Peter Zehren | Nonprofit Management and Leadership
When faced with financial ruin our leadership skills are challenged; especially navigating integrity and avoiding mission drift. At a Milwaukee Press Club luncheon recently, I saw such strength.
Milwaukee Symphony Orchestra (MSO)President and CEO Mark Niehause explained how his organization is moving forward in light of a recent announcement of the urgent need to raise $5-million to stay afloat.
Failing to stay above the waterline for the past two seasons, MSO major donors pulled back and demanded a plan in August. Niehause has been meeting that demand internally, and now has taken the message public. His thoughts on facing this biggest leadership challenge are worth examining.
Don’t Just Cry Wolf
The MSO did not just throw up their hands and say they needed money. First, Niehause says, internal planning trimmed both programming and staff areas.
Musicians made concessions in their contracts. Performance selections were made requiring fewer instruments and the orchestra has been pruned to 96 members.
The leadership lesson: first look for internal efficiencies and ways to trim the budget. Asking for help from the public has more credence once you’ve cut the fat.
The Cash Flow Question
Niehause is not the first CEO to face cash flow problems during these trying economic times. Even as pledges come in, the crisis continues with available funds to make payroll.
Understanding financials is essential when leading an organization, or even a department. Liquid assets and cash on hand are essential parts. Niehause readily admits, MSO has not had a successful capital campaign to shore up finances in the last four attempts.
As leaders we can succeed in balancing the budget yet loosing the store if we’re not aware of operational cash flow needs.
Quality and Integrity
Niehause presented a clear plan of where money needs to be spent to face the crisis—marketing and visiting artists. It’s a question of quality, bringing in top names to perform concerts people will want to see; and then, “getting the word out.”
MSO’s past cuts in marketing have hurt their ability to draw new support, according to Niehause. Although it appears the MSO has no problem filling seats, he sees marketing as a key component to filling the funding gap.
Pressures Beyond Our Control
The head of the MSO was quick to pull out his box of four outside reasons the organization is strapped:
- restrictions of a shared venue (Marcus Center)
- lack of a sizable endowment
- pension plan obligations
- cuts in arts funding (UPAF)
Nonprofit leaders know diversifying funding is key to stability over time. Yet, for many, dependency on government funds, which continue to be cut, has been disastrous. (This is even more of a challenge in the social service sector.)
Corporations are not immune to operational space issues either. As leaders, it is important to keep a finger on the pulse of all these areas from program needs, infrastructure, funding and future obligations.
Leadership Lessons
Perhaps is communication the most interesting lesson to be gleaned from the MSO. How you shape the story about your need can make a huge difference.
Although Niehause readily admits major funders demands pushed the internal changes, he has done the restructuring to bring efficiencies before going public. The image projected is a proactive organization addressing the problem, not a desperate pea for survival without a plan.
A leader should be on top of problems before they happen. Milwaukee loves the MSO and even at the luncheon a text came in from one of six top corporate funders. But how did Niehause not see this crisis? Why did his funders have to pull donations for the turn around?
Further, as the panelist from WUWM’s Lake Effect asked, what changes should be made to future fundraising models? No real answer was given. A leader continually searches for innovative, new methods.
How would you face this biggest leadership challenge?
