Happy New Year everyone! May your year be creative and exciting as you lead the way in the world of arts, culture, and creativity.
Today is the first business day of 2011, and today’s trend in our Eleven Trends for 2011 sets the tone for thinking about the relationships between local governments and nonprofit cultural organizations this year.
Does your organization expect to pay taxes on your building this year? NGO watchers expect municipalities to look increasingly at various forms of tax on land-owning nonprofit institutions that have traditionally remained exempt. While the early targets of this have been entities such as nonprofit senior living centers and educational institutions, along with some churches, it will be increasingly hard for governments that are starting to tax these types of nonprofits to leave museums, cultural centers, and nonprofit cultural facilities off the municipal tax rolls. Some of the taxes will come in the form of user fees – sewer, water, street maintenance, snow removal, security – but others will be a straight property tax. Expect this to come up for discussion as budget season starts everywhere and local government face shortfalls. Be ready to advocate, and organize to develop win-win solutions.
And win-win scenarios can happen. Economic development specialists and many others recognize the importance of nonprofit cultural institutions and related districts to economic vitality. Cultural districts that work can literally save urban areas, which economic leaders well know.
Performing arts centers or museums that need a subsidy to keep their programming alive, at the same time create the restaurant scene that keeps downtowns lit, exciting, safe at night, and create business for nearby parking facilities, retail, and more. The net positive economic impact is usually much greater than any subsidy, but this equation may need to be stated and documented with more clarity than ever before.
When good documentation of this net positive benefit is offered, look to economic development and planning specialists to be strong advocates and important allies in finding equitable solutions that keep tax/fee costs down while stressing -and building – the value of nonprofit cultural institutions as drivers of business and property values. Cultural organizations that have never met their colleagues in local economic development agencies need to start building good partnerships now for this to happen.
A tested and viable approach is service in lieu of taxes (or fees) that can be win-wins for the public sector and NGO cultural organizations. These approaches have typically included options such as free admission days to the public for museums, or free performances for civic celebrations. While not always easy to arrange – i.e. the contractual issues of professional musicians or actors doing free events – the public willl see tremendous benefits and the in-kind arrangements are almost universally more favorable than the tax or service fees would be.
Among other scenarios: look to more currently unaffiliated groups of nonprofits in a downtown or other part of the city to define themselves as a group and establish BIDs or similar districts, with strength to market themselves as a group and create an advocacy base that establishes favorable contracts with municipal departments and works toward building the excellent reputations that attract developers to a neighborhood. While this, too, has been a tested practice, count on seeing it more widely used with the goal of creating economic value for the municipal government by boosting the overall property values in what could be multiple small cultural and creative districts. (Sometimes smaller districts, each with a unique identity and niche, can be more effective in notching up investment a few blocks at a time.)
Look, too, at the marketing and fundraising opportunities that may come about as groups see strength in banding together. Even donors that aren’t particularly interested in, say, a historical society or community arts center may get behind “The Cultural Centers of City X” based on what the group of institutions make possible in economic growth.
Consider this to be a newly focused type of united fund concept, in which savvy organizations work in small and symbiotic coalitions – perhaps subsets of larger cultural funds, or groups coming together for the first time – to attract attention from today’s cause-oriented donors. Look to coalitions like this to develop joint case statements about their combined contributions to the six or eight block areas they anchor, demonstrating their value in social and economic stories that compel more financial support – even in the face of municipal fees – because of their combined net value. When groups can show that “in our six blocks, our four organizations make X economic difference” and when they can show that the net positive difference far outpaces the cost of public services for their few blocks of geography, they can develop quite a case for support.
At the end of the year, expect there to be some impressive new models in place, where marketing, advocacy, and excellent working partnerships with municipal governments and economic developers pave the way for actual boosts in overall local support for cultural institutions.