Too often the battle cry of community leaders to executives of arts organizations is “cut the budget”, “reduce the expenses”, “and eliminate the fat”. Well, truth be told, most arts organizations, regardless of size, just don’t have any fat to trim. They are operating as lean, effective, productive organizations. Sure, there are some that pay their top leader’s salaries near or over $1million; complete with guaranteed first class air travel, but those are the exceptions.
However, when expenses do get trimmed, the approach is often as scientific as throwing darts against a dart board while blindfolded. Departments are just told to reduce expense by “X” in order to bring about an overall reduction in the size of the budget. Staff is trimmed, new productions are put on hold, and expenses are reduced “across the board. “by a set percentage.
Sometimes a business model does have to change, and in that case a new kind of organization emerges after in-depth discussions amongst staff, board and funders. That becomes a new effective strategic course of action.
The wise leader takes a different approach. He/she seeks to generate additional earned and contributed revenue, instead of focusing only on expenses. Sure, it’s harder to generate more revenue, but that is what can pull an organization and a community together. Here are some steps to consider:
- Look to new innovative programming that can both attract new donors and a new audience.
- Re-examine ticket pricing. Perhaps you are not charging enough.
- Consider allocating more resources to the marketing budget, rather than cutting every department.
- Develop an aggressive annual fund program. Is your staff up to the task? Do you have the right fund raising team in place? A highly effective, hardworking Development Team is a far better alternative than just reducing expenses.
- Do you have an endowment fund? If not, why not. It’s not the silver bullet, but if your funding community is not willing to provide an endowment fund, then they may be sending you a message.
Put the dart board away. It has no place in the management of a non-profit. Focus on increasing revenue rather than solely on reducing expenses.