Retrenchment

There’s an intriguing blog post by Jacob Harold published on 7/15/2020 at blog.candid.org where he examines potential scenarios that could drive nonprofits to close over the course of the pandemic.

While I’m still getting through all of the methodology, there’s no denying that we’ll see some retrenchment in the arts and culture sector. It happens ever major downturn and this will be no different.

In all of those instances, groups that survive are those who have done the best job at diversifying revenue, have strong, dedicated boards, and more than a few large donors they can rely on for bridge funding during the highest of stress points.

After the housing downturn, groups that relied too much on contributed income and/or invested poorly suffered most. During the COVID downturn, we’re starting to see that revenue diversification runs deeper than traditional unearned/earned/investment ratios.

Specifically, we’re seeing far greater importance on diversifying earned income in a way that doesn’t rely primarily on traditional live in-person concert activity. I plan on writing more about that soon but for now, here are some of the key points from Harold’s article:

  • The arts and culture sector could see anywhere from 2.2 – 10.6 percent of organizations close.
  • Those figures fare slightly better than the averages for the nonprofit sector as a whole.

Read How many nonprofits will shut their doors?

About Drew McManus

"I hear that every time you show up to work with an orchestra, people get fired." Those were the first words out of an executive's mouth after her board chair introduced us. That executive is now a dear colleague and friend but the day that consulting contract began with her orchestra, she was convinced I was a hatchet-man brought in by the board to clean house.

I understand where the trepidation comes from as a great deal of my consulting and technology provider work for arts organizations involves due diligence, separating fact from fiction, interpreting spin, as well as performance review and oversight. So yes, sometimes that work results in one or two individuals "aggressively embracing career change" but far more often than not, it reinforces and clarifies exactly what works and why.

In short, it doesn't matter if you know where all the bodies are buried if you can't keep your own clients out of the ground, and I'm fortunate enough to say that for more than 15 years, I've done exactly that for groups of all budget size from Qatar to Kathmandu.

For fun, I write a daily blog about the orchestra business, provide a platform for arts insiders to speak their mind, keep track of what people in this business get paid, help write a satirical cartoon about orchestra life, hack the arts, and love a good coffee drink.

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