The Management of Art
When an important arts organization encounters an existential crisis, as Intiman Theatre and the Bellevue Philharmonic both did this year, business leaders inevitably scratch their heads. Perhaps if a nonprofit were run more like a business, they speculate, these organizations wouldn’t have to suspend operations after putting on only one of its five productions, as Intiman did, or go out of business altogether, as the Bellevue Philharmonic did.
And if a nonprofit were run more like a business, exactly what sort of business would that be?
“A startup that never ends,” says Gian-Carlo Scandiuzzi, executive director of ACT Theatre, which faced its own demise in 2003 but is now considered one of Seattle’s more viable arts organizations. Scandiuzzi, who joined ACT after cofounding a successful dot-com enterprise, IndieFlix, is familiar with the business model: the constant pitching of a product, which may be only an idea, with an ongoing quest for funds to make it happen.
“You can be a 40-year-old institution,” agrees arts management consultant Susan Trapnell, who helped rescue ACT and is now trying to do the same for Intiman, “but every year is like starting a new venture.”
Simply put, the arts make a poor business. There are no economies of scale and few ways to boost productivity. A string quartet needs as many musicians now as it did 250 years ago. Large, up-front capital costs can be impossible to recover in full over a limited run of a few weeks. Rarely does a revenue stream continue from one year to another. And most expenses are tied to labor, whose costs are always rising.
It’s also a business in which you can sell every seat in the house every night—and still lose money.
Kevin Maifeld, graduate program director in the college of Arts and Sciences at Seattle University, says the biggest surprise for most businesspeople is that ticket sales, even when those tickets go for $50 to $100 each, typically cover only half the cost of creating and operating an event. Arts organizations make up the difference on a subsidy of grants and donations. This 50/50 model has prevailed since the 1950s—and is under increasing stress.
Trapnell notes that in 1982, public support made up 12 to 16 percent of the budgets of five major theaters. Today, it constitutes 1 to 2 percent. ArtsFund, which raises money for arts organizations in King and Pierce counties, has tracked
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