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Basic Intro To Finance Options

December 10, 2014

by:

Joe Patti

When I was at the Ohio Arts Council conference yesterday, I attended a session on finance for arts and culture. This is unknown territory for me because I am familiar with grants and fundraising, but don’t really have any significant experience with finance.

One of the things I learned were the differences between Community Development Finance Institutions (CDFI) and Community Development Corporations (CDC). (Which is to say, I know slightly more than the textbook definition, but enough to start paying attention and learning more.)

There were representatives of each of these type of organizations as well as banks and venture capital firms talking about somewhat familiar financing options like bonds. There were also tools that I had no idea a non-profit organization might consider like the EB5 program which provides foreign investors with a fast track visa process.

While I had a sense that a non-profit might get funding from a revolving loan fund, I had no idea that a non-profit might actually run one. One option mentioned during the panel was possibly partnering with people to run your fund and coming in as a second layer on a loan that a bank was underwriting.

The panel made us aware of New Market Tax Credits which CDFIs sell to banks to encourage them to fund/invest in projects in low-income, high-poverty, high-unemployment communities at a lower rate. They encouraged us to Google the terms “New Market Tax Credit Arts Culture” to see what sort of projects popped up in order to get a sense of what was possible.

There were some main points the panel wanted those seeking financing to walk away from the session knowing about:

• Investors want to know how your project fits into the overall vision of: your city, foundations providing support, other funders, the community and your own organization.

• Even if they don’t explicitly say it, economic developers are looking for how the project provides cohesion in terms of issues like market change, safety and stability in the community. Economic developers don’t concern themselves about the health of an arts and cultural organization except as an attractor of new business and enhancer of quality of life. They noted one of the reasons businesses are starting to orient back toward downtowns is because the density of activity provides for connectivity and innovation.

• They emphasized that no one source will provide 100% of the funding. It is going to have to come from a mix of economic development entities, banks, public and private grants and donations.

• As a result, you need to have all parties at the table, even ones that you won’t necessarily need immediately. You don’t want to be in position where you realize you will need extra funding and go to someone at the last minute saying you need money, trying to explain your project to them and get them connected to your story.

• The panel explicitly said, if you start talking to these entities when you have a project in mind, it is already too late. You need to be telling your story and have people aware of it years in advance of soliciting support for a project.

Ultimately, it seems like you have to be telling your story every day, all the time to your immediate community in order to gain short term support for your projects and to anyone else who may ever remotely be of any use to you for a hypothetical project.

To heck with “Always Be Closing,” you need to be “Always Be Charming” (Yeah, that stinks. Anyone has a catchy phrase, let me know.)

An interesting suggestion about bolstering confidence in your organizational story was to devote part of your annual budget to enriching your endowment in order to show potential investors that you are investing in yourself.

It was notable that the first question asked after the presentation was about the shame directed at non-profits for overhead and the fact they might try to pay people a living wage. One of the panelists said people shouldn’t be ashamed and that foundations should know better.

However, I felt like he was sort of hedging when he said to break down administrative cost by task rather than by roles and titles. For example- assessment, program administration, engineering, capacity building.

I didn’t feel that overhead cost was of particular concern to the people on the panel. Their criteria for good governance and success seemed more aligned with the for-profit sector. So the fact this came up immediately may be a sign that the subject of judging an non-profit organization by overhead costs will become a more prevalent topic in the next couple years.

Business Models, Finance, Fundraising, Info You Can Use, Terms and Ideas

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I Get A Better Understanding Of Creative Placemaking

December 9, 2014

by:

Joe Patti

A short post today. I spent most of the day at a conference organized by the Ohio Arts Council to discuss the Arts and Cultural Ecosystem in the state and there was a lot of driving involved.

The keynote speaker was Jamie Bennett, Executive Director of ArtPlace America. The start of his speech was essentially the same one he gave for TEDxHudson that I wrote about last month.

However, then he went on to talk more about what ArtPlace was trying to accomplish which gave me a much better understanding of the creative placemaking concept. (Which is why a time limited TED Talk can’t replace substantial conversation on a topic.)

Bennett pointed out that the concerns faced by any community basically fell into broad categories of medical, education, housing, transportation and public safety. If you are the mayor, council person or other government executive/legislator, these are the areas that are important to you. If you work for a community development corporation, again, the quality and availability of these things are among your concerns.

What ArtPlace and creative placemaking wants is to put arts and culture at the table as something government and community development entities, among others, include in conversations and planning.

It is not that these things aren’t recognized as assets in the community. In a session I attended on finance, representatives of banks, venture capital firms and community development organizations all acknowledged that even if people have no intention of attending an opera, they want to move to a community with an opera because it is a signifier of quality of life.

The reason arts and culture are often absent from planning and other conversations seems to be more about lack of understanding how arts and culture contributes and how to bring about involvement.

Bennett said creative placemaking isn’t about creating more creative organizations, but to bring creativity to what is already in place in the community. I may be paraphrasing badly from my notes, but the essence seemed to be that the focus is outward from arts and cultural organizations rather than development of something internal to the organization.

Bennett said the projects should delineate a community (literally drawing lines on the map came up a couple times), identify a challenge, propose an arts intervention and know what success looks like so you know when to stop.

The example he gave of a really successful project was one Springboard for the Arts did in conjunction with the construction of the Green Line in St. Paul, MN. I had heard bits and pieces of this, but until today it wasn’t enough to understand the full scope.

Basically, given that the construction of the rail line was going to disrupt business and make residents feel miserable about the inconvenience, Springboard for the Arts’ solution was to train artists in placemaking and collaboration. According to Bennett, they turned about 120 artists loose telling them they could do whatever they wanted, as long as it was along the train line.

Over the course of two years, the number of positive phrases used to refer to the area far out numbered the negative. Instead of staying away from the construction, people converged on it.

According to an article written last month, this small effort resulted in deeper ties between the artists and the community. In one case, an artist’s effort was adopted as a mascot for the neighborhood.

An outcome of this type lends some credence to the idea that you can help yourself by helping your community.

Arts in an Age of Technology, creativity, State of the Arts

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On Board With Constructive Dissent

December 8, 2014

by:

Joe Patti

About two weeks ago, I posted about organizational behavior and included a quote from Peter Drucker about the value of dissent in decision making. Since then I came across another article specifically focused on the constructive use of dissent when serving on a board.

The article by Newton Holt acknowledges the power of groupthink and the pressure to always be in consensus I had noted earlier. It goes on to note that this can be an even greater issue with volunteer boards because there is a sense that the members are doing it out of the goodness of their hearts so you want to avoid conflict which may lead people to seek another way to spend their free time.

The piece also quotes BoardSource’s founding president, Nancy Axelrod, who notes that the infrequency of meetings and the turnover of part of the board membership every year or so makes it difficult to establish a culture of constructive dissent. Informal communication outside of meetings and the structure of meetings are important.

Given that building such a culture does take time—something in short supply for boards—Axelrod and others note the importance of frequent communication, formal and informal, among board members. A quarterly meeting simply isn’t enough to build the sorts of relationships needed to foster and maintain an environment of open dissent…

Sometimes, the procedures organizations establish to keep board meetings moving along do their jobs a little too well. “One of the biggest laments of most board members is that board meetings are boring,” says Axelrod. “They’re scripted, they’re ritualized, and their outcomes are predetermined. People are really not given much of an opportunity to weigh in, much less dissent, on important issues. The way a board meeting is structured and choreographed will have a profound impact on whether healthy debate and even dissent are tolerated on the board.”

The article spends a considerable amount of time discussing how you can tell the difference between constructive and destructive dissent. Briefly, the former focuses externally on influencing trends and decisions that will advance the cause. The latter is more internally focuses on personal power and authority. They will tend to see support or lack of support as reflection on them.

I thought the following a particularly interesting observation about why it can be so difficult to know the difference between constructive and destructive dissent. (my emphasis)

Tecker comments that part of the reason people have a hard time distinguishing between constructive and destructive dissent is because neither group, destructive or constructive, does a particularly effective job in presenting dissent. This is critical: For dissent to be effective, for it to be something besides an alarm bell or a cry of disapproval, the dissenter needs to make his or her case gracefully. Dissent takes “a lot of self-confidence,” says J. Clarke Price, CAE, president and CEO of the Ohio Society of CPAs. “It takes political savvy, because you could either be viewed as a lunatic or as a concerned, committed member. And the cultural challenge is to make sure that once you go through the dialogue, you can move on to the next issue and not have grudges carry over.”

[…]

Constructive influencers, says Tecker, “tend to be sufficiently thoughtful, and their own natural inclination is to look at situations from a multiplicity of perspectives … they tend to constantly examine the advantages and disadvantages of every position. Dissent for them will occur when they believe there is an alternate view that is not being given adequate attention. They usually will recognize that when someone identifies the disadvantage of an option, it’s not necessarily because they oppose the option—it’s just that they see a disadvantage. They will also recognize that when someone sees a particular advantage to a choice or an option, it’s not because they are advocating for it—it’s just that they see an advantage.”

I really appreciated the way they tackled the subject of dissent on boards. I had not seen it approached as thoroughly or from the perspective that constructive dissent requires a great deal of self-confidence. It is rather evident when you think about it. I just have not seen it addressed from that context.

Boards, Leadership, Volunteers

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High and Low Brow In A Cultural Garden of Eden

December 3, 2014

by:

Joe Patti

We are often told that at one time Shakespeare bridged the gap between high and low culture and classical music composers were the rock stars of their time, pandering to popular taste. These statements generally imply there once existed a cultural garden of Eden where no one knew they were supposed to sit quietly until Wagner asked for the lights to be turned off. I am always interested to read researched accounts of what conditions were actually like at the time.

I was intrigued by a recent essay on Pacific Standard by Noah Berlatsky about how the divide between high and low culture developed. At one time, material like Shakespeare was enjoyed and valued by people from all walks of life.

In Philadelphia, Levine writes, there were 65 Shakespeare performances in the single year of 1835.

It wasn’t just Philadelphia either, as Tocqueville testified: “There is hardly a pioneer’s hut that does not contain a few odd volumes of Shakespeare.” Levine writes that even illiterate men, like the famous scout Jim Bridger, would have Shakespeare read to them so they could memorize passages. In San Francisco, following the opening of the Jenny Lind Theater in 1850, “Miners … swarmed from the gambling saloons and cheap fandango houses to see Hamlet and Lear.” If the miners couldn’t come to the big city, Shakespeare came to them; major Shakespearean actors like Edwin Booth traveled out to mining camps where they acted from cobbled together stages.

However, a garden of Eden state of innocence didn’t necessarily exist. The way people experienced Shakespeare differed. There were those who valued pure Shakespeare for its sophistication and mastery of language. Others enjoyed wild adaptations that changed the endings, added ribald humor and mixed and matched plot and character, “Just as studios feel comfortable reworking stories about Spider-Man or Batman ad infinitum…”

“And over time, the intellectual elitists won; Shakespeare was purged of his pop associations, and became an elite pleasure.

This was in part because of changes in technology and preference—the growth of literacy, for example, ironically sapped the oral culture in which Shakespeare performance and recitation had been so natural. But the sacralization of Shakespeare was also, Levine says, pushed along by highbrow critics and patrons, who wrote against lowbrow theater-going habits, and created venues where Shakespeare was presented seriously, without melodramatic advertisements or farces.”

According to Berlatsky, some times the clashes between high and low brow were quite violent with mobs being fired upon by militia. Makes the effort to remove the intimidation factor associated with arts events seem relatively easy by comparison. While the situation obviously calmed down, the result was that high and low culture stopped communicating with each other and ultimately progressed to a point where they were unable to comprehend/tolerate what the other enjoyed.

Berlatsky notes a view expressed by Lawrence Levine that high and low culture began to converge once again in the 1980s. Berlatsky cites the example of

“directors like Quentin Tarantino, David Lynch, and the Coen Brothers slide cheerfully from art to genre and back again, sometimes in the same scene; on television, high-quality shows like Game of Thrones and Mad Men deliberately tackle serious issues in the format of serial melodrama.”

Depending on your opinion of these directors and shows, there is cause for optimism that our society is gradually mending the rifts that developed.

Uncategorized

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