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May A Large Donation Destroy Your Rating!

September 10, 2014

by:

Joe Patti

This story can’t be allowed to pass uncommented upon. Or at least, I feel the need to comment more extensively than did Thomas Cott when he tweeted this link.

In a case of damned if you have too much overhead and damned if you don’t have enough, ALS Association is in a panic about their rating as an effective charity due to the windfall they received thanks to the ice bucket challenges.

Since they didn’t expect such a surge in donations, they don’t have a plan formulated to use it. As a result, they are in danger of having their rating fall from a B+ to an F.

“You can get in trouble for having too much money in the bank,” said Daniel Borochoff, founder and president of Chicago-based CharityWatch, part of the American Institute of Philanthropy. “We want to see that there is a plan for spending down this money.”

[…]

Borochoff said having so much cash and no plan for what to do with that money could lead to an automatic F. Newhouse said those plans are in the works, which I ‘ve written about here in a separate post.

Concern over a potential downgrade lead ALS Association CEO Barbara Newhouse to take a peremptory step of writing to three rating agencies asking them not to penalize the association.

So let me get this straight. A commercial business makes five times their normal annual income and they are celebrated for it. Even if someone takes a close look at how this amazing feat was accomplished and sees something fishy, it is often difficult to get regulators, who wield legal authority, to take effective action. (Not to mention the business can sit on the cash as long as they want.)

However, a charity experiencing unprecedented largess starts to react with panic that the judgment of unofficial entities may result in bad will for them. This despite the fact that the process by which this funding is acquired is transparent, public and clearly unexpected.

The one glimmer of hope is that two of the three rating agencies she sent letters to, Guide Star and Charity Navigator, were signatories to the letter sent out last year urging donors not to use overhead ratio as a prime criteria for giving.

Hopefully there won’t be any problems for ALS Association as they consider their next move.

Otherwise, we may see spiteful people leveling the curse of prosperity in this post title.

Fundraising, State of the Arts

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How Green Is My Theater

September 9, 2014

by:

Joe Patti

Last week we were having a conversation to create a repair and replacement plan based on life cycle expectations for our performing arts facility. Of course, there are already a number of issues that needed to be addressed with some immediacy. The head of facility operations mentioned that these days there is little funding to be had for capital improvements. The only way to get much needed repairs and upgrades accomplished is via energy savings performance contracts. (ESPC)

The wikipedia description I linked to about performance contracts being a program for federal government entities is a little narrow. Nearly every state has a similar program, (Oregon has a good description), for themselves and their municipalities and many companies with large physical plants can benefit from them as well.

The benefit of a performance contract is that there is no up front cost to your institution. The company doing the work takes out loans and guarantees that the project will save you money in energy costs. Over the course of 25 years, you pay off the contract with the money you save.

As to whether ESPCs might be an option for arts organizations, I have looked at the programs of about 4-5 states. Other than Oregon’s which suggests a minimum of $100,000 in annual energy bills, there isn’t any clear guidance about what level of energy expense is appropriate to undertake such a project. Presumably your current bills should be relatively high as should the potential for energy saving to make it worth the while of your organization and the company undertaking the work.

You don’t necessarily have to be a governmental entity to have the work done. A couple of the vendors who provide ESPCs list retail and libraries as potential customers. Granted, they may be thinking supermarkets and libraries in need of excellent climate control for their collections rather than clothing stores and my neighborhood library.

But I think about the power use of theaters in particular with all their stage lighting and the energy savings that can be realized. LED lighting still has some color temperature and control issues which make them unsuitable for some uses, but the improvements come very quickly. Many theaters can benefit from upgrading their general lighting and HVAC systems.

When I was working in Hawaii the lighting in our lobby, offices, scene shop and exterior were all replaced. The illumination levels went up and the power use dropped immensely. My only gripe was that even with diffusion filters, the LEDs in some of the exterior stairwells were so sharply defined that it felt like you were furtively moving between pools of light.

My state arts council just sent out a survey yesterday and one question was about how they could better serve my organization. It wasn’t until after I finished the survey that it occurred to me to wonder if state arts councils couldn’t act as coordinators and guarantors on energy savings performance contracts.

Since many foundations aren’t providing capital improvement funding any more, this might prove to be a viable alternative. If a single organization wouldn’t realize enough savings to make a contract worthwhile, perhaps serving the needs of two or more organizations in the same community would be. The organizations could then turn around and use their energy savings to pay off the arts council (if not the energy contractor).

I am not sure what would happen if the organization went out of business or moved before the contract was paid off, but I am sure those considerations are already included in contracts for hospitals and other businesses.

Obviously, I am not fully acquainted with all the details of ESPCs to know how viable this would be. However, given how energy efficiency is becoming an area of increasing concern, I would not be surprised at all if the incentives for upgrading systems improved so over the next 10 years that it became easy for many arts organizations to do.

[Title of the post comes from the novel and movie, How Green Was My Valley]

Arts Facilities

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Hey Did You Hear About…

September 8, 2014

by:

Joe Patti

I was really surprised to find my name tucked at the bottom of Barry Hessenius’ 2014’s Top 50 Most Powerful and Influential People in the Nonprofit Arts (USA) In fact, since I read his blog via Feedly and had caught up with my subscriptions on Saturday, I might not have read the post for another week if it weren’t for someone tweeting that Robert Bush from Charlotte’s Arts and Science Council made the list.

It’s not that I don’t think what I produce is worthwhile, it is just that I don’t perceive the old blog here as having that high a profile.

Now, of course, there is pressure to meet the standard set by the company I am listed in.

But Barry’s list dovetails nicely with the subject I intended to address today: cooperation and competition in the arts. Last month, Seth Godin observed that authors don’t compete with each other.

Yet, not only do authors get along, they spend time and energy blurbing each other’s books. Authors don’t try to eliminate others from the shelf, in fact, they seek out the most crowded shelves they can find to place their books. They eagerly pay to read what everyone else is writing…

Can you imagine Tim Cook at Apple giving a generous, positive blurb to an Android phone?

And yet authors do it all the time.

It’s one of the things I’ve always liked best about being a professional writer. The universal recognition that there’s plenty of room for more authors, and that more reading is better than less reading, even if what’s getting read isn’t ours.

It’s not a zero-sum game. It’s an infinite game, one where we each seek to help ideas spread and lives change.

Even though the limits of funding, revenue generation opportunities and audience free time make existence as an arts organization or artist seem like a zero sum game, my experience starting about 15 years or so has been that arts people are generally pretty supportive of the work of colleagues in both word and action. They will tell their friends about interesting events and invite them along when they attend.

That hasn’t always been my experience. About 20 years ago, I feel like there was a lot more “us vs. them, we do the real art in this town” attitude. It has seemed over time the people I have worked with have espoused this view less and less.

Which isn’t to say that people aren’t envious of other organizations’ funding base; think other organization’s programming needs to be more diverse; think the annual awards ceremony for their community is all political; and aren’t befuddled by the more abstract and conceptual extremes of artistic expression.

Godin cites the intense rivalry of Pepsi and Coke as the antithesis of the relationship authors share. I mean, be honest. Haven’t you held your breath a moment when pouring Coke into a cup printed with a Pepsi logo, imagining the cup will melt? Have you ever mixed Pepsi and Coke together, standing at arm’s length expecting a reaction similar to dropping Mentos into a bottle of diet Coke, if not an explosion? That is how apparent the rivalry of the two companies is to the general public.

It would be hard to imagine Pepsi or Coke tweeting about members of other companies showing up on a list of the most influential and powerful people in the beverage industry.

But watch who calls attention to Barry Hessenius’ list over the next couple days. I bet you will find that the majority of those who do, don’t work for the same companies and organizations as those named. There may even be former employers and co-workers celebrating the attention someone has received. As Godin noted, there is a recognition that the success of one enhances the prestige and fortunes of the many.

Hey did you hear that Nina Simon, Laura Zabel and Donna Collins made the list?

State of the Arts, Working In The Arts

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Creativity for Creativity Sake

September 3, 2014

by:

Joe Patti

You may have seen this recent piece in The New Yorker on creativity. My state arts council linked to it and now I see multiple others have as well.

Author Joshua Rothman asks, “How did creativity transform from a way of being to a way of doing?”

That question gave me pause because in most of the posts I have done on the subject of creativity, it has almost always been about the product of creativity rather than the actual value of the process itself. I frequently invoke (as does Rothman) the IBM survey in which thousands of corporate CEOs said that creativity is one of the things they most highly value. I often talk about how the arts community can show their value to businesses, and by extension, the rest of the world via training and discussion of the creative process.

As Rothman points out, there was a time, (The Romantic period of Coleridge and Woodsworth), when there wasn’t an expectation that what was going on in your head would assume some demonstrable manifestation. (my emphasis)

It sounds bizarre, in some ways, to talk about creativity apart from the creation of a product. But that remoteness and strangeness is actually a measure of how much our sense of creativity has taken on the cast of our market-driven age. We live in a consumer society premised on the idea of self-expression through novelty. We believe that we can find ourselves through the acquisition of new things…Thus the rush, in my pile of creativity books, to reconceive every kind of life style as essentially creative—to argue that you can “unleash your creativity” as an investor, a writer, a chemist, a teacher, an athlete, or a coach. Even as this way of speaking aims to recast work as art, it suggests how much art has been recast as work: it’s now difficult to speak about creativity without also invoking a profession of some kind.

Even before I got to this paragraph near the end of the article, I started to think that we really aren’t allowed to make art for arts sake any more. There is both overt and subtle messaging that if your efforts aren’t advancing your career or marketable skills in some way, then it is frivolous.

It can absolutely be a lot of fun to try something new with the idea that you might be able to integrate it into your work. But how often do we allow ourselves to walk through mountain meadows and imagine making airplanes out of the flowers we see around us? If we allow ourselves to do that, how often is it being used to serve work in the sense of unleashing our creativity Rothman mentions: to surmount a creative block or as a vacation to refresh ourselves to go back to work bright eyed and clear headed?

Given the dynamics of our lives these days, I don’t know that we can ever return to the ideal state of the Romantics Rothman cites. In some sense, as a society we may be better off than the Romantics because more people have the leisure time to indulge their creativity than did in Coleridge’s day.

At the very least, we have the opportunity to open ourselves to fits of fancy and imagination. The exemplar that immediately popped to mind for me was when I was working in Hawaii and had the pleasure of driving Laurie Anderson around. She kept expressing her amazement at how blue the sky was. She may have noticed a dozen other things, but that is what sticks out in my memory. I was so struck by her enthusiasm, that I took her on a detour so I could share the panoramic vista of a scenic overlook with her.

creativity, State of the Arts, Working In The Arts

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