Substantial Change Comes From Within

Diane Ragsdale has an extremely interesting post today related to an earlier set of posts she made two years ago about coercive philanthropy in response to change of direction the Irvine Foundation was taking in their funding philosophy.

She notes today that many of the arts groups the Irvine Foundation had traditionally supported did not shift themselves toward the new direction the foundation was encouraging arts organizations to go. She says:

My view, in a nutshell, was (and still is) this: While the Irvine Foundation may have been justified in pursuing a brave new strategy, its grantees were also justified in rebuffing it. I wrote:

Irvine appears to be interested in bringing about a kind of diversity (i.e., change) in the arts sector we don’t often talk about: aesthetic diversity. … However well-researched and justified, Irvine must recognize (and I think it does) that its strategy is out of line with the missions of a majority of professional arts organizations, which were formed to present work by professionals for audiences that come to appreciate that work, not make it. … Irvine needs to recognize that it is endeavoring to coax organizations into uncharted territory. It wants to coerce a change that many cannot make, or do not want to make.

We often speak of arts organizations bending over backwards and stretching their missions and activities in order to make themselves eligible to receive funding so it was of great interest to me to read about arts organizations who were not doing so even though it might be significantly detrimental to their finances.

In one of the posts Diane made two years ago, she talks about the  long time period required to make the substantial change of the type the Irvine Foundation is signalling versus the impatience of most foundations.

She uses the example of Centerstage Theater in Baltimore which made a focused commitment to do a better job of serving the city’s 67% African American population. They initially lost subscribers and supporters before eventually replacing them in the 10 years it took to fully realize this vision.

Ragsdale suggests that substantive change only comes when the leadership is behind it, not when the funding philosophy shifts.

I seriously question whether funding organizations to make them change works. Has any organization that was reluctant to change made substantive long-term change because of a grant? I suspect any change that happens probably has more to do with leadership, other sources of income, and an intent to change that was already solid before the grant arrived.

And when change fails to be manifested? Well, I would wager that a majority of foundations perceive that organizations are at fault in that case (not the grantmaking strategy). And why wouldn’t they? Organizations write proposals in which they promise to change themselves in dramatic ways for ridiculously small amounts of money and over unreasonable periods of time. They lie about what they can do. They choose to do this to get the money. Foundations choose to believe these lies because it’s convenient to believe that it’s possible to change the world in 3-5 year cycles..

In her post today, she provides a insightful illustration of how this manifests. (To understand the reference to moving diagonally across the box, you need to scroll to the Ansoff Matrix graphic in her post.)

If a business is doing well, then (from its perspective) the best strategy is to continue to create the product it knows for the market it knows (market penetration). However, when that market is in decline (and one could argue that this is the case for many professional arts groups at the moment), its least risky move is either (a) to develop new products for existing markets (product development), or (b) to develop new markets for existing products (market development).

Asking arts organizations to develop new products for new markets sends them diagonally into the box marked diversification and is a high-risk move; there can be a significant chance of failure. And while Irvine might be willing to underwrite some of the financial risks associated with experiments in this realm, it can’t underwrite the strategic, operational, compliance, social, and psychological risks associated with such changes—organizations need to be ready, willing, and able to bear these on their own.

This section of her post really helped clarify some fundamental concepts of business strategy for me. It made me realize that when there is a discussion about the need for live performance organizations with middle to older aged audiences  to develop things like video based entertainment in order to engage younger groups, what is being advocated for is a risky proposition requiring a commitment to endure challenges on all the fronts she lists.

The efforts of Centerstage Theater illustrate that even implementing the changes required to develop new markets for the existing product may entail some of the same risks she mentions.

There are many other related issues Ragsdale addresses so the whole post is worth a read.

I realize I should mention her current post is in reaction to a report on a recent study the Irvine Foundation engaged in. Even though Ragsdale is critical of some aspects of it, my general impression is that the Irvine Foundation may be in it for the long haul with their new focus given they have committed to gathering data and studying the issues. Though I guess we will see where things stand in 8 or more years.