THE BLOG
10/07/2013 08:10 am ET | Updated Jan 23, 2014

Structural Deficits

As more and more arts organizations have difficulty balancing their budgets, I have heard an increasing discussion of structural deficits. The notion is that there is a built in deficit to the way the organization operates; that the sum of earned and contributed income simply cannot reach the level of expenses of the organization as it is currently configured. The term is used to defend radical reductions in organization size, salaries and ambition. If an organization faces a structural deficit, it simply must do less work, pay lower salaries, reduce staff size, etc. In other words, it must aim lower.

Having spent most of my arts management career working to erase deficits of arts organizations, I must suggest that most organizations that face deficits do not face structural deficits. A structural deficit is one that is built into the model for an arts organization. It can only be eliminated by a radical restructuring.

Many symphony orchestras today believe they have structural deficits and are, therefore, attempting to reduce work weeks, or reduce musicians' salaries dramatically. The ongoing tragedy of the Minnesota Orchestra is just one case in point of an organization that is attempting to reduce costs dramatically in the name of erasing a structural deficit.

But I think the term is overused, and misused, and is simply a cop out in most situations. It allows a group to rationalize reducing fundraising and ticket sales requirements. It provides a guilt-free excuse to do less to achieve the organization's mission.

Arts organizations may be earning deficits but they are doing so because they have not created the art, pursued the marketing, built the boards, or created the fundraising mechanisms that are required to sustain the organization.

I can point to dozens of arts organizations that are balancing their budgets. Why can they balance their budgets while others in the same art form cannot? Why don't they have structural deficits when they have the same structure as their less fortunate counterparts?

Almost always the answer can be found in strong management and a good strategy. The Miami City Ballet had been earning deficits and last year it turned the corner. So have numerous other organizations. Each of these organizations faced their problems, developed a strong plan, engaged in aggressive fundraising and marketing programs and is now poised for greater success and accomplishment.

How sad it would be if during the bad years, the boards of these organizations had decided to radically downsize, to reduce the ambitions of the organization, to cut staff and artist salaries and to become less important institutions. How many fewer audience members would be entertained? How many fewer children would be educated? How many fewer works of art would be created?

There are organizations with structural deficits, to be sure. But they are few and far between. Many more simply need to rethink the strategies they have developed, the art they are producing, the strength of their marketing efforts, the composition of their boards and the way they welcome new donors to the institution.