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The business of art
Local groups need more than just imagination to stay alive
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Credit:Doug Boehm

In the old movie musicals, Mickey Rooney would say, "Let's put on a show in the old barn!" And Judy Garland would not exclaim, "Why, I bet my mom could write the nonprofit corporation bylaws and apply for 501(c)(3) tax-exempt status!"

In real life they would have. That's arts administration, or as it's known in the field, "arts admin." It may sound boring, but sometimes it's as exciting as an old movie musical -- too exciting.

In recent years, area arts organizations and their brushes with death have shocked Madison with alarming regularity. In 2004, the Madison Repertory Theatre reported $300,000 in debt. In 2006 Children's Theatre of Madison all but died from unpaid bills totaling $300,000. This year, the smaller and more fragile Madison Theatre Guild had its own turn, brought to the brink for the lack of $15,000.

"You see one theater after another, you look at the articles - clearly it looks like people are mismanaging funds," says Sarah Marty, program coordinator for the UW Division of Continuing Studies in Theater. She's also one of the canniest arts administrators in the state, and she has a prestigious award to prove it: the 2008 Joyce J. and Gerald A. Bartell Award in the Arts for, essentially, her excellence in arts admin.

"They may be incredibly well-intentioned," Marty says, "but the appearance is that they're not managing their money like a business."

In each case there were shakeups in management, urgent fund-raising and waves of community goodwill, allowing each troupe to go on. But one begins to sense a pattern.

"Saying you're going to die is not a valid development strategy," says George Tzougros, executive director of the Wisconsin Arts Board. "It saves you one year, and then that's it. You can only die a couple times, and then it's the boy who cried wolf."

The solution: proper arts administration.

The public good

"Most people don't even realize that arts organizations have staffs," says Anne Katz, executive director of Arts Wisconsin, a nonprofit advocacy and development group. She recalls how, when she produced the Concerts on the Square, "intelligent, well-meaning people would say, 'Oh, do they pay the musicians? Do they pay you?' I think they thought little chipmunks set up all of those risers and then played the music."

Unfortunately, ignorance is sometimes shared by the organizations themselves.

A better way of understanding arts administration might be to reverse the phrase: It's the means by which the arts are administered - to us, the audience. Primarily, it's about safeguarding the public trust. More to the point, it's about what you have to do to get public money. Its historic importance might be more clear if every work of art that was ever created with government funding carried modern credits.

For example, The Nutcracker was made possible in part by a grant from Czar Alexander III, Emperor and Autocrat of All the Russias, in 1892. Shakespeare saw his plays performed by the King's Men troupe - King James. Handel and Beethoven - even Frank Lloyd Wright and Walt Disney - all at some point received government money.

"It has always been the case that the community at large has supported the arts through their leaders, from the czar to the pope," says Katz. "I mean, look at Michelangelo."

There was and is private funding, too, but these days it's unlikely that any serious private dollars would go to an arts group that does not have nonprofit status: the commitment to conduct one's activities according to statute 501(c)(3) of the Internal Revenue Service Code, so that you - yes, you - can claim a deduction for your donation on your tax return.

The idea is that, to get nonprofit status, an arts organization must serve the public good, not just a king's. Viewed this way, arts administration has been with us since at least the Bronze Age. In prehistory, oral storytellers, or communal bards, received all their material needs from the community. In return, wrote H.G. Wells, "the bards were blinded to prevent their straying from the tribe." This may be why the Greek poet Homer was blind. In other words, the community was safeguarding its investment.

These days we don't blind artists. We make them be 501(c)(3).

How to screw up

In the last decade it's been harder to get 501(c)(3) status. There's more scrutiny, but it's never been easy. You first must be a state nonprofit corporation. The corporation must be governed by a board of at least three, in accordance with bylaws and a charter approved by the state. Your board must meet regularly at publicly announced sessions. Except for personnel matters, your board minutes and financial records must be available for public inspection during regular working hours. You also may want to get a sales-tax exemption for your own purchases from the Wisconsin Department of Revenue.

You must file an annual report with the state Department of Financial Institutions and have a contact registered with the state. If you receive lots of donations, you must also file an annual report with the state Department of Regulation and Licensing. All this is in addition to the paperwork necessary for any business.

And, oh, yeah...then there was this play or concert you were supposed to put on.

If you screw up on the business side, your organization will die, you'll be in the papers, and you will be disgraced.

"The biggest thing would be not having systems for financial policy," says Marty, who works with the Rhinelander School of the Arts, the Madison Early Music Festival, the Wisconsin Wrights playwright competition, Four Seasons Theatre and the annual UW Varsity Band Concert. "Otherwise it's very easy to go down the slippery slope very quickly."

Under law, avoiding the slippery slope is the responsibility of the board and no one else. "The board is supposed to be an objective group of individuals, to make sure you follow all nonprofit rules and laws, so that you deserve the 501(c)(3) status and the public trust," says Marty.

If you can't keep up, "It all too often results in what happened to the Theatre Guild or any number of other organizations," says Katz. "You wake up one day and find that everything has fallen apart because you couldn't juggle all those balls. You just didn't know enough."

Welcome to the board

There are three types of nonprofit boards: working, advisory and a mix of the two.

Directors or trustees on a working board perform the organization's activities themselves. They may be performers who also serve as unpaid staff. Working boards tend to be small.

Advisory boards leave work to staffs or volunteers, and concentrate on policy and fund-raising. They are often much larger than working boards. (See sidebar.) "In the beginning, it's going to be a working board because there is no money for staff," says Tzougros. "Later, as roles are traded off to staff, it becomes a mixed working/advisory board."

The role of an advisory board can create conflicts. "More often than not, executive directors will scream, 'But my board doesn't realize that they're the ones who are supposed to raise the money!'" says Tzougros.

The goal of raising money is sometimes why advisory boards are so big, and why they may include celebrities or, better, rich people: for connections and cash. One rule of thumb in arts admin is that people tend to give money to people, not to organizations.

But an advisory board shouldn't contain only these kinds of people. "So many people think that's the only reason to have someone on a board," says Marty. "They're either going to write you a big check or it's all about raising money. There are many different roles to be filled."

For example, an ideal board would include a lawyer, someone skilled with finances, someone with a marketing background, and someone who's good with personnel.

There are many ways a board can err. One way is "founder's syndrome."

"A lot of times the founder has a closed fist," says Tzougros. "They love it so much they want to hold onto it, hold onto their vision, and in so doing they choke it to death." Boards need to figure out how to honor their founder while planning succession, way in advance.

Expedience can also kill an organization. "They have bylaws in place that they either ignore or they can't find, so they just merrily go on their way," says Tzougros. "They figure, we're all friends, everything's fine. Who will care? Well, sooner or later someone will come along who cares."

Says Marty, "It's easy if you're successful to just sort of relax. I think what's happened with all of these organizations that have been in the news is that it hasn't been the failure of one show. It's been a gradual chipping away at everything. Nobody looked at the big picture."

The key is orientation and even training for prospective board members.

Give us the tools

In George Tzougros' office hangs a poster. It reads, "The arts must survive as a business to thrive as art."

"Ultimately, that's the way it has to be," he says. "We can't have people out there who say, 'I'm just an artist, you can't hold me to that standard.'"

Unfortunately, this is where education tends to fall short. "They say you're an artist because you passed all of our art classes," says Tzougros. "But what we didn't teach you is how do you go to the gallery, how to make records, how to promote yourself, and so on. So you find many frustrated arts graduates who say, 'Yeah, they told me I was an artist, but they didn't give me the tools.' "

The Wisconsin Arts Board and Arts Wisconsin both conduct seminars and workshops throughout the state to provide stopgap education. UW-Extension sometimes offers seminars. There's also UW-Madison's Bolz Center for Arts Administration, the first program of its type. It offers a master's degree in business. Both Tzougros and Marty are graduates, both praise it, and both say you still have to pick up the nuts and bolts on the job, and in grad school seminars. As Marty notes, "There isn't a specific textbook."

On the other hand, it could be argued that arts administration, at least in the nonprofit mold, has serious drawbacks. "There are those who believe that the 501(c)3 model is broken," says Tzougros. "That it forces organizations to do things in a very corporate style, therefore not allowing the creativity and entrepreneurialism of maybe an artists' cooperative or those sorts of things."

It may be best for some arts organizations to start private and go nonprofit three years later, when they have experience. "If [a young organization] is constantly thinking about fund-raising, and money, money, money, you lose track of why you're there," says Marty.

Ultimately, we need to have good arts administration because we need to have good art. We don't owe it to arts organization to bail them out if they manage themselves poorly. But on the other hand, we can be the ones who'll suffer if they fail.

"It's not the community's job to save an organization," Katz says. "But it is the community's job to understand that if Madison Theatre Guild went away, or Children's Theatre of Madison or the Rep, we would be a poorer community."

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