Charity Navigator just published an updated listing for Fractured Atlas.  Not only did we keep our 4-star rating, but our overall score increased by a few points.

Of course, charity rating systems like these need to be taken with a grain (or two) of salt.  But it’s still nice to know that someone thinks we’re doing a good job!

Charity Navigator has given Fractured Atlas a 4-star rating (out of 4 possible stars) in its first ever review of the organization.

I know some folks object to these kinds of charity-rating metrics, and I do understand that perspective, but I find them useful nonetheless. No, they don’t tell the whole story, but that’s true of any set of statistics anywhere. You have to dig a little deeper if you want to develop a meaningful understanding of an organization. But I can’t help but appreciate the trend towards asking non-profits to run more efficiently and to be smarter about money. To the extent that metrics and competitive rankings are part of that process, they are valuable.

So why did Fractured Atlas get such a great ranking from Charity Navigator? The ranking formula is totally transparent, so you can see for yourself. Mainly, we scored lots of points for spending such a small portion of our expenses on management and administration. The one area that hurt our score was our working capital ratio (although in our case I’d argue that’s not particularly relevant, since our business isn’t particularly capital intensive).

Keep in mind these numbers are from FY2006 (which ended in August 2006) so they’re more than a bit out of date. For example, our budget for FY2008 is roughly twice what’s listed there.

After making some bad decisions in my mid-20s, I have become something of a personal finance hawk over the last few years. I recently found a fantastic interview that Bill Moyers did in September 2007 with financial kingpin, John Bogle (founder of Vanguard). So, what does this have to do with independent artists or arts & culture in general?

The crux of the discussion centers around Mr. Bogle’s position that the financial services industry is actually taking value out of our economy. What Mr. Bogle says at the end is what inspired this post. To quote him directly:

“I’m perfectly willing to give a high value, for example, to art and poetry and literature. They add value to society. It may not be easy to measure it in a society that measures too much of what’s not important. And not enough of what is important. As the sign in Einstein’s office says– There are some things that count that can’t be counted. And some things that can be counted that don’t count.“

What inspired me most about this comment is the acknowledgment that certain things with tremendous value simply CANNOT be measured using quantifiable criteria. This is one of the unique challenges that arts organizations face when it comes to justifying our existence as charitable under the IRS code (which does not actually recognize art as a charitable activity) and to grant makers who often require “measurable outcomes” when requesting funding and reporting on funds received. Fortunately for Fractured Atlas, we CAN measure our services quantitatively (how many artists enrolled in healthcare plans, how many dollars were disbursed to our sponsored projects, how many artists accessed our new online courses, how many liability insurance policies did we sell) but many of the artists and emerging companies in our membership don’t have it so easy.

I am all for measuring what can be measured and in fact, there are some innovative solutions in the arts to gather qualitative and quantitative data that prove our worth and demonstrate service to our community. What worries me about our logic-based, post-industrialized national psyche is that it often assumes “if it cannot be measured, it is worthless” and that is what struck a chord with me in Mr. Bogle’s interview (note: sound waves can indeed be measured).

Arts advocacy seems to feed this obsession with quantity over quality by continuing to tout the economic impact of the arts on communities rather than developing initiatives to promote the intangible value art provides and educate the voters about what a society without art would look/feel/taste/smell/and sound like…

Until our citizens and policy makers understand the immeasurable value of art with respect to our society’s quality of life IN TANDEM with the measurable outcomes, the issues surrounding sustainability in the arts will continue to grow and the small to medium sized community based arts orgs that are not gigantic institutions funded by massive government subsidies will find it harder and harder to survive. Thankfully, research on the topic of art’s intrinsic value has begun (my thanks go out to The Artful Manager for posting about the aforementioned report).

To learn more about Mr. Bogle and his insights into our economy, you can check out his blog.

Andrew Taylor is musing about the idea of a “fantasy orchestra league”, modeled after the wildly popular fantasy baseball, football, etc. leagues. It’s a cute notion, but until there’s a way to quantify artistic excellence/performance there’s just no way to make it work. One commenter suggests an American Idol style competitive performance among string quartets, but I suspect I’m not the only one who finds that a vaguely nauseating notion (although I bet my colleague Adam Natale would love it!)

Although there’s no way to award points for an artistic performance in an objective manner, there are some well established metrics for assessing an organization’s performance. I’m thinking of simple for-profit indicators like return on assets as well as more non-profity ones like the ratio of program expenses to fundraising expenses. Taken with a grain of salt and some narrative explanation, these kinds of measurements allow investors and donors alike to compare organizational effectiveness and make informed decisions about allocating limited funds. Of course, that only tells part of the story when you’re looking at a producing or presenting organization (the other part being subjective artistic quality), but it’s extremely valuable when assessing a support organization like Fractured Atlas.

Unfortunately, metrics like these are barely used at all in the non-profit arts world. To the extent that some organizations do cite performance-related statistics, they do so on an ad hoc basis because a particular figure makes them look good. There’s certainly no industry standard in widespread use.

This is a shame for a number of reasons but mostly because it entrenches the status quo and makes it harder for innovative upstarts to break in. It is partly the absence of good, quantifiable data that causes so much of the institutional funding world to operate based on cushy personal relationships, rather than unsentimental scrutiny.

Perhaps a time will come when some standard reporting guidelines arise in our sector that address this need. All I can say is, when that happens, you’ll definitely want to draft Fractured Atlas. Our expense ratio is sweeeeeet!