Five Trends and Then Some...

I just returned from back-to-back conferences in Austin TX (National Assembly of State Arts Agencies) and Chicago IL (Grantmakers in the Arts). Both conferences are designed to help us provide better services to our constituencies and I spent a lot of time absorbing the latest national trends. Here they are...

Trend #1 -- Eroding Public Confidence in our Institutions
With the exception of the US Military and the Small Business Administration, major institutions in all sectors (Public, Private, and Non-Profit) have seen public confidence wane significantly in the past few years. In general, if you are large, have a high overhead, and/or are slow to develop new products and services to meet changing circumstances--you are more likely than ever to be perceived as wasteful and a burden to society. The good news is that if you are a major arts institution, at least you aren't the US Congress, a Health Care organization, an insurance company or a bank--all of which are pretty much despised by the general public these days.

Trend #2 -- Burgeoning Accountability Movement
No matter how long you have been doing what you do, if you aren't "transparent and accountable" you are at risk. No data exists that proves the value of the arts on their own primarily because the arts have never existed in a vacuum. But we are nevertheless being asked to develop performance measures and key indicators that justify the investment. This is clearly a response to both the climate of deregulation on Wall Street (and the ensuing economic meltdown) and a few examples of some serious "worst practices" in the charitable sector and is related to the eroding confidence the public has in our institutions.

Trend #3 -- Declining Arts Funding
Although the amount of dollars going into the arts from the private sector has increased in the last five years, the share of all charitable giving (individuals, corporations, and foundations) going to the arts has declined a half-percent. In other words, while our "slice of the pie" has gotten slightly larger, the pie itself has gotten REALLY large. This is mostly because as governments have turned more and more to the private sector to make up the gaps in education and human services, the arts have been perceived as being less urgent. We have to get better and better at articulating our value to society and backing it up with cogent, believable data.

Trend #4 -- Arts Participation is Changing
Audiences for the traditional "western classical art forms" are declining: getting older, dying, and not being replaced by younger, "salt and pepper" audiences. This is not necessarily all bad news...it just means that if you present symphonies, opera, theater, ballet, jazz, or are a museum, you are probably not prepared to offer "art" the way the under-30 crowd likes to receive it.

Technology and the internet have created new ways of experiencing the arts, allowing for more direct, idiosyncratic access, even "flash mob" participation. Most significant is the rise of what is now called the "curatorial me;" the individual consumer who decides for him/herself what (s)he wants, when (s)he wants it, how (s)he want it (tv, laptop, or smartphone) and expects it delivered instantaneously for only a few dollars. This is radically redefining what an audience is, what an institution is, even what a community is.

Perhaps most significant is that opportunities for creating, sharing, and consuming art are increasing a lot, despite the loss of traditional audiences and the threats to arts education. One-third of all teenagers have created and shared works of art online--sometimes to audiences numbering in the millions! This is, needless to say, creating confusion and depression on the part of marketing and programming executives in arts organizations everywhere!

Trend #5 -- Woe Woe Woe!
As you might imagine, Trends 1-4 are creating a significant problem for the financial health of the non-profit arts sector. According to Grantmakers in the Arts data, only 16% of non-profit arts organizations are expected to end FY 2010 with a surplus and 65% have less than 90-days of operating cash on-hand. They are responding to this by downsizing, reducing HR benefits, reducing program commitments, merging/collaborating, creating new marketing strategies, waiting for emergencies to occur before taking action (which sometimes works but usually inspires panic), and even closing their doors precipitously.

At the very least, organizations are for the first time planning not to do "more with less," but to do "less with less." This is a new operating condition for our mission-oriented field. We have to start thinking of unlearning practices that are almost hard-wired.
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These are scary times in the arts. Our field is under-capitalized. Our traditional delivery systems (the institutions) are lacking demand (or perhaps there is too much supply?). Funders are demanding increased accountability and sometimes even collaborative input into programming decisions (egad!).

We are faced with new funding mechanisms that are tailored to the intensely "democratic" tendencies of the web--allowing great ideas to get noticed and funded by the general public through social networks. Strategic planning horizons which used to be five to 10 years out are now less than two. And we have just learned that even though the recession has been over for 18 months or more, it will be at least another two or three years before we begin to see a recovery.

So where do we go from here?

I'll explore some ideas in my next post...

(P.s. a big shout-out to Jonathan Katz at NASAA for setting the stage for this trend report and to others at Grantmakers, the Nonprofit Finance Fund, The Pew Charitable Trusts and the Cultural Data Project for unknowingly giving me some choice sound bytes to share...)