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Weathering the Economic Crisis
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EducationLink3/16/2009

Editor's Note: This article shares ideas behind surviving financially troubling times as arts education providers. The article originally appeared in GUILDNotes Winter 2009, published by the National Guild of Community Schools of the Arts. Partial text reprinted with permission. Copyright 2009, National Guild of Community Schools of the Arts. All rights reserved.
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With the fundraising climate at its worst since 1998 (according to a December 2008 report by Indiana University's Center on Philanthropy), how can community arts education (CAE) organizations best meet the challenges of the economic downturn?

In responses from experienced nonprofit professionals, two themes stand out: first, rigorously and realistically evaluate every program and analyze every line in your budget to see what's really needed and what isn't; and second, stay true to your mission. "During tough times, go back to your mission and the core service you provide that will drive revenues," says Karen Prasser, Executive Director of Solon Center for the Arts in Solon, Ohio. "Forget about the nice stuff you like to do but that doesn't bring in the dollars."

The most effective response is holistic, encompassing fundraising, cost-cutting, programming and marketing.

Fundraising: take a new look at individual donors
Foundations will have less money to give in the next few years. This year's portfolio losses will reduce the three-year average on which they base distributions; next year they will spend much less and the year after, less still, explains Nancy Burd, a consultant who helps nonprofits with strategic and business planning.

Nevertheless, stay in touch with all your donors. Let even those who have reduced or eliminated their contributions know how you're responding to the crisis and remind them of the value of your work. "This year, I made an extra effort," says Stephen R. Shapiro, Executive Director of San Francisco's Community Music Center (CMC). "I wrote 400 notecards to past donors, saying, 'Now more than ever we need music in our community.' The response in our fall campaign was heartening, typifying the national picture — that for arts organizations, individual fundraising as a whole isn't down, but fewer donors give more."

Be creative about developing new funding sources, focusing on individual donors. "This is a wonderful time to cultivate new donors," notes Burd. CAE providers have built-in audiences — students and parents who come to your programs, whom you may not have sought funding from before. Invite them — and also foundations and corporations — to performances and exhibitions. "Once the crisis lifts, you'll have all these new friends who appreciate what you do."

One of two supporters of a core Solon public-school program could not fund it this year and Prasser is considering several possibilities: finding additional funders who believe in its mission, who would each give less than the lost funder; asking the schools to underwrite part of the cost; or, instead of free admission, asking each child to pay $1.

Cost cutting: put contingency plans in place
The arts are a business and a smart business plan is critical, says Prasser. Plan for several levels of contingency. What would you do if you had to cut your budget by 10, 20, or even 30 percent? If Solon loses 10 percent of its city subsidy, for example, Prasser would "look at reduction of hours, probably skimming down programs that may be driving a lesser level of revenue."

Before deciding anything, do a thorough cost analysis, advises Burd. Figure out what each program costs, including associated overhead such as rent. Then determine where the money comes from to support that program. Is it breaking even, earning money, or being subsidized by other programs?

Based on this information, do a "mission match" analysis. Decide what programs are core to the mission, may lose money but must be maintained and which use up resources and aren't mission oriented. If one program is draining you and you have a shortfall, that's the first one to cut. "Really understand the core of what you do and make sure it's cost effective, efficient, consistent with the mission and as exemplary as possible," summarizes Jacobson. "Squeeze out the excess" in your budget. Examine every single line, decide whether it represents money you need to spend and if so, make sure your staff is spending it responsibly. Look for redundancies and any area where you can save money: producing fewer newsletters or putting them online; reducing hours; using public transportation instead of renting a car; giving cell phones only to staff with demonstrated need. Be sure your invoices go out and follow up on those that aren't paid.

Take a look at the ratio between restricted and unrestricted funds and consider requesting that a funder forgo a specific program outcome in favor of general operating support. Foundations will appreciate that you understand your budget well enough to know exactly what you can produce with those unrestricted funds, Jacobson says. Through it all, she cautions, be sure to sustain relationships, not just with funders but with all stakeholders, including community groups and sponsors, so when the economic climate warms up, they'll be ready to hear from you.

Programming: be efficient and flexible
Part of replanning is figuring out operational changes to make your organization more efficient and effective. Merging programs and partnering with another organization can lower administrative and purchasing costs. Clarifying lines of communication and decision making responsibilities enable staff to work more efficiently. Most important, says Jacobson, make sure your internal structure enables you to hold on to key staff and programs. Redouble your management coaching skills so these staff feel valued and won't emerge from the crisis so exhausted that they leave.

Find "the right niche, exactly what's going to serve the community," advises Prasser. Solon's theatre, music and art programs are deliberately designed to provide what public schools can't, due to time and curriculum constraints. To discover what was needed, she invited teachers to the arts center to tell her. The resulting programs "created the ties that are our foundation and bring in the revenue."

Don't stop marketing
"When any nonprofit loses money, the first thing it wants to do is reduce marketing costs," says Burd. "But that's counterproductive. You need to get more people in the door." The trick is to market strategically. Just as with programming, "review your marketing strategies and be honest about what works and what doesn't." Make sure that what you do spend is cost effective.

Word of mouth has always been a basic marketing tool of CSA providers: "keeping communication lines open to the people who are your bread and butter," as Prasser puts it. Now the Internet offers viral marketing, costing little but adding an exponential multiplier effect. A great example, Burd notes, is the Philadelphia Fringe Festival. Festival supporters use Facebook and other social networking sites to tell their friends about performances right after seeing them. A community has developed of Fringe attendees, who wait for that email every morning to decide what to go see that day. "This really builds audience," Burd says. "You can transfer the same idea to your programs or to an upcoming exhibition opening." Don't forget social networking by your artists, who have connections within their various disciplines. Your board too can be ambassadors for the organization, talking it up and bringing friends to events.

Look for other cost-effective marketing tools. In northeast Ohio, the Community Partnership for Arts and Culture's Community Events Calendar lists every organization's programs and activities on a single web page, for a minima
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