Leonard Jacobs at The Clyde Fitch Report bestows honor and queries upon Michael Kaiser’s latest essay in the Huffington Post, which explores ”Why the arts don’t pay for themselves.” Jacobs answers his first question quite ably — the arts DO pay for themselves, but through multiple marketplaces, including consumer and philanthropic. But his final question shows the gaps in Kaiser’s analysis, and the broad strokes that often blunt such conversations.
One of Kaiser’s comments suggests entrepreneurial venture as one road to bridge the gap of program losses. But he also suggests it has been a predominantly unsuccessful path. Says Jacobs:
My question is why have they been unsuccessful? What is it in our arts
administration training programs that leaves our leaders able to write
grant proposals and learn how to do the “ask” but cannot think
entrepreneurially?
Both the point and the question demand a slightly sharper focus.
Kaiser’s two points about why the arts ‘don’t pay for themselves’ are on the mark, but incomplete. He calls forward the classic Baumol and Bowen analysis of the performing arts from the 1960s, suggesting that performing arts organizations can’t achieve the same increases in productivity as other industries, leading to an ever-widening gap between income and expenses (which turned out to be only partially true). Secondly, he mentions the perishable and limited quality of live, experiential offerings like the arts — where the hall, gallery, and event dates constrain the boundaries of earned income potential.
Both are true, but more particularly to some art forms than others. Traditional performing arts organizations — which provide Kaiser’s primary lens on the subject — are the MOST subject to these two economic challenges. And for a range of reasons, these types of organizations have struggled with entrepreneurial thinking on both the cost and the revenue side.
But there is a universe of arts organizations that are extraordinarily entrepreneurial, and are not as subject to the two forces Kaiser flags. Small theaters, ensembles, community-based institutions, collectives, individuals, and cooperatives are innovating all the time, both on the cost side (borrowing, bartering, or begging venues; pooling resources and capacities; etc.) and on the revenue side (renting facility space to commercial and nonprofit users; charging for business services or consulting; licensing their intellectual property; attaching to retail activities or coffee shops or bars). They are resourceful beyond all reason, and deliver extraordinary art and arts experiences from only sweat, swagger, and duct tape.
Certainly, we could use more of this entrepreneurial drive (and more attention to what’s already happening). And any arts administration training program should make extra effort to foster this thinking among its students (as many do). But it’s out there now, in abundance, if we widen our gaze to see it.
Why don’t the arts pay for themselves? Well…they do. But if we’re limiting the discussion to earned income, the answer is more elemental:
The fundamental function of nonprofits is to deliver goods and services at below their cost of production. They exist to provide something of value to a community or a society at a quality, quantity, or diversity that traditional markets won’t bear, and the public sector can’t or won’t produce. To do so with energy and impact over an extended period of time is about as entrepreneurial as you can get.
“…that traditional markets won’t bear, and the public sector can’t or won’t produce.”
Why? It seems like you’re just patting the sector on the back for staying alive. How does that lead to the arts paying for themselves?
The argument that it takes the same amount of players doesn’t hold up because Shakespeare didn’t have an army of support staff. Arts org have actively worked to make themselves less productive.
Blaming a changing culture or the markets is a sham. At what point are we ready to at least examine what we’ve done to make ourselves as a field less productive?
Thank you for bringing attention to the fact that there is an abundance of entrepreneurial thought and action within the arts sector at the “emerging” or “community-based” or “independent” level.
My colleagues & I who work at this level often wonder why this is forgotten or disregarded in discussions about sustainability. Talk to an independent artist who has been producing high quality work in NYC for a decade while living off of $15K annually and you will learn many ways to beg, borrow and barter your way to a finished product.
On Tony’s comment, I don’t think it’s patting the sector on the back, I think it’s understanding what the role of a non-profit organization is (and is not): profit is not the motivating factor, mission is. Which is what Andrew was saying.
I think what Tony was trying to allude to is that we have to understand that about non-profits, but at the same time not let that limit our thinking on ways to support them. Very hard to do, but I think Andrew gave some good examples of that.
Some people think the non-profit models itself is wrong. But if you become a for-profit arts organization, are you still making art? Or are you selling out? Combining the two is an art itself: performing The Nutcracker as your cash cow so you can have money to do the art you really want to do.
How about looking at our state and federal funding sources’ continued refusal to support emerging arts organizations?
The NEA greatly restricted access to its stimulus funds to extant organizations who had already received a grant in the past four years. In my state the share of stimulus monies was restricted to established 501(c)3 organizations trying to save full-time positions who had already won a state grant within the last four years. That’s not a stimulus to create new jobs; it’s a bucket to bail out sinking ships.
In general, it’s almost impossible for an organization in its first three years of existence to apply for government funding beyond a very limited local level. This discourages innovation and productivity. 501(c)3 status takes years to achieve, and it’s hardest to find funds in the years that companies need it most–before they can establish a donor base, corporate sponsors, and a core audience.
Any artist or arts organization who operates long term without a deficit does pay for itself, through income that includes sales, rentals, grants, donations, etc.
Donors, patrons and governments invest in the arts organizations and artists they believe in much the same way that venture capitalists and stockholders invest in commercial companies they believe in. The goals of the investments are only slightly different: social profit versus financial profit.
Without external investors and government assistance (whether tax breaks, bailouts or grants) there are few companies in any industry that could turn a profit.
We can re-define profit through the values with which we invest.
But I do agree that blaming culture or markets can be a slippery slope, whether we’re talking about financial-profit or social-profit companies. Markets and culture respond to relevance, and many companies on both sides of the profit line excel or fail depending upon their ability to define that relevance.
Let me first endorse both the last paragraph of your post, Andrew, and David Pays’ excellent response.
It’s refreshing (finally) to see arts fundraising literally (rather than metaphorically) equated to investment. In a real sense, attracting venture capitalists and stock purchasers to an entrepreneurial effort is the analog of attracting major donors and members to a nonprofit. The most significant difference is that NFP fundraisers don’t make the (often false) promise that folks will get their money back.
The inclusion of stockholders in this analogy, however, is only true of those who buy during the IPO. (This comment is also applicable to your next post, Andrew, regarding NFP investment strategies.) With the exception of those initial investors, the money used to purchase stock DOES NOT go to the company or any of its activities: it goes to the guy or gal or organization or fund who held the stock before (with appropriate fees siphoned off by those who facilitated the exchange).
We all know this when we think about it, but the language used to describe the stock market obscures this truth and has led, I think, not only to David’s inclusion of “stockholders” in his comment, but to many of the excesses of the past two decades. Unlike an arts donation, a stock purchase produces nothing: it is, at its base level, a BET that the price will go up — and it is a bet AGAINST the seller, who is betting that the price will not increase.
There are significant ramifications to this fact that go unexplored — I believe deliberately. One is the logical and moral basis of the “shareholder rights” movement in the last quarter of the 20th Century: You paid $1000 for a piece of paper that did $40-worth of good for the company five years ago; why should that obligate the current management in any way? Just asking… Because it was that movement that underlay the pervasive corporate management obsession with quarterly returns over long-term, sustainable strategies.
If the stock exchanges were known as bookies, we (as individuals, as arts organizations, as a society) might have been a little less shocked to see our investments turn sour. And a little more appreciative of the transparency of the not-for-profit fundraising model.