Business Models vs Good Business (Janet's Blog)

The issue of new business models is a topic with which I am losing patience. To me it’s a “red herring” actually, when we should be discussing new product delivery models that engage more audiences, both young and old, utilize technologies and update the organizational structures and attitudes that may have worked forty years ago but are not working today. These are huge issues of leadership, boards of directors, management, community relevance and understanding audience trends.

“Money follows good ideas” is a mantra I’ve used most of my career. What we need are leaders who are seriously challenging programming, marketing and governance protocols put in place years ago. Whether the legal pot the money goes into is a 501c3, L3c, fiscal sponsorship or sole proprietorship is best determined by what gives the artist or organization the greatest flexibility to raise funds, reach audiences and fulfill their missions.

Until the IRS takes serious steps towards changing the 501c3 structure (like eliminating deductions for contributions), it’s the big dog in town. However, funders are seeking alternatives like fiscal sponsorships to reach out to artists and organizations that are outside the traditional 501c3 system. That’s currently a small percentage of who public and private organizations support. But, if we’re serious about supporting the arts in a holistic manner, reaching to all demographics in our cities, the number of organizations outside the “system” will grow and funders will need to determine how their own operating structures can best address this. New systems and ideas don’t start with legal structures. They start with individuals and groups solving problems with creative solutions. Putting those ideas into practice and building systems around them. This means breaking tradition and challenging the status quo. This takes courage and inspiration. This takes leadership.

I worry that focusing on legal business models, similar to the superficial discussions that have been flying around about supply-demand, give an illusion that somehow solving this issue fixes the current state of the nonprofit arts field. As Clara Miller, formerly president of Nonprofit Finance Fund, stated in a session at last year’s AFTA conference, no matter what your legal structure, the best business model is “make more money than you spend.” This puts the focus back on how organizations are managed and capitalized, the perceived and real value of their product to their communities and what funders are doing to invest in innovations in product delivery and public participation.