REBUTTAL: Maybe We Actually Need All Those Arts Administrators by Thomas Wolf
In October, 2022, I offered a blog arguing that the arts industry is burdened with too many administrators. Entitled “How Many Arts Administrators Does it Take to Change a Lightbulb?”, the piece seemed to have touched a nerve. Various people got in touch with me – some congratulating me for my wisdom, others convinced that I was naïve and ignorant. One nay-sayer wrote: “This is one of the most wrong-headed, ill-informed things I've read for a while.”
Some writers used aspects of my piece to take my argument in new and interesting directions. In Britain, Stuart Barr offered a radical proposal to consider an entirely new mechanism for public funding that would increase artistic productivity and reduce the percentage of dollars allocated to fund-raising staff. Another writer asserted that staff compensation was only the tip of the problematic iceberg: “My partner works in IT for a performing arts organization and often commented on the extent to which the staff ballooned post-Covid…far past the original 2020 numbers. I think he estimated that he set up 80 new employees since August. Further, many of the senior administration request multiple devices like phone, laptop, iPad, TVs. As soon as a new iPhone comes out on the market, everyone’s phones mysteriously ‘break’ and everyone needs a new one. It is frustrating to hear what seems to be a waste of resources.”
David Dik, Executive Director of a US-based organization with affiliate chapters, discussed a strategy for fighting administrative bloat: “In the last ten years, we outsourced all our finance, technology and HR functions and kept staff positions as mission critical. I also inherited a large program department because at the time the national organization felt it had a role in developing curriculum that affiliates would implement. I swapped them out for space to build greater capacity in external partnerships and advocacy.”
My piece was read by people in nearly 100 countries and it appears that the problem I identified was not limited to the United States. From Canada, one person wrote: “After a 50+ year career in arts and entertainment management and about a dozen full time positions as the senior staff person, I can confirm your thesis.” From London: “I'd like to say that we do not have enough of this thinking on this side of the Atlantic – particularly re. bloated bureaucracies!”
Lourdes Starr-Demers: In many organizations, there is rarely the time to pause, take a deep breath, reassess the situation, and possibly rethink and redesign staff structures.
However, also from the UK, Ash Mann, Managing Director of Substrakt, wrote a long article (definitely worth reading) in the journal Arts Professional taking me to task for my “flawed perspective.” From this side of the Atlantic, Lourdes Starr-Demers, who at one time worked at some very large arts institutions, identified why the problem of staff growth was so hard to fight. In her experience, when staff vacancies arose, it was rare that organizations would take the time to reassess the structure and look for efficiencies. “There seemed to be no luxury to allow time to pause, take a deep breath, reassess the situation, and possibly rethink and redesign things.” A different approach, she says, “requires tremendous discipline from arts leaders and hiring managers to stop and make some space.”
In this blog, I include two very thoughtful responses to my previous piece, offering contrary views to my own. The first is by Joe Kluger, former CEO of the Philadelphia Orchestra and a WolfBrown colleague. It gives a good perspective especially from the point of view of larger-budget organizations. The second is by Stanford Thompson, CEO of Play on Philly, someone who created a remarkably successful entrepreneurial arts organization from scratch.
The Gray Matter of Administrative Costs
By Joe Kluger
Joe Kluger: “Administrative expenses are like cholesterol: some are bad and should be minimized, while others are good and should be maximized.”
My esteemed colleague and business partner, Thomas Wolf, has penned a blog post posing the legitimate question of how many administrators are really needed to run an arts organization. Tom’s premise is that today, organizations often have too many. I agree with one of his basic arguments that the majority of an arts organization's resources should be allocated to serving its artistic mission and that administrative expenses should be limited to those that are necessary to support those related activities.
However, where our views depart is in his treatment of administrative expenses. Tom appears to view all of them through the same less–is-more lens. There are simply too many administrators bloating arts organizations, he is saying, regardless of what they are doing. But in my experience, this is an oversimplification. Administrative expenses are like cholesterol: some are bad and should be minimized, while others are good and should be maximized. And, to mix metaphors, a Goldilocks approach should be taken with administrative expenses calibrated to what is “just right” for the needs of each organization. One size does not fit all.
In my opinion, there are principles and parameters that should guide an organization’s thinking around administrative staff and related expenses:
1. Program-Related Staff: An arts organization that employs administrators to carry out program activities should count those costs as directly serving the artistic mission and therefore treat them as a program expense, rather than as an administrative expense. This concept applies equally to museum curators, staff responsible for education and community engagement programs, or programmers in performing arts organizations. Here the goal should not be to minimize these program-related administrative expenses, but rather to maximize them to the extent that they further the organization’s artistic mission. There should, of course, be limits on how many people are hired and the decision should, to some extent, be tied to the organization’s ability to generate reliable recurring revenue (both earned and contributed) rather than some arbitrary expense budget ratio. But consider the example of a talented curatorial staff that plans a superb museum show that not only furthers the institution’s mission but elicits favorable reviews and attracts many visitors. Cutting staff in this department to save money or meet some arbitrary goal of efficiency is clearly not in the long-term interests of the institution.
2. Marketing Expenses: As Tom Wolf makes clear, there can (or should) be a return on investment for marketing expenses, in terms of measurable increases in earned ticket or membership revenue. The marketing department should be held accountable for setting ambitious, but realistically achievable, earned revenue goals and developing marketing plans and budgets to achieve those objectives. While there should not necessarily be absolute limits on marketing expenses, they should be based on an appropriate, benchmarked ratio to earned revenue (e.g., 20% for larger budget performing arts organizations). One should also remember that developing successful marketing strategies with positive results takes time and investment in people. The return on investment will not be immediate and expenditures have to allow for the time lag.
3. Development Expenses: With fundraising expenses, the devil is in the details of how much is spent on each fundraising initiative. For organizations that are generating 90% of their annual contributed income from 10% of the donor base (a not unusual situation), a case can be made that some portion of the funds will be received regardless of what is spent on fundraising staff. Instead of setting fundraising expenses as a percentage of total contributions, a better way may be to evaluate how many staff are needed to steward relationships with the major donors. A direct ROI (return-on-investment) analysis can then be created to manage the research, cultivation, solicitation, and stewardship of the remainder of the donor base. Overall annual fundraising expenses should also be based on an appropriate benchmarked ratio to contributed revenue (this might be 20% to 25% for larger budget performing arts organizations but will vary depending on the type of organization, the nature of the donor base, and other factors).
4. Administrative Support Expenses: It is here that Wolf’s analysis of reducing staff levels may have the greatest merit. When he (and other people) rail about nonprofit arts organizations spending too much on administrative staff, they may be thinking of the back-office support functions, such as finance, human resources, information technology, and multiple levels of general administration. While these tasks are essential for any well-run organization, this is the one area in which I agree that they should be minimized utilizing some of the techniques advocated in the original blog. These general administrative functions should usually not consume more than 12% to 15% of an operating budget in larger organizations (though with smaller ones the percentage may have to be higher). But organizations spending substantially more than that should consider ways to reduce costs, either by outsourcing some functions or sharing the costs with other organizations that have complementary missions.
While most of an arts organization's expenses should always be devoted to serving the artistic mission, some portion needs to be allocated to providing the administrative support structure needed to ensure that artistic programs can be run effectively and serve the largest audiences. The challenge for boards and funders is to understand that there are different, nuanced standards and benchmarks that should be used to determine the appropriate levels for each component of those administrative support expenses. This may mean more staff in some areas and fewer in others. The trick is to achieve the proper balance.
Stanford Thompson: “For small and emerging organizations, many of which are led by people of color, building out a competent administrative staff is one of the keys to success. Small administrative teams are often not adequate to do the job.”
Your Team is Never Enough
By Stanford Thompson
In response to Thomas Wolf’s recent piece, I’d like to share my perspective as an arts administrator. For small and emerging organizations, many of which are led by people of color, building out a competent administrative staff is one of the keys to success. Small administrative teams are often not adequate to do the job.
I identify as a 35-year-old Black male who founded Play On Philly (POP), an afterschool music program in West Philadelphia, in 2010 after learning about the music education and social development program of Venezuela called El Sistema. I was trained as a professional trumpeter from one of the top music conservatories in the world, the Curtis Institute of Music, and spent one year after graduation in a fellowship program of Boston’s New England Conservatory (NEC) learning the basics of nonprofit arts administration.
When I was ready to start my program back in Philadelphia, I was fortunate to find a major philanthropist to provide a substantial donation to help us launch activities. The first year we served 85 students in grades 1-8 each weekday for 35 weeks throughout the school year, and for four weeks (half days) in the summer, and we presented 23 concerts with the students, primarily for their families.
We began with only two full-time administrators, 12 faculty members, and minimal dollars for other administrative expenses (concert production, grant writing support, instrument purchases and repairs, evaluation, marketing/PR, and teacher training). I thought it would be more than enough.
Indeed, I had thought running an afterschool program 4 hours a day would be the proverbial “piece of cake.” It would allow me plenty of time to keep my chops up as a trumpeter and perform in the evenings, and that we would easily strike gold each year since we launched with a six-figure donation. By the end of the first year, reality had hit home. I was forced to decide about my musical future and realized how challenging sustaining the beast would be. However, my biggest learning would be that running a popular program is different than running a sustainable organization. For the latter, one needs competent, well-paid administrators – a lot of them. Why was that the case?
Major donors were nervous about making sustaining major gifts without the proper governance structure in place. Recruiting amazing board members may not cost money, but running quarterly meetings, supporting five standing committees, and managing the needs of trustees is a tremendous amount of work. I needed help.
Major donors loved our work but needed to understand the efficacy of our programs. With an oversaturated marketplace of youth arts education and social development programs in the city, articulating how POP achieves these effects required me to oversee the work of an independent consulting firm that could handle a complex student research and evaluation project. A group of free local grad students working independently was insufficient.
As our popular program grew (200% in the first three years and 370% since we were founded), there were more phone calls to make, paperwork to process, and concerts to implement. We started on the cheap with volunteer and part-time staff, but our retention rates plummeted and the strained administrative team was quickly burning out.
As a young nonprofit leader often unfairly treated, I frequently had to work with costly consultants and engage in questionable partnerships to give assurances to our stakeholders who were unable to recognize their biases and unfair expectations that disproportionately affected me, my team, and our worthy organization.
If it wasn’t for my insistence to grow our staff and expand organizational capacity, we would not have been able to attract $20 million and engage over 2,400 youth since our founding. My team would not have been able to sustain their lives, support their families, and ultimately give tens of thousands of hours of work that we needed to log over the years.
Like I learned early on, “no money, no mission,” and ultimately those dollars had to go in large part to a growing administrative team. The challenges turned out to be especially real not only for us but for many other small, often emerging, organizations. It takes plenty of well-trained administrators to deliver on the mission.