Thu Oct 9 2008
[Editor’s note: This story has been expanded with online bonus content.]
Executive director, MATA Festival
What’s your initial take on the Wall Street meltdown?
I think we’re going to see a lot of scaling back, and unfortunately I think the result will be a lot less risk-taking. I mean, MATA is an organization that supports young composers and contemporary music, and for the larger institutions like Lincoln Center, I think they’re going to be less likely to take risks on younger people, less likely to be more adventurous in their programming. It’s a shame because that’s usually what revitalizes an art scene is taking a risk and invest in the younger generation.
How’s your board reacting?
We do have a board of directors, but no one really knows what’s going to happen. We have a plan A, B and C, but we have a commitment to the composers we commissioned for the season and to the performers we employ, so they’ll go on no matter what happens; we’ll find a way to do it. After September 11, we entered a similar crisis and we were able to bounce back from that, so I feel that if we can do that, we can do anything. Even when the economy is good, we’ve always kept our prices low because we want to make this music available to as many people as possible. Ironically, the audience will see little change in MATA.
Have you already observed a change in mood in your field?
I think the financial crisis more than anything creates a very dark mood, so even if we’re just asking people for a little bit of money—because we’re so small, all donations go a long way—but even $100 or $150, people are not in the mood to spend money, even if they can. It creates this rippling effect. We have a benefit on October 11 and we’re hoping that people hold through for it, but we have seen a drop-off in ticket sales as a direct result of the timing.
And your benefit is pretty affordable…
Yes, but getting this invitation a week after Wall Street collapses, people are not even going to look twice at it, unfortunately. Artists are used to having a hard time with money [Laughs]. I’m confident. I’m inspired by the fact that there’s more composers moving to New York now than ever and that will never stop, and artists will never stop making art, and young composers will never stop making music—there will always be a place for our organization. The only difference is people are going to stop moving to New York to do that. A lot of my friends have already moved to Philly, to Berlin, to Vermont, to Baltimore. I feel like every week a friend of mine is leaving New York. It’s not like they’re going to stop making art, it’s just that they don’t need to do it in New York anymore. My hope is that at least rents won’t continue to go up every year at the ridiculous rate that they’ve been increasing. The upside is that in this aspect of their life, artists can be more stable. The financial crisis is also going to force New York to take a good, hard look at how the arts are funded. It’s a flawed system and it’s a very fragile system. It doesn’t leave room for small organizations like MATA to bounce back easily and to grow, even when the economy is healthy. We’re very dependent on sources of funding that are not that stable.
How do you think this crisis rates?
I became executive director about a year ago, and I moved to New York about two and a half years ago, so this is my first financial crisis [Laughs]. I’m a financial-crisis virgin! I remember Lisa Bielawa, one of the founders, and Philip Glass, telling me what it was like after September 11, that there was a huge drop in funding. But the good thing about being small is that you’re flexible. The upside is that the music community itself will be stronger because artists will stop depending on foundations and will try to do more themselves with independent labels, independent publishing companies. At this point, we have nothing to lose. But I’m optimistic in the end—people will never stop doing what they do.
NEXT: Marianne Lockwood President and executive director, Orchestra of St. Luke’s»
President and executive director, Orchestra of St. Luke’s
What do you think is going to happen with this economic downturn?
There will be a substantial impact, and most organizations will have to retrench financially. But always in times of stress, the essential spirit of the arts asserts itself and most artists and arts organizations find a way to continue working, to continue providing their programs to the public.
What do you think will be the impact on St. Luke’s?
Over the past 34 years, it’s proven itself remarkably resilient. It has continued on a trajectory of stable growth, even in times of economic stress, and over the recent past has been able to strengthen its financial position by building an endowment. Essentially, its operating model, which rests on zero-based budgeting, responds to economic ups and downs in a timely and prudent manner. This has served the organization well in the past, and I’m confident it will enable us to weather the current storm. One could argue theoretically that economic downturns force organizations to reassess and find ways of operating more efficiently, and, to some degree, that’s true. Nonetheless, going through that process is difficult and inevitably puts strain on the organization. Is the hypothetical benefit worth the actual cost? That’s a really tough question.
Will there be an impact on the audience?
Inevitably, economic downturns affect audience size negatively. I think we will see fewer people attending performances over the next year or so, but we have to understand this not as a threat but a challenge. Yes, it’s difficult economically, but at least for us, our tickets have always been inexpensive by market standards, and we intend to maintain that policy, which I think helps us in times of economic downturn.
Any sense of what lies ahead?
Since St. Luke’s was formed in 1974, we’ve weathered three economic downturns, and throughout that whole period, we’ve continued to grow. Right now, it’s too early to know the full magnitude of this crisis. St. Luke’s is more stable financially than it’s ever been; that’s a big plus. But if this crisis evolves badly, and we end up in a long economic decline, it’s going to be terribly difficult, perhaps more challenging than anything we’ve had to face up to this point.
NEXT: Clive Gillinson Executive and artistic director, Carnegie Hall»
Executive and artistic director, Carnegie Hall
What do you think of this financial crisis?
The situation as a whole is very worrying for everybody. I don’t think anybody has a sense yet of what the outcome is going to be. All we can do is run our business in the best possible way we can see. I suppose the first thing it’s important to say is that no matter how tough and difficult the economic times are, it doesn’t in any way affect the role the arts need to play and have a responsibility to play in people’s lives. If anything, they become more important in challenging times.
Can you tell me a bit about Carnegie Hall’s budget and how you use the endowment?
What we do with the endowment is we take 5 percent a year on a regular basis, even when it makes more than 5 percent. Which means that when times are tough like now and it might come in below that, you still have the ability to take out 5 percent because you’ve never taken more than 5 percent when you could have. It’s really important that one manages that totally responsibly so one is always as a sustainable and long-term source of funding, and one is never encroaching on that discipline. And that is what we’ve done in the lean years when the investments have come in lower than 5 percent. On the corporate side, what tends to happen in the arts is that there’s usually a bit of a time lag in terms of economic climate. In general terms, the decisions taken now will affect the arts later on. In broad terms, a lot of this was signaled, so when we did our budgeting for this financial year, which runs from July 1, 2008, to June 30, 2009, we were very, very conservative on the assumption that it was going to be tough time.
It’s just striking to me how responsibly arts organizations are run. Wall Street should look at them for ways to run a business well.
There was a board member, a very successful businessman, who once said to me, “I cannot believe the margins within which arts organizations have to run themselves. They have such a narrow margin. You all have to be so rigorous and so disciplined in your financial management. There’s many big companies who don’t have to work on such tight margins.” He thinks people underestimate the skills needed to manage in the arts. The other thing is, if we left ourselves a bigger margin of safety, we would then be compromising on what our capacity was to do extraordinary things. There’s always a sense in the arts that it’s all about creating the most extraordinary possible experiences for people. If you play it safe, you won’t be taking any risks and you won’t be doing anything that’s worthwhile at all. So we do have to live under tremendous discipline and rigor in that way.
City Hall has really recognized the importance of the arts scene for the city’s health in the past decade or so.
One of the reasons New York is possibly the greatest city in the world is because of the extraordinary cultural life. That’s the reason people from all around the world come to New York. And it’s not just a magnet for tourists, it’s a magnet for talent in every way. A truly great city utterly depends on remaining a magnet for talent in every way, and that can be artistic but also business. So yes, I think the city genuinely recognizes that and has reflected that in its attitude toward the arts.