Arts and the Economy

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A discussion about the economic challenges facing Arizona’s arts organizations. Guests include Matthew Wiener of Actor’s Theatre, Rusty Foley of Arizona Citizens Action for the Arts, and Carol Kratz of Piper Trust.

Ted Simons: Actors theater of Phoenix recently announced it will have to close its doors if its finances don't improve. And the theater group is not alone when it comes to arts organizations struggling to survive the economic downturn. Here to talk about the financial challenges is Rusty Foley, Executive Director of Arizona Citizens Action for the Arts. Matthew Wiener, Producing Artistic Director of Actors Theater in Phoenix. And Carol Kratz, who assists arts organizations for the Virginia G. Piper Charitable Trust. It's good to have you all here. Thanks for joining us. Matthew, I want to start with you. We mentioned your story at the outset here, what's going on, how much money do you need and when do you need it?

Matthew Wiener: We need to raise $70,000 by November 30th. That's our first big threshold. And then after that we have two other phases where we need to raise more money by December 31st and then more money by June 30th. But the real close the door deadline was, or is November 30th. And we're off to a pretty good start. So we've been very encouraged by the response we've been getting from the community.

Ted Simons: What happened? Did ticket sales drop because of the economy, donations drop? What happened?

Matthew Wiener: It's not like one thing happened. We're kind of in the middle after perfect storm that really is hurting a lot of not for profit organizations, especially arts and cultural ones. We're in the middle of a global recession, and we can't imagine that there's not a trickle-down effect to the local level. We respond to the consumer confidence level, and right now it's not very high. Our ticket sales are okay, but one of the things we've noticed is that more and more people are buying discounted tickets. So that even though they still want to go, they're looking for the bargain. So our houses are okay, we're selling an okay number of tickets but the revenue is decreased.

Ted Simons: Does that sound familiar to you? As far as other organizations are concerned?

Rusty Foley: Yes, it does, Ted. This is something that is impacting arts organizations all across Arizona. Large and small. It's not necessarily peculiar to small organizations. There are a number of large organizations that are struggling too. It is the perfect storm, that's the best description of it. We have cutbacks, severe cutbacks in government funding, there's reduced corporate funding, reduced giving by individuals, and of course people are sort of minding their dollars pretty carefully, maybe not buying as many tickets and waiting for a bargain to come by as well.

Ted Simons: What are your thoughts? The story here with Actors Theater, sound familiar?

Carol Kratz: Absolutely. The Piper Trust opened for grant making in 2001, and the business model for the arts organizations that we review is just a terrible business model. You have to go and raise half of your budget every year. And so we've been looking for different ways to create different business models. One of the things we did that Rhonda alluded to was to provide some venture capital money about $1.2 million to help arts organizations figure out, is there a revenue generating product that they could come up with, or is there a way to reduce costs, is there a way to maybe merge or collaborate? So the business model itself is terrible, and then the economy hits all pieces of it.

Ted Simons: Is there a thought to change business models? I mentioned grants and stuff like this, hire someone full-time, what changes as far as where you are now and where you need to be?

Matthew Wiener: Well, we're always looking for innovation, we're always looking to try to figure out how to do things differently and better. I'm not sure that I agree completely that the model is terrible. The model is very hard. It's very challenging. But we're a community asset. Just like the library, just like the fire department. Communities need what we do, and part of the not for profit idea is that we're not commercial. We could if we did "Bye Bye Birdie," six times a year, we would not need philanthropy, we would not need charitable giving. But that's not serving the community and that's certainly not the mission of the Actor's Theater.

Ted Simons: How do you convince folks by not showing "Bye Bye Birdie" and something very different is good, even though maybe a lot of folks may not find a value there, but it's still overall good for the community?

Rhonda Phillips: I think the wonderful thing about the arts and culture community is and especially in Arizona, is that we have a very diverse array of cultural experiences available to audiences. So maybe Actor's Theater isn't your cup of tea, but there are performing arts organizations that probably do the kind of work that you would enjoy, and they all together they make a tremendous contribution to our cultural life, to our community life in Arizona. And I think preserving that whole array of opportunities is really important. Talk about that business model, I think unfortunately in today's day and age there are challenges with the business model, but that's really been the business model that arts organizations all over the United States have operated under for about the last 30 years. And one of the really important reasons for that business model is that by depending on only about 50% of your budget to come from earned income and the rest of it coming from contributed income, you're making sure that arts experiences are available to the whole broad population of people. If we had to pay market rate for what Matthew is doing, we would be paying a Broadway priced ticket, and there would be so few people who could afford that experience. And that would be wrong. The arts should be available and accessible to every Arizonan.

Ted Simons: How does the Piper Trust, how do donors in general, how do you decide, what do you look at? What are the factors, he's listening over here.

Matthew Wiener: Piper's been a wonderful partner.

Ted Simons: They've been a wonderful partner for a lot of folks. When you decide to be a partner with a lot of folks, what are you looking at?

Carol Kratz: Well, I think one of the things that I want to make sure to say is that we do a broad array of grant making for children, for older adults, for arts and culture, health care education, faith-based organizations and we're looking for how we can help in the arts area with infrastructure, with capital. With these venture kind of venture philanthropy kind of things. To strengthen the organization, we do a lot with capacity building for the board, for management, we'll bring in board source, we'll do in-depth training with organizations, trying to help raise the level of knowledge of the management and the board. So we look for these organizations in the community, they come to us or we ask for them to come for a particular request for proposal, and we really look to see how is the organization structured, how is the board, do they contribute to the organization, is it a viable organization, and how can we help them?

Ted Simons: Are there ever times when all of those parameters just look lousy? They don't know what they're doing, they can't count to 10, with all fingers and toes, yet there's a gut feeling this is something that this is important to the community. Can you go that far?

Carol Kratz: I think that it's not restricted to nonprofit organizations. If you look across the board, but yes, a lot of the capacity building that we're doing now is really trying to help organizations kind of ratchet up. We've got four that are newborns that we're doing this board source training with, so to start off on the right foot.

Ted Simons: For those who say, put on "Bye Bye Birdie" give us "The Music Man" we'll show up and how do you respond to that? Because you do what you do and the people that like what you do really like it, but if it's not supporting itself, you're saying, "You better support yourself or you can't ask for any money from me." How do you respond to that?

Matthew Wiener: We try to balance our programming. Even though we don't do "Bye Bye Birdie" and forgive me for picking on that show, we do other programs that a wide range of programming, hoping that everyone will find something, that's not true that there is something for a lot of different people. That a lot of different people can find something of pleasure in our programming. In terms of if they want to go see "Bye Bye Birdie" there are other companies that do that. Other companies around the valley that do it very, very well. One of the things I think is really critical is that when people say, "We're not going to fund you because we don't like that." I think that while I understand the kind of selfish nature of that, we always kind of pay for what we like. But I think when it comes to charitable giving and true generosity and philanthropy, we have to understand that it's not necessarily we're not necessarily giving so that I will enjoy it this year. We're giving so that someone else can have the opportunity to choose whether or not they like it. If we don't give now, if we don't support this organization, whatever it may be, or Actor's Theater, others will not have the opportunity to make that choice. So it's really important that people recognize that this broad spectrum needs support across the board.

Ted Simons: I want to ask you before we go, this concept of compromise, is there a concern when this kind of economic climate and folks maybe they would want to do X but they know I can't afford to do X, I gotta do Y instead? Are you seeing compromise in not just the theater, but other arts organizations right now?

Rusty Foley: I don't know that I am. But having served before I had this position in a number of nonprofit arts boards, I know that temptation is always there. I think it's important to remember for the good and the bad, and it's mostly good. Arts organizations are businesses. Matthew employs people. Matthew pays taxes. He's people pay taxes. Arts organizations like Matthews in the City of Phoenix alone pay about $17 million a year to the city coffers. If Matthew's business goes away, the Actor's Theater goes away, there will be people out of jobs, and people who come downtown to see his shows who won't be eating in restaurants, who won't be parking or going to maybe have a drink afterwards. It's a huge impact, but then on the other hand, if you're the arts organization, you have to make some very tough decisions about the programming in order to make it through this tough period we're in.

Ted Simons: Okay. We've got to stop there. Great discussion. Thank you all for joining us.

Matthew Wiener:Actor's Theatre; Rusty Foley:Arizona Citizens Action for the Arts; Carol Kratz:Piper Trust;

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