Putting up the wrong photo is hideous and unacceptable, but it's clear this is about consistent racist behavior. There are some institutions that won't be able to move forward with their current structure or leadership, and if no one is willing and able to take over and lead them in a new direction, they will fall.
There is just too much racism in the upper levels of the white echelon that runs the arts for culture makers to continue silently and begrudgingly supporting it. The Alliance fell apart because they lost their legitimacy in the eyes of the theaters the Alliance was meant to serve, and they walked away. If the Alliance can't take the necessary steps to regain that legitimacy, then their only other choice is to dissolve.