High Net Worth in da House

The Center on Philanthropy at Indiana University completed a study in October 2006 of high net worth giving in the United States, sponsored by Bank of America. According to the study "High Net-Worth households, those with incomes of greater than $200,000 or assets in excess of $1,000,000, represent 3.1 percent of the total households in the United States." Despite their small numbers, the members of these households make two-thirds of all charitable contributions in the country.

More importantly for nonprofit theatres, 10.8% of all HNW households (including households that did not give) made donations to arts organizations. By comparison, only 2% of all households (including non-givers, and HNW households) gave to arts organizations.

But wait! There's more! Of the households that did contribute to charity (givers only) 70.1% of HNW households gave to the arts, and only 8% of total households (givers only) contributed to the arts. What does it all mean? Read the report...

If you're pressed for time, I'll give you my take: we already know that our major donors carry the weight of our theatres on their backs. What's more important to note, is those people are also more likely to support the arts altogether, ergo, soliciting even non-major donations from high net worth households will be more fruitful than trying to increase the number donations from every household on your mailing list. Statistically you're five times more likely to receive a gift from a HNW household on your list than from the list as a whole. It certainly changes my thinking about the structure of annual campaigns and how I might spend my postage line.

Building the Better Mousetrap

UPDATE 2/25/2008: Skeptics read this. Then read this.

Many of you may have heard of Jim Collins - author of "Good to Great" and "Built to Last," books he wrote on the structural underpinnings of successful companies. He has since released a monograph called "Good to Great and the Social Sectors" in order to relate some of the key ideas in "Good to Great" to the nonprofit universe.

"We must reject the idea—well-intentioned, but dead wrong—that the primary path to greatness in the social sectors is to become 'more like a business.' Most businesses—like most of anything else in life—fall somewhere between mediocre and good. Few are great. When you compare great companies with good ones, many widely practiced business norms turn out to correlate with mediocrity, not greatness. So, then, why would we want to import the practices of mediocrity into the social sectors?

I shared this perspective with a gathering of business CEOs, and offended nearly everyone in the room. A hand shot up from David Weekley, one of the more thoughtful CEOs—a man who built a very successful company and who now spends nearly half his time working with the social sectors. 'Do you have evidence to support your point?' he demanded. 'In my work with nonprofits, I find that they’re in desperate need of greater discipline—disciplined planning, disciplined people, disciplined governance, disciplined allocation of resources.'

'What makes you think that’s a business concept?' I replied. 'Most businesses also have a desperate need for greater discipline. Mediocre companies rarely display the relentless culture of discipline—disciplined people who engage in disciplined thought and who take disciplined action—that we find in truly great companies. A culture of discipline is not a principle of business; it is a principle of greatness.'” -Jim Collins

I'm enamored of the process Collins used to write "Good to Great" - he began by sorting mounds and mounds of data and then, through focused debate with his research team, developed theories which described the data. The results, to me, seemed much more solid and useful then much of the usual claptrap that you find in business self-help books. And, it's a surprisingly good read (if you're a management-type geek like me).

What I'd like to do is make a post a week or so talking about some of these concepts - that way, we'll spread out the fun, you won't get bored, and I don't have to let on that my copy of the "Social Sectors" monograph is lost in the holiday mail and I haven't read it yet. By the time it gets here, it should be pretty relevant. I'll also keep you updated on my attempt to put his theories to use within my own theatre.

The Sum of Us

Yesterday, my Artistic Director and I met with Mark Fleischer, the new Producing Artistic Director of the Adirondack Theatre Festival. We introduced ourselves, had some coffee and exchanged some ideas. Mark is road testing some new web-based box office software next season; I'm eagerly awaiting his report. We also compared preliminary notes on how we could share resources and encourage greater circulation in the regional theatre community.

We're working out the details of a theatre passport that would give anyone with the card discounts at the participating theatres. Mark pointed out that the best argument for theatre begetting theatre was Broadway, with dozens of theatres jammed shoulder to shoulder in a few blocks of Manhattan generating the greatest concentration of commercially viable theatre in the United States.

The moral of this story: meet the people who run the theatres around you. Help each other. Share some ideas. Call someone this week and introduce yourself. If they live close enough - have a coffee. I called Tom Pechar at Alliance Theatre one day and exchanged only a couple of sentences, and took something away from that. I was interested in revamping my website, so I got in touch with the webmaster at the Guthrie and asked them about Drupal - a modular opensource web development tool - and they wrote me back. Take advantage of all the knowledge out there, and the fact that we work in an industry that has some of the coolest people around in management - and they're usually willing to share...

Beef up your Board

Theatre vs. Nonprofit
As a business, the theatre produces and sells seats to plays. In that way, our business model and capital structure are similar to such disparate industries as universities and airlines – we create a product and our customers have to fill a chair which we maintain in order for them to enjoy our service.

Most theatres are also nonprofits – one of an increasing number which dot the landscape each year. Although these nonprofits may or may not provide a similar service or product, we are often competing for slim pieces of the same small pie in terms of government and foundation funding, and especially for individual donors and business support from our community. The more nonprofits proliferate, the more competition for resources.

Accountability
The reporting and accountability burdens of nonprofits have increased drastically in the last decade, and will continue to increase. As the nation relies more and more on nonprofits to provide services once provided by the for-profit and government sector, the burdens will continue increase. In the last few years, congress has added numerous layers and requirements to the application for 501c3 status, and is in the process of restructuring the tax return forms that nonprofits fill out.

These changes have placed a level of responsibility on boards and individual board members that did not exist a generation ago. Today’s and tomorrow’s board must be savvy, proactive, and forward-thinking. The people with the dedication and capacity to meet the demands of a modern nonprofit board member are few and far between.

Competition
The success or failure of a nonprofit starts and ends with its board, and the nonprofits that will succeed in competing for the resources necessary to fulfill their missions are not the ones that write the most successful grants or raise the most money; the most successful nonprofits will be those that compete for, attract, and retain the most skilled and dedicated board members.

If a theatre is to remain a competitive nonprofit, it is imperative that we discuss and develop board governance policies that will bring the theatre to the forefront of the new nonprofit world. Your theatre should strive to join the ranks of those companies cited as how-to success stories, such as the Arena Stage, the Alliance Theatre, and the Steppenwolf. Every ounce of your program and mission success will depend on your theatre's ability to achieve this vision.

Take a trip to the library

The New York Public Library sits on the site of the historic Croton Reservoir, which supplied drinking water to the city from 1842 to 1899. In its place now sits a vast reservoir of knowledge in the form of books, journals, and a trove of online data.

The New York Public Library subscribes to dozens of journals and databases, including The New York Times and the Harvard Business Review - to name a notable pair. You really have to see it to believe it. Best of all - every piece of this data is available to any of us online with a New York Public Library Card. Useful for everything from AP photos, to articles on the philanthropic sector, to prospect and grant research, the NYPL card is available to residents of the City at no charge, and non-residents for a $100 annual fee. Compared to the fees you would have to pay to get the same information from these sources individually, it's a screaming bargain.

If you live in NYC now, get a card - you can keep it even after you move. I also have a card from the Chicago Public Library.

The Best Direct Mail Appeal Ever

This from a story by Robert Walser, originally published in the Swiss daily Neue Zurcher Zeitung, in 1915, translated from German by Damion Searls, and published in the January 2008 Harper's:

"As you well know, I am a great talent and as such in need of continual support. Where, my dear sir, do you have the nerve to leave me in the lurch, and hence to perish? I think I have every right to more fat advances. Woe is you, unhappy wretch, if you don't send me ASAP enough for me to keep dawdling. But I am quite sure that you would never be foolhardy enough, and hence never dare, to remain insensitive to the prospect of nefarious, predatory demands."

Our dauntless artist, however unfortunately denied, "learn[s] to forget that anyone was duty-bound to offer him assistance," and becomes "responsible for his own behavior once more."

I will donate $100 to the first arts nonprofit that uses the above as a mass appeal. Try me.

Many thanks to Walser, Searls, and the assiduous folks at Harper's.