We have this terrible time in the nonprofit performing arts sector with the idea (let alone the actual act) of letting groups go out of business. Groups on the verge tend to hit the panic button and mount a “Save Our _______,” which works only some of the time, and generally does not solve the problems that put the organization in peril. For all those involved, going out of business is only seen as a failure, an admission to be avoided.
The thing is that we need more groups to reach that decision point and then make a positive decision — let’s declare victory and move on! Why? Several reasons.
First of all, we have a supply problem. Remember when Rocco Landesman said that a few years ago as head of the NEA? Poor guy almost got his head taken off. You’d have thought he was suggesting no more sippy cups of alcohol in Broadway theaters. Inevitably, there were references to Theater Death Panels, which managed to stifle any sort of reasonable conversation. Now we have a situation where foundation heads and other arts leaders would all agree privately on the problem. But they won’t say it publicly.
But the fact remains that the recent growth of the sector (here illustrated by the number of cultural 990’s filed by year) is stretching audiences and funders beyond capacity.
The other very important reason to encourage more groups to close up is that we should expect the quality and value of anyone’s creative output to rise and fall over time, and that when it falls below a certain point, there is little reason to maintain the institutional infrastructure that goes around the creation of the work. There are lots of good analogies here. Think of the cultural ecosystem as a forest. Old trees die to make room for new ones. In fact, the forest fires that speed that along are profoundly important to the long-term health of the forest. Simply put, turnover is healthy, as it allows for regeneration.
So what’s the answer? We essentially need to help groups close up shop in a way that treats customers, working artists, staff and contractors fairly, preserves what should be preserved of the work, and honors the organization’s contribution to the sector. Tom Wolf (in his book Managing a Nonprofit Organization in the Twenty-First Century) refers to this as “Organized Abandonment.” But that still sounds like a retreat. Let’s call it “Dying with Dignity.”
The hard part is that what’s really needed to shut things down is not just the will to do it but planning (which costs money), time (which is money), and money. I’ve been talking about this recently with John Macintosh of Seachange, a merchant-banking group in the nonprofit sector that provides transactional support for organizations in transition. They’re already very experienced and proficient in their grant-making in support of organizations merging and collaborating, but now they’re considering the development of a pilot “legacy” fund that could provide support to organizations serious about closing up shop in the best way possible. It’s a great idea. Such a program could provide an incentive for organizations to be proactive about winding down rather than limping along until it’s too late, with negative consequences for directors, artistic and administrative staff, and the nonprofit sector at large.
John recently sent me a great report, written in 1991, by the Fieldstone Alliance. It was their Nonprofit Decline and Dissolution Report, entitled Going Out of Business: Why, When and How to Do It Gracefully. It’s a great report based on comprehensive research and fieldwork that identifies the situations that should lead nonprofit organizations to consider going out of business. It identifies warning signs and causes that signal the need to plan for the end. It provides a framework with which to consider various alternatives to dissolution. It suggests how organizations should deal with stakeholders and outsiders to achieve an honorable death.
This is the work we need to do. But given the sensitivity around the issue, I’ll settle for the idea that, at the very least, this is the conversation we need to start.