Sunday, August 5, 2012

On July 12, 2012, Scott Provancher, the CEO of the Charlotte Mecklenburg Arts and Science Council (ASC), 'sounded the alarm' about the current model on which the ASC operates. His article appeared on the Charlotte Viewpoint website and in it he promised a second article in which he will propose a solution.  I commented on his article and suggested a particular direction for the ASC to take. My article follows Scott's piece:
Sounding the Alarm  by Scott Provancher

I recently gave a keynote speech to a group of community leaders at the Annual Meeting of the Rockford (Ill.) Area Convention and Visitors Bureau. My good friend John Groh, the CEO of the Visitors Bureau, asked if I would be willing to talk about the role that social innovation plays in building vibrant cities.
I have a fond place in my heart for Rockford because they took a risk in hiring me to serve as the Executive Director of the Rockford Symphony when I was just 24 years old—an opportunity that became a defining leadership experience for me and a spring board for both the Rockford Symphony and my career. So when John called, I immediately said ‘yes’.
Preparing for this speech also gave me an opportunity to clarify in my mind what social innovation really means and the role it must play in ensuring Charlotte’s continued growth and prosperity.
Simply defined, innovation is an idea that creates value. There is a plethora of ideas in the world, but few create lasting value. To me, social innovation is the most elusive, yet most important form of innovation—a novel idea that creates value for the public good.
Examples of great social innovations, such as the development of language, irrigation, and the public library system, immediately come to mind. However, one doesn’t need to look back thousands of years or even outside of their own community to witness the importance of social innovation.
In fact, the development of the Arts & Science Council (ASC) was a social innovation. The pressing issue of the time was how a city poised to grow economically in the coming decades could ensure that it had the arts and culture offerings necessary to attract, retain, and inspire the needed workforce and their families.
Despite Charlotte’s prospects for future growth, it had a dilemma. More mature communities had built their arts and cultural amities through the generosity of a select few—famous philanthropists like Mellon, Rockefeller, Carnegie and Guggenheim had both significant resources and saw the importance of a cultural life for a community. Without that kind of wealth, however, Charlotte would need to innovate in order to accomplish this feat.
Through the visionary work of community leaders from both the public and private sectors, a groundbreaking partnership was formed. The ASC as we know it today was developed as a unique non-profit umbrella organization that would receive both public support from the city and county, and leverage that investment to inspire donations from companies and individuals through corporate and workplace campaigns. The dollars raised would not only help lead the creation of new venues and programs, but also provide operating support for a burgeoning group of arts and culture organizations.
What resulted was nothing short of a miracle. Over a 35 year period, more than $1 billion (52% private and 48% public) was leveraged to literally build a city centered on arts and culture. This innovation helped to make Charlotte the envy of other cities that by now are seeing stagnating urban cores and failing arts organizations, but is a significant economic engine for our community, generating over $200 million in annual economic impact and 6,200 full-time jobs.
Our funding model is no longer working
At the risk of being an alarmist, I am concerned that the entire funding model that fueled our cultural explosion over four decades is no longer working. Even before the economic downturn, the underlying system that had fueled the growth of the cultural sector was quietly and dramatically shifting without a true understanding of the consequences. The most significant shift came in two forms 1) how companies partner with ASC to fundraise in the workplace and 2) the City of Charlotte and Mecklenburg County funding structure for the arts and cultural sector.
Workplace giving was the single greatest growth engine for the cultural sector in the past, and it provided much needed operating resources to keep the doors open for organizations like Children’s Theatre, Discovery Place, Charlotte Symphony and a dozen others.
A Foundation For The Carolina’s sponsored task force in 2008 affirmed the crucial role of workplace giving for the future of both the United Way and ASC affiliates. However, the train had already left the station. Since the time of the task force report, the dollars raised in ASC’s workplace campaigns dropped almost 40%.
There is no doubt that the workplace giving model was seeing signs of its age before the economic downturn, and the task force agreed that a significant overhaul was needed to meet the changing needs of employees and employers. But the speed of this changing landscape left two huge non-profit sectors without the runway to develop a meaning alternative for the community. This is something that we still need to resolve.
Another quiet shift remained virtually unnoticed because of the tremendous growth in the private sector. The role that the City of Charlotte and Mecklenburg County plan in the partnership to fund the cultural sector.
An important aspect of the ASC model is that the City of Charlotte and Mecklenburg County would in essence outsource the function of a cultural affairs department to ASC, thus enabling a big savings on overhead and ensuring the greatest percentage of dollars going directly to the community.
These dollars also play an important role in the private-sector partnership by encouraging the private sector to match the public dollars committed to the partnership. However, over the last decade the public-private leveraging has become a lopsided arrangement, with the private sector now tackling the lion’s share of the annual support of the arts and culture sector.
Through a series of decisions beginning in the early 2000s, Mecklenburg County gradually reduced ASC funding until it reached an all-time low in 2010. During this period, total City and County funding for arts and culture decreased by 36%, while the overall City and County budgets increased significantly.
The need to forge a new path
All that is to say, the once-innovative model that was developed to support the arts and culture sector will need to be reinvented to meet the growing needs of our community.
The great Peter F. Drucker made a profound observation when he said, “Business has only two functions –marketing and innovation. All the rest are costs." In other words, the function of business is to develop products and sell them to customers.
The ASC and Charlotte-Mecklenburg is no different. We must design solutions that provide community value and ensure their success. Going back to the old model for support of arts and culture is simply not possible. The change that our community has seen is significant and, like our community did decades ago, it will need to forge a new path forward to ensure our cultural assets continue to flourish.
When I stood on stage in Rockford, behind me were two juxtaposed pictures: the Charlotte skyline in 1976 and one in 2012. I looked at the audience and said, “Do you want to see what innovation can do for a city? Look no further than the transformation of Charlotte.”
The arts and culture sector was one of the most significant catalysts in this transformation. With the help of the community, our key civic and corporate partners, I am confident we will find a way to accelerate our arts and culture sector and continue to make Charlotte one of the best places in the world to live. Innovation is how we can do it.

John Clark Response: 

I commend Scott Provancher for suggesting the current ASC model supporting cultural arts fundraising in Charlotte-Mecklenburg is no longer working.  Five years ago (January 2007), just before the Great Recession began, I offered a critique of the approach in a Charlotte Observer op-ed piece.  It garnered support from professional musicians, dancers, painters, poets, singers, actresses/actors and other individuals from our arts community and was generally panned by the ASC and other arts organization directors.  No surprise there. 

Naturally, I am interested in Scott’s upcoming solution to the problem and in the meantime would like to offer some thoughts about the model as it has worked in our community.  My purpose is not to revisit the past per se but rather to note certain inherent weaknesses of the model with the intent to steer clear of them in the design of a new approach to supporting the arts. 

The united fund approach for the arts, borrowed from the United Way by many cities, was primarily begun to minimize the number of financial requests to the business community from arts and cultural groups.  Another reason, as Scott cited, was the business need to achieve an arts environment “...necessary to attract, retain and inspire the needed workforce.” As you see, doing it directly for the benefit of the arts was not high on the list. 

The major strength of a united fund model is its efficiency. Organized by the ASC, hundreds of individuals volunteer through their places of work cover various sectors of the community (professionals, education, retail, etc.) to solicit employees to give to the annual fund.  Scott notes during the past 35 years, 52% of the $500 million raised came from the private sector.  That’s $260 million.  Break down that figure as an average for each of those 35 years and it is only $742,857.  Not all that impressive. 

Here’s why.  While this model is efficient as a workplace campaign, it denigrates the true nature of giving.  The experience of true philanthropy is exciting, inspiring and very rewarding.  An individual makes a gift directly to an arts organization such as the Charlotte Symphony.  She does so because she enjoys the concerts and is moved to give money beyond simply buying tickets to the performances.  It’s the emotional connection with the Symphony that is most meaningful in her gift-giving.  This connection increases over the years and is reflected by her greater involvement and in larger gifts to the Symphony. 

That experience is largely missing in the ASC united fund approach.  Sure, there are key volunteers who get involved in the campaign and are highly motivated.  It’s short-term, however, not only because it occurs once a year, but also because it’s a fundraising project, not an arts-making endeavor. 

If you’ve been living here for a while, you’ve heard the horror stories of employees, especially at the larger companies, being pressured not only to give to the ASC campaign but to give based on the level of their salaries.  I know of a friend who worked at one of our big banks whose work team had to go on a retreat to deal with sore feelings from such pressure.  This is akin to turning donors into mercenaries with the ‘pay’ being the fact you won’t lose your job or be overlooked for promotion. 

Even in its more benign form, that is not true philanthropy and hardly the way to build over the decades a true philanthropic environment for the arts.  And it does take time for that to happen.  Yet, because Charlotte opted for the united fund approach 35 years ago, we’ve lost a lot of time. 

Clearly, it’s difficult to say what would have happened if we had not gone the united fund route.  The symphony in Nashville nurtured a major donor.  She was instrumental in their impressive campaign of raising $123 million within five years.  Recall our ASC raised in private funds only $260 million in 35 years.  In choosing the road of developing a philanthropic environment for the arts during the past four decades, Charlotte may have produced a number of wealthy arts philanthropists (it did and does have very wealthy individuals).  More importantly, it would certainly have produced many more authentic donors who would have a direct giving relationship with an organization that actually made art—music, drama, dance, singing, painting, sculpting, etc. 

I hope the new direction the ASC takes is to foster that philanthropic environment to nurture individuals now in the 30s and 40s to experience the joy of giving directly to a group that is making art for our community.  The ASC can increase its role as an incubator for arts groups to learn how to raise funds and promote their art forms.  The ASC could work to get people excited, not about a fundraising campaign, but about a campaign that puts us in the center of our local arts world.  One that truly moves our hearts.