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Info You Can Use: Good Governance Policies

April 4, 2011

by:

Joe Patti

There is an old adage about the cleanliness of a restaurant restroom being indicative of the care being used in the kitchen for food preparation. There really isn’t an actual relationship between these two facts, but a dirty restroom is enough to give one pause.

The Non-Profit Law blog says the IRS takes a similar stance on whether you check Yes or No on your Form 990 about the presence of policies in the following areas:

* Conflict of Interest Policy (Part VI, Section B)
* Executive compensation approval process (Part VI, Section B)
* Document Retention and Destruction Policy (Part VI, Section B)
* Gift Acceptance Policy (Schedule M)
* Meeting minutes document practices (Part VI, Section A)
* Review process of Form 990 by the Board of Directors (Part VI, Section B)
* Whistleblower Policy (Part VI, Section B)
* Joint Venture Policy, if applicable (Part VI, Section B)
* Policies regarding chapters, affiliates, and branches, if applicable (Part VI, Section B)

It is not illegal to lack these policies, but their absence can be a sign of poor governance and therefore contribute to a decision by the IRS to subject an organization to greater scrutiny.

Emily Chan notes that just because you have policies in these areas doesn’t mean you are covered. It is important to evaluate the policies to ensure they are appropriate for your organization and its ability to adhere to them, comply with the law, are understood and actually practiced.

She supplies the following helpful info: “Note changes to policies are not required to be reported to the IRS unless such polices or procedures are contained within the organizing documents or bylaws and regarding certain subject matter such as conflicts of interests. See Form 990 Instructions.”

If an organization doesn’t have a policy, Chan advises not rushing to formulate them out of a desire to appear to be exercising good governance for public relations reasons (and to perhaps avoid the IRS’ steely gaze). Poor policy being nearly as bad as no policy. Proper policy takes time to formulate so give yourself the time to develop it. In her tips for evaluating existing policies there is an implication that one should avoid adopting the policies of other organizations in any significant degree.

The guidance she provides for creating new policies is:

Thoughtful considerations about how to get to “yes” can include questions such as:

* Which policies have a higher priority based on the circumstances of the organization? For example, an organization that frequently accepts non-cash gifts may have a more pressing urgency to adopt a useful gift acceptance policy as opposed to an organization that hardly, if ever, accepts donations from the public.
* What are anticipated governance issues or past governance issues that these policies should address?
* What kind of capacity limitations – staff, financial resources, or otherwise – should we be mindful of in drafting and adopting a new policy?
* What is the projected timeline for drafting such policy and presenting it to the board?
* If anticipating a prolonged delay (due to resources, time, etc.) before formally adopting such policies, what problems might this cause and what can the organization do to help mitigate these risks?
* Is the organization prepared to explain to the IRS, its constituents, or others why it currently does not have a certain policy and articulate its action plan moving forward to adopt one?

Additionally, it is important to note an organization lacking the recommended policies is not without any recourse on the Form 990. For example, Schedule O (2010) allows for supplemental narratives to further explain the policies or processes used at the organization to address these governance concerns.

Boards, Government Relations, Info You Can Use

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What Makes Sense In Refund Policies?

March 30, 2011

by:

Joe Patti

Adam Natale writes about Fractured Atlas’ development process for the ticketing module of their ATHENA software. They are talking to different sized performing arts organizations at Community Design Sessions (CDS) to get feedback about the design and assemble a wish-list of features. His discussion of the software’s use for ticket exchanges caught my attention.

“So, in each CDS, I brought up the fact that the software should allow for patrons to easily exchange their tickets. Most people in the room freaked out — enabling patrons to do this would result in complete pandemonium! And then my dear friend at Theatre Bay Area, Jamye Divila, a box office administrator and guru, sided with me. She said something along the lines of, “We do over-the-phone exchanges for subscribers constantly and it takes a lot of staff time to do this. What if we could automate the process and simply build permissions and restrictions into the software so that it doesn’t allow the patrons to do things they shouldn’t be allowed to do?” Suddenly, the air cleared. There was a collective “Oh, software can do that?” sigh that filled the room. Yes, software can do that.”

This made me wonder what sort of criteria people were using to grant refunds that they felt they could provide good customer service via a set of programmed rules. Often the criteria I use is based on judgments that are very human. The death in the family/grave illness, you don’t really question much and given that people know this, it can easily used as an excuse. How can a computer program know that a rock slide was just reported and traffic can’t get through from one direction? Granted, if the program is designed well, the ticket office could reprogram the conditions to make it easy for anyone to request refunds in this case. There are many occasions when nuanced decisions need to be made and I suppose it will always have to be a human that makes them.

Refunding does take a lot of staff time so I can definitely see the benefit of having the computer handle refunds in the cases when snow storms or sick performers force a cancellation. In cases when you have multiple performances and can have the computer offer an exchange to another performance or show of equal value to avoid processing a refund, there also a benefit. It would certainly also be a boon in extending subscriber/donor exchange benefits to people on a 24 hour basis. Those organizations like my own that have single engagement events, might opt to create criteria where anyone who has purchased an average of X single tickets a year since 2005 will be allowed to exchange because they are clearly loyal.

That raises the question about the whys of exchange and refund policies. Why do we not allow refunds? I imagine commitment is probably one issue. We want people to follow through on their decision to attend, especially in these days when there are so many competing choices. For the record, I don’t think people are waiting until the last minute to buy tickets because of the no refund policy. They are generally uncertain about what to do in the face of so many choices.

It is certainly logical to resist granting refunds given that it is a time consuming process. Selling the tickets can be too, but paying employees to give money back has a certain sting to it. If a computer could process the refund for you, would you be more willing to grant a refund?

I also don’t utilize as monolithic a response to refund requests as I once did. I sense this is a better stance in the face of all the options people have. But is it diminishing the perceived value of what we offer to do so?

Is it time to reassess the practice of refusing refunds given that people seem to be waiting until they are absolutely sure they want to attend? Is there an opportunity to appear more customer friendly by having a more liberal policy given that 90% of your audience isn’t buying until the last three days? My suspicion is that most people won’t have any awareness of your policy until they want to use it so a change won’t generate general good will. If you really go out of your way to loudly publicize a very liberal policy, you may really undermine the perception of your product unless you do it very cleverly.

Limitations on refunds and exchanges are a part of everyday life so I am not suggesting that it should be scrapped for performances in order to meet changing expectations. I am just using the occasion of this post to suggest looking at policies to assess if they are still valid in the context of changing purchasing and attendance behaviors and how they play into your goals for community relations.

Audience Relations, Management Philosophy

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The Lens Through Which You View This Will Be Provided

March 29, 2011

by:

Joe Patti

Earlier this week I received an email inviting me to become the “Twitterer in Residence” for the Crossing Europe film festival in Linz, Austria.

Now, I am under no illusion that this was anything but a mass emailing to every blogger around with some connection to performing arts and cinema. Still the fact that the festival and its sponsor, Austrian eyeglass manufacturer, Silhouette, are offering to provide travel, lodging and pocket money for six days to have an English speaker write about the festival, is a testament to how important and influential social media is perceived.

They don’t try to hide the fact they expect you to write nice things in return, at least about their sponsor. Their eligibility requirements note that during the festival, “personal opinion and impressions are put in the foreground.”

However, in relation to the main sponsor, “I understand to be not only reporter at the festival, but within the project also a testimonial for the festival’s main sponsor Silhouette Eyewear (http://www.silhouette.com) and I’m looking forward to this.”

If you are a cinema blogger, this may not be too big a deal to you. You aren’t being asked to compromise your views about films and actors. No one looks to you as an authority about eyewear so you can gush until the cows come home. Of course, people may wonder if your perception of the festival may have been skewed by the complimentary rose colored glasses you were given.

Regardless of what you may feel about the attempt to conflate compensated bloggers with the role once held by professional critics, you have to admit that the sponsor hasn’t tried to hide that they will be influencing the opinion about themselves. The burden of defending impartiality falls squarely on those who take them up on their offer.

I can see this type of social media promotion appealing to businesses. They can offer benefits in return for a person saying whatever they truly think about the organizations the bank/law firm/store supports. In return, the person has to write testimonials about their company. The company provides more or less sincere exposure that causes it supports might not otherwise receive. It also “buys” advertising for themselves. I imagine accountants can tell them how much of the benefits the company is providing the social media creator is tax deductible as an in-kind donation.

Arts in an Age of Technology, Marketing/PR

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Who Will Punch Our Sacred Cows?

March 28, 2011

by:

Joe Patti

I was reading a post on the Marginal Revolution blog about professionalism vs. amateurism. I had moved past it before a section of it percolated through my consciousness.

Amateurism is splendid when amateurs actually can make contributions. A lot of the Industrial Revolution was driven by the inventions of so-called amateurs. One of the most revolutionary economic sectors today — social networking — has been led by amateurs….

Amateurs are associated with free entry and a lot of experimentation. Barbecue quality is very often driven by amateurs, and in general amateurs still make contributions to food and cooking. The difficulty of maintaining productive amateurs is one of the reasons why scientific progress periodically slows down. Specialization, however necessary it may be, can make big breakthroughs harder at some margin.

I am guessing it was the sensory part of my brain thinking about good barbecue (MMMMM barbecue!) that prompted me to scroll back up. The amount of time and money people spend competing in barbecue cook offs can be pretty amazing.

It didn’t take long before I started wondering about the ways in which amateurs have driven changes in the performing arts recently. I have to confess, other than some people who financed movies by maxing out credit cards before landing a distribution deal, I couldn’t think of too many ways. Other than suggesting new ways to finance a movie, I am not sure these films brought about a lot of change. Though it did seem like the faux documentary format became popular after The Blair Witch Project. As I scour my memory it seems like, hip-hop was the last big amateur generated development in performing arts.

The easy answer is that the rest of the world has passed live performing arts by aided by technology. True, technology has provided alternative means of expression and dissemination. Shows like American Idol and Glee have inspired people to make an effort at expressing themselves through performance. But has that driven improvements in quality?

If people were showing up at an event with higher expectations of a performance as a result of YouTube videos or “nobody to star” shows, that would be great. It doesn’t seem to be happening. Or if people were coming to auditions better prepared than usual or with little formal training and knocking the socks off people, having absorbed lessons from these shows about cultivating ones abilities, that would equally desired. But I can’t think of any recent development that is widely acknowledged as a factor in forcing artists to step up their game.

I know there are groups using technology to enhance their performances or allow audiences to influence performances in real time via feedback. A lot of that is isolated and individual. The sort of change I am talking about is the type we are witnessing regarding food where people are concerned about where what they eat is sourced. Regardless of how you feel about such efforts, it has clearly influenced the way we eat and the way in which food is presented to us on a large scale. Restaurant menus now feature notes on such details. I can’t think of a similar influence in the performing arts which has forced the sector to acknowledge it.

The argument that live performing arts use antiquated means of production doesn’t seem valid. Cooking barbecue uses the same basic means of production in terms of heat, spices, enzymes, etc. Improvements have come as a result of applying those means in myriad permutations. Does the same hold true for the performing arts?

Social media tools exist that can allow someone to spread the word about their accomplishments so it is tough to claim that people are doing great work in obscurity and have no means to spread the word to other performers. The amateur barbecuing world is something of a niche community with closely guarded secret recipes, but apparently enough word gets around to influence change in restaurants.

Most of the improvements in the technical side of the arts are made by people with big budgets in Las Vegas and Broadway. LED lighting has its problems, but it holds the promise of enormous power savings and versatility that allows one instrument to replace many. Achieving the spectacle of these things is pretty expensive right now so while it may be argued they can provide improvements in environmental terms, it hasn’t been accomplished by amateurs.

Despite the high costs of creating a technically appealing production, I don’t think it can be said that there are too many barriers to entry preventing amateurs from influencing the performing arts. There are community venues across the country available as performance spaces. Not that you would necessarily need one when any space in a park or empty storefront can serve. One can self produce musical work thanks to personal computers rather than depending on gatekeepers at media companies to approve of them. There are plenty of available tools to support innovation.

I might be claimed that the performing arts community is so insular and devoted to preserving a particular way of doing things that the professionals are utterly ignoring the efforts of the amateurs and the burgeoning successes they are having. I don’t think this is the case for a couple reasons. First, a heck of a lot of people have to be complicit in this. I read a lot of articles and blogs in the course of a week and I have to believe there are at least a couple who would be pointing to the results amateurs are having and urging the rest of us to get on board or get left behind. While these sentiments have been expressed about social media and relationships with one’s community, I can’t think of an instance where people have claimed that the amateurs were eating the profession’s lunch.

Second, if there was such a change I don’t think it would be possible to completely ignore. People would be giving cues. It would be like the slow food/localvore movement and people would be asking where our metaphoric produce was sourced from. In the literal context of the localvore movement, Scott Walters’ Center for Rural Arts Development and Leadership Education may potentially be the next big movement, but it hasn’t manifested as such yet. Granted, it is entirely possible cues have been delivered time and time again and have been ignored.

Related to the idea of insularity, I also considered the possible claim that the performing arts was suppressing new innovation in this direction. I can’t believe there is enough of this stultifying energy present in the general culture of the performing arts to prevent the rise of a movement that thumbs its nose at everyone else and blazes its own trail.

Honestly, I think I am asking these questions because part of me is afraid an environment has been created where no one is invested in the performing arts enough to think it worth the effort to thumb their nose and punch a few sacred cows. Scoff all you want at the amateur, they are needed to drive change.

So I open it up to the readership. Show me where I am wrong. I am happy to learn otherwise. Perhaps there is a movement that is just developing legs that I haven’t recognized. I referenced hip-hop before. It started in the 70s but it really didn’t enter popular awareness until the 80s & 90s. It may be the same with whatever is coming. I should note that amateur lead change need not manifest itself in the destruction and supplanting of the old, it could be any sort of innovation that lead to change. In this context, perhaps the adoption of something has been so gradual and organic I have missed it.

The change also doesn’t need to have been something that achieved great popularity and acclaim. It could be an artistic development or new theory/approach whose impact is recognized internally to the performing arts but not necessarily widely acknowledged. Think Stanley McCandless, the father of modern theatrical lighting. Trained as an architect, his theories about how to approach lighting are the foundation for all lighting design today, nearly a century later. Few in audience members of the early 20th century likely recognized his efforts at improving lighting design were providing them with an better attendance experience much less knew he was responsible.

Art(ist) Education, Arts in an Age of Technology, General Musings, State of the Arts

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