The Cycle: A Practical Approach to Managing Arts Organizations

6 | Generating Revenue: Earning Rent from the Cycle

104 6 generating revenue Earning Rent from the Cycle A happy family, led by an engaged board and competent staff, produces money for the organization in several different ways: earned income (ticket sales, tour fees, licensing, rentals, auxiliary merchandise, parking, food, and unrelated business income), contributed income, and endowment income. While creating revenue is clearly not the ultimate mission of a not-for-profit organization, it is obviously an essential prerequisite for developing and maintaining excellent programming. Earned Income Arts managers and board members love earned income since it feels more controllable and more related to the normal business model of receiving revenue for producing goods and services. In fact, many boards are convinced that the key to success in the arts is to build earned income businesses—related and unrelated—so that the need for contributed income can be minimized. (In truth, well-managed arts organizations often have an easier time building contributed revenue than earned income.) While approaches to generating ticket sales were reviewed in chapter 2 and need not be repeated here, it is undoubtedly true that a larger family makes it easier and less expensive to generate a larger paying audience. Those organizations that do a superior job of nurturing their audiences, providing information about future events (and, in fact, market future performances or exhibitions at current events), offering high levels of customer service, and making each audience member feel important will generate higher levels of earned income at lower cost. Touring is one technique for building earned income for many arts organizations; touring is especially important in art forms that demand ensemble work of the highest quality but have limited audience appeal and, therefore, must limit the number of performances at home. This is why modern dance groups, chamber music groups, etc., are so reli- g e n e r a t i n g r e v e n u e 105 ant on touring. For every arts organization, however, a strong tour can help build institutional marketing at home if family members are wellinformed about the touring activities. Effective executives ensure that all donors receive copies of positive press coverage earned abroad; asking a dancer, inspired by a recent tour, to provide a brief report to a board on returning home can boost morale on both ends. However, tour fees are rarely net sources of funding for the organization. The fees received typically rarely—or barely—cover the expenses of touring. This does not imply that touring is bad for arts organizations. It only suggests that if an organization is going to tour, it should do so for mission-driven rather than financial reasons. (Some organizations have low enough costs of touring, or can demand high enough fees, that touring is profitable, but this is the exception.) Organizations that choose to tour need to build strong relationships with tour presenters who, in fact, become members of the family. The remarkably strong touring program enjoyed by the Alvin Ailey organization is a testament to its strong ties to numerous major presenters in the United States and abroad who are willing to present the company with regularity. This allows the organization to plan its tours well in advance and to make them sensible, without long gaps of expensive, nonperformance days on the road. Tour presenters are most helpful when the company, like Ailey, delivers what it promises, and the reputation of the ensemble is so strong that it helps the presenter sell the tickets and raise the funds necessary to break even. Arts organizations that plan repertory far in advance, prepare helpful programmatic marketing materials (and can advise on techniques that work when marketing their performances), and have active institutional marketing efforts are far more likely to attract tour presenters. The most competitive companies offer a complete package to the presenter with program copy, powerful images, press quotations, online videos, and auxiliary activities—master classes, workshops, lecture demonstrations. This package adds value for the presenter, makes marketing easier, and provides ready-to-go engagement and educational opportunities for the presenter’s family. Several companies also provide lists of their own Facebook friends and Twitter followers in the presenter’s city. This is all the more important for lesser-known companies trying to break into a new market. Success at the box office complemented by a vibrant community-engagement effort—which may satisfy a presenter’s own commitment to its funders—greatly increases the [3.144.124.232] Project MUSE (2024-04-25 18:34 GMT...