The big Arts Presenters conference in New York hasn’t yet begun, but I’m already sensing a trend in the conversation — based on the folks I’ve already talked with before it all begins.
Obviously, the economy is delivering a gut punch to so many cultural organizations, and the people and organizations that support them. Endowments are down 30 to 50 percent — meaning the earnings from endowments are down from what was budgeted. Foundation endowments are down, too, so some grants and gifts that were expected are being delayed or diminished, and future funds from those foundations are iffy at best. Governments from Federal to state to county to city are facing radical shortfalls, and considering significant cuts just to stay solvent. Wealthy individual donors are skittish, as well, wanting to hold whatever cash they have as a hedge against their floundering investments, and trimming their philanthropy as a result. Earned income from ticket sales and gate fees is all over the map — holding ground at some organizations, easing off at others.
But the core of the conversations — after the mutual venting of grievances and hardships, and the mutual consolations and nods — revolves around how to react in response:
Do we pull back from the punch? Or do we lean into it?
For example, foundations could respond to the endowment hit by focusing their remaining resources on long-time recipients and long term project commitments — pulling away from new, small, emerging, or perhaps even risky organizations. Or, they could spread the pain equally among established grantees and emerging initiatives. Or, they could dip into their endowments even further to keep the money flowing.
Performing arts presenters could cut their seasons, lean toward more commercially viable shows, trim their free or unfunded outreach efforts. Or they could rethink their allocations to ensure on-going support for riskier shows and broader public access.
There is no right answer, only the pressing question. And from the sound of it, governing boards are pushing leadership and staff in both directions at once — be conservative, be aggressive, pull back, push harder.
I’ll be interested to hear how the conversation plays out over the coming days.
Lean into it!
Tsk! Tsk! Andrew for jumping on the “The Sky is Falling” bandwagon. One might think you were writing for the Chronicle of Philanthropy : )
Yes, we’re in a recession and it will continue to have an effect on arts organizations large and small. The performing arts have been struggling with increasing diminished subscription and individual ticket sales over the last two years. The October financial crash can’t take all the blame for that.
Many foundation endowments are indeed down, however since most practice averaging, decreased grantmaking will be seen in their 2010 grant cycles and beyond. And, a number of foundations have already pledged to maintain their current commitments and levels of giving by dipping into their principal. Others are increasing their giving to counter the economic cycle.
There are other stories as well. Due to the weak dollar, some cities are seeing increased tourism from Asia, and as a result some cultural funders supported by lodging and travel taxes are seeing increases in their budgets.
Is there a silver lining? Hard to say. Lots about the 501(c)(3) non-profit environment has been in need of fixing for some time. Harsh as it seems, this recession may force some needed change.
On Monday, January 12, Grantmakers in the Arts will be launching a web site of resources and ideas for funders and others during this time of economic turmoil. The goal is to provide information, solutions, and share information and stories. See http://www.giarts.org
Its an opportunity for every non profit to consider what is most essential about their mission, and which are the best programs to meet it, letting go of some of the extraneous things that pile up in better times.
I am an Economics major at the University of Tulsa and I would advise handling a resources the same way as a normal business would handle its resources. Since the market is shrinking due to the scare presented by the “economic crisis”, one must be prudent with resources available. I would recommend devoting the majority of the budget to stable programs that are sure to provide returns. However since the market is tightening up now is the perfect opportunity to add a high-risk expansion because the returns will be multiplied. Therefore the optimal allocation would consist of a high percentage devoted to study programs to ensure the future of your institute with a few more risky programs to deviate yourself from others.
Sound economic policy is based on bread – that is explains the extreme “bear market” business cycle created by the past mistakes of the W Bush admistration. By bread, I mean helping those at the bottom.
It is time to reevaluate the use of funds by both private and public. All funds need to be (re)directed to the areas and individuals who need it the most. Merit needs to be determined based solely using that poll of individuals and groups. If a group or individual does not badly need it, do not give it – no grants to established artists, university professors, and groups that can get along without. Now is not the time to buy expensive art by known artists or give money to expand financially sound organizations for their buildings etc. It is time to look again at the New Deal.
The lesson is not to let this happen again – no more trickle down economics, unneeded expensive wars (remember, “Let the inspector’s work.”) In the future always greatly limit the amount money given to groups and artists who already have money. Greatly limit the purchasing art by well off artists. For now, do not give them a penny. The art-funding community needs to remember the art economy, as well as the rest of the economy is based on a wide distribution of wealth – something Carl Marx and Adam Smith might agree with.