01/10/2011 08:31 am ET | Updated May 25, 2011

Mid (And Other) -Course Corrections

At this time, arts organizations must be far more nimble, financially, than ever before.

Many of us have experienced unforeseen drops in contributed income as certain donors lose their giving capacity. Ticket buyers are also choosier now and virtually no arts organization can count on selling out routinely.

For small and mid-size organizations, the loss of just one major donor or a few less-than-stellar box office results can sink a budget. And since arts organizations tend to have little or no cushions, even one sub-par year can be catastrophic.

Arts organizations must be able to evaluate their financial performance, and take corrective steps with great agility and speed. This is true at any point in a fiscal year, but especially important now that so many of us have reached the mid-points in our seasons.

Why are mid-course corrections so essential? Because if corrective action is not taken soon enough, the organization loses the flexibility to make the cuts required in a relatively painless way. Wait longer into the season and, perhaps, lopping off the last chunk of your season might be the only option, no matter how interesting or important it is. Wait too long and you may not have any options for recovery.

But there is another important reason as well. It is far better for an arts manager to recommend cuts to a board than for the board to demand cuts of the manager.

When a manager comes forward proactively and says that some cuts must be made, the board comes to believe that the manager has a strong finger on the financial pulse of the organization. When the board members trust the manager, they tend to make fewer decisions that truly should be the province of management.

If the manager waits for the board to demand cuts, he has lost this credibility and the board will be looking over his shoulder for a long while, oftentimes demanding actions that truly are not in the best interest of the organization. But the board may not be willing to listen to the wisdom of the manager if he has lost trust.