In Ohio, a Trio of Arts Nonprofits Finds Strength by Banding Together

The ballet and the symphony in Dayton, Ohio, were born from the ashes of the Great Depression in the 1930s, and the Dayton opera came later, during this country’s classical-arts boom of the 1960s. All three thrived in the decades that followed. But by 2009, as the recession continued to hit the city hard, all three cultural organizations were suffering. Each was forced to lay off workers, trim salaries, and eliminate performances to survive.

While those cost-saving measures alleviated the immediate problems, the groups realized the best they could hope for over the next few years was a spartan existence. So they joined forces to seek a better way.

Over the summer, the three groups merged to form the Dayton Performing Arts Alliance. The arrangement is one of the first in the United States, and the process toward uniting the groups could be a model for other nonprofits, say management experts. Already the approach has unlocked $1.25-million in new foundation support and the prospect of new efficiencies in fundraising, marketing, and other needs.

‘Something Bigger’

Neal Gittleman, artistic director of the Dayton Philharmonic Orchestra, first suggested the new approach two years ago.

“We thought we needed to look at something bigger to turn things around and have a real possibility for an upside, rather than just trying to keep the downside at bay,” he recalls.

Some of the executive directors and board chairmen were skeptical of a merger, wary of the hard work of hashing out a new entity’s fundraising, management, and board structure.

Enter the Dayton Foundation. Since the recession started, the foundation had been providing grants and other assistance to local charities that wanted to merge or find other ways to collaborate.

“No sector was immune” from the effects of the recession, says Michael Parks, the Dayton Foundation’s president. “It wasn’t just the arts. Everybody was going to get whipsawed, and there’s really no relief on the horizon. So in anticipation of that, we offered a number of education opportunities for our local nonprofits.”

With a small grant from the foundation, the three groups hired a consultant to assess their strengths and weaknesses, assets, and other resources and help them consider their options. What they realized, he said, was that a merger could help each organization do a better job of achieving its cultural mission. “What started as a financial question ended as an artistic question,” says Mr. Parks.

A merger meant the ballet, opera, and symphony could collaborate regularly and optimize the fundraising potential of big season openings and closing gala performances.

And the three groups could plan their seasons together so their audiences wouldn’t have to choose between overlapping performances, a problem they had faced in the past, says Karen Russo Burke, the ballet’s artistic director.

“Last Valentine’s Day we were performing, and there was something going on with the philharmonic, and we heard the audiences were upset and a little torn about which one to choose.”

‘Positive Momentum’

By early 2011, the three groups decided they wanted to explore a merger. All three boards agreed to keep moving forward.

With help from a second Dayton Foundation grant (together the two grants totaled about $30,000), the groups spent the next year developing business, governance, marketing, and administrative plans.

The resulting 75-page document laid out how the merged organization would operate.

If the groups adopted the plan, the Dayton Foundation promised a two-year $500,000 grant to carry out the merger. Simultaneously, a foundation that asked to remain anonymous promised an additional $500,000 over two years, with the possibility of $250,000 more if the merged group thrived financially.

Despite the potential for new support, says Paul Helfrich, then executive director of the Dayton Philharmonic and now head of the alliance, the merger talks stumbled at times.

“We wondered if this was going to work or not,” he says. “But every time we hit something that seemed like an obstacle, we were able to overcome it and maintain some positive momentum.”

Guidance From Donors

One such obstacle: creating a new board. The merged board would require winnowing the 100-plus members of the three combined boards.

The merger project’s steering committee developed criteria for the people it wanted to serve on the new board, including a willingness to commit significant time and an ability to embrace all three art forms. Alliance board members would also be expected to contribute at least $5,000 annually.

After a debate over the appropriate size of the governing body, the officials agreed on a 39-member board and chose a mix of people who served on the old boards or who had never previously taken a role.

Officials also wrestled over the best way to appeal for money, wondering whether donors would prefer to give to a merged entity or earmark gifts for the ballet, opera, or symphony.

Surveys of patrons, says Mr. Helfrich, revealed that over all, “most said they would continue their support in the same way as they had in the past.”

But the range of responses varied among high-level donors. Some wanted to give to each of the three groups, while others liked the idea of supporting one umbrella organization.

To avoid upsetting loyal contributors, Mr. Gittleman says the alliance will seek support from previous donors for the group they have supported in the past, while new donors will be asked to support the umbrella organization directly.

“We’re trying to let donors guide us on how they want to be approached,” he says. “If they want to get three separate appeals, then we’ll do that. If they want one integrated approach that breaks a gift down [into three parts], we can do that. Over time, as everyone get used to this new way of doing things, I think things will start to flow pretty smoothly.”

Marketing Advantages

In January, the three organizations’ boards voted to accept the merger plan, which had been vetted by focus groups that included each nonprofit’s biggest donors and their administrative staffs and artists.

The Dayton Performing Arts Alliance started operations on July 1 with a budget of $6-million, 22 full-time administrative employees, and a roster of part-time artists: 83 musicians and 18 dancers.

Virtually all staff members at all three groups held onto their jobs, Mr. Helfrich notes. What’s more, the stability of the new combined entity has made it easier to retain some of the most talented staff members.

Aside from saving money, the alliance hopes the merger will make it easier for the three groups to promote ticket sales to a broader range of potential patrons. For example, when people subscribe to the Dayton Ballet’s entire series, they are now eligible to receive one free opera ticket and one free philharmonic ticket. Through such exposure, supporters might become subscribers to all three.

But the organization didn’t want to lose the strong identification so many Dayton residents have with each cultural institution. Under the new arrangement, the logos of all three groups appear along with the alliance’s on marketing pieces.

“You don’t want to go out and immediately have people feel like the organization they used to know and love is gone,” said Mr. Helfrich. “You want them to know it’s continuing, there’s a new efficient management structure that’s going to help it survive and do better in the future.”

A Merger Blueprint

Dayton’s experience provides a blueprint for arts groups and other nonprofits organizations in assessing whether a merger is an option worth pursuing, according to Joseph Kluger, a principal at the consultancy WolfBrown and an expert on strategic collaboration among arts groups.

“They did a good job, in advance of the decision to go ahead, to map out their donor bases and see where there was overlap,” Mr. Kluger says. “They could target individual donors that had been giving to multiple organizations and go to them in advance and get some buy-in.”

But the alliance still faces some challenges, says Mr. Kluger, especially as it must decide how much of the umbrella organization’s budget to allocate toward each group.

“The issue isn’t whether there will be tensions. There will be,” says Mr. Kluger. “The question is what systems are in place to resolve those tensions in a way that makes people comfortable.”

The alliance’s officials, however, are confident that they are ready to handle such questions.

Mr. Gittleman says, “The things that there are to worry about in the merged model are nowhere near as scary as the things to worry about if we had stayed in our own canoes paddling in separate directions.”

Unveiling the Next Act

The Dayton Performing Arts Alliance produced this video to announce the formation of the new organization.