Funding for the Arts

Written by Melinda Ennis-Roughton Sunday, May 02 2010

Since antiquity, the major benefactors of the arts have been the ultra-rich. Renaissance art flourished under the patronage of the house of Medici, and names synonymous with wealth in the United States – including Ford, Carnegie, and Rockefeller – have long supported museums, symphonies, and a variety of cultural enterprises with the foundations they established.

In 2005, private donors and foundations in the United States contributed $13.5 billion to the arts, culture, and the humanities or about 39 percent of all funding, according to the National Endowment for the Arts (NEA). Individual donors account for three quarters of that total.

State funding for the arts in the United States represents only about 1 percent of total arts funding in the nation. Federal funding from all agencies is about 9 percent, with about 1 percent of that from the NEA. This differs greatly from the European model in which, depending on the country, 80 to 90 percent of arts funding comes from the government. Italy spends 56 times the total NEA budget on a per capita basis, and France 80 times.

As the recession continues to rumble through America, and as state budgets become squeezed, controversies over public arts funding are roiling through legislatures from Michigan to Georgia. With public arts funding in jeopardy, Americans could find themselves relying more heavily than ever on the endowments, foundation grants, and private contributions of the wealthy.

Like a modern-day Medici, cosmetics heir Leonard Lauder donated $131 million to the Whitney Museum in New York City two years ago. The Whitney houses a world-renowned collection of 20th century American art including works by Jackson Pollock, Georgia O’Keefe, and Edward Hopper. But the record donation came with a caveat that the Whitney could not sell its signature building on the upper East Side. Now the space-challenged museum is seeking to relocate its massive collection to a more accommodating building. But with the Lauder stipulation, the museum’s board (which Lauder chairs) faces the economic challenge of housing the collection in two separate locations.

Do the strings attached to gifts such as Lauder’s put a burden on the arts to perform to standards that may be counter to the institution’s interests? According to experts, it’s not uncommon for major gifts and endowments to come with some direction. However, that does not translate to individual control.

“Since day one, philanthropy has always represented the single largest donor source in this country, and I don’t see that changing,” says Elizabeth Ellis, principal of AEA Consulting, a national arts consultancy in New York, with a list of global clients. “But, the days of just writing a big check at the end of year are numbered. Today’s donors view it as they would a business project and expect results.”

“Lead gifts (such as Lauder’s) activate additional giving,” says Lisa Cremin, director of the Metropolitan Atlanta Arts Fund, which awards grants and strategic support to arts organizations with an operating budget of less than $ 1.5 million. Cremin, who once owned a New York-based arts consultancy, says boards are structured to adhere to a governance and policies that protect one individual from calling the shots, no matter how large the gift. “He’s just one donor,” she says, referring to Lauder.

Contributing to this is the fact that most arts organizations operate with extremely low budgets that are not funded by major donors. “Of the over 450 arts organizations in the Atlanta metro area, only about 20 have budgets over a million,” says Flora Maria Garcia, CEO of the Metropolitan Atlanta Arts and Culture Coalition, who was also led arts organizations in Missouri and Texas. “The great majority of organizations have no major donor patron.”

But Ellis and others do see a new model of philanthropic giving that is increasingly employed by wealthy entrepreneurs. It’s no surprise that the new trend, venture philanthropy, would come from the trendsetters of Silicon Valley in California, home of the venture capital style of investing. Beginning with the Silicon Valley Social Venture Fund in 1998, venture philanthropy involves a partnership of investors who pool their resources for the advancement and effectiveness of nonprofit organizations. VC philanthropists also engage with the organization, not from a governance level, but by applying concepts and techniques from venture capital finance and business management to achieve philanthropic goals.

Arts advocates believe that VC philanthropy and other business measurement tools will ultimately help arts organizations survive. Having a business plan with a mission, a plan of action, and a strategy creates focus, says Cremin. “Every organization that seeks an investment has to make their case to a broader audience,” she adds.

With smaller arts organizations surviving on ticket sales and prayers in a free market system, how can we assure that the arts are for everyone, not just the wealthy?

According to Laura Scanlon, director of state and regional partnerships for the NEA, part of its mission is to assure that underserved communities, such as rural areas, receive funding to reach across all socio-economic strata. “The arts are decentralized, which creates greater diversity in a broad range of locations,” Scanlon says. “We want to assure that the arts are accessible to everyone.”

Ellis and others say the real news in the arts is not the Lauder/ Whitney flap. “The big story is that we’re not funding the arts. Funding has been whittled away and whittled away, especially at the state and local level. The way art education has been slashed is tragic,” adds Ellis.

She suggests the educational gap is one that philanthropy might also have to fill. “Maybe the philanthropists can also become advocates, or create public/private partnerships,” she says.

The bigger fear is that the lack of arts education in America is creating a vicious cycle that could one day even impact philanthropy. “Without art education, we are raising a generation of people who have not experienced any kind of engagement with art,” Ellis says.

And that lack of engagement could impact the giving priorities of a future Rockefeller or Bill Gates.

There is one new hope that Ellis, Garcia, and Scanlon all cite: the internet. Most arts organizations have employed some form of web marketing to reach and grow younger audiences – from Facebook fan pages to last minute e-blasts about low-price tickets. The millennials, some of whom will be 21st century philanthropists, are now getting their art education not in school, but in cyberspace.

A veteran of the marketing/advertising business, Melinda Ennis-Roughton is the principal and owner of an Atlanta-based marketing firm called MelWorks Inc., and a freelance writer specializing in women’s issues and film criticism. She was an on-going contributing film critic for the Atlanta Journal Constitution from 2004-2007.

Her career highlights include the position of Executive Director/Chief Marketing Officer (CMO) for Brand Atlanta, which was responsible for marketing the city under Shirley Franklin’s administration. She served as Global CMO for Church's Chicken, supervising marketing direction, from China to Costa Rica. And her career also includes executive positions at Atlanta ad agencies, including Fitzgerald & Co. Ennis-Roughton began her career with Arby’s Restaurants, where she stayed for ten years, eventually rising to the position of senior vice president, marketing and was the first female vice president of the organization.