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Flashback: How hard times forced arts orgs to deal with ‘new normal’

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How do you market a production called “Rhinoceros”? UMS had students take to the streets wearing masks. | Benjamin Weatherston

How do you market a production called “Rhinoceros”? UMS had students take to the streets wearing masks. | Benjamin Weatherston

This article originally appeared in the November 2012 issue of The Ann.

By Julie Halpert

Halloween came early in Ann Arbor this year. For three weeks beginning Sept. 29, students wearing rhinoceros masks could be seen engaged in everyday routines: reading the newspaper at a downtown coffee shop, studying in front of the computer, hanging out on the steps of the Michigan Union and playing an accordion on the Diag.

This wasn’t part of a fraternity hazing. It was a grassroots effort by the University Musical Society to promote Theatre de la Ville’s production of Eugene Ionesco’s “Rhinoceros” at the Power Center. The goal was to “confront people in unusual spaces where they’re not expecting to see art,” said Sara Billmann, UMS marketing and communications director.

UMS is one of many arts nonprofits — encompassing art, music and theater — that have been tested during the recession, and have found that creativity is the key to generating buzz.

Flashback: Ken Fischer’s keys to success

Area arts nonprofits have been hard hit and have struggled to find ways to make up for the shortfall in donations during the tight economy of the past few years. Many looked at obvious ways to save money, like reducing staff, prioritizing high-value programs and joining forces to share administrative expenses.

But the weak economic climate also forced unprecedented innovation in the ways they demonstrated their value to the community, said Cheryl Elliott, president and CEO of the Ann Arbor Area Community Foundation. Now, as state grants, corporate and individual donations begin to rebound, many of the art nonprofits feel they’re poised for a healthy future.

There are 240 arts and cultural nonprofits in Washtenaw County — an outsized number for the overall population in the area. According to ArtsIndex, a project of Americans for the Arts, the per capita figure is 26.97 nonprofit arts organizations per 100,000 population in Washtenaw County. That  exceeds the national average of 20.91 and the state average of 17.57. Residents of Ann Arbor and surrounding areas understand that education and access to arts and culture are “hugely important to the quality of life that they enjoy,” said John Bracey, executive director of the Michigan Council for Arts and Cultural Affairs.

But even in this hospitable climate, arts nonprofits struggled during the recession. It didn’t help that Pfizer, a huge corporate supporter, left town in October 2008. With a reliance on big corporate donors, the arts organizations also were hard hit by the financial struggles of domestic car companies.

“That had an impact that hasn’t been replaced,” since the giving among these companies hasn’t rebounded to pre-2008 levels, said Elliott. As a result, arts and cultural organizations are “dealing with a new normal,” she said.

State grants also dropped. The state slashed the budget for the Michigan Council for Arts and Cultural Affairs, a grant-making organization, from $7.6 million in fiscal year 2009 to $2.1million for fiscal year 2012. As a result, it has had to drastically reduce the size of grants it awarded. Wild Swan Theater, which once had been eligible for $20,000 in grants, could receive a maximum of $7,500. UMS, which in fiscal year 2009 received a grant of $199,000, only received $15,000 in fiscal year 2010. “Everyone took a cut,” said Bracey.

Yodit Mesfin Johnson | Benjamin Weatherston

Yodit Mesfin Johnson | Benjamin Weatherston

Also, funders shifted their focus to the community’s more dire needs: making sure residents could eat and be housed. “Even individual donors were saying, ‘I can’t give to the museum because I have to give to SOS’ (crisis center),” said Yodit Mesfin Johnson, director of business development for NEW, which provides technology services support to nonprofits.

Ann Arbor’s situation mirrored what was occurring on a national level. In 2007, the percentage of nonprofits nationally which had an operational deficit was 36 percent. That number increased to 41 percent in 2008 and 45 percent in 2009, said Randy Cohen, vice president of research and policy for Americans for the Arts.

The recession forced arts nonprofits to reexamine what had become a culture of entitlement, asking donors to just write a check, without demonstrating the value of those dollars, said Johnson. “Nonprofit organizations are learning that we need to have a wheel of engagement and massage relationships of all donors,” she said.

Cohen said that as arts organizations saw big drops in contributions, it caused them to rethink the traditional delivery mechanism. “The recession really put people in the position of, if you want to survive in this post-recession economy, you have to have a very good pulse of your audience, change as your audience changes and keep delivering the best artistic product possible,” he said.

Local arts nonprofits have taken that message to heart. For some groups, changes started with the most basic of overhauls: consolidation of administrative tasks. Deb Polich, executive director since 1993 of Artrain, a group that began taking art on the road in 1971, now also runs the Arts Alliance, an umbrella organization of local arts and cultural agencies. Since she worked with other communities running Artrain, Polich said she felt well qualified to manage the Arts Alliance.

In July, the Arts Alliance moved into Artrain’s offices and the two groups pool staffing, office resources and a telephone system, while maintaining their own, separate missions. Though she says it’s sometimes hard to bring such independent groups together, she says all nonprofits have started to work more collectively in the past few years.

Polich said Artrain has faced challenges. At a high point during Polich’s  tenure, there were 19 staff employees; now there are four. While it raised 80 percent of its revenues during boom times, she says that is no longer a sustainable model and the group is looking to partner with private companies to take art exhibitions on the road and curate exhibitions.

Other organizations are using the power of social media to better spread the word about their organization. Grappling with the loss of Borders and Pfizer, the Ann Arbor Symphony Orchestra has turned to the popular daily deal site Groupon to bring in new support. With a goal to fill Hill Auditorium for a “Beethoven’s Ninth” concert which kicked off the season in September, it provided half-off deals and sold 513 tickets through Groupon, including 153 to new patrons. It’s now offering a package of four tickets for $48 for its family series, a discount from the regular $96 price. Within 24 hours, 162 tickets were sold through Groupon. It also plans a Groupon for its Holiday Pops concert that will go live in November.

Stephanie Roose, marketing manager for the orchestra, said this is a particularly effective tool in reaching a younger demographic and “letting them know that classical music isn’t just for grownups.” She appreciates Groupon’s social media savvy. Groupon tweeted the deals and linked them to Facebook. This, in turn, led to retweets from Visit Ann Arbor and the Michigan Theater.

Wild Swan Theater, a professional company that performs for children, has faced its share of financial setbacks these past few years. The nonprofit received $25,000 from Pfizer from 2002-05, along with a one-time $75,000 grant from the Kellogg Foundation as well as money from other foundations whose grants either disappeared or “were offering a quarter of what they had previously had,” said Sandy Ryder, Wild Swan’s co-artistic director. There was also that reduction in available grants from the Michigan Council for the Arts from $20,000 to $7,500 over the past few years.

Since Wild Swan seeks to keep all ticket prices affordable (in the $6 to $7 range for school groups), raising prices wasn’t an option. Instead, the company trimmed its staff from three full-time and four part-time positions in 2007 to two full-time and two part-time positions currently. It also reduced the number of performances for school groups from six to four per production and tries to ensure that all its productions are hits. “We can’t take as many risks as we used to,” said Ryder. She says she and her staff once were drawn to stories they loved, without regard for box office numbers. But now “we also need to consider how well it will sell.”

As schools find it difficult to afford field trips, Wild Swan is taking more of its shows on the road. It upped its 78 performances in 2007 and 2008 to 96 this past year. One lesson Ryder’s learned during the financial crisis is flexibility. “You can’t be married to your job description in times like these,” she said. Being open to learning about areas which aren’t your strengths is key. Though these past few years have been a challenge, she says that, as the only adult professional theater that performs plays exclusively for family audiences, Wild Swan matters to the community, “so we’ve been more dedicated and more committed than ever to keep Wild Swan strong.”

UMS, under the leadership of Ken Fischer, has been among the most innovative. For its Aspen Sante Fe Ballet performance on Oct. 6, it launched “tweet seats,” allowing a few people, seated in the back row, to tweet throughout the performance. It’s also treated a group of people attending a concert to pizza and a chat with an expert about what they’d seen. During the run of Hubbard Street Dance Chicago in April 2010, patrons could describe their experience in six words on a Post-it on the wall in the lobby of the theater. UMS is “looking for more entry points for people to come into the world of the performing arts,” said Billmann.

“People just stopped giving, not knowing what was going to happen.” Marsha Chamberlin, president and CEO of the Ann Arbor Art Center | Benjamin Weatherston

“People just stopped giving, not knowing what was going to happen.”
Marsha Chamberlin, president and CEO of the Ann Arbor Art Center | Benjamin Weatherston

As president and CEO of the Ann Arbor Art Center for the past 30 years, Marsha Chamberlin said the recession has caused her to exercise her own creativity in keeping the organization healthy. She said even though Ann Arbor is an area of wealth, “people just stopped giving, not knowing what was going to happen” when the recession hit. While she once easily sold 30 tables for a corporate event, she couldn’t sell any in 2009 and 2010. The Ann Arbor Art Center’s operating budget was $1.3 million in 2007; it’s now down to $700,000.

Her solution? To rely less on corporate gifts and grants and donor dollars and instead build up class registrations. “We’re continuing to broaden the program offerings and identifying niches of people who will take them,” Chamberlin said.

The center is partnering with U-M’s Museum of Art to hold three dozen workshops in the museum’s multipurpose room, relating the workshops to museum exhibits. It’s also offering a greater variety of summer camp experiences. Beginning January, the first Friday of every month will be a three-hour workshop designed for couples. Girls’ night out, where patrons can sip wine while taking an art class, is also in the works. Chamberlin said registration numbers have increased 17 percent from 2010 to 2012, and that while the center generated only 48 to 50 percent in earned revenues three years ago, that’s now at 67 percent. “We’ve got money in the bank for the first time in a few years,” she said.

The Michigan Theater has seen a substantial growth in its memberships, from 400,000 in 2008 to 500,000. But despite a fairly steady operating budget, it’s continually pioneering new programming, including the Sundance Film Festival USA, which previewed Sundance movies in both 2010 and 2011, and Cinetopia, a new film festival. Both had “strong spillover effects,” said Lee Berry, chief development officer with the Michigan Theater. “People who come to that event get a new look at what the Michigan Theater is about and are likely to come back to see other movies,” he said.

Engagement, he said, is key to the future of arts nonprofit success. It’s “not just receiving a mailing and writing a check, but participating.”

Performance Network employed a desperate approach for a desperate situation in fall 2010, when it was faced with having to close its doors as support from individual donors and private underwriters dried up. It launched a “Save the Theater” campaign, asking for $40,000 from the community. Within two months, the theater raised $100,000, all from individual donors. Erin Sabo, Performance Network’s managing director, hopes never to face that situation again and is trying to develop a variety of new ways to raise money. This month, Performance Network is holding a theater sale, selling 30 years of costume stock, furniture and office supplies.

Some arts nonprofits didn’t survive the recession. Peter Sparling, Thurnau Professor of Dance at U-M, started the Peter Sparling Dance Company in 1993. He folded it in 2008 after he failed to secure $1million to purchase a former ball bearing factory where he was renting space.

In comments he plans to include in a yet-to-be-published memoir, “Confessions of  a Dancing Man,” he said he was “turned down or ignored” by a few of the wealthiest members of the Michigan arts community, while “not one of my fellow members of a community arts leaders group reached out to me.”

The Dexter Arts Center, which began in July 2010, went out of business in August 2012 after the group ran out of funds and lost its lease. Getting students in on a regular basis was a challenge, said Pam O’Hara, the president of the board. Families in Dexter have a limited amount of money in their budget, she said, and sports ranks higher as an extracurricular activity.

The same is true in Milan, said Leslie Sobel, president of the board for the now defunct Milan Arts Center. “Kids play soccer before they take art classes,” she said.

But in another part of Dexter, the Encore Theater is getting by due to its bare-bones operation and the clever ways it uses volunteers and solicits in-kind donations from the community. Anne Koch, producing managing director and co-founder with her husband, doesn’t draw a salary or have any paid staff. Electricians donated their time and materials. Community members helped paint sets. Some even do the laundry after every production.

Individuals are happy to support the only professional theater in Dexter, Koch said. When it needed money for the down payment for the building, she solicited contributions for $50,000 and in three months raised close to $60,000. “Whenever we ask for assistance, it’s there,” said Koch.

The future for arts nonprofits looks considerably brighter now, especially when it comes to state funding. Last year, ArtServe Michigan presented data to the state Legislature and the governor in an effort to lobby for increased funding. The data, compiled from the Michigan Cultural Data Project, found that 211 arts organizations contributed a half-billion dollars to Michigan’s economy, translating to a contribution of $51 for every $1 in state funding for arts and culture. That was an important factor that led to the governor’s recommendation — approved by the Legislature — to increase the state Arts Council budget to $6.5 million for fiscal year 2013, a $5 million increase over the prior year.

“It’s the first meaningful increase in state arts funding and opens up more opportunities for grants,” said Jennifer Goulet, ArtServe’s president and CEO. She says the data also provide organizations with information they can use to connect with their own funders and local communities. Bracey says that groups can now be eligible for grants of $20,000 — just like the good old days — up from $7,500.

The giving community is also starting to rebound. Bank of Ann Arbor didn’t eliminate arts groups it supported during the recession, though it did slightly reduce the amount it gave. Where it did a full sponsorship for an event in the past, it cut back to a co-sponsorship, said Hans W. Maier, the bank’s senior vice president. Now that the economy has improved, the bank has increased its giving. While it gave $41,640 to arts organizations in Washtenaw County and Plymouth in 2009, Maier said, it increased that to $81,250 in 2011.

The giving levels of other substantial supporters — Domino’s Pizza,  Masco Foundation and Zingerman’s — remained relatively steady throughout the recession. Even when Ford was losing money, the Ford Motor Company Fund still gave money away, but “clearly not as much,” said spokeswoman Della Dipietro. The company donated $10,000 in 2008 to the Purple Rose Theater Company in Chelsea, then bumped that to $50,000 in both 2011 and 2012.

Despite the more favorable economic climate, “things are still fragile for nonprofits in general,” said Elliott. She says the sector needs to be increasingly savvy about how it brings in revenue and uses that revenue, continuing to make the case to donors about why they should support the arts. “We’re not out of the woods yet,” she said.

But Bracey is optimistic. There is an ethos of “the show must go on,” he said. “This group of businesses will figure out how to make sure their doors stay open even if the executive director stops taking a paycheck.”

Sabo says the recession taught her some valuable lessons, including the need to install crucial financial management systems. She learned that being adaptable in the face of change is the key to survival. “We continue to change in order to adapt to the economic landscape,” she said.

Expressing the view of many nonprofit leaders, she added, “We believe this shape-shifting approach has helped us build momentum and excitement and we’re very optimistic about what the future holds.”

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