Making Fiscal and Cultural Sense

New York City, November 14-16, 2003

By Nicole Citron

Government funding and subscription bases may have dwindled this year, but in some ways the essence of the theatre business hasn’t changed since 1613, when playwright and Don Quixote author Miguel de Cervantes commented on the predicament—and the public value—of putting on a show. “The work of theatrical managers is incredible and the worry they have remarkable,” the Spanish author wrote in a passage that Mark Taper Forum managing director Charles Dillingham cited at TCG’s 2003 Fall Forum. “For they have to earn a great deal in order to avoid having so many debts at the end of the year that they go bankrupt. Yet they are necessary to the state in the same way as woods, groves, restful landscapes and all those things that provide honest recreation.”

Dillingham quoted the Cervantes novella The Glass Student in one of the plenary sessions of the Forum, which took place Nov. 14–16 in New York City. Approximately 140 theatre professionals and board members gathered for the annual event, which kicked off with a Friday night dinner and keynote speech at the Tavern on the Green in Central Park and continued on Saturday and Sunday at the Roundabout Theatre Company’s American Airlines Theatre. Titled “Dollars and Sense: Leadership and Governance in 2003,” the conference emphasized practical management tools, and it featured break-out sessions on topics including balance sheets, capital campaigns, fundraising ideas and events, conflict-of-interest policies, designing a board, ways to become more entrepreneurial and collaborative, and successful advocacy strategies. But these nuts-and-bolts lessons were informed by an emphasis not just on the bottom line, but on the less quantifiable bedrock of a theatre’s viability: community impact.

Keynote speaker Mark Moore, director of the Hauser Center for Nonprofit Organizations at Harvard University and author of Creating Public Value: Strategic Management in Government, applied his philosophy of public management to governing an arts organization. “To have both a financial accounting but also, perhaps more importantly, to have a story about the public value of the arts is an absolutely crucial part of the sustainability of the enterprise,” Moore said. This story, he stressed, must be believable not just to insiders but to the unconverted as well—the crowds of people who are not yet theatregoers.

In Saturday’s first plenary session, Clara Miller, president of Nonprofit Finance Fund, which provides financial advice and funds nonprofit projects with debt, articulated a way to re-imagine a theatre’s core business—selling seats—from the outside. “Your underlying core business differs from your artistic mission,” she said. Her plenary presentation, “Capital Structure Counts,” also charted out the alternate universe of nonprofit organizations as compared to for-profit businesses. In the nonprofit sector’s “special world,” Miller noted, money behaves in a different way than it does in the for-profit sector, a phenomenon that can create a “cognitive dissonance” for board members. “With a for-profit business, the growth costs are ordinarily covered because profits increase, but in the case of not-for-profits, you have to increase subsidy,” she said. “We know that growth reduces profitability for a long time before everything catches up.”

Miller’s analysis resonated with her audience, if the reactions of Forum attendees like Berkeley Repertory Theatre managing director Susan Medak are anything to go by. “The largest companies are having the hardest time, and the smaller theatres, well-priced and with no obligations, are having boom years,” Medak remarked during the coffee break after Miller’s talk.

In her plenary “Nonprofit Lifecycles: Stage-based Wisdom for Nonprofit Capacity,” Anne Howden, senior consultant with LarsonAllen Public Service Group, placed this growth stage on a diagnostic model for organizational advancement and development: idea, start-up, growth, maturity, decline, turnaround, and, for those who have lost their energy and their market, terminal. “It’s okay to be in the start-up stage after 25 years,” Howden joked at the start of her presentation, striking a sympathetic and humorous tone that, judging from the laughter, resonated with Fall Forum participants.

But after that start-up phase (which one participant likened to the fear and exhilaration Thelma and Louise must have felt driving off the cliff), and following growth (a process that Howden compared to “flying an airplane and building it at the same time”) may come the pivotal transition from maturity to decline. At this point, Howden warned, a theatre has turned inward, away from the community it serves. To reach turnaround and avoid the terminal stage, Howden advised, reconnect with the marketplace, change problematic behaviors, own the past, rebuild credibility, live with reduced means and risk failure.

Participants deemed Howden’s diagnostic model an accurate and helpful reflection of the growth process. “It’s important that you step back throughout the life of your organization. We don’t do that enough when we’re in the midst of activity and financial striving,” TCG board member and Plowshares Theatre Company producing artistic director Gary Anderson said during lunch.

Asked the following afternoon for his take on the highlights of the Forum, Dallas-based WaterTower Theatre managing director Tim Peterson said that the lifecyles plenary alone was worth the price of the trip to New York. “It re-focused us on the challenges that are ahead, but reassured us we’re heading in the right direction,” he enthused.

The risk-taking spirit Howden recommended was the subject of Saturday afternoon’s panel, “Making Strategic Decisions: When to Take Risks,” a discussion moderated by TCG deputy director Joan Channick with Susan Booth (artistic director, Alliance Theatre Company), Charles Dillingham (managing director, Mark Taper Forum), Teresa Eyring (managing director, The Children’s Theatre Company) and Jim Nicola (artistic director, New York Theatre Workshop). For these leaders, for whom reinvention is the key to survival, the real risk—or danger—is avoidance of creativity and change. Booth, for example, recognizes that the Alliance didn’t make a safe choice when they hired her, “a lippy new girl from Chicago who had never run a theatre.” Inheriting an $1.8 million deficit, Booth said she has since helped reexamine the Alliance’s mission, approached the theatre as a “centerpiece for social interaction,” and tried to “find the community context for the programming.”

While nonprofit theatres flourish by staying connected to the marketplace with relevant programming, their lifeblood, of course, is contributed revenue, and Sunday morning’s plenary offered the point of view of the funders they woo. Catherine Maciariello (program officer, The Andrew W. Mellon Foundation), Second Stage’s Timothy McClimon (formerly of the AT&T Foundation), and David Miller (executive director, New Jersey State Council on the Arts), in a panel moderated by TCG board president and South Coast Repertory managing director Paula Tomei, shared lessons on the grant application process in the foundation, corporate, and public sectors.

“If our agency denies a grant, I can have a senator on my doorstep the next day who wants to understand how a program that could deny one of his constituents a grant could possibly be a just one,” said Miller, illustrating the parameters of managing a $17.5 million budget in service to the state.

Maciariello, on the other hand, described the Mellon Foundation grant process, which doesn’t involve unsolicited applications, as provocative for applicants rather than ponderous. Speaking from his experience with AT&T, McClimon stressed the increasing involvement of the CEO in corporate philanthropy, encouraging theatres to get their trustees more actively involved in building relationships.

Ben Cameron emphasized McClimon’s point in his concluding remarks, calling for trustees to activate their social sphere of influence. Echoing Cervantes, he said, “Activist board members know that even as our increasingly fractious world and deeply programmatic policies threaten to create communities that none of us will want to live in, theatre is not part of the need—theatre is part of the solution.”