On Budgeting

I've been wanting to write about budgeting since I started the blog, but wanted to think about it for awhile first....

So here goes.

Coming up with how much you want to spend is the easy part.  The most challenging part of creating a budget is to figure where the money is going to come from.  I'm a big fan of only putting in income you have a reasonable sense of getting.  For instance, if you have been funded by Target for the last three years at $20k, it's pretty safe to put $20k in that line.

Another trick is to find trends in the organization.  Last year I made the mistake with our outreach, which is cyclical, of putting in the previous years' income.  Not only was last year a downer for outreach, but cyclically, I should have budgeted less anyway.  It tends to dip every couple of years (as groups will have us one year, then take a break before asking back again).  If I had looked back at the trends of previous years, I would have known that.

I also believe that it's important not to set unrealistic 'stretch' goals.  This is usually done in the Ticket Sales line and in the Individual Donor line.  It's great to dream that you are going to increase your donations by $50,000, but it's not a good idea to budget to spend all of that money before it's raised.

Anthony Andler (owner of Heimie's Haberdashery) was briefly on the board of Starting Gate Productions.  One thing he said that I will never forget: "I always let my business tell me when its time to grow, not the other way around."  This stuck with me.

There are some bonuses to this philosophy.  First, it's always a great feeling to do better than budget (and it's a downer to fail to reach out-of-reach stretch goals).  When you do better than budget, it sets a new precedent for the following year.  Second, if things do better than budgeted, that usually means a surplus, or the ability to take advantage of an opportunity that requires expense.  Third, if you do better than budgeted and end up with a surplus, that money will be helpful with cashflow and reserve.  Fourth, if you have a terrible year, it will hurt a lot less if you haven't already spent a lot of money you were 'hoping' would come in.

Now I need to clarify something here.  I'm not saying that you can't have a "if everything goes as we hope it does" budget.  Or that you shouldn't come up with a business plan to increase income by 40%.  Yes.  Please make plans for growing the business.  But I think it's dangerous to count on those plans until they succeed.

In the future, I'll write about cash flow.  I think this is a very important part of budgeting.  And, if done right, will help you budget more realistically by examining month by month expenses.

I'd be curious to hear if anyone else has thoughts on this or anecdotes they would like to share.

Tech Soup

This resource has saved me TONS of money over the years.  Techsoup.org takes donations from most of the major software developers and sells them for an administration fee.

They currently have Windows 7 in stock for $8.  Yes.  $8.
I have macs in our office and managed to get entire office suites for $16 each.

There are lots of different software worth checking out here: Adobe creative suite, donor software, server software, etc.

There is a little bit of a set up process.  You have to verify you are a 501c3.  Also, there are some limitations.  For instance, Microsoft will only allow you to order once a year (as much as you like in one order) and Adobe only allows either four products, or one suite.

One of the first things I did when I started at Mu was to update the software.  I'm a big fan of staying current.  One of my previous workplaces still used WordPerfect.  Transitioning to more current software proved really cumbersome both for files getting so old you can't access them to the users who have a harder time adjusting to the newer interface.  If you set up a culture of up-to-date software at your workplace, you'll find a lot of things easier and more efficient.  Another prime example is our Filemaker was version 5 or 6.  The database was broken (the address was showing up where the names should be, etc).  The version was so old I was having a really hard time fixing it and making it do what I wanted it to.  I upgraded to Filemaker 9 and found fixing the database much easier due to more user-friendly updates.

Use techsoup for your software upgrades.  At $16 per office suite, you should be able to set up your whole office for next to nothing.

Michael Kaiser - Kennedy Center

Since working at Mu, I have been fortunate to be a part of a capacity building program at the Kennedy Center in Washington D.C. (going on my third year of participation).  This program, led by Michael Kaiser, has done a lot to change the way I think and was already changing Mu when I got there.

Michael is known as the "turn around king" for taking over a number of troubled arts organizations with millions of dollars in debt and within one year closing that gap and producing the organizations most ambitious season in its history.  The Alvin Ailey American Dance, The Royal Opera House in London, and the American Ballet Theater are a few of the companies he has turned around.

His golden rule is this:  Great art, marketed well.

If you do this, all else will follow: Press, audience, ticket sales, donors, board members, foundations etc.

In terms of marketing, he emphasizes that show marketing is great, but institutional marketing is essential.  Create events that get people talking about your organization.  Bring in the artists that create buzz.  Produce shows that get people talking.  He suggests going as far as 'creating' news for yourself.  His biggest example is when he managed to get a major museum to curate a whole section on the history of Alvin Ailey American Dance company.  He created tons of press around it and got people talking about the organization.  Months later, the company also performed for Bill Clinton's inauguration on National Television (thanks to Michaels ambition and tenacity).  That's institutional Marketing.

A couple of recommendations: Artsmanager.org is a site created by the Kennedy Center.  It has Michael's blog (along with links to his Huffington Post blogs) and people can sign up to be a part of the online chat rooms and discussions.  It hasn't taken off the way they have wanted it to, but it's still worth checking out.  It also has an Arts In Crisis video series that's pretty informative.

The other recommendation here is his book "Art of the Turnaround."  I found it a really inspiring read.  Not academic at all, but very practical in it's applications.  Click here to buy it on Amazon

That was a long one...but some basic concepts I wanted to get out.  And the ideas are truly transformative.

Two more emails newsletters to check out

Nick Fellers has an organization called For Impact.  This organization specializes in fund raising for various large organizations.  What's refreshing about his advice, is his change in language.  He doesn't like the term NOT FOR PROFIT.  He prefers the term FOR IMPACT.  He emphasises that an organization should state what it's for, not what it's NOT for.  Another nugget in regards to fundraising that is stated repeatedly in his newsletters: Impact drives Income.  The more impact your organization has (and that you can articulate), the more people will want to give, buy tickets, join the board, etc.  Great, simple advice.  Here is the link to sign up:
For Impact Newsletter Signup

Another one is Technology in the Arts.  This is the web site where I hear stories of symphonies texting audiences during a Beethoven concert and giving background info on the performance as it's actually happening.  Lot's of forward thinking stuff here...not all of it is stuff that I would want to implement, but good to know what's out there.
Here is the link to sign up for this newsletter:
Technology In the Arts

You've Cott Mail

This is a great email list to be on.  Thomas Cott is currently the Director of Marketing at Alvin Ailey Dance.  He keeps an eye out for arts related articles and blogs and sends them out in a daily newsletter.

I've found some really useful information by subscribing and highly suggest you check it out.

Go to http://www.thomascott.com/ and on the left sidebar click on You've Cott Mail.  It will ask for your email address and you are in.

Cost Savings - copier

I recently did some reassessing of our copy machine and realized we had a lot of bells and whistles that never get used.  Here are a few things that I realized:

1. we hardly use color.  When we do it's usually by accident (we average about 200 copies a month)

2. we never use the 'extras' on the machine.  This includes stapling, folding, etc.  At one point we thought we would bring program printing in house.  This proved to take a lot of staff time babysitting the machine, so eventually we started outsourcing these jobs.

3. we were on contract for 5,000 prints a month when we only averaged about 4,000.

After talking with our rep. I found out that we still had 2.5 years on our current lease.  I was able to work with them to get a basic B&W printer on a new lease.  The rep also mentioned that a $400 fee that I had paid last year was optional and I realized that I never really used it.

All in all.  This process saved me over $1,600 a year.

First Post

I've been pondering starting a blog for some time.  What I hope to include here are practical tips, thoughts, musings, and daily decisions that have an impact on an arts organization.  Especially with the economic realities playing against an already difficult field, we all need to share ideas, best practices, etc. to continue to improve how we, as an arts collective, do business.

I hope what I post is helpful.  I'm interested in hearing feedback....