The Process Model of Closure and Nonprofits: The Exit of Exit Art

ABSTRACT

Experts think of arts nonprofits as fragile organizations, prone to closure. Despite these predictions, little research has been completed on the process of closure within these organizations. I leverage a comprehensive organizational database and seventeen in-depth interviews with staff and board members to understand the process of closing New York's Exit Art. I explore the value of Sutton's (1987) process model, and its application to nonprofits by Duckles et al. (2014), to analyze the case. This study offers novel insights into management practices that may benefit nonprofits in the future, and interest scholars who study management transitions and organizational closure.

KEYWORDS:

• Arts
• closure
• legacy
• nonprofits
• strategy

Notes

1. On the other hand, nonprofit organizations are oriented toward community service, and as such may be particularly likely to attract community support; this support can then buffer nonprofit organizations from the “liability of newness” (Duckles et al. 2005, 170; reporting the work of Hager, Galaskiewicz, and Larson 2004).

2. This claim is couched as a hypothetical because the empirical evidence doesn't support it. Haveman and Khaire (2004) find no support for the claim that the impact of founder succession is stronger in cases where the executive plays multiple managerial roles (than when she plays just one).

3. Duckles et al. (2005, 196–7) offer a possible explanation: the nonprofit status of these organizations prohibits stakeholders from profiting from the distribution of assets during closure. Since no one seeks to gain, there's little incentive for conflict. On the other hand, there are non-material gains that employees can generate during closure—the ability to control the narrative of their role in the organization, hogging access to job referrals and recommendations from board members and fellow staff, and the like. The non-distribution requirement is a weak explanation for this puzzling lack of conflict.

4. Duckles et al. (2005) remains the only study that explores the robustness of Sutton's (1987) process theory in application to nonprofit organizations. Utilizing “organizational narratives,” drawn from interviews with a panel of employees from thirty-one organizations in the Twin Cities that closed between 1980 and 1994, the authors identified patterns using event structure analysis, focused coding of events, and qualitative comparative analysis. They isolated a small cluster of factors strongly associated with the propensity to close, including program failure, the achievement of a mission, financial crises, and the loss of external commitment. They also discovered the reduction of internal commitment, including the loss of a founder, contributed to closure. During the process of closure, the authors noted a lack of conflict or resistance to organizational death, and a small cluster of organizations in which employees sought to reverse their fortunes through expansion or contraction (Duckles et al. 2005, 195).

5. “Mission_2010.” Unprocessed document, Exit Art Archive, NYU Fales Library.

6. Alberta Arthurs reports that she was not at the funeral in Puerto Rico, and speculated that if this conversation occurred, it took place later, in New York (personal correspondence to the author).

7. “Exit Art Closing.docx”

8. “minutes_11_10.docx”

9. In addition to Lambent, The Agnes Gund Foundation, the National Endowment of the Arts, the DCA, Ford Foundation's Institute of International Education, Pollock-Krasner, Lily Auchincloss, the Foundation for Contemporary Arts, O'Grady Foundation, Mirapaul Foundation, and NYCA all offered grants to Exit Art, or allowed them to retain previously granted but not disbursed funds to support the Legacy year. The Thirtieth Anniversary book project was supported by the NEA, the Brown Foundation, the Rauschenberg and Andy Warhol Foundations. DigiMovies programming was supported by the Rockefeller Cultural Committee, and exhibitions in the final year were sponsored by the Bloomberg Philanthropies, Greenwall Foundation and the Brown Foundation. The transfer of the archive to Fales's Downtown Collection was supported by a $2,000 grant from the Mirapaul Foundation.