Who owns nonprofit organizations?

by Jini Stolk

After a great deal of public outcry and the departure of some long-time board and staff members, the decision to close the San Diego Opera – a 49-year-old institution of considerable importance to its community and art form – was just overturned. Emergency fundraising, in-kind community support, and cost-cutting (including an agreement by admin staff to a 10% pay cut, and willingness by singers and other union members to negotiate similar concessions) have closed the projected deficit and made it possible for the company to plan a smaller but impressive season.

I have no doubt a lot of hard work will still be needed to ensure a rosy future, but I’m particularly interested in a few aspects of this story.

One is the way in which the community rallied to save a company they cared deeply about. In less than a month, 2,461 San Diego Opera supporters contributed $2.1 million in donations through a crowdfunding campaign. Over $300,000 was raised in the first 3 days, and the median gift was $100. According to the Opera’s website: “The news was dire and the future of San Diego Opera seemed hopeless. And then you stepped up. You spread the word, donated, tweeted and posted to Facebook and, because of an amazing and dedicated community, San Diego Opera is now moving forward.”

Second, other major institutions, including the San Diego Symphony (which donated use of their venue for gala concerts), and the Houston Grand Opera (which contributed $60,000 worth of sets for Nixon in China, a highlight of the resurrected season) made significant in-kind contributions to help save the San Diego Opera.

Third, in a mere few weeks a new survival (or perhaps “revival” is a better word) plan for the 2015 season featured a budget of $6.5 million, compared to the original $17 million budget that led the board to decide the company had to close! What a clear indication that the old board and senior staff lacked the creativity, vision or will to institute necessary change, even at the cost of the organization itself.

(I don’t know the ins and outs of Opera Hamilton’s closing this January, but the press release in which it’s announced, Opera Hamilton Ceases Operations Due to Lack of Funding, quotes the Co-Chair and Treasurer as stating “we  had  hoped  a  large  donation  from  an  individual would arrive  in  time,  but  regrettably  it  did  not  materialize…” I would say that waiting for a one-person bailout in such circumstances is a mug’s game. God really does help those who help themselves…)

Back to the San Diego Opera. Fourth, and I love this one, ticket prices have been reduced for the newly announced season, with single tickets starting at $35 and an increased number of $99 orchestra seats available for each production; this is widely expected to increase attendance and possibly earned revenue. (We’ve seen it work here in Toronto, where Young People’s Theatre and the Royal Ontario Museum made savvy and successful decisions to reduce their ticket prices.)

Fifth, that so much of the discussion about SD Opera’s decision to close and disperse its assets has centred on the topic of nonprofit governance. Andrew Taylor put it nicely: “How can you disassemble something that nobody owns? Nonprofits exist as a special class of organization…Neither the public nor private sector owns them.” The governing board is charged with stewardship of the organization and its assets, representing the as yet undefined ”public trust.” “Some boards interpret their job as ensuring the success of the organization at all costs. Other boards interpret their job as ensuring the success of their mission, within the context of the many ways (inside and outside the organization) that mission might be fulfilled.” Interesting point, that.

As it turns out the San Diego Opera Association, a group of more than 850 supporters who form the Opera’s legal membership, actually has authority over the company’s assets – a fact that was apparently overlooked by the board when it voted to start selling off the assets.

The disconnect between the concept of ownership and control, which is behind many internal struggles at nonprofit organizations, is one that deserves a vigorous debate and a fuller understanding by managers and board members on both sides of the border.

This entry was posted in Board & Governance. Bookmark the permalink. Trackbacks are closed, but you can post a comment.