not cut and dried

I have taken quite a bit of time thinking about the question of whether or not cutting arts organization budgets is a good way to their improved health.  It’s a complicated question, one that the best minds in the industry can spend time arguing over ad infinitum.  I’ve come to the conclusion that cost-cutting is analogous to the geometric relationship of squares to rectangles:  All squares are rectangles, but not all rectangles are squares.  Therefore: All cuts may save money, but not all cuts may help improve revenues. You can cut costs, but that only trims one side of the balance sheet.  It doesn’t improve your revenue, it just makes it appear better because the costs it is balanced against appear smaller.

It’s also helpful to know how the public (both the foundation/donor subset and the general public at large) will perceive the cost cutting measures.  If the cuts make basic sense, in the greater scheme of improving the health and efficiency of the organization, then that can be a good public relations boon for the organization.  Cuts as a comprehensive and far-reaching plan are generally perceived as a good thing.  Cuts for their own sake are often seen as desperate acts by an organization on the brink of collapse.  Look at Honolulu and Charleston for good examples of how not to make cuts. UPDATE: and now look at what is being asked of the musicians in Detroit.

What you cut is almost as important as how much you cut.  If you take a look at your organization’s offerings and decide that you’re competing too much with yourself, then pruning out less successful and redundant programs can make what’s left over more attractive to prospective patrons.  In addition, cutting selected repeats to create more ticket scarcity might help to create a healthy demand for the remaining performances.  This has to be done with care, however, as it tends to be (along with salary and health care benefit cuts) very alarming to the musicians or artists of the organization (see Sam Bergman’s quote in yesterday’s post).  For example, cutting all pops programming because “the audience is all dying anyway” is catastrophic cutting, whereas searching for the audience that we most want to develop and then catering to them within the general pops genre is the better route, though possibly more expensive and time consuming. The difference is what you or I might do to our prized Japanese maple tree if we just randomly hack off stray limbs instead of hiring a skilled arborist to perform careful pruning to make the tree more healthy.

I think that the point Michael Kaiser is making is more complex than it has been portrayed by most journalists.  I think he’s against dumb, short-sighted management.  To manage effectively, you’ve got to develop a plan, then do what needs to be done in order to effect the plan.  You need to realize that selectively cutting expenses can make room for careful expansion or experimentation.  Being conservative doesn’t always mean you’re being safe – it can just mean that you’re scared, or incompetent.  The best managers seem to have dozens of balls in the air at once, and everything is a balancing act – and not just an act of balancing the budget.  Even if they don’t have a clear vision of the future of the organization, they do have a clear vision of where they don’t want it to end up.  That’s what has been sadly lacking in arts organizations over the years, especially in Portland.  We are fortunate that here in 2010, we have our major arts organizations run by very competent professionals who not only compete for donor dollars, but also collaborate in ways to improve everyone’s lot – just as they should in such a close-knit artistic community.

As the African proverb goes: Knowledge without wisdom is like water in the sand.

Questions? Comments?

8 Replies to “not cut and dried”

  1. Charles,

    I read David Stabler and Barry Johnson’s discussion yesterday, and Barry’s original blog post which now has nine serious comments/responses. And I’ve shared them – and will share your articles – with Martha Richards, executive director of the Miller Foundation. (I don’t think it’s a secret that the Foundation is insisting on balanced budgets as a prerequisite for their continued significant support of Portland’s five major arts organizations. Martha and her trustees are tremendously supportive of our work, but they believe we must scale our activities to match our community’s willingness to support them.) I also read Michael Kaiser’s book a while ago, and went to hear him speak in May at Portland Center Stage.

    There’s a lot that could and is being said about the short- and long-term wisdom of the cuts that our companies are making. I think there are some major distinctions to be made, though.

    Portland Opera has cut one mainstage production from its season, in addition to taking furlough days, salary freezes and so on. I’ve run a major opera company (Canadian Opera in Toronto) and I know first-hand the grim economics of opera, in which the more you produce, the more you lose. (Theatre companies can extend successful productions and actually make money; an additional performance of a sold-out opera just adds to the loss.) So I sympathize with their decision, although Michael Kaiser and Barry Johnson would both undoubtedly say they are starting on a downward spiral.

    We haven’t done that at the Symphony. We continue to invest in our audiences, as must be evident from our brochure. We are shifting the mix of performances and trying to better balance performance supply with audience demand, without compromising our core commitment to the classical subscription series of 16 programs. And we have cut our marketing expenditures although I’m convinced we’re doing so shrewdly. (Who was it who said that 50% of all marketing expenditures are a waste of money but the problem is, you don’t know which 50%?) The Carnegie trip has captured public imagination and shows every sign not only of paying for itself, but contributing to the overhead costs involved as well. And that’s a big increase to our operating budget at a difficult time.

    But the cuts to staff and orchestra size, furlough days, wage freezes, shortened season, reduced/eliminated pension and parking contributions and changes to the health insurance plans are saving an enormous amount of money, and I’d describe this as increasing our internal subsidy of the company during a period when the external subsidies have been reduced. Michael Kaiser might call it “squeezing the nickel” but I’d disagree. It’s an expression of our collective commitment to this orchestra and yes, to our jobs and families. It’s something we agreed was necessary during the toughest economic time any of us has experienced. Given the much greater pain other people in this country are experiencing I think it’s unwise (immoral?) to grumble. But we are now collectively providing a subsidy of approximately the same size as the Miller Foundation’s generous $1 million annual grant. I hope we can soon get back to healthy levels of earned and contributed income, so we can stop depending on our musicians and staff to balance the budget.

    1. I’m so glad that you joined the conversation, Elaine. In my post I tried to avoid looking like an OSA cheerleader (though I am, of course), and I could have said that the Oregon Symphony is an example of an organization that is making exactly the intelligent choices that should be made in times like this, and that the musicians and staff have been aware of this, and the major concessions in our recent contracts are evidence of this. We gave up valuable parts of our compensation package to help keep the orchestra afloat, in the hopes that we’d become stronger in the future. Thanks to you, it seems ever more likely that this will be the case. Thanks.

  2. hi Elaine,

    i had forgotten about your Toronto connections. of course, you are abundantly familiar with R. Murray Schafer.

    to my ear, mind & spirit, Schafer is one of THE very greatest living artists in any field. i’ve always thought it a great shame – and loss to U.S. audiences – that his work seems to be be so rarely performed outside of Canada.

    do you think there is a chance that Carlos might be interested in one of his many brilliant works?

    i am in-touch with Murray and will be happy to help out if there is an opportunity to mount one of his pieces and/or bring him to town.

    1. Hi Bob,

      I remember one of Murray’s largest pieces that involved multiple choirs, orchestral and constructed instruments he’d put together out of farm machinery in his barn and – if I remember correctly – about 8 conductors, each with an assistant with a stop watch. And I spent a night at the Science Centre participating in the overnight experience that was Ra. His quartets are gorgeous. And as I’m sure you know, he is or was deeply involved with music education. He’s a great composer. I don’t know if Carlos knows his works but I’ll round up some CDs.

      How old is he now? More than 80?

      E

  3. Hi Elaine (& Charles),

    thanx for your note(s).

    you got to experience “Ra?!” wow, i’m envious. i was just showing that score to a friend the other day. i would love to hear your impressions of that monumental opus someday.

    Murray turned 77 earlier this month. he appears to still be quite active. his output is truly protean.

    i brought Murray to Seattle in 1990 and UVic in 1996 for several concerts & workshops. during his Seattle residency, the Purcell SQ played his first 5 quartets. you are quite right, they are gorgeous.

    oh, Charles, i have scores of SQs 1-3 (#2 is my fave) and CDs of SQs 1-5. i believe he is now up to #11.

    a great resource for Schafer’s music, CDs & books on music education (the best i’ve ever encountered) is http://www.patria.org/

    the man is a unique genius.

    cheers,

    bob

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