David Hoppe

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:: Steve Libman has a point

Nonprofits are different

By David Hoppe

I've got to hand it to Steve Libman. Libman, you may recall, is the former head of Carmel's Center For the Performing Arts, the centerpiece of which, the Palladium, looks like it was teleported here from the set of “My Fair Lady.”

Libman lost his job in Carmel last July. Why, exactly, seems a subject of some dispute. Whatever the reason, the guy demonstrated a sense of entitlement rare among local arts administrators.

In April 2010, before the Center was even open, Libman asked Carmel's City Council for $2 million for “one-time costs necessary to open the center.” This was in addition to the approximately $150 million the good burghers of Carmel were already shelling out for this cultural shrine. As I pointed out at the time, the $2 million Libman wanted for walking around money was more than the entire public arts budget for the City of Indianapolis.

The Carmel Council gave Libman the dough. But when he went back to the well last summer it was a different story. At that time, it was reported Libman wanted as much as $4 million from the city council — a number he later claimed was “speculative.” Eyebrows, however, were raised, jaws dropped. Libman handed in his resignation shortly thereafter.

Many people in Libman's position would have hightailed it out of town. Libman, though, has stuck around. He started a performing arts consulting business and, according to his website, was recently hired to help plan a performing arts center in Bermuda.

Last week, Libman published an op-ed piece in the Indianapolis Star, “Arts organizations don't fit mold of for-profit businesses.” Given his history here, you could be excused for seeing this column as an exercise in self-justification. But it also turns out that Libman has some trenchant things to say about how we manage our nonprofit enterprises.

Libman begins by observing that performing arts organizations in Central Indiana are never able to live on the revenue generated by ticket sales. They must rely on public and private contributions in order to survive. This not only defines what is meant by the term, “nonprofit,” it points to why it is misleading to think that we can run such organizations as if they were businesses.

Libman writes that he thinks the Great Recession of 2008 caused the boards of directors of many arts organizations to focus on “return on investment” as a benchmark for measuring success. Although I think it is demonstrable that this way of thinking dates back at least to the boom years of the 1990s, when corporatism and market-think were all the rage, Libman is right on the larger issue that nonprofit culture has been effectively subsumed by the very value system it was intended to counter-balance.

“Return on investment is an appropriate measurement for the performing arts,” writes Libman, “but it happens outside the organizations' balance sheets.”

Libman argues that applying business metrics to nonprofit organizations prompts us to ask the wrong questions about why and how creative enterprises work. Rather than wanting to know whether or not the arts are breaking even, we should be trying to determine the acceptable amount of financial support necessary to help arts organizations efficiently deliver a return on investment that consists of “communities reached, students served, lives transformed, inspiration shared and stories told.”

Many nonprofits suffer from a kind of cultural dissonance that starts at the top, with the composition of their boards. Board members who are recruited because of their business prowess may actually see nonprofit values as obstacles to be overcome. Here, Libman is bracingly frank: “Trustees of nonprofit arts organizations who do not subscribe to [these values] should consider resigning and apply their talents to generating more profit for the companies that employ them. And arts organizations need to do a much better job of vetting potential trustees to avoid electing individuals who do not comprehend the nonprofit model.”

Libman might just as well be talking about the current wave of politicians whose claim to office is based on their wanting to run government as if it were a business. In this model, a forest is only worth preserving so long as its timber can be logged. The value of nature itself plays little or no part in the equation.

These are the same folks who will demand to know why certain types of performance should be exempt from the vicissitudes of the marketplace. If they don't go to the symphony or enjoy modern dance, they don't see why their tax dollars should be spent in these venues. They might say the same thing about public schools if they don't have kids, libraries, if they don't read books, and welfare, if they've got theirs.

What these folks refuse to accept is that communities are complex organisms, made up of interrelated and overlapping parts. This can be aggravating at times. The various elements don't always fit and some are weaker than others. Sometimes they don't even speak the same language. It's tempting to want to simplify this situation, reduce everything to a common formula — a business model, if you will. It's not until the trees are gone that you realize you've lost a forest. I'm glad Steve Libman pointed this out.