Who "Owns" Your Favorite Nonprofit?
You may be surprised! nonprofits
are vital to alive communities. Typically nonprofits provide
significant services that fall in the gap between commercial
enterprises and government agencies or tax districts. Under-performing
nonprofits have a negative impact on day-to-day living for a
significant percentage of the people in any community. Effective
management is required in nonprofits if they are to fulfill their
assumed roles. Noble intentions do not automatically provide
desired outcomes. Yet many nonprofits specialize in survival,
instead of service. Let's look at a current (1999) example as
a case study, and explore the underlying reasons for the situation.
Our purpose is to learn from the experience of others.
We have a splendid, relatively new, theater facility in our community.
It's a gem built by generous donors. The population and cultural
level here is large enough to support the enterprise. Yet the
theater has been on the brink of financial misfortune off and
on for the last five years. Even though it is in fair fiscal
shape at the moment, due to the Herculean efforts of a few, it
may end up on the brink again soon if the pressing matter of
its "ownership" is not properly resolved. Why? When
ownership is unclear, as is now the case, important questions
go unanswered. They include: Who is in charge and responsible
for the theater's viability? How shall the assets be used? What
shall the theater become in the years ahead? Everything points
to supposition that these building-block issues are being neglected.
Neglect is harmful to the enterprise and, therefore, to this
community. In short, the future of the enterprise is falling
between the cracks; the buck doesn't stop anywhere.
So, who owns this nonprofit? To start, taxpayers do not own the theater. It was not constructed, and it is not maintained, with tax dollars. Elected officials in neither the town nor the county in which the theater sits assume any responsibility for its performance or continuance. Likewise, there is no taxing district for the theater such as there is, for example, for the local medical center and emergency medical organizations.
How about users? There are a number of users in a calendar year, but the single biggest one is the local school district. Teachers and pupils are in the theater a significant percentage of its available hours. As a practical matter, the theater is an extension of the nearby school facilities. But the school district pays zero for the upkeep and operation of the theater. Even though the theater provides a vital element in the school district's enrichment program, the school district's support in terms of dollars is less than the cost of a box of footballs.
Performers & directors & crews? Do they own the theater? Clearly these devoted people make a major contribution. But in a sense they are paid to do so. A few, very few, receive cash; the rest-on stage and behind stage-receive at least psychic income! So, in the sense of overall responsibility, use policies, and longer-term development, performers, directors, and crews are not the owners and probably don't want to be. They are artists, not managers.
Attendees? People like you and I buy tickets and go to shows. Our dollars, after paying for the direct cost of the performances, contribute about $30,000 per year toward the annual cost to keep the theater going. This is 12 percent of the theater's budget of $212,000, a budget that covers staff salaries, insurance, routine maintenance, phones, tickets, advertising, utilities, etc. So we ticket buyers don't qualify for a chunk of the ownership position, even though many of us are interested in its continuing success.
Supporters? CATS (Community Arts Theater Society) is far and away the primary, organized booster of the theater. Its volunteer members put on events and benefits that generate hard dollars-over $35,000 a year-for the theater. Without CATS the theater might not have survived in recent times. Together with an ad hoc legion of volunteer financial supporters, CATS has provided the regular cash flow vital to the theater's staying solvent.. Does CATS own the theater? The people in CATS apparently don't think so, and they, like the other prime participants, don't wish to do so. The same is true for the many other volunteer financial supporters in the community who in recent years have collectively put up about half the money required to meet the payroll and keep the lights on.
So we are left with: Who does "own" our nonprofit theater? The only remaining candidate is the theater's Board of Directors. And given the recent fiscal, staffing, and programmatic ups and downs, it is possible that, collectively, the directors are having difficulty functioning effectively in their important organizational work. In short, the Board is doing a poor job in carrying out its responsibilities. There are three reasons why this might be the case:
1. With 22 directors,
the board is probably too big. The Supreme Court of the U.S.
only has nine people. Our local Hospital District board has but
five people, a much larger annual budget, and a bigger physical
facility. When a volunteer board-such as the theater's-is oversized,
responsibilities can easily slip between well-meaning members.
Everyone assumes someone else (such as a staff person) is minding
the till and making the hard decisions that really can only be
made at the top. Without coherent policy decisions and steady
implementation, an organization is rudderless.
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2. The directors apparently cannot agree on a comprehensive
managing process or plan. In the absence of agreement, it
is a natural temptation for volunteer board members to sprinkle
opinions and ideas around at random ("try this try that")
without giving much serious attention to the direction and health
of the total enterprise. The end result is often an organization
with limited resources trying to be all things to all people.
This is a formula for continuing crisis.
An honest plan requires focus. The practical alternative to being all things to all people is to be (only) some things to some people. Doing this requires tough decisions. It requires saying no to pet projects, marginal ventures, old events that have passed their primes, and new artistic directions for which there is scant support in the community. By saying no to certain things, the deck is cleared for a yes or two for other initiatives. Big volunteer boards often have difficulty with these kinds of tradeoff decisions, with reaching them and with sticking with those made when it comes to actual plan execution.
3. The Board may need a little fresh blood-perhaps from beyond our community. What are the needs of our theater looking ahead? They include: Longer-range planning in terms of artistic direction, operations, and the facility; fund raising for the annual budget and the endowment; staff management including performance and performer oversight; and community and volunteer relations. There are people out there with proven, theatrical expertise in one or more of these areas who would probably be delighted to serve on our local Board for a modest stipend. We don't need to reinvent the wheel with local talent. One or two new people with fresh perspective could be solid additions and make a world of difference via the value they could add.
Our theater is a vital element in the life of this community. We would be at a loss without it. It can fail; other such theaters have. Non profits, in general, tend to be fragile organizations. In the last few years our theater has been kept afloat by a relatively small cadre of enthusiastic supporters. They may tire in the task. The time is right for some bold moves by the primary "owners," the Board of Directors.
Copyright © 1999, 2003 Steven C. Brandt.
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