Writing on the Wall? What to Make of the Demise of the Silicon Valley Ballet

As of late 2015, the Silicon Valley Ballet seemed to be doing everything right.

At the helm was the experienced hand of Artistic Director Jose Manuel Carreño, formerly of the American Ballet Theatre, who came onboard in 2014. Ever aware of the power of branding, the ballet had changed its name from Ballet San Jose last year. And most encouragingly, it met a $3.5 million emergency capitalization goal and found its books balanced.

Yet in early March the ballet announced it was shutting down, ending a 30-year run as the primary Bay Area dance company south of San Francisco.

What happened?

A close look at the ballet's demise reveals a perfect storm of challenges that offer food for thought for any arts nonprofit executive director. Some of these challenges were unique to the ballet; others, more alarmingly, speak to larger trends related to the interests of younger tech donors in the "high brow" arts sector, a topic we've written about often lately. Let's start with the former.

The Silicon Valley Ballet simply ran out of money. It had no endowment to pull from, and launching another emergency fundraiser a year after the previous one simply wasn't feasible. Oh, and its pipeline of expected donations dried up. According to the SF Gate postmortem, the ballet's annual budget was around $5.5 million, half coming from the Silicon Valley Ballet school and ticket sales, and half from philanthropy. According to board member Millicent Powers, "Donations that we thought were a 'yes' turned into a 'no.'"

Yikes. Fear of evaporating gifts always worries nonprofit leaders, especially when the stock market is turbulent—another topic we've been writing about lately. But the timing in this case couldn't have been worse. You don't want your nonprofit in a fragile state when the Dow is on a roller coaster ride. 

The ballet had also been roiled by internal disruption over the past five years. Back in 2012, then-board chairman John C. Fry, founder of the $2.2 billion Fry's Electronics, purportedly ousted ballet founder and director Dennis Nahat. Fry is no longer listed among the ballet's current board members, thereby cutting off access to Fry's wealth (and his Rolodex). What's more, the SF Gate cryptically alludes to "legal actions against a board member." These kinds of litigious affairs can not only be expensive, but also toxic to fundraising morale. 

So to summarize, the ballet's dissolution was caused by many of the usual suspects: a paltry endowment, lack of donations, and boardroom drama. A cynic could argue, "Well, what if they ran their organization better? After all, they're sitting in the wealthiest region in the known universe."

If only it were that simple.

Arts organizations in the Silicon Valley, the Bay Area, or any urban area grappling with the influx of tech dollar and the gentrification that comes with it are faced with a new imperative to appeal to the "nouveau riche." As we've noted elsewhere, it isn't easy. And so we give the ballet credit. It saw the writing on the wall — it even changed its name! — but it could only do so much.

One big challenge is that many of the younger tech leaders have not yet turned to philanthropy in a major way and, to the extent that they have, local cultural organizations haven't been a top priority. In other words, these tech guys are cheap when it comes to the arts. At least according to people like attorney David Lindsay Barch, who, in a Facebook post reprinted by the SF Gate, said, "The stinginess of corporate philanthropy in Silicon Valley is a disgrace to the region and its residents. Even the robber barons of old did more for the arts and culture of their time than the penurious gorgons that reign today. Just shameful." (However, in fairness to Silicon Valley, the ballet did meet its previous $3.5 million emergency capitalization goal. And, as we've noted, the Silicon Valley Community Foundation exploding with new resources—to the point that its giving has nearly doubled in the past year.)

Which bring us an even more vexing challenge. As we noted in our previously linked piece on the fickleness of the nouveau rich, "high brow" arts organizations are up against serious demographic challenges. It takes a lot of work to get, say, a 26-year-old programmer to spend his free time at the opera or ballet. What's more, these kinds of productions don't come cheap. And so people like Wayne Hazzard, executive director of Dancers’ Group, which supplies support services to the dance community, wonders if the entire sector is on its last legs.

He called the ballet "an institution that was devised in another time — big ballets, live music, staging and costuming. We know how much it costs to do that," he said. "Maybe it is a model that needs to be rethought, like some of the big uber-restaurants."

We'll table this discussion for another time. Until then, we'll leave you with some news suggesting that all hope is not lost in Silicon Valley and the Bay Area. First, check out our take on Silicon Valley Donors Circle, which has awarded more than $441,000 to emerging arts organizations in the Silicon Valley region since its inception in 2008. 

Then meet the Community Arts Stabilization Trust (CAST), which owes its existence, in part, to $5 million in seed funding from the Kenneth Rainin Foundation, an outfit committed to nothing less than saving San Francisco's soul. (How's that for a teaser?)