Nonprofit Arts: A New Paradigm

“Nonprofit organizations need to behave more like businesses,” is a common refrain stated by well-meaning business-minded board members and advisors trying to help nonprofits grow and succeed.

*Sometimes* they’re right.

Nonprofits are often started from a place of passion—a parent with a sick child wants to create a support group for families struggling in similar ways, a college graduate learns of barriers to success in a certain community and wants to assist with a tutoring program, a musician is frustrated by the marketplace and wants to create a new platform for her art. All of these noble pursuits are inspiring and may lead to modest success, but when it comes to longevity, scale, and sustained resources, a host of other ‘business’ elements are required like financial management, disciplined marketing, a platform for sales and donations, and strategic and business plans to tie it all together.

What I’d like to discuss today, however, is the way in which they’re wrong.

I’d like you to imagine a spectrum of business endeavor, graphed along a line from left to right. On the left is the word FORM, and on the right is the word ESSENCE (see above). Today most ‘business’ falls somewhere left of center on the FORM side, and consequently our broad concept of what it means to operate a business is informed by practices that feed success in that arena.

Form is what we can see, own, measure, and claim. Essence is our emotions, meta-characteristics, sense of significance, mental health, and spirit. An excellent example of a business that is almost purely form is a convenience store. Convenience stores carry things people want like beer, cigarettes, gasoline, snacks, and household necessities. We go to convenience stores when we want something because they efficiently provide the items at a reasonable price.

Here then we see the fundamental principle governing a form-based business: transaction. They’ve got something we want, we give them money and obtain the item. As long as it’s efficient and cost-effective, they get our business. There is no business better at this in the world than Amazon, and that’s why it’s an enormous company that has created one of the richest humans of all time.

Let’s talk for just a moment about things we don’t expect from the convenience store or from Amazon. We don’t expect compassion, carefully prepared, healthy food, community responsibility, thoughtful supply chain, or commitment to employees and families.

Of course, most businesses are a little bit closer to the center of the spectrum. Banking is an interesting example. Anyone who has been around long enough to remember regularly walking into an actual bank and speaking to an actual teller will recall the days when there was much more ESSENCE in banking. Banking was personal, and things like trust, friendship, and caring mattered. With drive-throughs, ATMs, and now online banking, much of the ESSENCE has been squeezed out of the personal banking business. And that’s a real problem! It’s a problem for consumers who are frustrated by poor customer service, manipulative marketing, and hidden fees—even though they entrust their treasure to these institutions—and it’s a problem for the banks themselves, who fall over themselves to attract customers by claiming form-based perks like ‘free checking,’ in an era of depersonalization.

Perhaps even more revealing is the healthcare industry. Almost everyone can agree it’s a giant mess, including doctors. No one likes the impersonal treatment they often receive at the ER, the long waits with endless forms, and the ever-shorter amounts of time with actual physicians. Physicians complain about giant caseloads and overbearing management systems, and report record levels of burnout. But in the purest sense, healthcare should be a wonderful mix of FORM and ESSENCE. Sure, we want our tests, diagnoses, and prescriptions (form) but we also want care and compassion—we want to trust that the people making decisions about our health have our best interests in mind. The more the business moves toward FORM as a governing principle, the less healthcare feels healing.

I could go on! How about the airline industry? Those poor flight attendants, some of whom continue to give their all to make us feel welcome and appreciated, while their industry squeezes more of us into less space, adds luggage fees, and scrimps industry-wide in what feels like a race to the bottom in terms of customer experience.

The point is that from retail, to banking, healthcare, and travel, the gravitational pull of FORM as the north star for business is dominant. And in many businesses, this is richly rewarded as profits increase with efficiency. Many industries resist this pull, of course. Take independent restaurants, for example. All of us expect more than food on a plate when we visit a restaurant (unless it’s fast food), and none of us will return to a place where we were treated poorly. Real estate, financial planning, high end hotels and spas, these are all businesses that operate with an eye toward ESSENCE, because customers simply won’t settle for less.

Which brings us to nonprofit arts.

When you go to a concert or play or art exhibition, chances are that you will leave with nothing in terms of form. You spend time and money to be there, and you don’t get anything tangible in return. And much of the time, unless you’re going to see a commercial music act or Hollywood movie, you’re not even going to experience anything you’re familiar with. So what do you get? You get an experience. You have your mind stimulated, you spend time with other people, and you participate in a ritual of celebration of human creation. These things are ESSENCE.

Furthermore, arts organization financial engines are not generally powered by ticket sales. No sizable arts organization makes even half of its money with sales. Instead, the majority of revenue comes through donations. Where donations are concerned you ‘get’ even less! By law donations cannot be rewarded with anything tangible and are instead met with earnest thank yous, perhaps some public recognition, and the satisfaction of knowing you’re supporting something beautiful.

So why does any of this matter?

It matters because the implications of this realization are huge and touch nearly every aspect of nonprofit arts organization management!

Remember that ‘passion’ thing I mentioned at the beginning of this article? The little heartbeat in the core of the founding of the organization, around which mature people try to build a ‘real’ business structure? Well, it turns out that it’s that passion that must return to center stage and be taken seriously, if we’re going to build a sustainable business whose territory is ESSENCE not FORM. We’re not selling widgets, we’re selling passion. We’re not managing efficiency, we’re managing energy. We’re not wielding money, we’re wielding good will.

This means that our Unique Sales Proposition is not a commodity. It’s not even really art. It the way our art makes people feel, in ESSENCE, that has value. Our USP lies in the methodology by which we achieve that feeling.

This means that—like those restaurants mentioned earlier—our business will depend not only on what we deliver on stage, but also on how people feel about every aspect of the experience they have with us from the point they buy the ticket, to the point they leave our parking lot after the show.

This means that our communication must be much more about why than about what (nod to Simon Sinek). People are not attending a concert for the art, they are attending a communal gathering representing human achievement—it’s bigger, more fundamental, than the names of the composers and performers, and our marketing strategy must reflect that.

This means our employees and volunteers—who in almost all cases are not compensated at the rates they would be in the corporate world—must be led with an enlightened approach to core motivations, human kindness, recognition, common purpose, pride, and joy (nod to Jim Collins: Good to Great and the Social Sector). (Though yes, our employees also need to be compensated fairly).

In short, when we understand that arts nonprofit organizations operate within a set of rules and values related to ESSENCE, it changes almost everything about how we strategize and manage. But no one I know talks about it. Instead, good arts leaders do some of these things because of their innate instincts about what their art and community require, while constantly measuring themselves—and being measured by others—with a yardstick designed for the commodity- and service-based business models that dominate American commerce.

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Thanks for reading! Questions and comments? Hit ‘contact’ up above and send me a note.

If you’re interested in (much) more about Form & Essence, buy the book! Or read the KIRKUS review here.