Tag Archives: arts funding

Budget Cuts: A Look Forward at Arts, Culture, and Public Funding

We have two choices (not necessarily exclusive) in facing the federal and states’ budget prognosis for arts, culture, museums, heritage, humanities, historic preservation, cultural resources and allied causes that range from public broadcasting to education to job corps. 1) We can write and call our legislators and do the best job of advocacy the field has ever demonstrated. 2) We can lay the groundwork for the future infrastructure of what I call the creative-cultural sector.

We must do both. We can no longer afford to just advocate. But when we do advocate, it has to be around a much larger cause. (More on that, below.)

There are two strategies required to lay the groundwork for a new future. We need to act on both. 1) We must become a unified sector. 2) We need to propose and advocate for an entirely new, unified funding approach that advances the entire sector as fundamentally valued by our economy and society.

To be a unified sector, we have to really and truly get past the distrust and the sometime-backstabbing that has kept this from happening over and over. The for-profit creative sector has to embrace the nonprofit sector and be in, one for all and all for one, and the non-profits have to sit by side with profitable and unruly creatives whose needs and priorities may be at odds with their own. On the nonprofit site, the historic preservation and heritage folks and the arts, museums, and humanities folks all have to look each other in the eye and pledge – and demonstrate – solidarity. No end runs. No peeling off to find safe havens elsewhere.

Then, we need to put forward radical, energizing ideas on how to reshape our creative-cultural funding infrastructure. The Department of Transportation has recently put forward a streamlining of 55 different programs into 5. We’re the creative thinkers: can’t we put forward a model that re-engineers our creative-cultural sectors’ funding in a similarly bold way? Why not go to Washington with a new approach in hand?

Now, on advocacy. It made me pause when I heard this week that the White House has proposed that arts and history be joined together in something called “Effective Teaching and Learning for Well Rounded Education.” Most people in our field have an immediate and angry response to this, feeling it prospectively marginalizes both arts and history in learning and in our society’s related view of their importance. It may be a semantics thing, even a small signal. But it may also point to the alliance we must form between arts, history, culture and heritage to preserve their importance in education and to preserve their value with the public at large.

Where will the leadership come for this to happen? The creative-cultural sector’s current splinters each have their own leadership and structures. It doesn’t seem like there is a lot of trust or common cause between them. Many leaders and agencies around the country are also (perhaps wisely) sitting as far below the radar as they can, hoping to go unnoticed in the current and projected budgetary mess. Perhaps this is a time for some of America’s leading foundations and private sector leaders to join together in a pledge to build a new creative-cultural infrastructure keyed to our 21st century, and then to bring their recommendations to the White House.

Where ever you are, we need you.

Reinventing America’s Cultural Support System

Imagine for a moment that the current tumult over federal and state funding for culture led to the opportunity to pause and thoughtfully reinvent a viable public support system. A silver lining to the dark cloud, if you will.

Would it look like the support systems and amalgamation of agencies our country invented – one piece at a time, over a half century ago? Chances are, not at all.

Anyone looking for good thinking about a new type of cultural system would do well to read Culture and Creativity in the EU Structure, a report that came out last September. It studies EU investment in culture over the past decade and makes a solid case for what it calls “a focused, flexible and integrated culture-based development
strategy” throughout communities and regions of the EU.

At its foundation for examining the value of investing in culture, the analysis uses the tri-part definition that the EU Cultural System has employed since 2006:

Core Arts Areas: Performing and visual arts, cultural and architectural heritage, and literature.
Cultural Industries: Film, DVD and Video, TV and Radio, Video games, New media, music, books, and press.
Creative Industries:Those industries that use culture as input but whose outputs are mainly functional, including architecture, advertising, design, and fashion.

Both the Cultural and Creative Industries are further defined as “Those industries that have their origin in individual creativity, skill and talent and which have a potential for wealth and job creation through the creation and exploitation of intellectual property.”

In a few simple lines, this glues together all the splinters across arts, heritage, history, and combines non-profits and for-profit industries. Wouldn’t it be great if our cultural system was as straightforward and inclusive as this?

By taking this holistic view, the report (an outgrowth of a policy group brought together in Brussels in 2009), was able to examine both the traditional impacts of core areas – tourism and related economic value of attending and participating in arts and culture – and contributions to a larger economic future. The report points to the “the rich and dynamic contribution” that all three of the above areas make to the knowledge economy and innovation, and to employment creation and social cohesion. In policy, the EU is unafraid to talk about supporting creative entrepreneurs at the same time as supporting traditional institutions. They have equally important roles worthy of investment, and the report notes that even in the past two to three years, the ROI on supporting culture and creativity as drivers of broad innovation has been well documented and demonstrated.

It is in this area of arguing for investment in culture as an economic driver of wide ranging knowledge-based industries that the EU has come the furthest in making a case for a comprehensive approach to culture and creativity. According to the report, “Culture-based creativity is an essential feature of a post-industrial economy. Culture drives technological and non-technological innovation, stimulates research and optimizes the application of human resources in the development of new products and services.” Basically, it makes a coherent case that the knowledge-based economic system cannot thrive without a healthy cultural-creative capacity.

How refreshing. How non-defensive. Imagine if we could restructure, reinvent, and optimize our investments in America’s cultural-creative system along similar lines. Imagine if we could go beyond the economic impact studies we rely on so heavily to make our case. (Per the report, a research institute in the UK that focuses on the nature of innovation has documented the supply chain linkages between artistic and creative activities, demonstrating positive relations to innovation and showing that creativity and culture “play an important role in the ecology of innovation.”) We could and should do the same.

Imagine, too, if like the EU we recognized that artists are important leaders in demonstrating entrepreneurship and small business development. The report writes that “The creative sector makes many of these processes evident and communicates the positive attitudes, the excitement and the vision that provide the motivation for entrepreneurs.” Rather than seeing the arts community as off to the side of entrepreneurialism and small business development, the EU is increasingly putting artist out ahead as models to others.

Now let’s be totally honest. Culture is not all rosy in the EU. A great deal of what the EU has attempted in what it calls “social cohesion” through culture has failed to live up to expectations. Some, including most recently the President of France, say it has failed completely.

That said, there is much to consider if we in the United States were to advance our system of cultural support and related advocacy for investment as has the EU in its support of the three part cultural system and the related recognition of both culture and creativity as central to innovation. We hear a lot these days about “invest in clean energy” or “invest in new technology.” Wouldn’t it be great if we could similarly talk about America’s investment in culture and creativity? We could, and should. The first step is to reinvent our cultural support systems and structures, and bring the field together around a new vision and expanded purpose.
Culture and Creativity in the EU Structure

Charitable Giving: An American Right

After doing a fair amount of international work in the past few years, I’ve come to cherish our US system of charitable giving, our deeply held commitment to giving, our strong foundations and charities, and our American belief in personally supporting wide ranging causes. Imagine being a theater company somewhere else, where your choice of support mechanisms are government, and…well, maybe some good friends who believe in your cause, and a few underwriters who get trade visibility. If you think it is a harsh financial world for the arts in the US, imagine being just about anywhere else, where government funding is threatened and there is little to no tradition of charitable giving.

There’s been a fair amount of grumbling at US foundations and overall charitable giving these past few post-stock-market crash years, as they’ve had to cut their grants and edit their focus, often away from the arts. But what if they weren’t here at all? We take them very much for granted, and we shouldn’t, because there is considerable momentum toward limiting charitable contributions, limiting what can be supported through charitable giving, limiting foundations in general. In fact, there is movement toward limiting the tax deductability of contributions of any size, by anyone, unless those contributions are toward government-determined priorities.

I recently came across an article by Adam Meyerson, president of the The Philanthropy Roundtable, from a speech he gave at Hillsdale College in January. I highly recommend reading the full article and have posted the link in the blogroll.

Meyerson outlines why we should all be more than a little concerned about the future of charitable giving, and why we should be actively in contact with our legislators and civic leaders to ensure that charity and philanthropy remain in tact. He notes that after many years of gradual attacks on foundations and philanthropy, the heat is again turning up. Late last year, the Congressional Research Office published a report calling for a new federal oversight agency for charities and foundations. This is on its own not too concerning. But the CRO report has been coupled with comments made by members of Congress that foundation assets are “public” money and are therefore subject to political control. As Xavier Becerra put it, foundation assets are a “32 billion dollar earmark.” No, they are not.

Meyerson also notes that there are growing political and governmental proposals to restrict what kind of giving may be done. (By foundations or by you or me.) He notes that many proposals now on the government table would limit charitable giving only allowing giving to racial minorities, low income families and communities. As he says, “Americans of all races and income levels benefit from giving to religious institutions, colleges, universities, hospitals, medial research, the arts, the encironment, and many other causes that would not fall under some of the narrow definitions now being proposed.”

Imagine if giving to arts and culture no longer counted and was no longer allowed as a part of philanthropic giving, at the very same time when government support for arts and culture – especially at the state and local level – is threatened by deficits. Imagine no tax benefits for giving for foundations or for individuals like you and me. Imagine running that theatre company in a country other than the US, because that is what it will feel like. With no benefit, no incentive to give, few will.

Write your Congressional representatives on this one. If the Philanthropy Roundtable is taking it seriously, we all should take it seriously.

Fixing Charitable Giving in the Arts

If you haven’t seen Monday’s Wall Street Journal special section Report on Philanthropy and Charitable Giving, go find it on line. Make sure your favorite funder gets a copy.

Pablo Eisenberg’s superb and provocative cover story, “What’s Wrong with Charitable Giving and How to Fix It” hits the nail on the head in calling for nine fundamental changes in the way that foundations of all sizes give out their money to all types of nonprofits. (See link in blogroll to the left.) His top three priorities are to increase the amount of payout from 5% to 6%; to increase general operating support; and to increase multi-year funding. The first priority takes an act of Congress. The other two are common sense. So are his other points, including simplifying application and reporting procedures and adopting rolling grant making.

Let’s get the first priority dealt with first. Eisenberg argues that “an increase in the payout rate to 6% in all grants would eventually add about $10 billion a year to the coffers of nonprofit organizations, to the approximately $40 million that it is estimated that foundations now give.” Yes, you read that right. $10 BILLION would be added to the $40 million. He goes on to say that “Foundations claim that such an increase would jeopardize the perpetuity of their assets, yet a number of studies argue that their assets could be maintained with a payout of 7% or 8%. The Obama administration and Congress should act quickly to increase the payout to 6% in grants, and the President should use his bully pulpit to pressure foundations to give much more than they are currently giving.” (Well, my sense is that most foundations are giving as much as they can to save nonprofit organizations in this dire time. But I fully agree: Congress has to let the payout go up to 6% or we will simply lose our vital nonprofit sector.)

As for Eisenberg’s other key recommendations – increased operating support, multi-year funding, and rolling grant making – they are essential changes that have to happen to keep the arts sector alive. Many foundations, to their vast credit, have already scrapped their various grant programs in favor of general operating support – at least through the predictable future. But the very notion is still politically charged among funders who have traditionally used grant making to address their own priorities. Equally charged is the idea of multi-year funding and overall larger annual allocations so that organizations have a chance to really do what they set out to do, rather than accomplish only a fraction of their goals.

In the arts, the past/current model has been proven, and proven, and proven to not work. In her report to Grantmakers in the Arts – the association of foundations and public agencies that fund the arts – Holly Sidford recently wrote that “the nonprofit arts business model is shaky, for many reasons. One important reason is that the practices of both nonprofits and funders have not recognized that there are different kinds of money (in the Nonprofit Finance Fund’s terms: build, buy, and burn capital), a financial diet too rich in project grants erodes the fundamental viability of any nonprofit organization. A commitment by more funders to better understand and respect capitalization principles in their grantmaking, coupled with more open-minded exploration of ways funders can support hybrid and alternative financial models, would increase responsible practices in the future. A corollary to this is the need to adequately capitalize collaborative ventures.”

For decades and through a number of recessionary cycles everyone involved in arts funding has known that the emperor has no clothes – the funding approaches adopted and used in both the public and private sector do not and have not and will not work to create a healthy nonprofit arts sector. It was 1966 when economists William J. Baumol and William Bowen first studied and wrote about the fundamental earnings gap within the performing arts and here we are today, still with the same earnings gap and the same undercapitalization and underfunding of the arts.

Write a letter to the President. We need that 6% payout rate.
Talk to your favorite foundations. It has been 44 years since the earnings gap was documented as undeniable. Isn’t it time to fix charitable giving so that the arts survive and (maybe) thrive?