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Portland Vs. The Overhead Ratio Beast

October 2, 2017

by:

Joe Patti

You may remember that back in 2012 voters in Portland, OR approved a $35 flat tax to benefit arts education in schools. The tax has survived a number of legal challenges, but according to a piece on Artsy, may fall prey to the dreaded overhead cost beast.

Even with the tax’s successes in schools, accounting concerns remain. The cost of administering the tax has risen above the allowed limits, while returns still have yet to reach the expected $12 million annually estimated at the time of passage.

In a memo to the city council last week published by the Portland Mercury, Thomas Lannom, Portland’s revenue division director, detailed some of the challenges—namely, that 7.7% of the total funds raised over five years has gone to administrative expenses related to collecting the tax….

Under the existing law, only 5% of the total raised by the tax should go to administering it. Think of it this way: Since the art tax began in 2013, the city has spent $3.69 million to collect a total of $47.99 million. Under the official cost cap, the city should have spent, at most, $2.4 million.

[…]

…. 7.7% of the total funds raised over five years has gone to administrative expenses related to collecting the tax. Averaged over the last three years, that figure is an even higher 8.9%.

Much of the overhead costs are due to the fact that residents are mailed a tax notice which they must pay separately from federal and state tax. If they don’t pay, the city staff has to take follow up actions and assess penalties.

The process is partly to blame for relatively low compliance with the arts tax. Original estimates predicted that 85% of Portlanders would fork over the funds. But only 73% of residents on average paid in the first three years of the art tax.

While a city government isn’t a non-profit organization, imposing a 5% overhead cap on the program feels just as much an unrealistic expectation as those imposed on non-profits. In the Portland Mercury article, the revenue division director says as much and mentions the 5% cap polled well. What I had hoped the article would mention is the overhead cost typically involved with collecting other taxes in the city.

The other taxes Portland collects are business and occupancy related. People are more habituated to paying these taxes so if those collection costs hovered around 4%-5%, you know it isn’t practical to assume a once a year tax assessed on individuals would have comparable expense levels.

Government Relations, State of the Arts

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You May Be Dead, But Thanks To A QR Code Your Memory Can Last Forever

September 27, 2017

by:

Joe Patti

Over on ArtsHacker today, Ceci Dadisman wrote a post suggesting that the dreaded/derided QR code may be making a comeback thanks to improved functionality on Apple’s new iOS11.

I have been keeping an eye open for close to a year to see if QR codes might return given that they are used on and for E-V-E-R-Y-T-H-I-N-G in China. With that sort of massive usage, it isn’t hard to foresee that companies will recognize the utility in transactions and encourage people to use them. When I say they are used for everything in China, I mean beggars on the street have signs with QR codes on them so you can donate. A village planted trees in the shape of a QR code that can be scanned from the air.

There are some other interesting uses like the shopping mall with a giant code on the side of the building so you can discover the hours as you drive by rather than pulling up and squinting at the sign on the door. QR codes also allow all those people waving signs on the side of the road/middle of the sidewalk get paid for catching your attention when you scan their sign to learn more.

The one use that really caught my eye, and you almost miss it in the article, is putting QR codes on tombstones so that people can learn more about the person.

But QR codes appear for dead people, too… Since people in China believe that QR codes are here to stay, even tombstones are engraved with QR codes that memorialize the life-story — through biographies, photographs, and videos — of the deceased. From the leadership of the China Funeral Association: “In modern times, people should commemorate their deceased loved ones in modern ways”.

While some obvious uses for QR codes in the arts would be to provide information about art works in museums and performers and their characters in performances, (especially interactive ones where a printed program might get in the way), I wonder what innovative uses for storytelling people might come up with.

One idea that just popped to mind is a quest that wasn’t dependent on the presence of physical objects. If you scan a treasure chest or information source without having first found and scanned a key/preceding information source, you won’t receive the treasure/solution. That way you can have multiple people play a game without having to make multiple versions of an item for people to claim.

Anything else pop to mind for people?

Arts in an Age of Technology, creativity, State of the Arts, Working In The Arts

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Looking To The Countryside

September 26, 2017

by:

Joe Patti

As a person who has lived and worked in rural locations, I read an article about the Catskill Mountain Foundation (CMF) on the Inside Philanthropy site with great interest. I thought some of the observations made in the piece were valuable both for funders who might be reluctant to fund rural organizations, and for organizations who were rallying support for creative placemaking and related endeavors in rural locations.

Writing for Inside Philanthropy, Mike Scutari suggests that some of the assumptions funders have about getting the most bang for their buck by supporting programs based in urban locales might not be entirely accurate.

Scan Inside Philanthropy’s archives and you’ll find examples of huge urban philanthropy efforts whose return on investment is murky at best. Most recently, David Callahan wrote that despite an influx of $1 billion from the Charles Stewart Mott Foundation to Flint, Michigan, life has mostly become worse in the city over the past half-century.

Finn’s smaller-is-more-impactful approach flips conventional wisdom on its head: Funders can move the dial more effectively by operating in more concentrated communities.

CMF Founder Peter Finn identified four challenges that particularly face rural organizations in addition to the perennial general concerns about the shrinking pool of available funding.

First, a feeling among some locals that change is not welcome. It’s an idea we sometimes see in urban creative placemaking, where some longtime residents can view arts organizations as interlopers and gentrifiers. Finn’s experience suggests that rural organizations aren’t immune from this perception. “The Catskill Mountain Foundation encountered this at times during the past 20 years,” Finn noted, “but seems to have finally gotten beyond this.”

Second, attracting sustained participation from the local community….

Third, finding talented staff. “We have been lucky that we were able to hire several excellent staff members…But in rural communities, the pool of talent to select from is limited.”

And lastly, the perennial specter of donor fatigue. “It is relatively easy to attract money in the early years for an energetic new arts organization that seems to be on path to success. All organizations encounter bumps in the road, and some donors are lost in this process. There has to be a core of key donors committed to sticking with the mission for the organization to become both successful and sustainable.”

Some of these points probably aren’t groundbreaking revelations. Still, it takes living in a rural community to appreciate the particular nuances of some of these points. I included the entire quote about CMF encountering resistance to change over 20 years because acceptance of the new tends to be a lot faster in urban environments. In many places rural locations you are considered a newcomer if you haven’t been around for about 50 years. I don’t doubt that some people may have finally warmed to them after 20 years.

Fundraising, State of the Arts, Working In The Arts

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Remind Yourself Maximum Performance Is Not Necessarily Optimum Performance

September 25, 2017

by:

Joe Patti

Last week I wrote about a blog entry Seth Godin made in January that examined phrases like “The purpose of society is to maximize profit” and “The only purpose of a company is to maximize long-term shareholder value.”

I intentionally wrote about Godin’s January post in order to provide some additional context for a post he made recently. (Though last week’s post got some pretty good response so check it out too)

I once drove home from college at 100 miles an hour. It saved two hours. My old car barely made it, and I was hardly able to speak once I peeled myself out of the car.

That was maximum speed, but it wasn’t optimum.

Systems have an optimum level of performance. It’s the output that permits the elements (including the humans) to do their best work, to persist at it, to avoid disasters, bad decisions and burnout.

One definition of maximization is: A short-term output level of high stress, where parts degrade but short-term performance is high.

This excerpt from his post addresses a number of issues faced by non-profit organizations.

First is the obvious reminder that it is easy to equate optimum outputs with maximum outputs.

This mistaken equivalency is the basis for the whole “X needs to run more like a business,” and “X should be self-supporting or close” sentiment. The work non-profits do can’t be maximized because it involves interacting and responding to humans, not providing products for human consumption. There is a difference between helping someone cultivate their creative abilities and producing the computers, instruments, paint, lighting or fabric that serve as a medium of creative expression.

Which is not to say it didn’t take Crayola a fair bit of time and effort to develop their new blue crayon, but the trial and error mixing chemical compounds can be accomplished a lot faster and with fewer repercussions than involved in trying to use that crayon to express what is inside yourself.

The second obvious reminder for non-profits is Godin’s point that humans are one of the elements that is susceptible to burnout. Optimum output is nowhere near the maximum output staff are capable of but the replacement cost is pretty high.

We are all pretty much aware of these issues because the problem is discussed across a range of forums. Still the press of societal expectations make it easy to succumb to the mistaken notion that maximum equals optimum and therefore if our organization isn’t working to its maximum ability, we are not producing optimal results.

General Musings, Leadership, Management Philosophy, Working In The Arts

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