FotoFest: How to Run an Art festival, part 2

Robert Boyd




Last time around, we looked at how FotoFest launched itself. They assumed they would be a major operation right from the start, and acted accordingly. Now I want to look at how the organization is run, starting with the financials. Non-profits must file a form 990 with the IRS each year. This form contains within it most of the information one might find in an income statement and balance sheet issued by a publicly-traded corporation, but not in the same format. If you want to see it in that format, you can pay GuideStar (sort of the non-profit equivalent of Edgar). If you don't want to pay, you can download the 990s from GuideStar and still get a rich collection of data.

The most recent 990 for FotoFest was for the period from May 1, 2008 through April 30, 2009. Their revenues for that period were $786,323, with expenses of $865,375, so that year they ran a deficit. This period started just after the 2008 FotoFest (March 7 to April 20, 2008), so I think we saw a kind of weird financial situation. I'm guessing that a lot of the bills for the 2008 FotoFest came due after May 1, 2008--and thus were registered in that tax year. But I bet most of the revenue associated with FotoFest 2008 came before May 1! Before we dive in deeper, I want to compare FotoFest to a few other arts organizations in town that are registered nonprofits (and thus produce 990s).

On the tiny end, Box 13 had total revenues of $62,161 in 2009. Because their revenues were less than $500,000, they were able to use form 990-EZ, which is too bad (for me) because it lacks a lot of detail. Their assets were $5440--they don't own that cool building they are in. FotoFest is similar--they are renters, not owners. Their net assets were $456,824, and they consisted mainly of office equipment and photos that they own (and sometimes deaccession to raise money). The Art League, on the other hand, owns a beautiful new building, making them asset rich ($1,182,820 as of May 31, 2009) but weirdly enough, revenue-poor ($262,182). The ran a relatively large deficit that year ($137,840)--they could probably use some contributions, people! (Or at least stop by and drink some coffee at Inversion.) The CAMH has one big fat asset, its building. Its net assets as of June 30, 2008 were $7,424,659, with revenue of $2,662,376 and a deficit of $332,911. Diverseworks is, in size, closest to FotoFest: assets as of August 1, 2008 were $459,910 (they are evidently renters), revenue was $780,652 and that year they ended up with a $67,830 surplus. All the above visual art organizations, including FotoFest, are involved in displaying art as well as other artistic endeavors (art classes, art studios, etc.). None of them are art-collecting institutions. The MFAH is, and that is reflected in the value of their assets as of June 30, 2008: $1,146,624,730! (Their many buildings also add a lot to this total.) Their revenue that year was $52 million, and they ran a $6 million surplus.

So, back to FotoFest. I mentioned that revenue and expenses are likely to be "lumpy" because their big event happens every two years. The 2009 return didn't include a FotoFest and had revenues of $783 thousand. But the 2008 revenue was $1,590,893--more than twice as much. When FotoFest comes around, people open their wallets.

Who is opening her wallet? Let's look at 2008, since it was a high revenue year. Of that $1.59 million, $1.43 million came in the form of "gifts, grants and contributions received." Form 990 includes a schedule of contributors. These are only contributors who contributed at least $5000 or 2% of the total contributions, whichever is higher. In FotoFest's case, they are only required to show contributions equal or greater than $31,817 (in 2008--the totals were much lower in 2007 and 2009). They only had five contributors who met that minimum in 2008--well-known foundations like The Brown Foundation ($105,000), the Cullen Foundation ($150,000) and the Houston Endowment ($150,000). It's worth noticing that the Houston Arts Alliance gave $55,900. They are a 501 (3)(c) funded by the city--specifically by the hotel occupancy tax.

If we look at 2009, we can start to see some of the deep-pocketed individuals (as opposed to foundations) who contributed to FotoFest. They did a Form 990 EZ in 2009, which meant they were required to list every donor who gave $5000 or more. The big foundations gave a lot less that year. On one hand, it may be that FotoFest asked for less (it being an "off-year"), but we must also consider that the foundations' endowments took huge hits that year. The foundations are still the major donors, but six individuals or married couples gave more than $5000 that year.

 How much of the contributions are from the deep pocket people? In 2009, they received $763,815 in contributions. Of that, $403,050 came from foundations and individuals contributing more than $5000. So the proletariat contributed $360,765. When you stuffed a dollar into the donations box, you did your part.

One thing you notice when you look at these tax forms is that FotoFest spends all the money they get. And why not? They aren't a corporation--they are not going to pay out dividends. They ask for the money they need. Sometimes they get a little more than that, sometimes a little less. The foundations look closely at their books and operation.

"In your proposal to the foundation, you include your budget, you include last year's 990, as well as the year end report," Wendy Watriss explained. She laid out how much money comes from the various sources:

30% foundations
8% from corporations (in-kind donations and cash)
25% earned income (we'll return to this)
20% events (mainly a fine print auction with Sotheby's, but they also have an education event)
11% government
6% individuals

One can imagine that this differs greatly for different organizations and festivals. I think this speaks to the longevity of FotoFest. They know their way around foundations, and since foundations (as we have seen) are able to write the biggest checks,their time and effort cultivating them has a good ROI. The earned income also reflects 20 odd years of doing this--they know how to make money. (Not that making money is their goal.)

They have workshops and portfolio reviews (the Meeting Place) for which they charge photographers to attend. The portfolio reviewers include museum curators, publishers, gallery owners, editors, directors of non-profit organizations and photo agencies--so for photographers, this isn't just a place to get feedback. Serious professional connections can be made at The Meeting Place--not to mention sales. There are potential tangible benefits, and that attracts serious photographers from all over. This is an aspect of FotoFest that is largely invisible to the public, though.

Another revenue generator is the catalog(s) they publish for each festival. 

This year, there were two volumes (I think that's how it has been for recent festivals). One is for the official FotoFest exhibits and one for the participating spaces, and they cost $35 if you buy them through the FotoFest website. These are large, beautifully designed books with a stunning variety of photographs in them. 

What does all this revenue pay for? I think anyone who has been to the biennial can see that it is a complex and probably expensive event. Form 990 breaks it down somewhat. In 2007 (which included the 2008 biennial). Salaries and wages cost $156,206 (six salaried employees plus two contract workers--they depend a lot on volunteers and short term contract workers during the biennial. They spent $111 thousand on contract labor, and $159 thousand on professional fees--which presumably include the professionals brought in for the Meeting Place). Legal fees were $36 thousand, as was shipping and postage (presumably shipping the artwork accounts for most of that). Printing and publication was $170 thousand--catalogs, which as I mentioned are large and luxurous, as well as mailers and brochures. Travel soaked up $323 thousand. This seems crazy, but I suspect it includes the hotel rooms they purchase for the show, which Watriss said accounts for $200 thousand in hotel rooms for the Doubletree and Lancaster hotels. Because fo the complexity of the Biennial, FotoFest ends up adding a whole additional section, "Statement 2," to the expenses section of Form 990. 

So they know what things cost, what their budget is each year, and what to ask for from the foundations. Does it always work? No, because sources of income aren't always dependable.

"We had Kodak as our sponsor in 1992 with a contribution of $500,000," Baldwin explained. Remember the largest contribution in 07-08 was $150,000. "Then in '94, we got zero from Kodak because they fired their CEO [Kay Whitmore], the guy who was funding us. And that created a major crisis for us. It took us two years to dig out of that hole."

"After '92, we downsized by 45 to 50% in staff and operating costs," Watriss added.

"We came out of that stronger than ever," Baldwin said. "The fact that we went through it and survived added to our reputation."

I thought I'd be able to handle this in two entries, but I think I'll need a third. I want to briefly discuss the participating spaces and a few other odds and ends.

FotoFest: How to Run an Art Festival, part 1

Robert Boyd

I have always been interested in the economics of art, and since getting an MBA, also interested in the nuts and bolts of running an artistic enterprise. This puts me in a minority among people interested in art--artists in particular would rather not hear about it, even though they are the people most affected by these issues, the most vulnerable, the ones with the most to gain and lose. This spring, as I was attending FotoFest exhibits (both the main exhibits and the ones at the many participating spaces), I found myself wondering about the economics of art festivals and biennials. Clearly there are a lot of models, including the purely commercial model of Art Fairs (or comic book conventions, for that matter), as well as a variety of non-profit and semi-commercial affairs.

I decided the best way to find out about how a FotoFest-style art festival is run would be to sit down with the people who run FotoFest and ask them. Wendy Watriss and Fred Baldwin, who cofounded FotoFest in 1985 and still run it today, generously gave me two hours of their time and didn't flinch when I asked them nosy questions about FotoFest finances and operations.

I'm dividing this post into two three parts because there is a lot to cover. Also, there is a logical reason. Part one will cover starting the festival. This was not something I would have thought was important to how the festival is run now, 25 years on, but they convinced me otherwise. Part two will deal with the financing of FotoFest. And part three will deal with other issues, including the partnerships with the "participating spaces."

When you start a non-profit enterprise, you basically have two choices--either you start big or you start small and try to grow it to the right size (whatever that is). One reason to take the latter approach is that growing it gradually allows you to acquire the operational skills you will need to run a bigger operation. But as anyone who has seen a business grow can attest, there are different competencies needed for small start-ups than are needed for large, more mature operations--and the transitions between those states can kill a business. The competency you acquire in the start-up stage may not only be irrelevant but positively counterproductive in the more mature stage of the operation. That's why there are serial entrepreneurs--people good at starting businesses who sell out before the business becomes too big, then move onto to the next opportunity. Do these people exist in the non-profit arts institutional world? Maybe, but Watriss and Baldwin are decidedly not like that.

The other obvious reason to start small and grow gradually is that it allows you the time you might need to build up a donor list. You establish a reputation, get the attention of some foundations, grow some, get attention of more donors, etc. A nice neat virtuous cycle. It seems logical, but it doesn't take into account a powerful psychological motivations of donors. If you start small and grow gradually, by the time you reach certain targeted donors, you are no longer the new kid on the block. Donors may not feel excited about supporting your organization at that stage.

A third reason to start small is that the public may need time to become used to the ideas you are presenting them. If your curatorial ideas are outside the mainstream or unfamiliar to people, you could end up with a lot of deserted exhibitions. Start small and find your audience, then grow from there. Very logical. FotoFest categorically rejected these cautious, conservative ideas.

"We decided that in order to make it work in Texas, it had to be big," Baldwin said. "Some people tried to persuade us that Houston was not a photography town, you needed to educate the public and start off with Ansel Adams and work up.

"We decided to do the opposite."

Baldwin, a professor of photojournalism at U.H., and Watriss got the idea for the festival in the early 80s. They had been to the long-running photography festival in Arles, where they made some contacts, got some magazine assignments, and sold some photos to European museums. They liked what they saw. "On the plane back, we decided to do something like this in Houston," Baldwin said.

Also in the early 80s, Jacques Chirac instituted the Mois de la Photo (Month of Photography) in Paris, in which photos would be shown in all the municipal museums in the city for a month.

"We combined those two ideas for FotoFest in the planning stages," Baldwin explained.

At this point, they were at the stage where a lot of projects founder. They had a great idea. Period. Now they had to gain credibility and introduce Houston to the idea. They took a series of fairly audacious steps to achieve these two goals.

First, they drew up the names of three hundred people who had given money to the arts in Houston. They wrote these people letters explaining the FotoFest idea. They got no response whatsoever. Instead of giving up, they instead concluded that this was the wrong approach to take, and went in an entirely different direction.

Next, they brought over the director of the Mois de la Photo to meet with the mayor and the city council. While he was in town, they also introduced him to a few representatives from the business community. This got some interest going.

The next step was to invite four very famous photographers (Ikko Narahara, Franco Fontana, William Klein, and Helmut Newton) to come to Houston in February, 1985, to photograph the rodeo. They made certain that this was a huge social event and that as a huge social event, it was associated with FotoFest (the first official FotoFest was already scheduled for 1986). The Houston Chronicle captures the flavor of the event:

Back in 1962 a gorgeous American model known then as the girl with the $100,000 face" posed for a French Vogue fashion layout photographed in Paris by the already famous Helmut Newton.

Considering inflation and the way she still looks, Houston socialite-wife-mother-thoroughbred horse breeder Dolores (Mrs. Stuart) Phelps could be tabbed the million-dollar face" today.

Helmut Newton, even more famous than ever, this time was in Houston and delighted to be having a reunion with his former photo subject. [...]

Newton was one of a group of premier international photographers who have been focusing their cameras all this week on the Houston Livestock Show and Rodeo and other Bayou City vistas. [...]

French Consul General Didier Quentin took center stage at the party to read a telegram of congratulations from Paris Mayor Jacques Chirac [and] City Councilwoman Eleanor Tinsley, representing Mayor Kathy Whitmire, read a Foto Fest proclamation. Heading out with husband Jim Tinsley for the opening performance of the rodeo, she wore a chic cowgirl's scarf knotted at the neckline of her navy jacket.

Camera International publisher Lorenzo Merlo of Amsterdam introduced the photographers who were brought to Houston by Foto Fest: Ikko Narahara of Japan. He and wife Keiko are staying with Betty and Freck Fleming of Paradise Bar and Grill fame and driving publicist Barbara Dillingham's little red Toyota truck. Japan's Consul General Taizan Araki was among the guests at the party.

Franco Fontana of Italy, a color and landscape specialist who lives in Modena and has compiled books about his home town and Bologna. Former honorary Italian consul Achille Arcidiacono is playing host to the Italian contingent which also includes photographer Ernesto Bozan and art magazine publisher-photo collector Franco Panini. Houston photographer Ed Daniel, doing yeoman service with a camera at the party, also is chauffeuring the Italians.

In absentia, William Klein, an American photojournalist who has lived in Paris for a number of years and done books on Rome, Moscow, Tokyo and New York. Houston next? He and wife and son arrived the day after the party and are house guests of Gay Block.

Joe and Christina Hudson were to take the visitors to their ranch in Brazoria County. (Betty Ewing, The Houston Chronicle, 2/23/1985) 

Many more socialites and prominent Houstonians were mentioned in this article. FotoFest was extremely canny in bringing these four world-renowned photographers to Houston, and lining them up with the local aristocracy. Houston was an insecure city in the mid-80s (and in many ways still is). The city was then riding very high on high petroleum prices--as the oil business grew and got rich, so had Houston. (Oil prices would crash one year later. If they had decided on a "start small" model, they might have expired then and there.) Urban Cowboy chic had happened, partly as a result of the fascination with brash, wealthy Houston. But Houston was feeling culturally not up to snuff. Where were our writers and artists, our great cultural institutions, especially compared to New York and L.A. and Chicago? FotoFest played off this insecurity. The social and political leaders loved the fact that a bunch of the world's greatest photographers were here, in their homes, at their parties.

Lesson learned: if you want the rich in Houston to open their wallets, don't send them a letter. Instead, let them party with Helmut Newton. The party described above was paid for by foundation grants (!), but the party itself was the seed for raising real money for the 1986 festival.

I was talking recently with someone who runs a tiny alternative art space, and she was fretting about how to make it grow, how to fulfill her ambitions for it. So I suggested becoming a 501 (c)(3). But she was reluctant because a 501 (c)(3) had a board of directors and she was reluctant to hand her vision over to them. But she also complained that she didn't want to be in the position where she would have to host a fund-raising gala. The way she pronounced the word "gala" said it all. The thought was simultaneously distasteful and terrifying. But FotoFest succeeded right from the beginning by embracing that aspect of a non-profit's existence. These moves allowed them to start big--the inaugural festival had 60 exhibitions.And despite various hiccups, FotoFest has been running every other year ever since.


In Part II, I'll discuss how it runs. We'll look at what it costs to put on and where the money to put it on comes from. (Get ready to dive into some tax documents with me! Oh boy!)


FotoFest 2010 opening night