Arts Nonprofits: Fiscal Responsibility Is Not a Mission

Your mission is not a slogan. Your mission is not an ad campaign.

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And this little piggy went all the way home and forgot about the mission of your nonprofit.

What does fiscal responsibility have to do with your mission?

From my list of 15 Fraught, Flinch-Worthy Phrases from the Nonprofit Arts World comes #5: “Fiscal responsibility.” Especially as it relates to the mission statement of your organization. Let’s first be clear: all companies should be fiscally responsible to the level of their capacity. Arts organizations are no different from Amazon in that regard. Neither are they different about having bathrooms that work, air to breathe and staff members that receive paychecks. Fiscal responsibility is no different than breathing in this sense: it’s what a thing does to live, not what it does to make an impact on society.

That said, an inordinate number of donors have been trained to look at accounting audits, forecasts to budget, historical financial analysis, and long-range bottom-line projections to determine their inclination to give to a particular nonprofit. Lost in that pecuniary shuffle is the actual mission of the nonprofit.

Back in 2013, the three most prominent charity rating organizations — GuideStar, the Better Business Bureau’s Wise Giving Alliance, and Charity Navigator — wrote an open letter to the donors of America in a campaign to end the Overhead Myth, the false conception that financial ratios are the sole indicator of nonprofit performance. Nonprofits of course participate in the misinformation cycle, so the rating organizations directed a similar letter to nonprofit boards and executives.

Of course, there’s nothing mythological about overhead; this truth is the crux of the campaign to discredit the abominable Overhead Myth. Operating costs are not a mark of inefficiency or greed in well-run nonprofit organizations. Paying salaries and the electric bill have to happen, but financial statements (guided by specific calculations on the 990 tax form) determine a dangerously worthless cost-to-program ratio.

Intuit, the company that manufactures the popular accounting program QuickBooks, gets it completely wrong in its advice to nonprofits — and too many nonprofits who use their products believe them.

Recommended overhead ratios vary between sources according to your industry. In general, your nonprofit should try not to exceed an overhead ratio of greater than 35%. It is often recommended that you should attempt to reach an overhead rate of less than 10%.

Anywhere between these two rates is the standard breadth you’ll find most nonprofits.

None of this information is true in the absolute. Most of it is unethical. All of it can do harm.

Interestingly, over in the private sector, businesses often claim “all proceeds go to charity.” Donald Trump, the Prevaricating Pinhead of Perjurious Pomposity, has been sued by the New York Attorney General for lying about that statement when it was attached to marketing materials promoting his eponymous steaks, his eponymous “university,” his eponymous vodka and other fraudulent products. This is because “proceeds” could reflect gross or net — and as net proceeds might actually be zero, he’d be off the hook. Incompetence and bankruptcy have their virtues.

Fiscal responsibility, then, is good business. But it is immaterial with respect to, and when contrasted with, a nonprofit’s impact. Fiscal responsibility, then, has no place anywhere near a mission statement.

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There are many other words and phrases in mission statements that harm nonprofits. These should cause hairs to rise on the backs of the necks of any potential donor who reads them. Or any arts nonprofit consultant. Or any thinking person. They can easily be categorized, and perhaps you have some words and phrases that you would like to add (please do so in the comments section down below).

Category 1: The Outs

“Outs” are words and phrases that allow for distraction, drift and non-impactful activities at a nonprofit, including an arts nonprofit. These words allow for failure. Don’t get me wrong: failure can be a viable option for companies that take real risks. But outs are caveats. They tell the reader that the company has scant expectation of having a truly successful impact upon its constituency.

  • Try
  • Attempt
  • Strive
  • Create an environment where
  • Aim
  • Seek
  • Make every effort
  • Endeavor
  • Aspire to
  • Want to
  • Make progress on
  • Work to
  • Nearly
  • Almost

Would you give to a company that tries to feed 100 people or one that feeds 100 people? Obstacles can be explained. Failure cannot.

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Category #2: The Symbols

If your nonprofit’s mission changes every time there’s a new director — and in arts organizations, that’s almost a standard practice — your mission is unsustainable. It follows that your organization is unsustainable.

Leaders are symbols of action, not the action itself. Is your mission bound by, and to, its original leader, or does it continue, regardless who pilots the company?

Don’t be mistaken: mission statements change all the time. There may be a change in focus. The original mission may have been so successful that the problem may have been solved. The mission may not reflect the activities or goals of the organization because it was written by a development officer some afternoon when a grant was due. Popular support for your current mission may have been overestimated or invented, possibly for vanity purposes.

But if a mission is based on the current leader’s vision — or the building in which the company does its work, or the city in which the company resides, or the idiosyncrasies of its chief benefactor — then it’s not merely malleable, it’s fungible. And a fungible mission results in an expendable nonprofit. So when you see phrases like these, it may be time for someone, somewhere, to expunge the funge:

  • Celebrating John Founder’s vision of…
  • Under the leadership of Joan Founder…
  • The Founding City’s most visionary company…
  • Located in the historic Founder building…
  • Led by Founding City’s J. B. Boardmember, J. P. Moneybags, and J. C. Charismatic Leader…

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Category 3: The Fluff

The mission statement is the single most important set of words your nonprofit organization has ever put together. It is the biggest tool in your shed, the brightest star in your sky, the sharpest arrow in your quiver. It is what every single stakeholder points to and says, “Here’s why we get up in the morning.” The bylaws of a nonprofit are its Constitution; a mission statement is its Declaration of Independence.

It is not a slogan or it is not an ad campaign. Contrary to popular belief, “Just Do It” is not a mission statement. Nike’s actual mission statement is far more inspirational:

To bring inspiration and innovation to every athlete* in the world.

*If you have a body, you are an athlete.

So why use filler and fluff? If it’s meaningless or hyperbolic, it’s useless. And it takes away from the meat of the mission.

In 2013, Marc Koenig posted a helpful chart, which tells you all you need to know about your mission, on the website Nonprofit Hub:

My favorite mission statement was developed by David Saar at Childsplay, a magnificent children’s theater company in the greater Phoenix area.

To create theatre so strikingly original in form, content or both that it instills in young people an enduring awe, love and respect for the medium, thus preserving imagination and wonder, those hallmarks of childhood that are the keys to the future.

As inspiring as the company is, it has an actionable reason for being: to create “strikingly original” theater. Admittedly, asking how many young people received an “enduring awe, love, and respect for the medium” could be difficult to quantify. Still, this evergreen mission, though created by the company’s founders, continues without pause. It narrows the focus (a great thing) and narrows its constituency (even better). Its mission guarantees longevity and persistence, which is not something measured by fiscal responsibility or a single leader’s vision.

Which is why this mission statement, on a dedicated page of a theater’s website, disappoints me so:

Goodman Theatre, Chicago’s oldest and largest not-for-profit theater, has won international renown for the quality of productions, the depth and diversity of artistic leadership, and the excellence of its many community and educational programs. Under the guidance of Artistic Director Robert Falls and Executive Director Roche Schulfer, the Goodman is committed to producing both classic and contemporary works, giving full voice to a wide range of artists and visions. Central to that mission is the Goodman Artistic Collective, a diverse group of outstanding theater artists whose distinctive visions have given the Goodman an artistic identity of uncommon richness and variety. By dedicating itself to three guiding principles –quality, diversity and community — Goodman Theatre seeks to be the premier cultural organization in Chicago, providing productions and programs that make an essential contribution to the quality of life in our city.

This is an example of a mission statement that tells you what they think the company is, not why it does anything at all. The artistic reputation of the company is excellent, but is their standing as a nonprofit? Hard to quantify.

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By contrast, here is (part of) the mission statement of the American Civil Liberties Union:

To defend and preserve the individual rights and liberties guaranteed to every person in this country
by the Constitution and laws of the United States.

Boom.

Through my consulting practice, I have come to learn that mission statement of nonprofit arts organizations are no place to talk about outs, symbols or fluff. When given such a short window to do good works, it makes more sense to grow a figurative bonsai, not decorate a Christmas tree.

Alternatively, if a full commitment is what you’re thinking of, your nonprofit might profit from engraving this statement all over your company’s letterhead: