The Business of the Arts

The Great Recession has resulted in a significant decrease in charitable giving in southeastern Wisconsin, making it even more difficult for nonprofit organizations in the arts to thrive.

After all, basic human concerns, such as hunger, health care and heating, are front of mind for most donors and recipients these days.

Still, the region is blessed with a variety of quality institutions in the arts, including the Milwaukee Symphony Orchestra, The Milwaukee Ballet, The Milwaukee Repertory Theater, First Stage Children’s Theater and The Skylight Opera Theater.

In addition, Milwaukee is home to the nation’s largest art supporting organization, the United Performing Arts Fund (UPAF).

Many of the arts organizations are making sacrifices and cutting corners to survive and remain a community asset.

How important are the arts to a community? A 2007 national study, “Arts & Economic Prosperity III: The Economic Impact of Nonprofit Arts and Culture Organziations and Their Audiences,” accounted for the economic impact of the arts in 156 communities and regions across the country, including Milwaukee County.

The study indicated that the nonprofit arts and culture industry generates $166.2 billion in economic activity nationally every year, including $63.1 billion in spending by organizations and an additional $103.1 billion in event-related spending by their audiences.

According to Linda Edelstein, executive vice president operations and communications at UPAF, the study documented that the arts and culture industry in Milwaukee generates $235.41 million in local economic activity. The industry generates $145.31 million in organizational spending every year, and an additional $90.1 million in event-related spending by audiences.

The arts industry supports 7,412 full-time jobs in the community, generates $148.97 billion in household income to local residents and delivers $25.09 million in local and state government revenue.

“The economic impact study sends a strong signal that when we support the arts, we not only enhance our quality of life, we also invest in Milwaukee County’s economic well-being,” Edelstein said.

Like the region’s for-profit businesses, local arts organizations are experiencing hardships in the recession, said Cristy Garcia-Thomas, president of UPAF.

The recession is forcing many arts organizations to be more resourceful and innovative to survive.

“The arts groups in our community have been working for many years on collaborating with each other,” Garcia-Thomas said. “Because of their ability to collaborate, I feel they are ahead of the curve and have continued to take advantage of that strength and put on excellent performances, while still managing the financial side of the equation.”

Executives in the arts community have had to make some tough decisions

‘Lean and trim’

“As an organization, we have looked at this upcoming season as one where we are trying to be lean and trim back where we can,” said Dawn Helsing, managing director of Milwaukee Repertory Theater Inc. “We wanted to set a goal for ourselves that would be achievable considering the economy, but still be something our staff and donors could aspire to.”

In addition to cutbacks in its budget, The Rep’s endowment was down 25 to 30 percent this year.

“We knew this wasn’t going to be a year we could expand exponentially, but at the same time, we wanted to protect our educational outreach programs, both youth and adult, and be able to celebrate Joseph Hanreddy’s final season at The Rep appropriately,” Helsing said.

Hanreddy is the current artistic director at The Rep. This year, he is directing his final season after 17 years with the organization. He will be succeeded by Mark Clements in the spring of 2010.

“Choosing plays with fewer cast members and shortening the season by a couple of weeks reduces the amount of money spent on actor and staff wages throughout the year,” Helsing said. “It definitely has a bottom-line impact on our staff, but no one is immune to the cutbacks.”

According to Helsing, everyone within the organization has been required to take furloughs and take cuts in benefits.

The Rep has seen a slight decline in subscription sales, but has actually seen an increase in single ticket sales. Even with the slight increase in single ticket sales, Helsing said, the theater will needs to rely more than ever on community support in 2010.

Making sacrifices

Ticket sales for the Milwaukee Symphony Orchestra have also increased, but not at the rate the organization was anticipating and the MSO has also seen a slight decline in annual contributed income support, said Mark Hanson president and executive director.

“As a result, the symphony has had to decrease expenses in ways that hopefully aren’t noticed by the audience or the general public,” Hanson said. “Performing arts organizations are quite flexible, and it is quite possible in the midst of a recession to ask employees, artists and vendors to make personal sacrifices in the form of pay reductions or benefit cuts that allow the organization to maintain or even grow its profile and level of activity.”

According to Hanson, every paid staff member and musician within the organization has given up some income or accepted a reduction in benefits over the last year.

“In addition to cost cutting, I also believe that the recession actually allows performing arts organizations to conduct their business affairs in ways that demonstrate to the community as a whole that we are really very fiscally responsible,” Hanson said. “We are constantly thinking of new ways to deliver and produce better art for more people in a more cost-effective way.”

Earlier this year, controversial cost-cutting moves at Milwaukee’s Skylight Opera Theater, including the elimination of the artistic director and other positions, eventually resulted in the resignation of the managing director. The shakeup received national media attention and, along with the recession, has taken a toll on the organization’s financial support from the community, said Joan Lounsbery, interim managing director of the Skylight.

“As a result of the theater’s tumultuous summer, corporate supporters want to be sure we are back on our feet and have a good financial plan going forward,” Lounsbery said. “There is definitely a little caution there, and individual donors are probably doing a little bit of the same thing.”

The Skylight has cut its costs by implementing wage freezes and voluntary employee furloughs, Lounsbery said.

“We are basically trying to hold costs and not continue on any incremental increase from year to year,” she said.

The Skylight has hired Amy Jenson, former chief financial officer of the MSO, as its managing director. She will officially begin her role on Nov. 16.

“The economic climate has forced many organizations to deal with cost-cutting wherever possible, in light of understandable drops in revenues,” Jenson said. “I think that’s the biggest challenge that we face; finding that balance and finding what you can cut creatively without harming the product itself is a very delicate balance that we are struggling with right now.”

Bill Theisen, who was ousted as artistic director earlier this year, has been reinstated as the artistic director at the Skylight until June of 2011. Lounsbery said there is a strategic planning process in development among the board of directors to decide how it wants to move forward after that point.

Supporting the local arts

The arts organizations are competing for dollars from the same regional pie of donations that also support more immediate human concerns.

“Corporations and foundations are sometimes faced with the decision between giving to an arts organization like us or giving to a local charity that helps feed hungry children or keep homeless individuals off the street,” Helsing said.

“I think there is a definite sense that arts and cultural programs are considered frill, and today’s importance is putting food in people’s mouths and nourishing the community in those ways,” said Christine Harris, president and executive director of the Cultural Alliance of Greater Milwaukee. “While I agree those things are most certainly important, the arts and culture of a community can often provide nourishment for the mind, and hope and inspiration for a community.”

According to Helsing, arts organizations have to compete more than ever, to show their importance in the community.

Juan Carrasquillo, director of administrative services at We Energies and chair of the company’s employee arts campaign, believes the arts and arts education have a significant impact on the quality of life in Milwaukee.

“There is statistical research that indicates children score better on SAT’s if they have been exposed to arts education at some point in their life,” he said. “In 2008 alone, more than 400,000 children in 120 communities were served by UPAF outreach groups.”

The We Energies charitable arts campaign extended beyond UPAF member organizations.

“We forced people to imagine, life without the museum, life without books on the shelves at the library and life without the animals at the zoo,” he said. “Because if they can’t afford to operate, that’s what would happen.”

According to Carrasquillo, since he took over the We Energies arts campaign in 2008, employee participation has increased 33 percent and the amount of dollars raised has increased 19 percent.

“We Energies also runs a very high-profile United Way Campaign,” he said. “I think the main thing here is that you cannot support one organization at the expense of another.”

Milwaukee-based Northwestern Mutual Life Insurance Co. is one of the largest corporate donors to UPAF, said John Kordsmeier, vice president of disability income insurance at the company and chairman of the board of directors at The Rep.

“This donation is a monetary contribution that comes from our foundation as well as from our employee-run campaign in support of the arts,” Kordsmeier said. “The arts organizations in Milwaukee play a direct role in our ability to attract and maintain a quality workforce because one of the factors in attracting a solid workforce is the quality of life we can offer in the Milwaukee community. The arts organizations here certainly play a role in that.”

Many of the arts organizations have educational outreach programs and components that put them in elementary, middle and high schools across the region, as well as providing adult education through various programs, Kordsmeier said.

“Arts provides a way to grow and add value to individuals, to ideas and thoughts across cultures and generations,” he said. 

BizTimes Arts Survey
BizTimes Milwaukee recently sent a survey to the leaders of nonprofit organizations among southeastern Wisconsin’s arts community. Twenty-five of them responded. The survey results indicate that most of the local charities in the arts are optimistic about their future, but they will face challenges in 2010, including declining budgets and a need to find more effective corporate board members.

1. Are you optimistic about the future of your organization?

Yes    24
No    1

2. How would you describe the status of the Arts community in Milwaukee?

Thriving and robust    6
Holding on to status quo    10
Endangered    9

3. Is your organization in danger of closing down due to lack of funding in 2010?
Yes    2
No    23

4. What does your budget look like for 2010?
The same as this year    8
Decreased from this year    15
Increased from this year    2

5. Which area of giving do you expect to be the most difficult to secure in 2010?
Corporate giving    12
Individual philanthropists    2
Foundation giving    11

6. Do you expect change in your organization’s leadership for 2010?

Yes    4
No    20

7. Will your organization consider merging with another organization in 2010?
Yes    1
No    24

8. Is your organization in need of more effective corporate board members?
Yes    20
No    5

Sign up for BizTimes Daily Alerts

Stay up-to-date on the people, companies and issues that impact business in Milwaukee and Southeast Wisconsin

No posts to display