One of the most gratifying things about this campaign so far has been seeing the wave of support we’ve received from people whose work is central to our field. Barry Hessenius, whose blog is another widely-read resource among arts managers, graced us last week with a completely unsolicited and glowing endorsement of this project:

I hope you will go to the Indiegogo site and support this effort.  I did….I can give you two good reasons why you might part with the cost of a couple of Starbuck’s half caffeine, double mocha, caramel, latte frappacinnos:  First:  Ian and the people he has assembled to help with his newest reinvention of his site are exactly the people we want to support in our field – young, smart, dedicated, committed people who are already making a contribution to the field to help make things better for everyone.  Supporting that alone ought to be worth ten or twenty bucks.  But Second, I can almost guarantee you that if you follow whatever Createquity does over the next year you will read two or more posts that you (you personally) will find of great value to what you are doing on your job.  That ought to be worth a few bucks, no?

And how often do you get to play Santa Claus in July?

Indeed, it’s been amazing to see the movers and shakers who find value in Createquity’s work. Every year, with the help of a pool of nominators, Barry compiles a list of the nonprofit arts sector’s 50 most powerful and influential leaders. More than a fifth of the 2013 list has contributed to our campaign so far. The show of support from our field has been extraordinary, with donations from star consultants like Holly Sidford (Helicon Collaborative), Alan Brown (WolfBrown), Adrian Ellis (AEA), Jerry Yoshitomi (MeaningMatters), Claudia Bach (AdvisArts), and Anne Gadwa Nicodemus (Metris Arts Consulting); arts organization leaders like Adam Huttler (Fractured Atlas), Laura Zucker (LA County Arts Commission), Mara Walker (Americans for the Arts), and Kemi Ilesanmi (The Laundromat Project); current and former foundation leaders like Kerry McCarthy (New York Community Trust), Angelique Power (Joyce Foundation), and Marian Godfrey (ret. Pew Charitable Trusts); and fellow arts thinkers and information mavens Doug McLennan (ArtsJournal), Nina Simon (Museum 2.0), Thomas Cott (You’ve Cott Mail), Andrew Taylor (The Artful Manager), and Diane Ragsdale (Jumper). The latter four have contributed to our campaign in particularly special ways: Thomas, Andrew, and Diane all were kind enough to record video testimonials for us (embedded below), and Nina is donating two rare signed copies of her classic read The Participatory Museum, which are available to donors at the $100 level. Grab ’em fast!

I hope you agree with us that this is a pretty incredible list. Won’t you add your name to it and help us cross the finish line?

• RIP Artnet Magazine; more here. I will always be grateful to Artnet’s Ben Davis for being just about the only arts journalist worth his salt during the whole Yosi Sergant debacle.
• Congratulations to GiveWell, which has announced a not-quite-merger with Good Ventures, an emerging foundation led by Cari Tuna and Dustin Moskovitz (the latter is one of the founders of Facebook). The blog post is a bit thin on details, but it sounds like this arrangement will ensure GiveWell’s financial security for some time to come while substantially enhancing its real-world impact.
• Indiana University is set to open the country’s first School of Philanthropy later this year. It’s early, of course, but these snippets from the article suggest to me that buyer beware: “As with any academic setting, funding is an issue….With the nonprofit sector roughly 5 percent of the nation’s gross domestic product and 10 percent of the workforce, such [a] school could be a profit-center for the university, Rooney said.”
• One of the NEA’s lesser known programs, the Citizens’ Institute on Rural Design, will now be a partnership between the NEA, the Department of Agriculture, Project for Public Spaces, the Orton Family Foundation, and CommunityMatters. CIRD facilitates and hosts workshops on community design in places with fewer than 50,000 people.

BIG IDEAS

• Michael Kaiser has a penchant for inciting digital controversy, and his recent two–part post calling bullshit on “new business models” was no exception. At the core of the debate is this central question: how much is the nonprofit arts sector going to change in the next 50 years? Kaiser says not so much; Adam Huttler, on the other hand, thinks quite a lot. Huttler’s second post on the subject, in particular, is one of his most thought-provoking and brilliant in quite some time. EmcArts’s Richard Evans and Sarah Lutman also weighed in.
• Whither the future of open data and philanthropy? The Knight Foundation is currently considering a proposal to digitize 10 years of IRS 990 nonprofit data and make it available to the public for free. GiveWell’s Alexander Berger, writing on his personal blog, argues that this presents a clear opportunity to GuideStar’s next president to reform its business model around open data. (GuideStar’s current president, Bob Ottenhoff responds in the comments.) And the Foundation Center’s Brad Smith makes a passionate case for data standards and greater transparency among foundations.
• We’ve now entered an era in which college-age students have never known what it’s like to have to pay for music. Casey Rae and J. Holtham have more.
• What is the future of museums?

BIG MONEY

• The Irvine Foundation has announced its first set of grants under its new arts strategy that emphasizes audience engagement.
• Jon Silpayamanant makes the interesting point that sports teams have a performance income gap (i.e., expenses that outpace ticket revenue) just like symphony orchestras do.
• Wait, nonprofits are allowed to have shareholders?
  

  The deal will settle a lawsuit the Koch brothers filed in February over shares that determine control of Cato. It results from the original division of shares between the two Koch brothers, Crane and late Cato Chairman William Niskanen. After Niskanen died of stroke complications in October, the Koch brothers claimed a founding shareholder agreement gave them the option to buy Niskanen’s shares. Crane held they should go to Niskanen’s widow, which would leave him in effective control of the organization.

  The settlement involves dissolving the shareholder agreement. In addition, Crane is expected to retire under an agreement that allows him to select his successor, though the Koch brothers could veto the hiring.

RESEARCH (AND EVALUATION) CORNER

• FSG’s Valerie Bockstette points out the dangers of measuring what’s easy to measure instead of what’s most important.
• The Colorado Health Foundation’s Anne Warhover describes her organization’s approach to impact assessment.
• If you thought the theory of change and measurement framework for ArtsWave was ambitious, just take a look at this new comprehensive sustainability plan for Rockford, IL, which intends to measure economic, social, and environmental outcomes in 16 categories including cultural life and the built environment. The transportation category alone tracks 43 indicators.
• Kudos to the Cultural Policy Center at the University of Chicago for the most blockbuster release of an arts research study so far this year. Called “Set in Stone: Building America’s New Generation of Arts Facilities 1994-2008,” the report takes a critical look at the billions of dollars thrown by arts institutions at new buildings, museum wings, expansions, renovations, etc. during the decade and a half in question. Authored by then-grad-student Joanna Woronkowicz (as her dissertation), Carrol Joynes, and about a half dozen others, “Set in Stone” argues that much of that building boom was of questionable wisdom. The report is available in full multimedia regalia, even including an animated video, and scored a feature in the New York Times, along with reactions from The Atlantic Cities, Lucy Bernholz, the Nonprofit Finance Fund, and Sunil Iyengar (now Woronkowicz’s boss at the NEA’s Office of Research and Analysis). Elizabeth Quaglieri has a helpful summary over at Technology in the Arts. Congratulations, Chicago, you sure know how to get our attention!

ETC.

• Umm, please apply for the Createquity Writing Fellowship, Delali Ayivor?

It seems to me the devil is in the proverbial details on this one…

Is there a number you have in mind that, once crossed, makes compensation unreasonable? How much does an organization’s budget size matter? Is performance completely irrelevant, or are you more tolerant of high compensation when the long-term performance seems to justify it? Should we consider whether someone has grown an organization or merely stewarded it?

And then, a few moments later:

Another thought occurred to me…

What about compensation for specialists at NFP orgs? For example, the Chief Investment Officer at the Ford Foundation makes nearly $1M/year (see Guidestar). But that person is responsible for investing over $12B in assets. That’s pretty important! And the specialized skills involved would be in demand at any Wall St firm, so there’s real competition from the FP sector.

I don’t think it serves the sector to be skimping on some of this stuff.

These are important points, and kudos to Adam for raising them. The first thing I’d say is that I don’t disagree in principle with people like Dan Pallotta or Sean Stannard-Stockton who say that we shouldn’t care about the magnitude of compensation so long as the organization is producing a level of impact that justifies it. I guess where I differ with them is on a couple of points: first, I am deeply skeptical that performance and compensation are all that highly correlated among nonprofit executives, or that simply offering higher compensation would somehow increase that correlation. Secondly, I feel that one must consider an executive’s performance in terms of not only the total amount of impact generated but also the counterfactual scenario of the impact generated by a hypothetical lower-priced executive’s performance. Obviously that latter concept is impossible to measure exactly, but to explain what I mean in more basic terms, I want to know if a high-priced CEO is just coasting off of the firm’s own internal momentum and/or accidents of history, or is he/she generating that momentum him/herself.

To address the question about growth vs. stewardship, clearly one job of a CEO is to grow revenues. However, that’s not his or her most important job. The most important job is either growing profit or growing impact, depending on which sector you’re talking about. Either of these can be accomplished with flat or decreased revenues. So to me, growth is an interesting but ultimately fairly incidental factor when considering appropriate compensation. Budget size matters up to point, insofar as you can’t just make up money out of thin air, but after an organization gets past a certain size ($20-30 million?) I think impact should matter much more.

Is there a magic number? Following my logic above, no, but Seth Godin says the following in the post I linked to the other day:

After a million dollars or so in salary, the absolute amount that a person is paid has no real impact on their life. They can’t eat more meals in a day or wear more shoes. What matters to the manager is the relative amount. How much more would I make over there? Why does that company pay its CEO more than my company pays me?

Seth’s number is a million bucks; I’d put it a fair bit lower than that, particularly if one doesn’t live in New York City or the Bay Area. But basically that’s the idea. I have no problem with reasonably demanding jobs supporting reasonably comfortable, upper-middle-class (or lower-upper-class) lifestyles. As one gets further and further beyond that horizon, though, for me the expectation becomes exponentially greater that the higher salary will be justified by some sort of extraordinary evidence of impact. And if it’s not, then I for one start to lose trust in individual and organization alike.

Adam also asked about investment professionals. I just took an endowment management class where we discussed this very issue in some depth. Here’s the thing: it may be hard to believe, but those folks who earn $1m+ from managing Ford’s assets are actually already forgoing much higher pay packages that they could earn in the private sector. The other thing to consider is that investment professionals’ skills are more transferable between for-profit and non-profit sectors and that it is easier to measure their performance than that of CEOs. (Though Seth G., again, would argue that the whole system is messed up: “should the guys who drive an armored car that carries millions of dollars in bonds get paid more than the guys that drive an armored car that only carries thousands of dollars in cash?”) So I agree that there’s a slightly stronger rationale to pay investment managers what they get paid, though I would still think it’s important to consider whether the premium for a “blue chip” candidate over a less obvious but clearly mission-driven one is really worth it, especially when one considers the program funds and potential PR/trust issues at stake.

I will be back with my promised post on nonprofit compensation and lower-level employees in short order.

• Adam Forest Huttler is really smart. The founder of Fractured Atlas delivers a very lengthy, but entirely worth reading analysis of what MBAs can bring to the nonprofit sector, and arts organizations in particular. I am by no means a card-carrying member of the “business skills can save the world!” club, as regular readers will note, but Adam does a great job of boiling down the positive aspects of management education and showing how they’re relevant to day-to-day realities in the arts. Adam also mentions how he met the now-Chair of his organization’s board at business school; as it turns out, she is now a (fantastic) professor at SOM and taught me in two classes last year.
• Speaking of smart people with MBAs, my colleague at the Hewlett Foundation, Jacob Harold, has been guest-starring at Sean Stannard-Stockton’s Tactical Philanthropy blog this week. Jacob is Program Officer with the Hewlett Foundation’s Philanthropy program, which is one of the only ongoing foundation initiatives I know of explicitly dedicated to the meta-work of improving grantmaking outcomes.
• For his part, Stannard-Stockton has written a fair amount recently about the concept of “Philanthrocapitalism,” which can basically be summed up as a form of venture philanthropy. His posts “For-profits vs. Nonprofits” (featuring the punchline, “What I think is most critical is that we begin to understand that the work of producing social impact is just as worthy as the work of producing profit”…it hurts my face that such a thing actually needs to be stated, but it does) and “Philanthropy & Capitalism” are good manifestos (manifesti?) to start with.
• The Boston Globe has an interview with Massachusetts’s new Culture Czar, Jason Schupbach.
• And for a…different kind of art, check out Hats of Meat. (h/t DK)