Sunday, October 31, 2010

An Interview with Adam Huttler, Ex. Director of Fractured Atlas

Good morning.

“And the beat goes on………………………………”

Note:  The following interview with Adam Huttler, Executive Director of Fractured Atlas, is, I think, one of the better interviews I've done - thanks to two factors:  1) Adam is smart and insightful, and represents, I think, some of the best of the new thinking in the field;  and 2) he is refreshingly frank and doesn't parse his responses to the same extent a lot of us in the field do.  One of his attractive qualities seems to me that he is willing to take stands on issues and unabashedly defend his positions. 

The Interview:

BARRY: Your organization has grown very quickly. You’ve been quoted as saying that part of the reason for that explosive growth is that you were willing, early on, to provide services in areas others were not. Do you think others are now entering the areas of health care, providing fiscal sponsorship services, and some of the other things you do? And how does, or will, that affect how you expand your business operations?

ADAM: If your view of the competitive landscape is sufficiently broad and holistic, then you’ll never find yourself wholly without competition. Our programs face different levels and kinds of competition from different sources. For example, Fractured Atlas is the only arts service organization with a major liability insurance program, but there are commercial insurance brokers that consider us a serious threat and are competing aggressively for business from the arts community. Arguably the biggest competitor to our fiscal sponsorship program is the IRS itself, since the agency provides an alternate strategy (i.e. obtaining independent 501(c)(3) status) for soliciting grants and tax-deductible contributions.

That said, I’m deeply committed to the idea that we shouldn’t do anything unless we can do it in a way that provides substantially different or greater value to the field than existing alternatives. I’m not interested in “me too” programs. Hopefully that means we’re sufficiently self-aware and unsentimental to recognize when it’s time to close up shop because a program is no longer relevant.

BARRY: Whereas a great many of the national arts service provider organizations are still being led (and often largely staffed) by boomers or senior Generation Xers, Fractured Atlas seems to have a decidedly younger infrastructure. That seems to be one of the things that is attractive about Fractured Atlas to all generations. Is that by design?

ADAM: It’s true that the Fractured Atlas staff is ridiculously un-diverse with respect to age. It isn’t by design, but it’s clearly not a coincidence either. Our organizational culture is irreverent, technophilic, aggressive, and perhaps a bit cocky. That attracts a certain personality type that, while not limited to youngsters, does seem to skew that way.

BARRY: I note that there seems to be somewhat of a divide between the generations in fundamental thinking about any number of issues. For example, at the recent GIA conference, I found a concentration of reservation and suspicion about the National Capitalization Project in the younger attendees. Do you see wide generational shifts in thinking about the major issues facing the arts – and if you do, can you highlight some of those that seem particularly pronounced to you?

ADAM: Generalizations are always dangerous, but yes, I think there are some big differences in the way my generation and the baby boomers contextualize their work. The gap only gets wider when you start talking about the Millennials, etc. The biggest source of tension may be around how we define ourselves and the extent to which we operate in self-imposed silos. Andrew Taylor has described younger arts leaders as “tax status agnostic”, referring to their ability to fluidly move between the non-profit and commercial realms. I agree with that assessment, and would add that they also tend to be discipline agnostic, at least relative to their forebears. These kinds of foundational questions inevitably shape our dialogue about field-wide challenges.

BARRY: You’ve been on the record as critical of nonprofit organizations for failing to act like businesses, and for using the excuse (at least in part) of “mission trumps business considerations” for that failure. Can you elaborate on what you mean, and do you think that failure is, at its heart, an attitudinal problem that pervades the nonprofit universe psyche and culture, or is it a practical problem that nonprofit arts leaders by and large have too little training or access to training?

ADAM: Some non-profit leaders use mission as an excuse for inaction, inefficiency, or incompetence. In a capitalist society, non-profit organizations exist to provide goods or services that are considered valuable but that can’t survive without subsidy due to some kind of market failure. The word “mission” is ultimately a kind of shorthand for those inherently unprofitable objectives.

Of course, just because some activity meets the IRS criteria for charitability doesn’t mean it must be 100% subsidized by philanthropic support. On the contrary, non-profit organizations have a moral responsibility to be thoughtful and focused about how those subsidies are applied. There is a limited supply of charitable dollars out there, and to allocate them to activities that could be self-financing with a little creativity is wasteful and represents a lost opportunity.

Beyond that, there are important strategic reasons to emphasize earned revenue. Wherever possible, I want to align Fractured Atlas’s operations so that the folks paying for our services are the same ones benefitting from them. There’s no better way to test whether you’re providing real value to your constituents than to ask them to open their wallets. Artists and arts organizations rarely have disposable income, so they’re not going to spend their money on something unless it provides clear and compelling benefits to their work. If a program of ours is misguided or ineffective, we get immediate, painful feedback to that effect.

Mission-fulfillment and revenue-generation are both more effective when they’re aligned with each other. I appreciate that this isn’t always possible in practice, but it’s always a useful guiding principle. As non-profit leaders, we have a responsibility to be thoughtful and intentional about how we approach this stuff.

BARRY: Where do you think arts organizations can share business functions so as to cut costs and enjoy the efficiencies and economy of size, and where is that likely to result in artistic paralysis?

ADAM: Running an organization requires a mix of commodity and specialized resources. Commodity resources are one-size-fits-all and therefore mostly interchangeable. Email servers, bookkeepers, and office supplies all fall under this category. Specialized resources are things like artistic directors and custom software. They’re specific to the organization and much harder to swap or replace.

As an industry, we can realize economies of scale and other benefits by pooling commodity resources wherever it’s practical to do so. This can take a lot of different forms. Most of Fractured Atlas’s services are commodities, and we’re able to share the acquisition and maintenance costs across 14,000+ members. A more intimate model might involve several small dance companies sharing office space and administrative staff.

Occasionally you’ll see arts organizations try to share specialized resources, which in my view is almost always a mistake. If those same small dance companies try to share a development director, they’ll run into irreconcilable conflicts of interest, without actually seeing any scaling benefits.

BARRY: Why do you think there is so little attempt to share the functions that might so easily be aggregated and provide an economy of scale – e.g., bookkeeping / accounting / payroll / office space etc.?

ADAM: I think there’s a lot of interest in it, but there aren’t a lot of service providers. It’s tough to run a successful business when none of your customers have any money.

BARRY: Your core client base seems to lean more towards individual artists or entrepreneurs. Is the organizational membership rising as fast? Are you actively seeking a balanced mix with arts organizations? Most of your membership is New York centered and the rest is principally in larger urban states. Do you have a strategy for expansion into more rural areas at some point, or is the growth simply left to chance?

ADAM: The dividing line between individual artists and arts organizations is more fluid than it used to be. Fractured Atlas tries to be flexible enough to accommodate the various ways in which artists actually work. Many of our fiscally sponsored projects, for example, are one-time collaborations with a finite lifespan. As far as what kind of members we’re seeking… Right now it’s almost totally driven by word of mouth, so it’s a bit organic and random.

The urban vs. rural question is trickier. We need to do a better job of serving artists outside major metropolitan areas. That’s unlikely to happen anytime soon, though, unless we make a specific attempt to reach out to them. I’m open to suggestions on how that might work.

BARRY: You have launched what is still an embryonic Online Course offering – principally for artists. Do you see expanding that at some point to also offer courses for arts administrators working within organizations? To what degree do you see training or professional development as a bigger part of Fractured Atlas’ offered services in the future?

ADAM: Fractured U. – our online course offering – is still a work-in-progress. We launched it a while back with a specific business model in mind that hasn’t yet panned out. We made a six-figure investment in researching best practices in online pedagogy and designing a software application to support them. The software itself is a great foundation for a web-based learning platform. The trick right now is getting the content. Fractured Atlas can’t be the sole or even primary producer of online courses. We’re talking to a number of service organizations and other groups with professional development programs about how they can reach a bigger audience by distributing their material online at Fractured U. I’m not precious about the branding, so we’re open to white-labeled mini-portals or anything else that makes sense.

BARRY: What about research. What kinds of research do you see Fractured Atlas getting involved with and to what purpose?

ADAM: Our research strategy is closely tied up with our technology strategy. We’ve been working on a new software system for cultural mapping and analysis called Archipelago. The rough idea is that a variety of web-based applications each serve a different community of users in specific ways (e.g., one application might provide a searchable database of rentable rehearsal studios, while another aggregates event listings on a central calendar). As a natural side-effect of their use, the applications collectively generate a ton of useful data that can be aggregated into a shared backend repository. The information is anonymized as appropriate, but then it can be sliced and diced in a million different ways. We see utility for academic researchers, institutional funders, policymakers, and others who are interested in a 30,000 foot view of the cultural landscape.

I’m very interested in a research tactic that might be called “organic data collection”. There’s some real data entry fatigue in the field right now. Every day we’re being told about new surveys or places where we have to record and update information about our organizations. It’s impossible to manage it all, and the data itself quickly becomes stale. The irony is that we’re creating gobs of good data all the time as a natural byproduct of our daily business operations. The challenge is to capture that information, aggregate it (anonymously where necessary), and distribute it in ways that make it useful. Done right, I believe we can end up with more data, of a higher quality, and with a much shorter time lag than currently exists, while actually reducing the data entry burden on the field.

There’s also a network effect here. When data from lots of different sources are connected, each individual data set becomes more valuable because of the ways in which it can be cross-referenced and mashed up with all the others. We can start to explore more complex metrics for tracking the health of artistic ecosystems holistically. This all lays the groundwork for the kinds of robust analytical resources that other fields, like education, transportation, and health care, have enjoyed for decades.

BARRY: Research and data collection / analysis is the one place where disparate sub-sections of the arts field (from funders to discipline based organizations) have come together for real collaboration. Do you think this continuing emphasis on that one area of cooperation is inhibiting working together in other areas, or do you think this emphasis is a transitional phase that will ultimately facilitate and broker more (and deeper) collaborative efforts in other areas in the future?

ADAM: Authentic collaboration is very hard. All of the challenges we normally face within our own organizations around communication, timelines, resource management, or goal-setting are exponentially more difficult when the work stretches across organizational boundaries. The good news is that you get better with practice. You also become smarter about identifying future opportunities for collaboration. So my instinct is that some of these wonky research-centric efforts are just a first step. Hopefully we all have the intestinal fortitude to stick with it, in which case we’re setting the stage for even more productive collaborations in other areas in the future.

BARRY: How else do you see Fractured Atlas helping artists and arts organizations better run their businesses in the future? What plans are on your drawing board? Where would you like to take the organization in the next two years?

Do you see an expanded role for Fractured Atlas in the technology area beyond simply providing consulting services to individuals or individual organizations – something that might impact the whole sector – and what might that be?

ADAM: Historically, Fractured Atlas has used technology as a tool for delivering fundamentally low-tech services. By integrating our back office systems and making all of our services accessible from our website, we’ve been able to serve a huge community of artists and organizations with a relatively modest staff and budget.

Going forward, I expect that technology will increasingly be something we provide as an end in itself. We’ve got two big projects in the cooker. One is the Archipelago cultural mapping software that I mentioned. The other is ATHENA, our open source software platform for the cultural sector. In the first quarter of 2011 we’re planning to launch the first versions of ATHENA Tix – an event ticketing system – and ATHENA People – a donor/patron-management tool. Down the road we’re looking at ATHENA components for everything from social media management to non-profit accounting. All of these tools will be available for free as open source downloads. We will also provide cloud-hosted, “software-as-a-service” versions for organizations without the capacity or interest to manage their own complex IT infrastructures.

BARRY: On your website you claim: “We can also help institutional funders, policymakers, and others refine their 30,000 foot view of the field.” How do you do that?

ADAM: This mostly comes back to Archipelago and the benefits I mentioned earlier. Over time, we believe these tools can provide unprecedented breadth and genuine nuance in our collective understanding of the cultural sector.

BARRY: Do you find the funding and policymaking sectors open to outside help in refining their rarefied view of the field, or do you find them still insular, preferring to heed their own counsel exclusively?

ADAM: Can I plead the fifth on this one? In all honestly most of the folks I talk to from those worlds are eager for more, better data that can inform their decisions. I don’t expect them to substitute my judgment for their own, however. Their conclusions are always going to be informed primarily by their own experience, insights, and biases. But I’m a big believer in the power of information. It’s hard to hold on to your insular perspective when data that undermines it is staring you in the face.

BARRY: Your business model claims to be based on earned income, though you do allow that new program development and expansion of existing program scope is dependent on outside (government / foundation) funding. Is that model replicable for a performance arts organization with ever increasing fixed artistic and production costs coupled with dwindling audiences?

ADAM: Yes, I believe this philosophy can be adopted by almost anyone with a little creativity. The first step is to clearly distinguish between start-up/ramp-up costs and ongoing operating costs. For a performing arts company, this could be conceptualized as the difference between the resources required to develop a new work vs. the costs of running the show. I know it’s hard to survive on ticket sales, especially if you want to appeal to young and/or diverse audiences, but I refuse to believe it’s impossible. The arts community is starting to get a lot more sophisticated about its approach to marketing and audience development. We’re not yet in the same universe as Proctor and Gamble, but we’re making progress.

I’m going to get into trouble here, but my personal belief is that the tension between aesthetic integrity and popular appeal is overblown. All too often this ostensibly irreconcilable conflict serves as a convenient excuse for vapid artistic pretension, incompetent marketing, or both. Shakespeare was the most popular playwright of his day, and he sold a lot of tickets.

BARRY: Is the current revenue stream model of the typical nonprofit arts organization – consisting of earned income, government support, foundation and corporate support, and individual donations – still viable?

ADAM: It can be, sure. Diversification is really important. Having a mix of revenue sources – different products or services, different types of customers, etc. – makes you more resilient in the face of change or crisis.

BARRY: In considering advocacy as part of your organization’s portfolio, you say: “Policymakers shouldn't be curators, hand picking artists and organizations to support based on perceived aesthetic merit. Instead, it's the government's responsibility to ensure a healthy infrastructure in which creativity and culture can thrive.” Does that mean you oppose the NEA and state and local arts agency model that allocates grants based on peer panel review of artistic (and other) merit? Where, ideally and specifically, do you think government money can best be allocated to ensure that “healthy infrastructure”?

ADAM: I’m not opposed to public funding for individual artists or organizations, but I don’t see it as the primary role for government to play. The NEA’s budget is $160M or so and it’s a brutal fight every year just to prevent Congress from making cuts. It’s easy for ignorant opponents of arts funding to cherry pick controversial artists who’ve received funding and use them as wedges in the culture wars. This is a grim slog of a fight, and even when we “win” the rewards are pretty skimpy.

Meanwhile, policymakers – on both a local and national level – have countless other levers for impacting cultural vitality. Zoning laws can determine whether urban cultural enclaves remain dynamic hubs of creativity or gentrify into sterile swaths of Starbucks and bank branches. Immigration rules can facilitate or inhibit international cultural exchange. Even if you’re only interested in funding, then consider that the NEA represents less than 1/20,000th of total federal spending. We need to take a more holistic view in which the arts play a role in projects funded by the Department of Housing and Urban Development, the Department of Transportation, or the Department of Homeland Security.

BARRY: The calculation of the total amount of money spent (or available to be spent) by the federal government has always been skewed by the arts sector so as to characterize it on the lowest possible end. If you add the Humanities, Smithsonian, and Museums to the NEA, plus all the other funding that might conceivably be counted as arts support from other departments and agencies (Transportation to HUD et. al) -- not to mention factoring in state and local support – and the total is considerably higher. Moreover, the “potential” for substantially larger pools of support is arguably there IF we had more political clout. And don’t we need to be more politically savvy and organized if we are to be able to pull some of those other “levers” you are talking about?

ADAM: You haven’t even mentioned the biggest public subsidy by far, which comes indirectly through the tax code. The federal government forgoes something like $5B/year in tax revenues to incentivize private philanthropic support of the arts. But yes, we’re in agreement; it’s not all about the NEA.

You’re also correct that we’re politically impotent as a field right now. Fixing that is not going to be easy, but getting organized and nurturing young leaders who are savvy about this stuff is a place to start.

BARRY: You also state (on advocacy) that: “Rattling our tin cup for more government funding is no longer enough.” Yet you haven’t formed a sister 501 (c) (4) organization, nor started a PAC or other mechanisms that would allow you to take a more aggressive role in moving arts advocacy from rattling that tin cup to joining the ranks of other special interests, both public and private, in developing and using real political clout – based on candidate support. Why is that? Is a more active political agenda in Fractured Atlas’ future?

ADAM: For me, the tin cup metaphor is less about flexing our collective muscle and more about adopting a broader frame for thinking about the arts and public policy. Having said that, there are a lot of ways we can approach policy questions from a position of strength rather than neediness. The arts have a lot to contribute to society, and we ought to start acting like it.

As far as 501(c)(4)s and PACs go… Remember that there’s no prohibition against 501(c)(3) organizations engaging in lobbying activities. We can’t directly support or oppose specific candidates, but we’re legally allowed to do a lot more than many of us realize. Fractured Atlas is already pretty aggressive on this front, and I see us only being more active in the future. We’ve explored 501(c)(4) and PAC options and we may go that route at some point, but there’s no concrete need at the moment.

BARRY: Actually, we can legally and directly support or oppose candidates, and contribute money to them as well - we simply have to create the right mechanisms to do so (just like any other special interest group) – from 501 (c) (4)’s to PACs and beyond. Some have argued (me included) that the nonprofit arts sector (by taking advantage of its ability to do performance benefits to fund its political activities) ought to be one of the most powerful special interest groups on the playing field – with real political clout that might not only help us to obtain more funding, but pass diverse legislation on all the levels as you suggest – from tax laws to zoning regulations. Yet we do not. I continue to be somewhat dismayed that we don’t move towards that direction. Why do you think we continue to cling to the (false) notion that we aren’t permitted to give money directly to candidates we support or oppose, and why aren’t we interested in developing real political clout?

ADAM: I suspect this is just about semantics, but my point was that 501(c)(3) organizations themselves are not allowed to support or oppose candidates. Yes, if you establish a sister organization with a different tax status, your options widen considerably. Even then, however, the laws are very strict about coordination between the two companies. I think some folks are simply intimidated by the legal complexities of something they see as outside their core mission.

I can tell you that I’ve personally made a few attempts at political fundraising, mainly drawing on colleagues who I’ve met in the field, and it’s not easy. Not only do we not have a lot of disposable cash lying around, but I’ve also encountered ethical resistance based on the idea of an implied quid pro quo. That said, clearly there are some people who get it, who are politically pragmatic, and who have the resources or connections to make something happen. To anyone reading this blog who sees him/herself in that description and wants to start a PAC: give me a call.

Thank you very much Adam.

Have a great week.

Don’t Quit!