Fiscal responsibility should be the guiding light for everything. Personally, being on a budget is the key to living your life to the fullest by knowing how much is coming in annually, what your fixed costs are, what you have left to play with and how much you want to put away. Sounds so simple yet it is really hard to be disciplined around fiscal responsibility.
Fiscal responsibility is important for companies and non-profits too. There are certain rules that apply such as how much should be spent on marketing from outbound reach to the team. It is more difficult for growing companies because their annual income changes and managing to that budget is obviously key but paying attention to the push-pull of growth takes constant monitoring.
The non-profit world does something when it comes to fiscal responsibility that I will never understand. There seems to be this mentality that they can always go back to the well (philanthropic donors) to make the budget work. That is not a formula for success. It works until it doesn’t. Millennials will be different than their baby-boomer predecessors when it comes to philanthropic giving and we will see many non-profits find themselves in a place that they do not want to be.
One of the most important art institutions in the world, the MET, just found themselves in a situation where they were short of more than $30m to function last year. That is a serious shortfall that doesn’t just show up with a check. They had to restructure the operation which means cutting back on their workforce. From everything I have read, the Board of the MET, was thrown for a loop, as boards can be. What they did to respond is quite brilliant and I hope we see more non-profit organizations think like this.
After the former head of the MET resigned, under pressure, the board elected Daniel Weiss to be the CEO of the MET. He was a board member for a few years. He has run universities, and for all account appears to be fiscally responsible. The MET will bring in a creative person that is absolutely needed in any major non-profit organization dedicated to the arts, but I am not convinced that the creatives should be running the organizations. Very different skill sets and just like other shifts we are seeing when it comes to retail, currencies, travel, start-ups, etc, we will need to see a shift in the next generation of non-profits and how they are run. I have met some brilliantly creative people over the years and less than a handful also have the same brilliant mind for business.
I applaud the MET for this decision. Let’s hope that Weiss will have a mindset of being fiscally responsible while giving a very long arm to the creative process and thinking about a different future of engagement with visitors and donors.