The Business of Art

Financially burdened, nonprofit institutions struggle to make dreams come true

plans to roll out a huge fundraising campaign that will connect the choir with several private, individual donors who will make sizable donations — enough to cover the salaries of a new executive director and chief financial officer. “The board is putting several financial controls in place to ensure that the choir never operates in a deficit again, and to ensure that the legacy of this institution exists into the future,” says Palmer. Some of these financial controls include being more selective when choosing performances, eliminating programs that are too costly, and managing direct and indirect expenses, such as the cost of music easels, which was ignored in past budgets.

Kaiser, who has worked to make both The Dance Theatre of Harlem and the Alvin Ailey American Dance Theater more financially stable, agrees that an effective board of directors is a necessity for any nonprofit organization. “I suggest working very hard to strengthen your board and being very clear in what you ask your board for. I also suggest being very aggressive with respect to building an individual donor base,” he says. As it’s the individual donors who make up the vast majority of contributions to the arts in this country, African American nonprofits are missing out on a very large source of funding that doesn’t depend so much on the economy. Kaiser says a tremendous amount of marketing must precede the efforts to build a productive board as well as an individual donor base.

THE LAST STRAW
The Dance Theatre of Harlem is one organization that has managed to overcome fiscal obstacles. After having to close the doors to its school and lay off its main company in September 2004 because of a $2.3 million deficit, it only
recently began putting measures in place to secure financial success for the future.

Marketing is the strategy Executive Director Laveen Naidu has used to revive the financial life of the nonprofit organization. “Not-for-profit does not mean running at a loss. It simply means that the aim of the institution is not primarily financial profit,” shares Naidu, who joined the organization as a dance student in 1989 and replaced Arthur Mitchell as executive director in October 2004. Mitchell’s reassignment to artistic director was one of several strategic moves meant to create a superior business structure and alleviate the financial problems from which the Dance Theatre is still recovering.

The Dance Theatre’s tribulations began after the company’s peak in the late 1980s and early 1990s, when its unearned income dropped off because foundations and corporations had begun to shift their money toward other priorities such as healthcare, cancer research, AIDS, and education. Donations and income from company performances used to amount to $6 million, which adequately covered the organization’s $3 million to $6 million in expenses.

Although revenues increased slightly over the next decade, expenses also grew, leaving no money to contribute to an endowment, which Naidu says would have helped sustain the company after 9-11. Nevertheless, post 9-11, the company continued to accept children and perform, embarking on a

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