Balancing Your Budget When There's Nothing Left to Cut

What are Some Creative Ways to Control Expenses?

Choral organizations don’t tend to run with a lot of fat that can be easily cut, so we’ve all likely encountered that moment when we’ve sliced and diced across many categories and still can’t get the numbers to work. What then? 

When Emma Marzen joined the Santa Fe Desert Chorale as executive director, she faced substantial financial challenges, including nearly $200,000 in accounts payable. Her advice is to start with a people-first strategy: “We [went] to all our people, all our vendors, everybody that we work with, and asked if they could cut us a deal. And that worked. Often, sticker prices may be negotiable. We talked to our venues, and we just laid out our circumstances. We know that they do have some dependency on us as well.” If a vendor won’t reduce the cost of a good or service, you can also ask to spread out payments; this can alleviate cash flow strains. 

Eric Rubio, finance director at the National Symphony Orchestra and formerly at The Washington Chorus, recommends that organizations consider sharing: “Two or more organizations could co-produce a particular program, share personnel (artistic or administrative), and share resources like equipment, music materials, or venues.” There are numerous added benefits to this strategy beyond just cutting expenses; cross-pollinating audiences and showing efficiencies can make a compelling story to tell institutional funders. 

One of the most painful and difficult decisions we may be faced with is cutting items related to personnel. 

Steve Neiffer recently retired from his position as the chief operating officer of the Los Angeles Master Chorale; he is also Chorus America’s treasurer. “Rather than providing merit increases or cost-of-living increases, consider holding wages unchanged and provide a ‘make whole’ payment at the end of the fiscal year when the actual results are known,” he says. 

Finally, it’s important to view your budget as a mission-aligned set of goals and guidelines, but not necessarily an inflexible document. If you look carefully at your operation, you may find places where having more information will allow you to make thoughtful decisions throughout the year. 

 Anthony Salvi-Exner, executive director of The Washington Chorus, is approaching this year’s unknowns by holding back on releasing all his performance dates. "I was a little concerned about sales for my Christmas show,” he says. “We have two different venues we use, and I held back a date, just to be careful. If sales were tanking for my ‘Christmas in July’ sales push, I was going to pull that last date.” But, he says, “sales are good enough that I feel comfortable releasing the date." 

When you build your budget, give yourself (and your board) several checkpoints throughout the year that will allow you to make better-informed decisions. Whether it’s holding back the release of a performance date or waiting for more information before increasing compensation, give yourself the gift of more data before committing. If things go south, you won’t have committed to anything you can’t manage. 

We Can’t Compromise on the Art 

Whether you’re a big-budget chorus that works with a union orchestra or your artistic expenses comprise sheet music and an accompanist, you’ve likely looked for ways to save on the artistic side of the ledger. So how should we think about saving on these expenses while not compromising on our mission? 

At The Washington Chorus, Salvi-Exner and artistic director Eugene Rogers have a simple agreement: Rather than make cuts that detract from their ability to put on an exceptional concert, they will reconsider the project altogether and plan something different. 

Salvi-Exner says, “There's no compromise on artistic product. If a piece requires a full orchestra, we're going to use a full orchestra. We would pass on a project versus not doing it to the highest standard that is required." 

This is where a multi-year artistic plan—and a multi-year budget—become crucial. If a project is too expensive to do this year, consider pushing it to a future season to give yourself more fundraising runway. Ask yourself what you can perform this season or next that will require less expenditure but still have significant impact. 

Rubio notes, “Artistic vision is never a one-and-done thing; it’s continuous over the generations an organization will serve, and more practically, it should run in parallel with the term of the current strategic plan, which should be a multi-year undertaking.” 

We Simply Cannot Make It Work This Year. Is It OK to Budget for a Deficit? 

In short, yes. However, there are some guidelines that need to be very clearly understood so that you don’t put your organization into a perilous financial position. 

Neiffer says this about whether it is ok to pass a deficit budget: “Absolutely, but only if the organization has had a track record of accumulated surpluses that exceed the proposed deficit, or a cash reserve is in place to absorb the proposed deficit. This makes the case for boards to designate a portion of surplus-years results as a contribution into a cash reserve plan.” 

Salvi-Exner concurs, cautioning us that “you have to have money in the bank. Don't spend what you don't have.”  

Budgeting for a deficit is ok “because budgeting should be about more than a one-year profit and loss,” says Rubio. “It should be about a multi-year forecast of the balance sheet, planning the ebb-and-flow of net assets [that are] being invested in the artistic vision.” 

But “this is where it gets really tough because artistic vision can often be the reason that people want to pass a deficit budget,” says Marzen. “And I don't know that that's really the right thing unless it is specifically tied to growth and investment in the future.” 

If you have the reserves to cover the planned deficit, you can consider using them. If you do not, the danger of becoming insolvent—or running out of cash when you need it most—is too great. 

Know your limits and stick to them. When you approve a deficit budget, you should know exactly how much you’re proposing to pull from your reserve fund. Ensure that you are checking your actual spending throughout the year so that you don’t exceed this amount. 

Look at your budget from a multi-year perspective; if you are only looking at the budget one year at a time and there is no plan to eliminate the deficit, you will simply continue to draw your reserves down. 

Share the Joy of Financial Planning

Every organization has multiple stakeholders with eyes on the budget, from artistic and administrative leadership to the treasurer and the board. While the process of developing a budget and monitoring financials differs from organization to organization, it’s important that the primary stakeholders be in continual conversation. 

In approaching a difficult financial situation, Neiffer recommends we “start by ensuring that all stakeholders recognize the challenge in a non-alarming way. So long as the challenge is broadly understood among all an organization’s functions, including by artistic leadership, then at least you have an acknowledgment of the situation.” 

The benefit of this approach is not only to create a teamwork-oriented response to the challenge, but also to engage your primary stakeholders in finding solutions. Often, by talking about the challenge in an honest and transparent way—and early in the process—you may find that donors will increase contributions and board members may work more diligently to activate their own networks, particularly if they see strong artistic planning and exciting projects ahead. 

When approaching a budgeting process that has competing priorities, Rubio reminds us to share our desired outcomes first. “Don’t start by trying to find common ground at the budget,” he says. “Find common ground at the mission, vision, and values level, things that last for a generation, and then at the strategic plan level, which covers multiple budget cycles.” 

Each of these approaches reminds us that the work of a nonprofit organization doesn’t happen on the shoulders of a single person. As leaders, we often place on ourselves the success or failure of the projects we have championed. However, the best thing we can do is to spread ownership for the organization among our key stakeholders, especially during the most challenging times. 

Tempting Tactics to Avoid 

While there are a few things we can do to mitigate our financial risk, there are also choices we shouldn’t make. 

While it’s ok—and right—to plan for growth, it’s the underlying plan that’s crucial. Don’t include aspirational revenue in your budgeting process unless there’s a reasonable expectation you’ll realize those gains and you have a good plan to do so. 

Be honest and transparent in your budgeting. If you think there’s a chance the expenses on a concert will run over, include that in your estimate now. When possible, bring a ‘tear the band-aid off’ approach: Absorb the pain of a difficult budget now, while you’re still able to problem-solve, rather than setting unrealistic expectations and falling short. There’s nothing worse than getting into the year and realizing that you’ve just put too much pressure on yourself and your team to hit numbers that were unrealistic to begin with.  

Moreover, it’s important to have a clear understanding of the environment. If the data shows a continued decline in contributed revenue, then your budget should reflect that reality. 

You Can’t Cut Your Way to Success 

It is possible to cut too much. In practice, this means you’ve eliminated so much capacity that you’re unable to do your work in a way that is artistically fulfilling and culturally impactful. While each organization needs to wrestle with its own risk tolerance, it’s important to carefully consider the structural pillars that your organization is built upon and not to compromise them. 

Marzen says, “We exist to create, right? So that has to be always in our minds. At the end of the day, if you forget that, then you've forgotten why you're here. I think for organizations to value themselves is extremely important. You have to think of yourself with great confidence and be willing to go to bat for your organization.” 

How do we know if we’re cutting too much? Alarm bells should ring if you encounter one of the following:  

• If you feel you are unable to work your mission in a way that is impactful for the community you serve, you may have cut too much.
• If the things you are cutting are going to create a downward spiral with ever-diminishing returns, you should think twice. An example of this may lie in your marketing budget: If you cut too wildly, you could see a fall-off in your attendance, which will decrease your ability to develop long-term sustainability.
• If your business model isn’t working and you need to change it, you need ‘change capital’ to do that work—and it doesn’t happen overnight. If you and your board have decided to change a major facet of your work, give yourself time, grace, and the necessary funds to make the change carefully and meaningfully. 

Final Thoughts 

While managing the financial health of an arts organization is not easy during the best of times, periods like the one we are in can place our nonprofits under added stress that makes us question the very viability of our business models. It’s important to remember that this is cyclical, and that things will get better. When it does get better, take advantage of those times by building budget discipline and a surplus that will allow you to navigate the hard times (and don’t forget to work on your planned giving campaign). Budget for surpluses and save them for a rainy day. Start an endowment—no matter how small. 

Marzen reminds us that “it's easy to get mired and really burnt out from being in that hellacious expense-cutting zone where you just feel you've cut everything. You've done everything you can. And you're exhausted. Focusing on the people—that is your saving grace. And people will show up for you if you show up to them and tell them why they should care.” 

And remember: Your budget and your balance sheet are there to help you serve your mission and not the other way around. Use the information they provide to guide you as you create the art that makes such an enormous difference in our communities. We’re rooting for you! 

Creative Ways to Control Expenses 

• Negotiate: Talk to vendors and service providers. Ask for discounts, flexible payment plans, or deferred schedules. Small adjustments can relieve immediate cash flow stress.
• Share & Collaborate: Co-produce programs or share resources like personnel, equipment, or rehearsal space with other organizations. This can reduce costs and expand your audience.
• Strategic Personnel Decisions: Consider holding wages steady during tight times, with “make whole” adjustments later if the budget allows.
• Flexible Budgeting: Treat your budget as a guide, not a hard rule. Build in checkpoints to revisit and adjust as circumstances change.
• Delay Commitments: Postpone announcements, hiring, or other major expenses until you have the data and confidence to move forward. This keeps you from overcommitting. 

Christopher Eanes is a musician and arts leader devoted to engaging people in the transformative art of choral singing. As President and CEO of Chorus America, he and his team work to strengthen the choral sector through strategic advocacy, groundbreaking research, and the annual convening of hundreds of choral leaders.

Contributors: 

• Emma Marzen: Executive Director & CEO, Santa Fe Desert Chorale
• Steve Neiffer: Treasurer, Chorus America Board; Former Chief Operating Officer, Los Angeles Master Chorale
• Eric Rubio: Finance Director, National Symphony Orchestra
• Anthony Salvi-Exner: Executive Director, The Washington Chorus