Here we go again. Another great arts group has been hit by another editorial hit piece, by another media company whose ideas of “fact-finding” begin and stop at the management’s press release.
This time, this bit of kabuki theater is playing out in Pittsburgh. The musicians for the Pittsburgh Symphony Orchestra—one of our nation’s great ensembles—are currently on strike. The issues involved mirror those of several other orchestra labor disputes; the management of Pittsburgh Symphony, Inc. (PSI) has demanded steep cuts to the musicians’ pay and benefits, and insisted on reducing the size of the orchestra to a level it feels is “sustainable.”
Recently, Pittsburgh Tribune-Review published an editorial that purports to explain the situation to its readers, and advocate why it feels the strike is a lost cause.
This editorial is hugely problematic. I’ve lost all patience for media outlets who mindlessly toss out pieces like this, which are based on incorrect assumptions, false information, and a reliance on “experts” who seem to have been consulted for their political views rather than any expertise in their fields.
For the record, I’ve worked in nonprofit administration—primarily arts nonprofit administration—for many years, and currently serve as Board President for an arts group here in Minneapolis. I’ve also had a front-row seat to several similar orchestra strikes, lockouts, and contentious contract negotiations.
As such, allow me a few words of rebuttal on this unfortunate editorial.
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“[W]hen it comes to classical and pops symphonic music and the contemporary orchestras performing it, that also requires money. Lots of it. And a large and steady stream of it from patrons attending performances. Which is something the Pittsburgh Symphony Orchestra (PSO) does not have.”
How curious that this editorial takes the position of the PSI—one party of this dispute—and presents it as an inalienable truth: there simply is no money. Why? This is a key point of contention between the parties.
Is there any proof that this statement is actually true, and not just an assertion that is advantageous to the PSI’s position?
In reviewing the PSI’s materials, it seems that it has done nothing but presented a forecast for future revenues. This closely mirrors the actions taken by the Minnesota Orchestra management during its 16-month lockout here in Minneapolis. Here, the PSI presents a financial projection showing the most dire possibilities; essentially it uses wildly pessimistic assumptions to assert that future deficits will cripple the organization.
But again, this is only a projection, and the deficits in question exist only in theory. This isn’t a case where the organization is in danger of imminent liquidation, nor is it a case where the PSO requires immediate bankruptcy protection. And if bankruptcy isn’t imminent, why is the PSI advocating for a radical organizational overhaul right this very minute? It sounds like the medicine is worse than the disease, and it’s hard to avoid the conclusion that this financial “crisis” is simply being manufactured right now as a labor negotiation technique by the PSI.
So back to the editorial. Why is the Tribune-Review presenting the idea that the PSO doesn’t have any money… as a fact? At the very least, this statement needs a qualifier, to read something like: “The PSI argues that money is something the PSO does not have.”
“The PSO has canceled another series of concerts — through Nov. 18 — because of a protracted strike by unionized musicians.”
This statement is true, but minimizes an important point… the management cancelled the concerts. This is curious, in that when the musicians of the Philadelphia Orchestra went on strike (on the same day as the PSO musicians), Philly’s management met with them and negotiated a settlement in 48 hours.
It bears emphasizing that the PSI responded very differently, and is clearly choosing to preemptively cancel concerts rather than negotiate. It also bears emphasizing that this difference in attitude and actions is not the fault of the musicians.
“But even with a marked increase in ticket sales, scholars at the Allegheny Institute for Public Policy suggest the PSO cannot be sustained without a large and regular infusion of money and changing the way it does business.”
Wait… is the Tribune-Review stating that ticket revenues have risen? Or could rise, if the PSI put more energy into making it happen? Doesn’t this prove my (and the musicians’) point that the PSI’s cries of financial doom are overblown?
“‘Over the last five fiscal years, 2011 through 2015, the underlying problem of operating revenue falling well short of covering operating expenses has seen little or no improvement,’ say Jake Haulk, the Allegheny Institute’s president, and Frank Gamrat, the institute’s senior research associate.
The orchestra’s operating deficit has been at or slightly above $20 million for each of the last five years. That’s even with well over $2 million annually of operating revenues (20 percent in 2015) coming from government grants.”
Where do these numbers come from, exactly? In the press it’s been reported that the PSO could face “more than $20 million in debt over the next five years.” Not $20 million each of the past five years. Even the Tribune-Review itself reported that “Despite exceeding budget goals for the 2015-16 season in earned and contributed income, the orchestra will post a $1.5 million deficit for the season ending Aug. 31.” I mean… the whole budget of the PSO is $31.8 million.
“Digging into audit reports, the researchers uncovered numbers they consider to be ‘surprising if not shocking.’
To wit, ‘revenue from orchestra performances is an unexpectedly small share of total operating revenue and is nowhere near enough to cover the cost of the orchestra,’ say Haulk and Gamrat.
The operating revenue shortfalls to date have been covered mainly by contributions to the annual fund and by tapping the orchestra’s endowment and investment income.”
How curious. How is it that the Allegheny Institute can so fundamentally miss the point of what a nonprofit is?
This statement is absolutely jaw-dropping.
To the august members of the Allegheny Institute, let me share some knowledge with you. The PSO is a 501 (c) (3) not-for profit organization, as recognized by the IRS. That means the organization is a nonprofit—in structure, it is like the Humane Society, American Red Cross, or Habitat for Humanity. Like every other non-profit in the country, its costs will be higher than its earned revenue. That is why it is classified as a 501 (c) (3) nonprofit. By definition, the PSO will engage in fundraising activities to supplement the revenue coming in from endowment, ticket sales or other sources of earned income. Just like every other non-profit in the country. This is not a failure of its business model… it is the PSO’s business model, as approved by the IRS.
But I understand that for many people, the world of classical music is somewhat arcane… perhaps another example will help clear things up. Let’s take Habitat for Humanity, another nonprofit. Just like the PSO, Habitat for Humanity’s earned income does not cover all its expenditures, and it depends on charitable donations and volunteer labor to fulfill its mission of building homes for families in need. Yes it could bump up its earned revenue—the quickest way would be to sell the homes it builds at market prices, rather than give them away. Problem solved! Then it would be able to buy its own supplies, and pay its workers rather than depend on volunteers. But in doing so, it would stop being a mission-based organization, and simply become yet another real estate developer. Plus, there would no longer be any reason to donate to it, so it would have to completely restructure its budget to compensate for the loss of that revenue stream.
In short, it certainly could reshape itself to rely on earned income… but it would be an altogether different organization.
Let me be clear. Organizations like the PSO and Habitat for Humanity are businesses, but they have to be recognized as nonprofit businesses. Nonprofits stand apart in that they are designed to meet a critical social need, or provide an important service to the community. They are driven by a stated mission, and their success or failure is ultimately determined by how effectively they live up to that mission. Yes, there absolutely is a business and financial aspect to doing this, but the business and financial strategies and decisions are always in service of the outcomes, not the profits. Thus nonprofits are fundamentally different from for-profit businesses, both in outlook and financial structure.
Which is why it’s so bizarre that the Allegheny Institute tried to make this statement about the PSO. Is it unclear about what fundraising is? Is it suggesting that a nonprofit abandon using donated income—a revenue stream it is legally entitled to use—on some kind of moral grounds? Is it somehow advocating that PSO renounce its 501 (c) (3) status and become a for-profit company?
More to the point, why is the Tribune-Review even giving this ridiculous position the time of day? I have to believe ideology is at play, on both counts… it’s the only reason to publish such willful mendacity.
“‘In sum, the PSO is caught up in a long-term trend of fewer people attending symphony concerts,’ Haulk and Gamrat say.
Based on what evidence?
As I’ve written before. The notion that fewer people are attending symphony concerts is demonstrably false… and I’m growing tired of nonprofit leaders who continue to propagate this falsehood. Many groups are reporting record years in terms of ticket sales and donations. Douglas McLennan form ArtsJournal has posted a list of recent successes. And, outgoing International Conference of Symphony and Opera Musicians (ICSOM) Chair Bruce Ridge has recently provided a run down for last year:
- The Atlanta Symphony announced that it ended the season with a surplus, and raised $13 million
- The Arizona Opera exceeded its fundraising goals
- The Buffalo Philharmonic saw record season ticket sales and subscription revenues for the third consecutive year
- The Charlotte Symphony received a $2 million gift
- The Cincinnati Symphony raised over $26 million and signed a new contract that adds 15 new musicians over the next five years
- The Dallas Symphony achieved a balanced budget and received a $5 million gift
- The Detroit Symphony raised $1.4 million in one evening
- The Houston Grand Opera exceeded its fundraising goal, raising almost $173 million
- The Houston Symphony received a $5 million donation, the largest gift in nearly a decade
- The Indianapolis Symphony saw ticket sales increase 15%, and subscriptions rose 24%.
- The Memphis Symphony received a $1 million gift for education programs
- The Minnesota Orchestra received $6 million in special gifts and embarked on a historic tour to Cuba
- The Nashville Symphony set fundraising and ticket sales records
- The Omaha Symphony saw record attendance
- The Oregon Symphony set records for ticket sales and contributions, and its gala raised a record $700,000
- The Pacific Symphony’s gala raised a record $1.6 million
- The Richmond Symphony received a $1 million gift for outdoor concerts
- The Rochester Philharmonic reported a 19% increase in single ticket sales
- The St. Louis Symphony received a $10 million gift
- The St. Paul Chamber Orchestra saw its highest attendance in 20 years
And for another perspective, the 2016 Giving USA report shows that total charitable giving in 2015 was a record $373.25 billion, which averaged out to more than $1 billion given each day. And a key finding of that report is that contributions to the arts have grown wildly over the last five years, with record growth in 2015.
So again, plenty of people all over the country are cheerfully attending classical concerts, and giving orchestras/opera companies money. If the leaders of the PSI are convinced it’s impossible to succeed, perhaps they should make way for others who can.
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So once again, another hit piece consisting of faulty premises, incorrect data, specious statements, and ideological blinders.
This is not just absurd, it’s obscene.
The PSO has had a glorious, 120-year run. In doing so, it has survived two world wars, the Great Depression, and more. It has done so because of outstanding community support, and the hard work of thousands of people. It remains to this day a community treasure.
So why is the PSI so willing to throw in the towel… right now? Why the radical plans to restructure the organization? On a larger scale, why does the PSI suddenly believe the PSO is irrelevant, and must somehow have to be ripped apart right this very minute? Especially when so many peer organizations are thriving?
And why on earth does the Tribune-Review seem to be cheering the destruction on?