Scarcity Mindset is Killing Your Arts Organization
Here’s 5 Steps to Immediately Help
Every employee at an orchestra, theater, opera, dance company, or museum wants more resources. More money to pay the bills, more people to do the work, more budget to spend, more salary to take home.
But for a lot of arts organizations, even just maintaining is getting harder and harder. In fact, according to a recent poll, nearly half of all arts leaders are anticipating a budget deficit this year.
I’ve been there. From sleepless nights over budget woes, to dreading the next board meeting, to knowing when my finance person walks in the office we’re going to have to choose which bills to pay this week and which ones have to wait, I’ve felt the worry and struggle that comes with lack of resources.
But what if it didn’t have to be that way?
What if there was a future where executive leaders didn’t lie in bed awake at night over how you’re going to balance the budget? What if there was a future where you could pay staff (or yourself) more competitively? What if you could go to the collective bargaining table with some semblance of a raise instead of hoping the temporary agreement can hold the rates for just one more year to kick the can down the road? What if you could say yes to the artistic director or music director on a project or idea or commission they wanted to pursue instead of having to explain why it costs too much?
This future is possible. I know because I’ve seen it many times now, having worked with over 200 individuals and organizations who today are balancing budgets, making and surpassing their sales goals, hiring stronger talent willing to live and work in their market because the package is compelling, and planning out future mission-driven projects with confidence.
For a lot of arts organizations though, scarcity mindset is a big source of what’s driving the financial pain, if not literally killing them by death spiral to the bottom. We cut and trim and scrape and downsize. And then when that doesn’t provide lasting relief, we’re faced with finding more places to cut, borrow, beg and steal all over again. But there’s good news. Scarcity mindset is a disease with a cure.
This article first looks at some of the underlying reasons why scarcity mindset permeates the arts (it’s not your fault, but there are consequences). Next, I offer five steps that helped me overcome scarcity mentality when I was in the executive hot seat, and that now help the organizations and leaders I work with. Just like our bodies fighting an infection, this banger of a disease can be attacked from multiple angles so you and your organization can plan for a smooth return to health.
“Nearly half of all arts org leaders are anticipating a budget deficit this year, but it doesn’t have to be that way.”
It’s Not Your Fault — You Were Taught to Think In Scarcity
I know firsthand how anxiety-inducing it is to wonder how the org will make payroll next month, or hope when the job posting goes up that the person I hire will accept less than the last person, or scour the budget trying to figure out where to trim a little off.
And you know what? We were conditioned to think this way; it’s not your fault. As human beings, we are wired to perceive scarcity. Our lizard brain survival instincts have been shaped by centuries of scarcity and limited resources. It’s no surprise, then, that we tend to approach life with a scarcity mindset. We worry about running out of money, time, or opportunities, personal or professional. We feel that resources are limited and hard to come by, because for a large portion of human history they were.
This already-ingrained mindset is perpetuated since arts organizations are often operating on tight budgets, with limited resources and a need to constantly prove their value to funders and audiences. It’s understandable that leaders of these organizations may adopt a scarcity mindset, believing that there simply isn’t enough to go around. However, this mindset can be incredibly harmful to your organization’s success and sustainability.
That survival brain isn’t serving you today. We’re not faced with hunting and gathering for food to last through winter, we are talking about money. And while money doesn’t grow on trees, it does grow. The percentage of Americans in the upper-income tier (i.e. a lot of arts patrons) has grown from 14% in 1971 to 21% today. The stock market is up 33% since 2022. For most current arts attendees, their income is growing, and as a general statement, it will continue to do so over time. The money is out there.
Even Though It’s Not Your Fault, There Are Consequences to a Scarcity Approach
When leaders of the organization believe that resources are limited, the natural response is not to allocate enough funds towards things like marketing, employee compensation, or investing in new technologies. But this results in a lack of growth and development for the organization, which leads to a decline in audience engagement and ultimately hinders the sustainability of the organization. Sound a little close to home for anyone?
Additionally, scarcity mindset can (and by “can” I mean definitely does) create a culture of fear and competition within the org, even when unintentional. If people believe that resources are limited or on the chopping block, they may feel like they need to fight for their share of the pie, fighting to preserve what’s “theirs”. I remember at one major institution I worked for, even if my department’s expenses were on track to come in under budget for the year, we’d find a way to spend the remainder because we feared that if we came in under, it would be taken away from us next year. Talk about not serving the broader institutional goals and wellbeing. But scarcity mentality prevents us from making those kind of smart, wholistic choices.
The next stop on the scarcity doom loop isn’t just protecting budget turf, it’s an environment of increased mistrust and negativity, which, to state the obvious, is harmful for collaboration. You know how as leaders we’re supposed to help our teams work together towards a common goal? That’s on the scale of hard to impossible when we’re dealing with scarcity.
A final way in which a scarcity mindset has consequences for arts organizations is through a lack of innovation, risk-taking, and creativity. Forget the first two for a moment, because “innovation” and “risk-taking” are pretty intimidating words when we’re stuck at scarcity station. But for that last one, “creativity,” to be hindered is code red, really really not good for an arts organization.
I get it. No money equals no room for failure, no breathing room, no inkling for experimentation, no trying anything new. Or the other end of the spectrum: going for some super hail Mary passes and hoping they work out. Hope isn’t a strategy though. Growth doesn’t work that way. And playing it safe isn’t actually safe at all, not when you’re entire existence depends on your creative work.
So what do we do about all this? How do we reverse the undertow sucking us under and find a way forward that lets us breathe?
Here are 5 things you can do.
1. Stop Trying to Cut Your Way to Health
I talk a lot about what arts organizations can borrow from the for-profit world — it’s the theme of my whole book. But here’s one way we’re different from our corporate counterparts: we do not have fat to trim. We trimmed it last year when things were tight, or the year before when we decided to scale some things back, or the time before that when we didn’t meet some of our sales goals, or before that when we hired our last staff member and negotiated the salary a little lower than the person in the role before them, or before than when…you get my drift.
For what it’s worth, I’ve been there too, feeling like cutting, crimping, and scraping was the only way to level the ledger. But perennial budget cutting never leads to growth in the arts. Ever. Not for any organization I’ve served in nearly two decades of arts management, nor any organization who’s been in the headlines for their financial woes over the years.
Does that mean go big or go home with spending? No, because we still have to pay the bills at the end of the day, and also unlike our corporate counterparts, a lot of arts organizations don’t have much cash in the coffers to do that anyway. So if you want to stop trying to cut your way to health, how exactly do you do that? That brings us to the next thing you can do.
2. Start Developing Your Budget Differently
When the going gets tough, a lot of times, financial forecasts are set by what makes the math work, not what’s actually on the horizon. Estimating holding flat in subscriptions didn’t work to balance the budget, so we decide to bump up the single ticket goal an outsized amount to make it work. It takes two seconds to do in a spreadsheet and, just like that, problem solved. Except problem not solved. It’s like eating dessert (a moment on the lips, forever on the hips…only more like a moment in Excel, forever your revenue teams don’t make their too-high goals and everyone is demoralized and set up for failure). I’ve fallen prey to this before too, until I learned there’s a better, more accurate way to do budgeting.
Sales targets need to be set differently than the typical subscriptions versus single tickets by program. The traditional budgeting method goes something like this: the Brahms will sell, but the all-new music program not so much. December is a ticket sales goldmine, but January the dead zone. And those generalizations aren’t wrong, per se, they’re just not serving you well enough to make the kind of revenue forecasts you need.
Instead, try setting revenue goals by behavioral segment. How many first-time buyers will you have based on historical data? How many of those will you get to come back before the season is over? That’s a real number you can set and make a concerted plan on how to achieve (what are you going to do to get them back? What’s the post-concert communication sequence, for example? You can solve for this goal and reverse-engineer the plan to get there.). How many multi-buyers do you normally have each year? How many of those do you successfully convert to subscribers? What can you do to make that number 5% higher? What’s the plan you can make?
What about first-time subscribers? They normally have a much lower renewal rate than all the other subscribers who’ve been around two years or longer. How can you treat that group with specific efforts to get those renewals 10% higher? I recently did a podcast episode full of ways to do that.
Same for donors at every level of giving, including those smaller amounts that add up when you get those folks to renew at rates higher than the abysmally low national average.
When you start developing budgets this way, it does two things: 1) it focuses you on the specific areas of potential for growth and development, rather than a perceived lack of resources. And 2) it in many ways makes you develop your expense budget simultaneously, because as you’re reverse-engineering these goals, you’re realizing the way you’re going to need to spend to get there (we’ll need to automate this email sequence for our first timers, print these postcards for our multi-buyers, and create that onboarding flow for our new subscribers, as examples). This is how you start cooking up a budget that works hard for you — because every dollar has a purpose.
“Sales targets need to be set differently than the typical subscriptions versus single tickets by program…they’re just not serving you well enough.”
3. Don’t Structure Your Financial Goals By Department
I’ve written before about the siloed structures at arts organizations, and a downstream effect of those department lines is that the accompanying financial goals for those departments actually pits the teams against each other in many ways.
For example, separate revenue goals for marketing and development teams directly hinder collaborative work in serving the patron because both teams are extracting money from the same people. Consulting firm TRG Arts recommends a budget reframing. Instead of the typical breakdown of earned revenue (ticket sales) versus contributed revenue (donations), they ask, what if we looked at patron-generated revenue (tickets and individual donations) versus other sources (grants, corporate sponsorship, rentals, concessions, etc.)? When you slice the numbers in this alternate way, it really underscores how critical our customers are and how marketing and development aren’t on two different paths, but rather on one quest together.
4. Stop Swinging Big
Maybe that sounds weird coming from someone who loves big ideas. But going big all at once is a bad/sad/mad idea. Big sweeping cuts and big sweeping new initiatives alike are not going to solve your financial challenges. As humans, we tend to want big, grand solutions to complex problems. I wrote all about the research behind that here — this is natural. But the research shows that going big is not the effective way successful companies operate.
Jim Collins, OG business author, says it this way, “fire bullets before cannonballs.” Test a new idea on a small scale. Call it a pilot test. Measure the results and see if there’s indication that the initiative is or could be successful. Silicon Valley calls this the MVP, minimum viable product. It saves tons of time and resources while allowing the organization to gather important intel on if that product or service or initiative is going to deliver the results they think it will. And only then when the data is there to suggest you’re on to something — the bullets have hit their mark — it’s then time to go for the cannonball and put big energy and funding into that project.
“That’s the best thing about making modest investments: it doesn’t take much growth for that investment to pay itself back and then some.”
5. Start Making Modest Investments
If not having a scarcity mindset means no one is swinging for the fences (or not firing cannonballs prematurely), that means the investments you make at the beginning of this new, growth-focused thinking aren’t a home run (er, sink the battleship strike) either. The first time I added professional development to the budget after it had been eliminated for years prior to my arrival, it was a mere $300 per staff member. It wasn’t even enough for anyone to go to a conference if it wasn’t local (and even then a stretch). But it was a start — a modest investment — and we found ways to spend that money that weren’t very expensive (and in one case someone found an online conference that had a team rate of $999 for everyone, which made attendance more doable).
The point is, it wasn’t a perfect solution to the challenge of providing professional development that the employees were hungry for—we didn’t go from 0 to 100. But moving from no investment whatsoever to something fed and filled the team with new ideas and motivation they immediately applied to their work. And then guess what happened? Those employees started producing a lot more revenue for the organization because of it, and the revenue we gained far surpassed the initial investment, allowing me to add ten times more to the professional budget line the following year (see the graph of return outpacing the investment here).
I recently went through a version of this in my current business too. A few months ago, we concluded we needed a new email platform. The old one had worked for the last five years, and now we’ve grown and upleveled and gotten more savvy and sophisticated in what we’re doing. And it became clear the old system was not going to do what we needed going forward. I knew this was on the horizon, and I had hoped I wouldn’t need to spend the money until the second half of this year or even next year. I also didn’t want to spend the time I felt I didn’t have (migrating email providers is just always a painful time suck IMO). And then I realized this resistance was holding us back.
There were already some great things in progress (due to the way we budgeted this year, like mapping out the work plan and strategies at the same time as setting revenue goals as described in the points above), and I realized the difference in achieving those goals or not probably lied in when I would take action and find a platform that met our needs. Not making the modest investment was the bottleneck.
The team member working on this with me and I made a 10-week plan that allowed us to take small steps each week to make the email platform migration happen. Read: not a plan to pound it out in a few weeks and run ourselves ragged and stressed because of it. We worked to find some combination of realistic week by week progress, motivation to get it done, and yes, the modest budget investment to make the upgrade possible. Now, only a month on the other side of the decision to do the migration, and we’ve already seen how we’ll make that money back in the extra sales we are able to generate this year.
That’s the final and best thing about making modest investments: it doesn’t take much growth for that investment to pay itself back and then some. And that feels so good when it happens, every time.
Freedom and Oxygen
Scarcity is just that…scarce. Limited. Stifling. Suffocating. Scarcity is not knowing how you’re going to make it to the end of the fiscal year without drawing way too much from the endowment, or facing another round of layoffs or major cuts of some sort, or losing yet another night of sleep over the financial challenges.
But when you take the steps above — stop cutting your way to health; start budgeting strategically based on behavioral segments and structuring your financial goals so departments are working together not against each other; stop looking for a big silver bullet solution and rolling out big grand programs; and start making modest investments — you give yourself oxygen.
So choose oxygen, for yourself and for your organization. Fill those lungs and breathe easy when you decide that pursuing financial freedom for your organization is possible. I hope you have the best night’s sleep ever because of it.
Interested in more strategies to grow relevance and revenue at your arts organization? Order my book, Run It like a Business: Strategies to Increase Audiences, Remain Relevant, and Multiply Money — Without Losing the Art.
You’ll learn how to:
- Grow audiences and keep them coming back again
- Make our organizations more inclusive
- Get younger attendees in the seats and on the donor rolls
- Generate millions more dollars in revenue
- Continue to create the art we love — without the stress of figuring out how to afford it
Just because your arts organization is a non-profit, doesn’t mean it shouldn’t make money; it means the money the organization makes goes back to fund the mission — whether that’s music, visual arts, theatre, dance, or one of many other mediums that enrich our lives. www.aubreybergauer.com/book
About the Author
Hailed as “the Steve Jobs of classical music” (Observer) and “Sheryl Sandberg of the symphony” (LA Review of Books), Aubrey Bergauer is known for her results-driven, customer-centric, data-obsessed pursuit of changing the narrative for the performing arts. A “dynamic administrator” with an “unquenchable drive for canny innovation” (San Francisco Chronicle), she’s held offstage roles managing millions in revenue at major institutions including the Seattle Symphony, Seattle Opera, Bumbershoot Music & Arts Festival, and San Francisco Conservatory of Music. As chief executive of the California Symphony, Bergauer propelled the organization to double the size of its audience and nearly quadruple the donor base.
Bergauer helps organizations and individuals transform from scarcity to opportunity, make money, and grow their base of fans and supporters. Her ability to cast and communicate vision moves large teams forward and brings stakeholders together, earning “a reputation for coming up with great ideas and then realizing them” (San Francisco Classical Voice). With a track record for strategically increasing revenue and relevance, leveraging digital content and technology, and prioritizing diversity and inclusion on stage and off, Bergauer sees a better way forward for classical music and knows how to achieve it.
Aubrey’s first book, Run It Like A Business, published in February 2024.
A graduate of Rice University, her work and leadership have been covered in the Wall Street Journal, Entrepreneur, Thrive Global, and Southwest Airlines magazines, and she is a frequent speaker spanning TEDx, Adobe’s Magento, universities, and industry conferences in the U.S. and abroad.
