I’ve been known for saying “…it’s a tax status, it shouldn’t be an attitude…” and recently I’ve been thinking about this statement. I’ve been thinking about the differences in beliefs, mindset and attitude that exists in charitable/non-profit organizations compared to commercial/for-profit entities. My thoughts have been fueled by numerous opportunities to engage with arts leaders across multiple regions this year, as well as news articles and social media posts.
I’m finding common themes in these conversations and readings…themes that to my ears threaten our sector’s ability to thrive at a time when our communities need creativity and social cohesion most. In many cases, we need to imagine something new—that may add and subtract from our past ways of working so that we can deliver to our communities in ways they value. To my thinking, these changes require an entrepreneurial mindset that I don’t always see.
I find the difference in thinking exists largely in attitudes about what is “right” or “possible” based on the structure and perceived realities in charitable and non-profit businesses. These attitudes can result in a remarkably different way of approaching very practical and important issues. Issues like risk management, competition, staffing and performance management. But my belief is that while our businesses have different tax structures we mustn’t, by default, have different attitudes about what defines smart organizational operations.
I think about my business, TRG Arts, often when I’m considering these realities. TRG Arts is a firm that provides services to the arts and cultural sector. Our outcomes are symbiotic to the sector we serve, and our goal is to strengthen the (largely) charitable and non-profit businesses our clients run. We do this relying entirely on business results that help our clients act in ways that help them achieve THEIR results. There is no safety net in our business, per se. Bank debt, sure. Outside investment? At a cost. At the end of the day, the risks we take and the decisions we make are designed to enable us to achieve our business objectives, period. We’re clear-eyed about this, and our annual profit-loss statement helps us stay that way. The recent result of this reality has been a complete restructuring that is now enabling consistently profitable operations. It was (and still is, in many ways) a risky change that reinvented how we do what we DO at TRG. But change was required.
By comparison, arts and cultural organizations in the regions we serve are most often charities or non-profits, and the objectives and missions in these businesses are equally service-oriented; arguably more so. But somehow the tensions between the “charity” parts and the “business” parts muddy things. Today, the sector’s balance sheets tell often terrifying stories about its ability to withstand another crisis. But often, instead of considering radical, transformative change or focus, I see waffling. Why? Is it because balancing budgets isn’t usually required of a non-profit or charitable organization and leaders and boards feel they still have runway? Government and philanthropists do, indeed, often rescue a “bad” year. Macro or community culture affects micro and organizational culture, too. For example, I know that in some regions, provinces and counties, annual operating surpluses are viewed critically, as if the “unspent” resources could have gone to better use delivering programs than sitting in an investment or bank account representing risk capital. But today…today, the concern must be about our sector’s ability to see it through the next three to five years, given our current cash reserves and macro-economic, political and societal realties.
Ugh. None of this is simple, and I know it. There are many, many priorities for charities and many, many stakeholders.
And yet: I observe that this “charity vs business” tension often frustrates, slows or stops decisions that could improve organizational results now. Why must this be the reality, when arts and culture requires solid focus on organizational resiliency more than we’ve seen in our lifetimes? I share more on this in the clip below.
I wonder if you see what I see. Below, I share some of the themes I’m hearing now, and I’m curious: do you agree that these narratives are part of a “mindset” issue? Would it be possible to add new frames and narratives that might help organizations react differently? Or not?
Right now, I’m having conversations where I hear…
1.“Our customers won’t pay it.” Or won’t tolerate a price increase. Or, “it’s not moral or ethical to increase prices right now.” My take: inflation has affected every sector of every region in which our clients work. In America, since February of 2020, inflation has grown 21%. Similar growth has taken place in the UK and Canada. According to our aggregated Arts & Culture Benchmark (join here for free), the average price paid for performing arts tickets has grown 3% compared to pre-pandemic times. Is this “just the way it is” in arts and culture? No. Customers of TRG clients are paying 14% more than pre-pandemic times and these organizations are not experiencing related volume decreases. Now: 14% is not revenue growth in line with inflation, but it’s millions of dollars delivered to a sector that, like other industries, requires it to operate.
2.“We’re out of (low on) capital…now is not the time to be taking risks.” Balancing risk and reward is a huge leadership task in any business, and now it feels especially fraught. And yet, those leaders that pushed despite the odds and found ways to do things like…
…are now reaping big rewards. Understanding ROI is obviously key, whether it’s technology or staff or something else. But my observations from watching these leaders (and making some of these decisions myself) is that to enable growth and resilience we must plan (just enough), take the plunge, and test and learn. We must activate toward our new futures. Now.
3.“Long range financial planning is impossible right now.” “We don’t have the necessary data or time to do it,” some say. And they’re right; pandemic-era data is wonky and we don’t have excess time. It’s the rare organization in our sector that I see planning beyond one year or season. But doesn’t this have to change? Long-range planning, no matter how imperfect, enables this year’s risk to be put in the context of future reward. It provides context and courage and adjustment as we test and learn. It’s a must-do that isn’t being done way too often.
4.And finally my favorite: “the subscription is dead…finally!” You know what we think about this at TRG. Recurring revenue businesses now make up a trillion-dollar industry and like it or not, these businesses are more resilient and valued at 10x others without recurring revenues. Arts and cultural organizations have led the way here decades ago with subscriptions and memberships and more…and we’re still innovating, because many realize what we do at TRG Arts: our fragile charities and non-profits must have more predictable, renewable income streams. And the good news is that our relationships with customers offer us an opportunity to invest in them, nurture them, and benefit together from that investment. Watch back the Leading the Way webinar I led last week to learn more.
Does the non-profit or charitable mission make the a priori difference in how a business operates for results? Must it? Let’s talk about it. React to and with me here and in the meantime, consider joining me for a fall Executive Convene in Boston, MA or Newcastle, England where we’ll be talking about customer focus through the lens of programming and requirements of managing the customer journey today.
Our communities NEED arts and culture to thrive through the next three to five years, not just survive. To do this, we may need to shift our mindset and leverage what we know we bring to the table as creatives: the ability to imagine something new.
Jill S. Robinson
CEO and Owner, TRG Arts