Arts Funding

Late To The Confession

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I have only just gotten around to following up on my bookmark of John Killacky’s Regrets of A Former Arts Funder. If you hadn’t read it when it came out in late June, Killacky reflects on some of the practices he engaged in when he was a program officer at the San Francisco Foundation.

Most of his regrets focus on how he and other funders provided support to culturally specific organizations. Among the problems he identifies was the creation of a two tiered funding model that had different criteria and funding levels. It ultimately was not constructive for those organizations relegated to the second tier and tended to perpetuate and reward mediocrity on the first tier (or at least provide no incentive for taking chances). In fact, he also acknowledged, much as Scott Walters recently noted, that grant panels frequently employ evaluative criteria that punishes projects where success is not clearly assured.

I was intrigued by his suggestion that foundations adopt an approach more akin to that of venture capitalists (though not surprising given he worked near Silicon Valley, the VC capital of the nation)

“Maybe philanthropy should have taken a page from venture capitalists’ playbooks, investing more deeply at a significant level over a five- to eight-year time frame, as well as offering a range of non-cash, value-added assistance by sitting on boards, mentoring, and coaching of senior managers, in addition to artistic support. This is not hands-off, outsourced grantmaking. Focus on the triple bottom line and then get out!”

and later

When setting up these programs, I reminded the trustees that not all projects would come to fruition. For many venture capitalists, there is a rule of thumb regarding start-up investing. It suggests that on 1/3 of your investments you will lose all of your investment. On another 1/3 you may make or lose a little. The other 1/3 is where you make your money, and one or two is probably where the bulk of the return is. Unfortunately, this kind of risk-taking would seem foolhardy to funders.

I thought the second paragraph apropos to my posts of the last two days about admitting the arts experience can be disappointing.

One of the commenters to Killacky’s piece expressed concerns about the first paragraph I cited. The idea that foundation officers might come in to an organization that did not serve a traditional arts audience and tell them how they should be doing things seemed to strike the commenter as being even more detrimental than poorly funding the group.

This isn’t an unfounded concern. Venture capitalists often impose their own hand picked management teams on businesses in which they choose to invest and make demands about the way the company should be run. Depending on how it is handled, it either be a constructive or traumatic experience for the start-up that wooed VC support.

Foundations would presumably be entering a relationship with a fledgling arts organizations without the same sort of profit-driven motivation, but could still end up stifling the creative spark with too heavy handed an approach. The feeling that any attention is better than no attention being the stuff on which abusive relationships are made, arts organizations may bow to the demands of foundation officers, grateful that at least they can depend on their support over a number of years.

But obviously it can be a constructive situation for both entities if approached in a careful and deliberate manner. Being that intimately involved with an organization can give a foundation a much clearer picture about the needs and challenges faced by the sector they support than the sugar coated final reports they are getting and allow them to respond accordingly.

If foundations provide technical support and mentors over many years in the form of other working professionals rather than out of their own staff, the foundation can help arts organizations form support networks which will persist after their direct involvement ceases. As they share the fruits of their experience and own best practices, the mentors in turn can gain a deeper view of how different arts organizations operate than interactions at conferences and meetings can afford them.

If The Postman Rings And There Is No One To Sign For The Check..

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Hawaii Public Radio reported last week that the state’s governor had sent layoff notices to 10 employees of the State Foundation on Culture and the Arts, including Executive Director, Ronald Yamakawa. “That leaves only the Art in Public Places staff, one account clerk, and three federally funded positions to fulfill agency functions.”

The public radio story may be heard here. Given that the foundation’s state funding had already been cut, the lack of an entity to receive and administer federal funding from the NEA, especially ARRA stimulus funds, is causing great consternation in the state arts community. Even when there isn’t a formal federal stimulus plan, federal funds help secure other support.

I have lived in and read about enough state budget crises to know that threats to the state arts councils are often part of a larger political fight. (NJ’s willingness to go broke rather than fund the arts, for example.) I confess I was suspicious when a search of the local daily newspapers didn’t turn up any mention of this story. I wondered if the story was specifically aimed at the public radio audience which tends to have more political influence than many other demographics. The sad truth is that the omission may just be reflective of the state of newspaper priorities and resources.

Whether it is a political ploy or in earnest, the truth will be known on November 13 when all 1,100 layoffs the governor ordered become effective.

NJ Would Rather Go Broke Than Fund The Arts

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Via Artsjournal.com comes news that New Jersey Governor John Corzine wants to cut arts spending below the legal minimums. A few years ago, the NJ State legislature decided to set legal minimums for funding the New Jersey State Council on the Arts, the Historical Commission, the New Jersey Cultural Trust and Shore Preservation Fund.

State treasurer David Rousseau made it clear how the administration feels about those laws. They just don’t apply anymore.

“We will be setting aside those laws,” said Rousseau. “We didn’t want to be bound by laws that were created that say shore protection has to be this amount.

“Same thing with arts. Why should they be held at a higher standard just because some Legislature in the past put a law in that says it can’t go below this amount of money?”

It isn’t terribly surprising given these tight financial times that state governments would make a move to claim monies set aside for funding arts and culture. I think we pretty much expect it. What does raise eyebrows is that by doing so, New Jersey stands to forfeit greater income. The laws which set the funding minimums have poison pill clauses included to prevent just this very thing. (my emphasis)

The law changed the way New Jersey funds arts and culture by replacing their direct appropriation with a portion of the hotel tax. As revenues grew, so would the funds supporting the cultural agencies and tourism advertising. If the tax revenues dropped, the cultural and tourism programs would get less.

The law mandates the four areas receive at least $28.2 million or the tax disappears at the start of the fiscal year. Corzine’s budget allocates just $24.9 million. Similarly, the realty transfer tax has a provision that eliminates the tax if the beach replenishment fund drops below $25 million.

Sen. Kevin O’Toole (R-Essex) wondered why the administration would risk losing a tax that has generated hundreds of millions of dollars since 2003 in order to save a couple million dollars next year.

The governor and his allies in the legislature are trying to mount challenges to the poison pill provisions. It will be interesting to see if they hold or not. I have personally never heard of such arrangements being used to guarantee funding for arts and cultural purposes. If the laws hold, it might be worth advocating for similar protections in other states. (If they don’t hold on the basis of technicalities, it would be worth advocating for under better written terms.)

My suspicion is the governor figures even if the taxes do automatically disappear, the revenue source will be viewed as too crucial to the operation of the state and the legislature can be prodded into reinstating them without the arts, culture, history and shore preservation encumbrances.

I am interested to learn if any other states or municipalities have similar arrangements to keep funding for non-emergency causes secure from raiding. Comment below.