Viewpoint

Myth: Arts organizations don’t merge well.

Truth: When strategy, leadership and finances are aligned, unity has the potential to be catalytic.

Last week, two national arts service organizations — the National Center for Arts Research (NCAR) at Southern Methodist University (SMU) and DataArts — announced their merger, becoming SMU DataArts.

As a longtime trustee of DataArts and a member of the advisory committee for NCAR, I’m excited about the prospect of stronger data tools and resources for arts and culture organizations. I also see the combination as an example to the sector of a merger dance well choreographed.

What factors made it possible for these two organizations to unite? I highlight six here.

Nonprofit leaders appreciate the value of strategic planning. They understand that organizational reimagining is done best with intention and method. Yet many often overlook the need for financial planning, which connects strategic goals to their financial implications.

Poor planning happens despite good intentions. Senior staff and board members welcome the opportunity to partake in visioning and values creation. They embrace their responsibility to take stock of organizational impact. They fall short, however, when they delegate financial planning to the finance director as part of the annual budget cycle. The result? Surprises, when programs don’t secure resources needed to grow, or when changes in direction open up a structural deficit.

A good financial plan plots a realistic route to fiscal health. It makes visible whether, and how, an organization is achieving its financial goals. It anticipates the goal of sustainability, but recognizes that the direction of travel won’t always be a straight line. It enables flexible decision-making by identifying targets that have been missed or exceeded.

Does your organization’s strategic plan include a financial roadmap for its business model and balance sheet? A strategy without an aligned financial plan is not a sound strategy!

Every financial plan needs these six critical components:

Battered by the news headlines, conversations in many cultural nonprofit boardrooms have turned to questions of “what if?” Over the past month, I’ve participated in several discussions that went something like this:

• “What if our major donors shift their funding to social justice, women’s rights and legal advocacy organizations?”

• “We just heard from a national funder that their longtime support of our organization may be in jeopardy. How will we meet this year’s budget if they reduce the size of their annual gift?”

• “What if the NEA goes away? How will potential ensuing cuts in government funding at the state and local levels affect us?”