Distorting Nonprofits

The nonprofit world has a fundamental distortion; the people who pay for services hardly ever receive them. The person who pays for the homeless shelter, never uses it. The person who pays for a child to receive a meal in Africa will most likely never meet that child. There is one portion of the nonprofit world for which this fundamental distortion is not generally true, the arts world.

Those who pay to keep art museums open, symphonies playing, and theaters performing are generally those who visit them regularly. This gives these organization a fundamental advantage when it comes to funding (and why some think these organizations should not really be considered nonprofits).

The Stanford Social Innovation Review, a go-to resource for all in the sector, had an interesting article last week entitled Arts Funding Promotes Neighborhood Vibrancy. What I found most interesting though, was the idea of selling the general community benefits of arts organizations. The SSIR had originally reported that arts funding spurs economic development but the organization ArtsWave responded by saying, while that’s true we like to say that it increases neighborhood vibrancy.

Here’s the ArtsWave insight: people are ready enough to agree with the notion that the arts are good for the economy. But if you probe deeper, and ask what top three things we should do to improve the economy, no one answers “subsidize the arts.” So apparently the argument that the arts are an economic engine (true or false) is unpersuasive, which is what really matters.

Let me just pause here quickly and say that I think they are slightly incorrect. Everyone would probably agree with the statement that having a healthy diet will improve an athletes performance but it probably wouldn’t show up in the top three ways to improve an athletes performance. Other things like exercise, good coaching, and practice might be the best ways to improve performance but they are not the only ways.

But the ArtsWave research also uncovered the fact that if you ask people what would improve their neighborhood the most, the arts come up time and time again. Why? Because artists’ residences are known to herald an improvement in real-estate values; because arts audiences mean feet on the street and therefore greater public safety; and because arts venues are known to spawn coffee shops, restaurants, and other places of urban liveliness.

Therefore, the argument for public funding needs to be focused not on the art but on the public benefits of art-making.

I think this is an important insight. When approaching donors, the focus needs to be on persuasiveness, not just what is true. Organizations need to think about how to sell their impact to donors. This is true for all organizations, not just arts organizations. Think about the effect you have on your community and how that benefits various stakeholders, then approach them and ask them to pay for that benefit. It is a subtle correction to the fundamental distortion found in the social sector.

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