How Arts Orgs Used Relief Funding Is Beginning To Be Examined

A couple weeks ago Hyperallergic had an article that was a critical of museums who had received Paycheck Protection Program (PPP) funds meant to keep people employed, but instead ended up laying off large numbers of people. They particularly noted that the Museum of Science Boston initially didn’t qualify for the program due to employing more than 500 people, but were later able to apply for funding after laying off more than 300 people.  The article also suggested that while some institutions needed the money to survive, some of those at the top ended up in almost better financial shape.

It found that out of $1.6 billion given to about 7,500 cultural institutions that qualified for PPP loans, nearly half of the money ($771 million) went to just 228 recipients. These same 288 institutions collectively laid off more than 14,400 employees, or at least 28% of their workforce.

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However, AFSCME’s report found that not all museums faired that poorly during the pandemic. In fact, an analysis of 69 cultural institutions with available financial data revealed that 67% of them ended fiscal year (FY) 2020 with operating surpluses.

The Museum of Contemporary Art, Los Angeles (MOCA), which received $3.3 million in PPP loans, laid off 97 workers during the pandemic despite ending FY 2020 with a $2.3 million surplus. Nearby, the Natural History Museums of Los Angeles County ended FY 2020 with a $23.9 million operating surplus after receiving a $4.8 million PPP loan. And yet, it furloughed its 127 part-time employees from March 2020 until the end of December 2020.

Not to excuse the act of laying off people after accepting money to keep staff employed, the fact that institutions ended fiscal year 2020 with a surplus may not be indicate they profited off of layoffs. Many non-profits have a July 1 -June 30 fiscal year so if the organization was doing well from July 1, 2019 through March 2020 when the pandemic started, losses of the three months from March-June 2020 may not have moved them into a deficit. The PPP program started in April 2020 with a deadline of June 30, 2020 so organizations may not have received the funds until their 2021 fiscal year.

It has been generally acknowledged that a lot of those who applied for the PPP program didn’t have the severe financial need the program was intended to serve. Determining whether museums used funds meant to stave off layoffs to achieve better financial footing should be examined, but it isn’t clear from the information provided here. The full report can be downloaded on the AFSCME website. I haven’t downloaded the report at this time because the registration form indicates they and others may use the information to solicit and lobby me.

It will be interesting to see if a similar examination is conducted of performing arts venues which largely fall under the Shuttered Venue Operators Grant (SVOG) program, something most museums were not eligible due to the fixed seating requirement for that program.  From what I have seen, the administration of that program is still plagued with errors which they are trying to resolve for adversely effected venues, but that raises concerns that there was opportunity for inappropriately granting funds as well.

About Joe Patti

I have been writing Butts in the Seats (BitS) on topics of arts and cultural administration since 2004 (yikes!). Given the ever evolving concerns facing the sector, I have yet to exhaust the available subject matter. In addition to BitS, I am a founding contributor to the ArtsHacker (artshacker.com) website where I focus on topics related to boards, law, governance, policy and practice.

I am also an evangelist for the effort to Build Public Will For Arts and Culture being helmed by Arts Midwest and the Metropolitan Group. (http://www.creatingconnection.org/about/)

I am currently the Director of the Grand Opera House in Macon, GA.

Among the things I am most proud are having produced an opera in the Hawaiian language and a dance drama about Hawaii's snow goddess Poli'ahu while working as a Theater Manager in Hawaii. Though there are many more highlights than there is space here to list.

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