 I'm so excited for this episode. Arts and tickets, more ways to make money than just selling tickets. If you've joined us today on the nonprofit show, welcome. We have Justine Townsend with us, manager from your part-time controller, one of our favorite guests of all time. Justine, I don't think I've ever asked this of you, but are you, it seems to me, I know you're a CPA and you have this brilliant accounting mind and everything, but were you trained in any type of performing arts or music, or what's that like? Ooh, that's a fun story because my pathway to becoming a CPA was like many. I started out as a theater performance major and then switched to accounting. Ha ha ha! Oh my God! I'm so happy. I'm so happy. I'm so happy. Oh my God. You know, I always think about this after I've spent time with you, and then I'm always like, damn, why didn't I ask her? Because, you know, the way you're fabulous on camera, you do makeup and you do your hair in a certain way. And I always think, I wonder if you had that training. So yeah, it makes sense. Yes, I do. Yeah. Yeah, and it takes some time. I mean, I say all the time, like I use my acting experience and training every single day of my accounting career. I mean, there's not a time where I don't use it because, I mean, so I was in an improv troupe too. And in improv, we listen, right? Like that's the most important thing as you develop listening skills. And as an accountant, my most important job is to listen to the pain that I'm hearing and to think about those solutions, right? And so, and to be light on your feet and willing to pivot, right? That's what makes you a good accountant and one that people wanna work with. Accountants get a bad rap for being very rigid, but people wanna work with you if you can be light on your feet and pivot and improvise a bit and say, okay, that's not working. Fine, let's shift, you know? Somebody who can give you a yes and. Yes and, I love it. You know, it makes so much sense. And it would be one of the things we always say about your part-time controllers that we're able to have great conversations. It would be interesting to know how many of your accountants across the landscape have some sort of, you know, tied to performance arts or something because the ones that have come on to do the show are great. So on my arts and culture team, I have quite a few performers who are performer accountants. So I have singers, we have musicians. So, you know, one of the things I always ask my students because I also teach financial management for arts leaders at University of Houston. And the first thing I always ask my students is what was your original art? What brought you here? What's your passion, right? So what made you wanna facilitate art? Cause that's really what I see is what we do now is we facilitate it, you know? And we're gonna get into this big time. Again, I'm Julia Patrick, CEO of the American Nonprofit Academy. Jared Ransom will be joining us later. Hey, we have amazing sponsorship and that comes in the form of partnerships with Bloomerang, American Nonprofit Academy, your part-time controller, non-profit thought leader, fundraising academy at National University, staffing boutique, non-profit nerd and non-profit tech talk. We also have ways to get to us. We have nearly 900 episodes in our archive so that you can get to us through our brand new sexy app as I like to say. You can get to us on our streaming broadcast and our podcast. Okay, Justine Townsend CPA, I witness to you this in the green room, one of my top five all-time favorite shows that we have produced out of almost 900. So this is like a pretty big deal. Features you go back and watch October 31, 2022. The topic was like scary accounting issues. And we come on and Justine is in her glorious witch's costume, green makeup, I mean the whole mine yards and we had the best time. Got her. It was a really fun episode. It was really fun. I so enjoyed it. It was amazing. Well, you know, we talked about this and I hope you were able to join us. It's about how you have to communicate as a CPA or in the financial world with your clients, what it takes, your training in the arts and now your practice in the arts is absolutely fascinating. And a lot of my board service has been in the arts. And so I'm really fascinated by this concept. And I know that you speak my language on so much of this. So let's get right into it because earned income and revenue to arts organizations, it's not just about tickets at the door, is it? No, not at all. In fact, tickets at the door is usually the minority of your revenue, right? So other options are venue rental, renting out that space much. I know everybody does the weddings and then the events, right? You can get married under the dinosaurs and pretty much every natural science museum, right? Every science teacher ever can get married under the dinosaurs if they want to. But it's far beyond that, right? It is, how about setting up a co-working space? How about using your additional space that you have for classrooms during your, if you've got classrooms set up for summer camps or after school programs, what are you doing with that during the day? Could those be co-working spaces? Could those be innovation spaces? Could you invite in festivals or conferences for other arts organizations where you create these collaborations and these partnerships in your community, right? You could even use some spaces to kind of incubate smaller organizations where if you have a small little rehearsal space, could you let a small little theater use it? If you have a entrance exhibit space, wouldn't it be fun to let a small blossoming museum put a little exhibit there? Now, very important though, that you clearly label this is not your work, right? You want to make sure you're getting credit for what you do and they're getting credit for what they do and obviously before you partner with anyone, vet them. You don't want any controversies coming from this collaboration. So you want to make sure you vet. And then also you can read out if you are a performing arts company and you build up your productions and your sets, rent those out to others, costumes, wigs, and you can rent them out to other professional companies but also to schools and to community productions. Now, obviously if you're gonna rent out to schools, then you want those to be your older items that you don't have in as frequent rotation, right? Cause they're probably gonna come back damaged. So I have some insurance on those. And then also, what about renting out your work? So as a museum, renting out your work to small exhibitions and municipalities, cultural districts, events in your community, let's say one of the other arts organizations is going to put on a performance that is gonna feature the life story, maybe Picasso with the La Pina Gilles. If you have a Picasso, what an important and valuable and great opportunity to cross pollinate, cross market and maybe even bring in a tiny bit of revenue for letting them put up that Picasso in the lobby, right? You know, I think it's, one of the things that I love about this is I have been on the other side of the desk and I know as a trustee of an opera company, we started renting sets and costumes and it transformed our revenue model. It was amazing and it was so innovative at the time I remember that we actually won a national award that had like a $25,000 gift on being an innovative organization for revenue generation. So I mean, it took us further than just those rentals, but it really, I found, it made us step outside of ourselves. And to what you just said about, let's say you have an opera production and you work with a museum, that collaboration probably would not have happened, right? We are not doing that well enough in the arts world. And so I love the added benefit of opening it back up into the community and saying, okay, we're gonna do, you know, the mercado, what art museum, you know, in the art museum, what do you have from your Asian arts collection? How can we pull some of these things together? And really feature the culture too, right? Like we're trying to, when you're presenting a work, we wanna present the full culture around that work, right? And so what a great opportunity to monetize a little bit and also ensure the experience is complete for our patrons. And I mean, what a much better experience for patrons, that's what you hear on surveys, is that when things are happening out in the lobby before a performance or during an admission, that makes the experience that much greater, right? They, that much more memorable. And right now when we're trying to get audiences back in the room, creating those memorable experiences is key to getting them back, especially young people, they're not committed to a specific art form, they're shopping. So now's the time to really bring out the bells and whistles, the young people are shopping. I love it. You know, I know we could do a whole show on this alone, but I would love to get your take on program fees. I mean, that is those programs that you get in the performing arts. I think, and of course, my background's publishing, so of course I would think this is great advertising, but you know, I think there's a value to looking at who that clientele is and marketing to that group directly, because what arts patron ever sat down and didn't immediately open up the program and start looking at it. Oh, absolutely, right? So we had the opportunity to advertise to them, right? And it's not just other arts orgs that we can be advertising, it's kind of the whole community. And a lot of, you know, if you're, if you are a larger arts organization, a large opera company or a large ballet company, then you have the opportunity to take your demographics for your patrons and say, hey, these are our customers, they're the same as your customers and go target directly businesses that will want to advertise to those people. Same thing for a small company. Even if you're a small company, who attends your events? Who attends your performances? In, same thing for a historical site. Who is going? Who's showing up? You're collecting that data when they come in. You're at least asking what their zip code is. So you're at least getting some demographic data from people as they walk through the door. If you're not getting zip codes, please get zip codes. This does help in funding. It's not very good. It is. It's like, get zip codes when people walk in, please. Especially museums, historical sites, anything like that. Definitely we want zip codes. Who's here, right? We want to collect that data. How are we getting to everybody in our community if we're not tracking who from our community is coming? So I mean, it's not just this one. We also have tuition, right? So everybody has your education programming is not just an opportunity to get grants for education programming, right? This also and should be always an audience development program, right? That is how, those are our future artists, but also our future patrons. Well, let's get into that a little bit because the annual patron membership, I feel like this kind of goes to the wayside. And I don't think that we're spending enough time cultivating annual patron memberships or understanding benefits. What does some of that magic look like to you? So for me, the first thing we want to do is identify what are the benefits we're providing them? So that we can decide, is this more of a supporter model where we're going to put them in a patron circle and they're getting some benefit, but it's pretty minimal? Or is this a membership where they're getting a lot of benefit and it really is much more of an exchange transaction? They're getting free entrance to the museum all year long for their membership, right? So we want to make sure that we first quantify so that we can communicate when we are attracting those patrons what kind of membership this is and what this membership is doing. And interesting, this is new research that our Gen Z and millennial patrons who are buying memberships are buying them because they want to be supporters for the belonging, for the being a part of the community. Whereas Gen Xers like me, but over again beyond what we've been taught to look for the value. So what are we getting from our membership? So you want to make sure that you are evaluating whether or not you should be stratifying your marketing and your membership development so that your message is maybe, is it a message of belonging and a message of support for this public asset you hold or is it a message of look at all the value you're going to get from this membership. And then when you're doing renewals you want to make sure that they're timely, that you're talking to them before their membership expires. So if we're an annual renewing membership, we can either do automatic renewals. So when they sign up, we tell them, just like your prime membership, you have to cancel your prime membership. Why shouldn't you have to cancel your museum membership? Love it, love it. So we can set it up now so that it's automatic and we tell that we communicate that upfront. And then they think, oh, that's great, I won't have to think about this or I have a whole year to decide whether or not I want to continue, right? I can try it. We give them time and then we want to communicate ahead of time. If we're not doing automatic renewals, if we're not going to implement that, then we want to be incentivizing. So how are we incentivizing them to renew early? Are we incentivizing them to renew with a discounted renewal? Are we incentivizing them with additional benefits? They get to purchase this exhibit early, they get to purchase this season tickets early, whatever it is, we want to give them that special access but tracking it and then tenacity. You lose those members, go get them back. Go get them back, right? Don't let them disappear on you. Find out what was the thing that they loved coming to? This is why it's so important to have good donor software, good patron manager software of some kind where you can track. And I didn't mean to plug patron manager there. Not offensive patron manager, they're lovely, but patron management software, I should have said. But when we've got tickets and we've got donors all in one place or we've got admissions and we've got donors all in one place, we can see what do they like? What are they coming to? Right, right. This is our opportunity to get them back. And I think this is like what leads me to one of the most interesting, for me, one of the most interesting things. And that's the special event piece because I saw the magic of this with an arts organization I serve. And then I saw lost opportunity with other arts organizations. One of my favorite things that we ever did with the opera company that I served as a trustee is in Carmen in the Bullring. We allowed patrons to buy tickets to sit in the Bullring. And, oh yeah, it was awesome. And so in the Bullring, and you had to wear black, you couldn't wear any jewelry or anything. And then they gave you a bandana, so you looked like the typical Bullring. And then in the Bullring, they placed the opera chorus. And so you'd have to like stand up and then the opera performers would sing and then you'd have to sit down. There were a couple of times when we were allowed, we were asked to yell, you know, Olay and stuff like that. But we made so much money from that. And people around the West like flew in to sit in the Bullring and be a part of that. And to sit in the Bullring and look out and to see the patrons, to see like how they were transformed by the opera. I'm telling you, every single board member, or excuse me, trustee that did that came back so much more energized and committed to the opera company because they physically saw what happened. And now you couldn't really see beyond the first five rows. But it was transformational. Oh, 100%. Those artists for a day, I call them, that's what I call them, artists for a day. Yeah, yeah, yeah. Those artists for a day programs are amazing. And you can do those and it doesn't matter what your organization is, right? Because your patrons are there because they're passionate about the art. And a lot of them used to be involved in it, right? Maybe it's been a lot of years, like for me. Or maybe it's not been that many years, but this is a great opportunity for them to feel a part of it and get that mission connection, that mission moment that energizes you. And then what a great time to make another ask. But, right? Yeah, and you know, we, I'll tell you, we sold those spots. Yeah, you sell those spots and then right afterwards, when they're so excited, you know, two, three months later, you keep them excited. And I mean, that's the thing. In the arts, we have something that none of the other nonprofits have. We have fans, right? Oh my God, I never thought of that. I never thought of this. Everybody else just has donors. We have fans. We have fans of specific artists. We have fans of specific art. We have fans of specific types of performances or fans of specific types of exhibitions or fans of specific types of historical reenactments. We have people who are really into this stuff. Yep. And giving them that access. Oh, they are willing to pay for that. And then keep coming back every year and become your supporters. And those are the people that you are gonna like have a really great relationship with. Those travel, patron travel programs. Huge. So fantastic. You put one of your artistic staff, right? You get an artistic director or even, you know, a programmer who's just really passionate about this one thing you're gonna go see. Everybody go see it and experience the art together. Then they get the opportunity to experience it through the artist's experience. That's transformational too. I mean, that's obviously gonna be your big patrons, right? That's gonna be your top 10 patrons. But they're gonna stay your top 10 patrons if you take them on a little trip. You know, I call that, I've done that quite a bit. And I'll tell you, I think that becomes what I like to call estate patrons. I think it's awesome. Those are great opportunities for legacy gifts. Yeah, because I think it's so transformational to take, in my case, guided tours with the art director, a museum art director. And then to go to another city and it doesn't have to be in the US. It can be anywhere in the globe. And then have that experience and meet their connections. It's transformational on the donor side like nothing else. And I do believe it becomes a legacy gift like that. And so yes, that's a whole nother show in itself because I mean, it's a huge topic. And now that we're post COVID and people are so excited to travel and to experience. It's a great opportunity to start putting those programs back in place, right? Like we had our recovery years now's the time. Yeah, I think that's, it's another big thing. Let's get into another way to build revenue for your nonprofit organization. Investment returns and endowments. Again, a whole nother show topic, but can you kind of just give us a glimpse of this? Because I feel like the arts organization culture, you either are into this or you're just trying to keep the doors open and you have that direction. Yes, definitely. And it's hard to decide when you're ready, right? So either you already have one and you're trying to decide, is it big enough? Do we have to keep investing resources into building this thing? Or you don't have one and you're trying to decide, do we need one? Do we want one? And what I always say about endowments is that the greatest benefit of an endowment is if you get it large enough, then you can achieve immortality, right? When you're immortal, then you can do all of the avant-garde crazy stuff you've been wanting to do. Then you can tell your artistic director, yes and yes and let's do it, right? And so it's really having an endowment that is three to four times the size of your annual operating budget. Once you hit that mark, that's when you've achieved that immortality, that freedom. When you have two times your operating budget, then you're sustainable. That's a sustainable endowment that's gonna keep the organization going. In a pinch like COVID, that's gonna be the thing that keeps you. That takes you. Yeah, that takes you, that is the bridge over those troubled waters, right? But you can't start an endowment campaign until you have a strong annual giving because you always end up cannibalizing some of that annual giving. So you need to have strong operational support. And then I always recommend start with those legacy gifts. Name us in your will. Don't make an outright donation to the endowment, please just name us in your will. And your patrons who have given a long time to the organization, who have given a lifetime of devotion to the organization, that might be, if you have an aging patron who's given a lot to the organization, what a great legacy opportunity for you to give them to be the first one to name the organization in the will and for to be the first person to start your endowment. So that might be a good opportunity, a good window to look for that, but that's what you're looking for. But you can't start one if you're, if you cannot start an endowment campaign and start campaigning for direct endowment gifts unless your annual fund is strong because you're just gonna cannibalize. It is what it is, right? And then you wanna make sure you have strong investment policies and that you're taking care of that endowment so that it is a strong investment for your donors. If you're one of those, I'll wear it two times, but we wanna get to that three to four times. We wanna get to immortality. Then make sure you have strong investment policies and that you have a good return in your financials so that you can say, this is why you should give your money to us. We're gonna do a better job than you of growing it. If you give it to us now, we'll grow it. I, you know what? I've never heard anyone really articulate that. And I've been in a lot of those donor asks. I've never heard that and I wish I had because that's a brilliant way to work with that legacy gift and that donor and that family and that organization. I think that's amazing. I also think that naming rights in the arts world are not done enough. And I'm not talking about physical space. Again, every piece of your physical space needs to be named. Yes. I mean, that's like- And every artistic position. That's where I was gonna go. Every artistic position. And I don't know about you, but I don't see that enough. What do you think? Not enough. You always have the chair. This is the chair and it's the managing director or the ED or CEO's job is. And then the artistic director, we usually have endowed chairs for those. But, well, okay, if I'm an orchestra, what about my concertmaster? Let's endow that, right? What about first oboe? What about the timpani player? What about, right? Like what about those positions that are harder to fill? That's it. And you know what instruments your donors used to play, right? You know what their connection is exactly. Like, or our, you know, our tenor of the year. Get it to an endowed tenor of the year. Yeah. For your big, your big tenor that you're presenting, whether you're a Broadway show or whether you're an opera, you get a big tenor. You get a big soprano that's really fancy and everybody knows, get that endowed, right? So that you know you can always bring at least one big name to the stage every season. Same thing for your exhibitions. Name every exhibition, every single one. If you have a rotating collection, that whole collection needs to be named. I agree. And I think it's a fascinating thing that we, I mean, my gosh, if you look at Major League Baseball to all the way through, you know, to other sporting sections and venues, they have figured this out brilliantly and it's not, it doesn't have to be sports related. I think that's the thing. We need to take a page from that playbook and really understand in our arts organizations. Man, that can make such a difference. That can get you from that sustainability model in your endowment to immortality, which I love the way you phrase that. I think that's brilliant. I mean, think about it. If you just look at what your opportunities are and how you market that, I think it's a total win-win. I really do. Well, again, I just love having you on. You're so much fun. You're so intelligent. You are. I love doing this. Oh my God. And it's really cool. I love that the YPTC powers that be and team have invested into the arts world and have said this is a team that understands this. Well, that's how we started. Our first client was the Rosenbach Museum and Library. We, our first clients were all arts and culture. And the SMU data, arts data, we started that actually, our founding partner started that. It was not SMU data arts back then. It was just data arts back then. And so, yeah, we started this way. This is what we began as and this is what will stay as. Core function of what we do is the arts. It's really amazing. Well, it's super powerful. I mean, I believe the arts is what navigates society to its brilliance and navigates it through trauma and heartache. I believe it is a core function of how we can be. It shows us how we can be better people. And it holds a mirror up to us at the same time when we are not. And so it's one of those key functions of civil society. I truly believe that. I totally agree. I say health and human services, they help you live. And arts and culture, we make life worth living. Yeah, I love it, yeah. It's really amazing. Well, super cool to have you on. I mean, go back to that episode. Oh, yeah. Everybody just watched the Wicked, not the Wicked Witch of Accounting, the Good Witch of Accounting. The Good Witch of Accounting. But you know, great information. It's just, you have to like adjust your brain for the first few minutes to see everybody in costume. But then it's just fabulous. So you have to go take a look at it. Justine Townsend, CPA manager of your port time controller coming to us from Houston, correct? Yes, ma'am. Yeah, just amazing. One of the great and many unbountiful minds across the landscape at YPTC. So check out YPTC and you might be fortunate enough to meet Justine. Again, I'm Julia Patrick, CEO of the American Nonprofit Academy. Jared Anson will be rejoining us soon. Again, we have these amazing partners and they wanna make sure that we extend our gratitude for their investment in us. They include Bloomerang, American Nonprofit Academy. Your part time controller, Justine and her crew all across the US. Nonprofit Thought Leader, Fundraising Academy at National University, Staffing Boutique, Nonprofit Nerd and Nonprofit Tech Talk. These are the folks that join us day in and day out as we march towards 900 episodes. Many with which we've had folks from YPTC on talking about all different things. And it's always fun, I gotta say. Even though it's accounting, at first I was like, when Eric Frank talked to us, your founding partner, I was like, ooh, accountings are boring. I mean, good, but it has not been the case. It's been fabulous. So we say thank you to you. Justine, go out, hit the stage and make us proud. Yes, ma'am, thank you. Y'all have a wonderful day. Thank you, everybody. As we like to end every episode of the nonprofit show, we want to remind you to stay well so you can do well. Thank you ever so much.