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Unexpected Development In Student Debt

July 24, 2017

by:

Joe Patti

There was a warning shot across the bows of university/conservatory arts training programs whose graduates have debt out of proportion with their earning potential in the Chicago Tribune last week. Harvard University is suspending graduate admissions for their theatre program for three years after receiving a failing grade from the Department of Education.

Simply put, the federal policy looks at the debts-to-earnings ratios of career-training programs (and, yes, the arts are a career) in an attempt to discern whether the programs provide students reasonable returns on their investment in tuition. The 2015 regulations hold that the average student’s debt from the program should not exceed 20 percent of their discretionary income or 8 percent of their total income. If that is not the case, then the program could lose access to federal student loans.

[…]

Which brings us back to Harvard and… the A.R.T. Institute, …. The Institute has been facing two big problems.

The first is that the median debt rate for students of the two-year program, which enrolls about 23 people a year, is a whopping $78,000 and the typical post-graduation income of those students is miserably low when compared with that debt: just $36,000 a year. If you’re trying to make it in New York City, or even in Boston or Chicago, $36K per annum sure does not allow a lot of cushion for debt repayment.

Such are the entry-level salaries in the arts, which long have been subsidized by those who work therein, especially those in the kinds of jobs you can expect straight out of graduate school.

Tribune reporter Chris Jones goes on to suggest that arts training programs should be held to similar standards as trade schools rather than claiming an exception,

“…based on the mostly spurious argument that students are pursuing their creative dreams, know the cruel realities of the profession and thus have some awareness of the financial risks and the inequality of its rewards — some people, obviously, make a whole lot.

In many cases, these students are going into debt to acquire credentials and, yet more importantly, a network to aid them in a profession that, to its detriment, is growing ever-more nepotistic and lazily elitist, especially when it comes to its dominance by a few well-known training programs.”

That last sentence about the industry being partially to blame for using the imprimatur of a brand name as a shortcut for hiring decisions evokes the recent conversations about arts careers only being accessible to people with the means to take on debt and support themselves during unpaid internships.

Well, actually Jones goes on to explicitly talk about that, no extrapolation of concepts required.

But who wants the arts dominated by debt-free elites?

[…]

…If these programs cannot be made more affordable and accessible without the promotion of onerous indebtedness, then more attention must be paid by the culture industry to those programs that can.

Many fine public universities offer excellent arts education, at both the undergraduate and graduate levels. The issue that needs fixing is whether such programs can open an equivalent number of doors.

The ultimate question of course is, will people start to make the effort to seek out talent elsewhere or will the status quo remain? I don’t really want to wish complications upon anyone, but I wonder if the issues Harvard faced might crop up with other schools and that will provide greater incentive and necessity for arts and media companies to look elsewhere when hiring.

Art(ist) Education, State of the Arts, Working In The Arts

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Good Basic Advice At Any Career Stage

July 19, 2017

by:

Joe Patti

Juilliard Professor Benjamin Sosland shared some advice he gives his students as they think about developing their careers. Some of the advice is pretty common across most career advice articles, but there were a number of suggestions I hadn’t seen very often and wanted to share.

(I would share a fair bit more but MusicalAmerica seems to take pains to inhibit easily excerpting from articles on their site.)

• Are you meeting people who can offer guidance and a helping hand? (Networking is not a dirty word. Really)

[..]

• Do you maintain a mailing list and is your website and use of social media reaching the audience you hope to attract?
• Is there a self-generated artistic project that you have always dreamed of realizing?
• Have you gained the necessary financial literacy to plan and advocate for such a project? (A good budget is based on research, not wishful thinking.)
• Do you write thank you notes to anyone and everyone who ever offers even the slightest bit of assistance? (Not to get all Emily Post or anything but, wow, is this ever a powerful tool.)
• Have you developed a vocabulary to be a convincing advocate for your art? (Here is a good exercise. Defend this sentence: The arts are important.)
• Do you have role models whose careers you admire and do you know the story of their journey? Case studies on successful people are fascinating. (Hint: there is no such ting as a self-made man or woman.)

I don’t believe I have mentioned the self-generated artistic project too much here on the blog, but I bring the topic up with students with a fair bit of frequency. I just had such a conversation about two weeks ago. Sosland’s follow up point about financial literacy to plan and advocate for the project is one of my motivations for such conversations. Of course, I often talk about the need to develop these skills regardless of the method.

Some of these suggestions are good regardless of the stage you are in your career. As much as I write on the topic, I don’t feel I am as adept as I should be when it comes to speaking extemporaneously as an advocate for the arts.

If you have read my blog for any length of time, you will know I heartily support that last suggestion about examining the career journeys of people you admire. I am a big proponent of breaking the illusion that success and talent are exclusive blessings from the heavens rather than the result of a long term (often unexamined) process and effort.

Finally, the thank you note suggestion I could definitely do a much better job at. Despite my mother inculcating the practice in my siblings and myself, my sisters are much better at the follow through than am I.

Art(ist) Education, Working In The Arts

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For- & Non-Profit Difference Is In Relations, Not Good Intentions

July 18, 2017

by:

Joe Patti

Last month, Non-Profit Quarterly reprinted a piece by Paul Hogan that explored the basic differences between for- and non-profit organizations that are not clearly understood and often lead to the “should be run like a business” statements.

Hogan says that companies that focus on the well-being of their employees and are dedicated to stewardship of the environment and other causes still have more in common with other for-profits than non-profits, despite their worthy intentions.

Higher fixed costs lead to lower net profits. But consider that in this way, the profits aren’t lost at all: They are simply allocated differently, to the greater benefit of employees or the community in which the business operates. Regardless, the for-profit enterprise still is fundamentally extractive, transactional, and profit-driven.

In comparison,

Nonprofit enterprises, on the other hand, are relational and restorative, or generative. The basis of activity in the nonprofit enterprise is personal and interactive, and seeks to restore or help generate whatever people need to improve their lives, or the life of the community in which they live.

[…]

It could be argued that even this exchange is transactional, no different from a for-profit interaction. But there is a critical difference: The person to whom the service is being provided is not usually the source of the payment for the service. I don’t pay my doctor or my dentist or my phlebotomist. Someone else does, and generally, I have no idea what amount is actually paid. So, the nonprofit person-to-person interaction is not zero-sum or about money or profit at all; it’s about the relationship that is established. And it is this disconnect of the cost of service from the third-party reimbursement for that service that destabilizes the nonprofit sector in ways that the for-profit sector does not deal with or need to understand.

And specifically in relation to the arts:

This isn’t restricted to healthcare or human services, either. The amount you pay for a ticket to many of the arts organizations you attend is subsidized, sometimes heavily, by outside public or private funders. If most arts organizations had to charge the full amount they needed in order to operate, most of us wouldn’t be able to afford to attend. That’s important because the health of people and communities depends as much on arts and culture as it does on all other nonprofit work, and arts must be as accessible as healthcare and education.

I apologize for the long series of quotes from the article, but I wanted to highlight his logic in contrasting for- and non-profit businesses and how he related insurance payments with fundraising.

I was especially interested in the way he compared insurance payments by a third party with third party funding of the arts (or any non-profit org). The idea that you need insurance because you might not otherwise be able to pay a medical bill is widely understood. That context provides a smoother segue to discussing why most of those non-profits serve couldn’t afford access to the services provided without a third party subsidizing their operations.

Of course, health insurance and healthcare costs being a hot button issue, you have to quickly insert assurances that there pretty much aren’t any heavily inflated costs related to the work you are doing.

Advocacy, Business Models, Fundraising, State of the Arts

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Ever Think About How Many Staff You Need Per Attendee?

July 17, 2017

by:

Joe Patti

Last week the National Center for Arts Research (NCAR) released some interesting data about the ratio between the number of full time employees at arts organizations and the audiences/visitors they serve.

An average of 3,547 people attend for each full-time employee. That is the relationship between an overall average of 38,741 attendees and 11 full-time staff members annually.

Finding that attendance at many organizations has either decreased or is flat, but number of staff has grown NCAR says,

This means that organizational capacity expanded at a slightly faster rate than growth in the number of people served. This does not mean that staffs became bloated. Instead, modest staff expansion can mean that an organization realizes it has maxed out its current staff’s capacity to provide high quality offerings and services, and the ability to attract more future audience members depends on making initial investments in people.

They break down the data by sector, organization size and market size.

Every Answer Raised More Questions

The part that really interested me and left me wanting to know more detail was in the Ecosystem Highlights section where they talk about “What Drives In-person Attendance?” (their emphasis)

• In-person attendance varies by sector and increases with organizational age, square footage, budget size, the number of programmatic offerings, the amount spent directly on programs (emphasizing the importance of findings related to the Investment in Program Index), targeting kids or Asian-Americans, and having higher levels of local funding.
• Attendance tends to be lower when organizations receive higher levels of support from state or federal agencies, when their lowest ticket prices is not terribly low (representing the importance of an accessible price point), if they produce proportionally more world premieres, or if they target young adults, African-Americans or Hispanics/Latino

Bearing in mind that correlation doesn’t equal causation, I really wanted to know more about the relationship of attendance increasing when programming targeted Asian-Americans or when there was higher levels of local funding.

Does the fact that attendance is lower when there is higher levels of support from state and federal agencies have any significance? Does that say something about the value of NEA funding? Are there restrictions on federal and state support that don’t exist with local funding that leads organizations to program and promote in ways that don’t connect with the local community?

This could be the case since NCAR found,

The number of world and national premieres increased contributions from trustees and other individual donors but decreased government contributions and program and earned revenue.

and

Government Grant Activity has a positive effect on fulltime employees, program expenses and total expenses but a negative effect on the number of offerings and direct marketing expenses.

So maybe federal funders aren’t really supporting the new work, broader programming and marketing that is needed to engage larger audiences.

I started to assume local funding meant high giving from individual donors until I read (my emphasis),

Physical attendance is lower in communities where the total population is larger, there is a higher percentage of children in the community, and the community’s overall level of philanthropy is high.

So I guess higher levels of local funding associated with higher attendance must be either local foundations or government? Except, apparently federal funding is helpful except when it comes to securing money from foundations:

The receipt of an NEA or IMLS grants had a positive effect on nearly all outcomes except foundation funding, which was lower for federal grant recipients.

Some Surprises About Demographics Orgs Want

Why is attendance lower for young adults, African-Americans and Hispanics/Latinos? Is it something about those segments or are arts and cultural organizations as a general group doing things that don’t resonate well with those groups but do resonate with kids and Asian-Americans? (Keeping in mind we aren’t necessarily talking about the same organizations doing well with the latter groups but not the former.)

There seems to be an inverse relationship on these same factors when it comes to Full Time Employees.

• Organizations that target people under 25 years old or Hispanics/Latinos, and those awarded NEA or IMLS grants tend to have more full-time employees.
• The number of full-time employees tends to be lower for organizations that present higher levels of local and world premieres and for those who target Asian-Americans.

I wondered if organizations that targeted young adults and Hispanic/Latinos also got more federal grants. Since young adults and Hispanic/Latino audiences are often mentioned as groups arts organizations aspire to attract, this might mean these efforts are targeted to receive more federal funding. There is a suggestion this might be the case:

And Government Grant Activity has no effect on program or earned revenue and a negative effect on physical attendance and engagement; this negative effect may reflect government support for arts and culture organizations that are initiating outreach efforts targeting traditionally underserved populations.

Is there an implication of racism/classism in the suggestion that government grants have a negative effect on physical attendance because the grants support targeting underserved populations?

Knowing that organizations that target Asian-Americans have smaller staffs and that organizations that target Asian-Americans have higher attendance, does that mean Asian-Americans are easier to attract? Or are these statistics just a result of there being only a few small organizations specifically targeting Asian-Americans and they are doing a good job with that demographic segment?

Among the interesting pattern NCAR noted in regard to organizations focused on serving minority populations:

Organizations that target African-Americans attract higher levels of contributed funds but tend to have a smaller footprint, with fewer offerings and lower marketing and development expenses and lower program revenue, attendance, and engagement.

Organizations that target Hispanics/Latinos have higher contributed revenue, program salaries, development expenses, and total offerings but lower marketing expenses, and program and earned revenue.

Other Notes Of Interest

Some other interesting observations that don’t necessarily fit with the aforementioned topics:

Youth Orgs Have It Great Until The Kids Grow Up

And organizations targeting children have lower marketing expenses that yield higher attendance, engagement and program and earned revenue, and higher development expenses that yield lower unrestricted and total contributions. This puzzling finding seems to suggest that parent-contributors have a short-term focus on immediate benefits for their children without necessarily supporting the long-term financial health of the organization.

A Vibrant Arts Community Is Great, Except For Attendance

Total Arts Dollars in the community is positively related with nearly every performance outcome, with physical attendance being a prominent exception; this negative relationship likely reflects the presence of many small arts organizations in a thriving arts and culture community competing for audiences.

The Number of Arts Providers in the community positively impacts program and total expenses and contributions from every source except foundations; there is no effect on program and earned revenue and the impact on attendance and engagement is negative, again suggesting competition for audiences.

A Wealthy Community Is Great, Except For Attendance

Higher socio-economic level is negatively associated with physical attendance and engagement – likely reflecting increased access to other leisure opportunities like travel – and positively associated with program, development, and total expenses and program and earned revenue, reflecting the ability of arts organizations to invest more in the art and charge higher prices.

Just to repeat the old saw about correlation not equaling causation, while these findings are interesting individually one should be careful drawing assumptions and relationships between them. Even some of the things listed together as having positive outcomes may not necessarily lead to a positive outcome when all present together. (i.e. You won’t necessarily increase attendance by expanding your physical plant, offerings, budget, spending and programming to Asian-American kids in a place with high local funding.)

Audience Relations, Fundraising, Government Relations, State of the Arts, Terms and Ideas

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