Arts Groups Must Think Like Businesses in Wake of Funding Drops

Connexeo - 04/06/2018


Community arts funding is at risk from a variety of sources.



What’s an arts organization to do?

While public-arts funding cuts are not universal by any means, many non-profit arts organizations are starting to take lessons from for-profit business models when it comes to supporting themselves. Theatre and dance companies, orchestras, visual art organizations and the like have to come up with innovative ways to create revenue.

It’s called “earned revenue” – though anyone who has gone through the grant process would strongly object if they were told the award wasn’t earned. But the term refers to direct sales of tickets, merchandise, services and the like, as well as sponsorships. An Americans for the Arts study conducted in 2017 found that 60% of nonprofit arts organizations’ revenue was earned in this fashion. Some 24% came from individual donations. Only 9% came from government sources and 4% came from foundations.

So, if an organization is seeing stagnant or decreasing funding from outside sources, it needs to earn more revenue if it wants to sustain or itself or even thrive. . Sometimes, unfortunately, the burden falls on its patrons. However, remember people want to support good programs in their community. Make sure you are providing opportunities them to do so. Businesses do the same thing when they raise prices on products or introduce new flavors or styles in an effort to stay sustainable. 

Among the possibilities for arts organizations:

  • Raise ticket/membership prices. This is a tricky proposition, since you don’t want to make your shows/recitals/exhibitions unaffordable, but most people won’t mind a slight increase to support your organization.
  • Begin or step up merchandise sales. Have posters and t-shirts made for your show and sell them at the performances. Have coffee mugs, tumblers, coasters, mousepads, etc. made with your organization’s logo and sell them.
  • Always upsell. If your group has a season, entice your audience to buy a season ticket, with the current performance included. Or, if it’s near the end of the season, market next year’s season tickets.
  • Use compelling marketing techniques: Create a website with compelling copy, graphics, video and audio, highlighting the art and the personnel. And be sure to include an e-commerce function so people can buy tickets and merchandise. Send an e-mail newsletter each month (and generate an expanding mailing list of everyone who has ever bought a ticket). Develop a daily social media presence. Together, they should drive ticket sales and overall engagement with your group.
  • Spend money to make money. It’s unavoidable. For-profit businesses take the risk every day, by paying for goods, services, personnel and ideas they believe will more than pay for themselves. Non-profits must do the same, but much more carefully since they have limited funds.

With additional ticket sales and marketing efforts needed to grow earned revenue, community arts organizations will need platinum-level administration software to efficiently keep up with the increased load. This tool will manage seating, keep personnel roll and track spending, among many other details. It can also track fund-raising campaigns.

With funding from outside sources on the decline for many community arts groups, a more business-minded focus is needed to keep the show going on.



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