Moving Beyond Red at Arts Organizations

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November 29, 2011; Source: The Huffington Post  | Michael Kaiser, president of the John F. Kennedy Center for the Performing Arts, believes that it really is possible for arts organizations to have their cake and eat it too, or, to stay true their missions without operating with a deficit. In a recent post for the Huffington Post, Kaiser asserts that it is “dangerous logic” for nonprofit arts administrators to accept annual budget deficits as the norm, and cites select examples of financial turnarounds at the Oregon Symphony and his own organization to back up his case. 

As a nationally known arts administrator, Kaiser has literally taken his theories of arts management on the road to all 50 states during the economic downturn of the past few years with a program called Arts in Crisis. In his recent blog in the Huffington Post, Kaiser offers the example of the Oregon Symphony as a refutation to any staff or board member of an arts organization who assumes that deficits are a given in the arts world. Citing a recent story in Portland Monthly, Kaiser notes that not only has the Oregon Symphony been in the black for the past two years through a combination of touring and recording, it has also “earned a surplus of over $190,000 on an annual budget of $13.9 million during the 2010/11 season.” In response to an eager Huffington Post reader who requested more explicit information about how the Oregon Symphony achieved such glowing financial health, as well as advice on how other organizations can replicate its success, a Symphony board member responded with the following tips: a new musician contract; staff cuts, along with some pay reductions; and a transfer of unrestricted funds to pay off a lingering bank debt. As an added note, this same board member pointed out that a direct result of the organization’s balancing its budget has been an increase in foundation support.

In his post Kaiser shares a detail from his own career. When he first came to the Kennedy Center, in 2001, the organization was projecting a deficit, but Kaiser was told that as long as it stayed under a million dollars the deficit was acceptable, even if it meant the organization would be late in paying its bills. Although the Kennedy Center certainly has resources beyond the scope of most arts organizations throughout the country, Kaiser presented his theory of “insisting on earning surpluses and conserving cash” as a universal management approach, and the Kennedy Center turned its budget around. So is fiscal success according to Kaiser a goal that can be reached by any and every organization? What do you think? —Anne Eigeman