Costs & Missions & Assessments ... Oh My!

I was listening to a podcast recently called "Freakonomics Radio," hosted by Stephen Dubner - specifically, to the three-part series on the economics of live theater. As a board member for Delaware Theatre Company, a regional professional theater that is reimagining its business model in order to help keep live theatre alive and well in our community, this series piqued my interest.   

Something that was discussed during this series was a thing called “cost disease.” Now, if you haven’t heard this term before, don’t fret – neither had I. But after Stephen’s explanation and some of my own research, I developed a pretty good grasp on this economic phenomenon.   

So, let me give you a little synopsis on cost disease.   

In sectors of the economy reliant on technology, like manufacturing, productivity increases, which decreases costs and wages. But in human-reliant sectors, technological advances don’t lead to increased productivity. In these human-based sectors, to keep up with inflation, wages and prices must increase.    

But what does this have to do with theatre?   

These human-based sectors tend to be things like arts, education, and healthcare. That means they are also often run by nonprofits with missions to increase accessibility to these services. Unfortunately, increasing accessibility and paying livable wages are often directly conflicting goals. This makes board members want to rip their hair out!   

That being said, I’m not in the habit of just announcing problems to the world without solutions. That would be demoralizing and, frankly, a little counterproductive.   

Now that I’ve presented you with a problem – or rather, provided you with a name of a problem that, as a nonprofit leader, you’re all too familiar with. It’s time to present you with a solution!   

An Organizational Assessment!   

Through this process, your nonprofit can take a look at what’s working and what’s not. It's a holistic view of your company – analyzing the organizational processes, work culture, and structure. With this 30,000-foot view of your company, it becomes clear where people can work smarter and not harder, where money can be reallocated, and why you might be missing out on funding. An organizational assessment shows where you can find harmony between paying your workers a livable wage and providing accessibility to the community.  

While we can’t completely eliminate Cost Disease, there are real and tangible ways to operate in alignment with your goals. With the right solutions, you can treat the symptoms. 

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