The greatest source of misunderstanding I've seen as I've surfed the myriad theatre blogs addressing the ostensible failure of the NFP theatre model is a gross lack of knowledge on the part of the plaintiffs of the rest of the NFP universe, board governance, diffuse executive models, etc. As the practitioners of a collaborative art with great opportunities for both earned and unearned revenue streams unique to our business model, it seems we could do much, much better by investigating how we as NFP theatre leaders are not taking advantage of the tools on the table. Every NFP lives or dies by the quality of its board. Blame your management for building a bad board before you blame the board.
One of the glaring oversights in every thread I've read about creating a new business model is the total lack of math. The general agreement among audiences and NFP theatre producers is that ticket prices are too high - that costs are too high to take risks, etc. Due to tricky things like Baumol's Cost Disease, "affordable" theatre exists in a state of what traditional economists call "market failure" - meaning the cost of the supply is higher than the existing demand is willing or able to bear. NFP status provides a vehicle through which we create subsidy that compensates for the difference.
If we ditch the NFP model, where is the subsidy going to come from?
Many, many good and interesting thoughts there. And, yes, clearly, I'm not an economist, or someone with a hardcore business background. I actually hadn't heard of Baumol or the cost disease before and had to check it out. It makes a lot of sense and there are some aspects of it to definitely apply. It's also true that this conversation tends to happen without enough administrators and financial people involved. So glad to hear from you, Chris!
My one quibble with his comment is this: the word "plaintiffs". I don't want to think of this along a plantiff/defendant dialectic or keep it adversarial. We're all collaborators in the creation of this and we're all both beneficiaries and casualties. And we should all be engaged in making it better. I know some folks really see themselves as bomb-throwing anarchists, lobbing Molotov cocktails over the castle walls. Not so much me. At my most adversarial, I see myself as a diplomat in a war-torn country trying to find rapproachment. I'm a playwright who's worked in artistic development and production in a series of standard model organizations over the last eight years and I like to think I see things from more than one side.
The important question, though, is the last one: where does the money come from? Because I'm seriously committed to finding ways to get the artists paid decently without cutting back too severely on production values and management support while keeping ticket prices to an extremely affordable level. And that means a fairly substantial income stream that's gotta be flowing from somewhere. Where I think Chris and I diverge (and, Chris, feel free to correct me as necessary) is that I don't think that a board of deep pockets is the only way to provide that income. Sure, some deep pockets are needed, but also more smaller pockets and more ways of connecting to the pockets.
The problem I find with the very deep pockets is that they know they're deep pockets. So the expect certain things from an organization: a certain kind of person dealing with them, a certain kind of experience when they arrive at the theatre, a certain kind of return on their investment. (And, yes, I know I'm generalizing. Just work with me.) So you need those things in place to keep them, and, in the standard model, that translates to more staff, more specialized staff and a staff that becomes more and more distant from the artists. And eventually, that puts organization further and further away from the artists and their needs. That's when we get into the edifice complexes, the feeling that if we don't grow, we die. That's also how we move to boards that are more and more homogenous, older and less and less reflective of the community at large. What we're all hoping to do is to halt this trend.
And, yep, the bigger problem is that management is picking bad boards. But how do you define bad boards? If the board is helping the theatre stay flush with cash and resources, you've moved into a big new building and the tickets are selling well enough. Who cares if the plays are bad, or not interesting or not challenging. Is your board bad in that circumstance? The definition of terms is vastly important to this conversation.
So...seriously, where does the cash come from? There are options: for-profit ventures, like this and this, using the artistic talents of the company to generate income. There are more co-productions. Scott describes some very interesting ways of generating income and keeping expenses down here. (Side note: I intend to draw up a similar model for NYC at some point in the next few weeks.)
Does this mean that all traditional boards go by the wayside? Of course not. For some organizations, it makes sense. All we're saying is that that doesn't have to be the only way that theatres are organized. And, yes, I also know about the legal responsibilities and expectations. But remember, when a company begins, the company members are usually the board. It works and makes sense that way. It's only further down the line that the two groups get separated. What I think we're trying to do is keep the two parties closer together.