How do the best performing arts organizations achieve financial health? How can a struggling organization turn its fortunes around? Interviews with leaders of 20 high-performing arts organizations suggest that the key to success lies in high-quality art that resonates with an organization’s community.

This report synthesizes these leaders’ views and traces a possible path from quality and relevance to growth and sustainability. Among the factors that help organizations along this path, the report suggests, are clarity of mission, transparency, long-term planning and the ability to adapt to changing conditions. Such factors, the authors argue, could help leaders build internal support for their efforts, strengthen an organization’s brand and ultimately lead to greater audience and donor engagement and a surer financial footing for future efforts. The report also identifies external factors that are important in influencing organizational health.

The report examines 10 organizations that have a long track record of high performance and 10 that once struggled but managed to shore up their finances and held strong for at least five years. To identify the highest performing organizations, the authors use an econometric technique called stochastic frontier analysis, which seeks to identify the best possible outcomes given a specific set of inputs. Such an analysis allows the authors to look beyond balance sheets and account for the organizations’ specific contexts and starting points.

The report comes amid a pandemic that presents an existential threat to many arts organizations and is likely to transform operations in ways that few can foresee. While its findings reflect pre-pandemic conditions, the authors believe that the data it presents could help inform organizations’ future efforts and serve as a productive starting point for future study.