Does Your City Need An Arts Bureaucrat?

Given the Labor Day holiday and the fact that Wells Fargo seems to think kids need to set aside their childish artistic dreams for real career choices, it seems appropriate to do a post on interesting, constructive arts careers.

Jennifer Lasik, Arts Coordinator for the City of Evanston, IL makes a “Case for an ‘Arts Bureaucrat’ in City Government.”

While her boss hates the use of that term, (the real job title is Cultural Arts Coordinator), she sees the arts bureaucrat role as one of the most important parts of her job. (my emphasis)

In public performance or art installation, there is often perceived conflict between what the artists want to accomplish and the objectives of the City regarding liability, maintenance, budgets, and code regulation.

[…]

While intended primarily as a resource for the arts community, City staff has appreciates having someone who “speaks artist,” can plan and evaluate artistic projects, and listen to and fine-tune artists’ proposals to address various departmental questions and concerns. Both groups trust me to negotiate a balance between the artistic and practical aspects of the project, helping artists through the application and permit process, and cutting through some of the bureaucratic red tape that can cause frustration and bottleneck. The time and energy this position saves for both the City staff and the artists is a compelling argument for an arts bureaucrat position.

She lays out the scope of her position which makes it sound like this position, created in 2013, was the next step in a process in which Evanston was amenable. She notes, for example that:

“Public Works uses a “Complete Streets” model, which means that when maintenance or repair work is done, other goals such as public art, accessibility and sustainability are factored into the rebuild.

At the end of her post, she provides some suggestions for municipalities that don’t have the capacity for a full time arts bureaucrat, including appointing a staff person to act as an “arts whisperer” to help facilitate communications.

Resources From Unexpected Places-Federal Reserve Banks

Okay, I know this week I posted a piece that continued my long standing assertion that talking about the economic impact of the arts is not an effective way to garner long term support and investment around arts and cultural activities.

However, while it shouldn’t be the central argument for support, I don’t discount the value of using economic impact as corroborating data.

In that vein, I have recently been wondering if it might not be useful for the arts community to forge closer ties with the various regional Federal Reserve Banks. I have seen some publications coming from them that are valuable to non-profits and make a case for the place cultural organizations have in community development.

Last December, I used a well-written guide on managing Non-Profit Executive succession and transitions produced by the Kansas City Federal Reserve in a post I wrote for ArtsHacker.

Since then I have seen two pieces in a four part series written by the Federal Reserve Bank of Cleveland on the importance of cultural organizations in Eastern Kentucky’s transition away coal mining. The first focuses on creative placemaking and the second specifically spotlights the work of Appalshop in Whitesburg, KY.

I am not sure how many may read the articles, but the people and businesses who closely watch the activity of the Federal Reserves are not without influence. Section headers like “The economic impact of creative placemaking;” “A Case for investment: two examples;” “Making Dollars and Sense” can resonate with the interests and concerns of these groups.

It might be worth having state and regional arts councils reach out to make contacts with the respective Reserve Banks in the different regions to explore whether the councils can provide data and stories that might be of interest to the readers of the Federal Reserve publications.

Having the Federal Reserve’s research as an additional source to corroborate statements and statistics about economic impact can help bolster non-profit organization goals.

In return, the Federal Reserve banks may be able to produce publications like the non-profit leadership succession guide that are useful to non-profits. Having issues of finance, taxation, labor law, business relations, etc tailored to the national needs of non-profits could be helpful.

If the Federal Reserve produced case studies about beneficial collaborations between businesses and non-profit organizations, the gravitas they bring could cause groups to consider exploring similar efforts.

Maybe they already produce documents like this and we are just not widely aware of it. It actually took me some time to find the third installment in the series on Eastern KY on the Cleveland Fed website. Had I not had the URL of Part 2 as a guide, I may not have found it.

Positive Signs For Reimbursement Of Overhead Costs

You may remember back in January that I wrote about the new rules promulgated by Office of Management and Budget (OMB) requiring that any entity receiving federal funds much cover at least 10% of a non-profit’s overhead costs.

Don’t worry, its okay if you don’t remember. But this is relatively important and bears repeating.

One of the concerns at the time was that state and local governments and other funders might pressure non-profits with whom they contract or provide grants to waive a their right to receive overhead costs. The OMB rules prohibit this, but if a non-profit isn’t aware of the rules or are afraid to advocate for themselves, the problem may continue.

Given this context, it was a positive sign when the L.A. County Board of Supervisors voted to adopt the OMB guidelines and to write a letter to the state government to do the same.

It may not seem significant for a governing body to agree to adhere to the conditions under which federal funding was allocated, but as Non-Profit Quarterly notes there are “rob Peter to pay Paul” concerns about how funding may be manipulated.

Rules do not implement themselves without strong nonprofit monitoring and oversight—hopefully, as in this case, in partnership with government authorities. In this case, not only are the supervisors talking to state officials, but they will also be developing an implementation strategy in consultation with Los Angeles nonprofits, which we presume, based on what we have seen as policy statements from CalNonprofits, ought to address how to ensure that higher indirect cost reimbursements do not occur at the cost of lessening service delivery.

As I had noted in my earlier post, the National Council of Non Profits created a guide to educate organizations about the rules and provide responses to assertions from funding entities that the rules don’t apply.

One thing I had mentioned was that arts organizations should note that these rules likely apply to the funding you receive through your state or regional arts organization:

One- it doesn’t matter whether it is called a contract or grant or any other term, the rules are based on the substance of the transaction.

Two – Sub-recipient non-profits who are required to acknowledge part of the funding is received from the federal government are covered under these rules.

Investing In Social Outcomes

Non-Profit Law blogger Gene Tagaki had a post on LinkedIn a couple weeks ago about Social Impact Bonds. These bonds are a fairly new approach to funding non-profit activities. While I think they could be a viable tool for funding the arts, I had some reservations about them as well.

The biggest difference between a social impact bond and the current practice of government entities providing grants to solve the same problem is that a private investor is involved in the process.

Here’s how that might work using social impact bonds:

  1. A government agency identifies a social problem and commits to making a payment, but only if the targeted social outcome goal is met.
  2. An investor interested in addressing the social problem makes an investment which will may result in repayment with an additional return on its investment, but only if the social outcome goal is met.
  3. A nonprofit organization is paid by the investor, delivers services to achieve the social outcome goal, and provides a report back to the other parties.

Typically, an intermediary develops the SIB, raises capital from the investor(s), selects the nonprofit service provider(s), and selects an independent assessor that will determine if the social outcome goal is met.

Among the benefits to this approach that Takagi lists are:

  • Government payments only for agreed upon social outcome results, generally shifting government funding from short-term relief to longer-term impact.
  • Greater development and use of metrics for impact assessment, which may contribute to a favorable change in the way government funding works in its selection of service providers, models of service, and evaluation criteria and protocols.
  • Investors screen nonprofit service providers for those most likely to deliver the targeted social outcome result.

The shift toward long term impact rather than short term goals would definitely be a boon for most arts organizations. But the potential for service providers to be chosen on the basis of independent analysis using different criteria can be very appealing.

Arts organizations which are well positioned in communities investors wish to impact and who specialize in providing the services desired have the potential for receiving all the funding they need to do the job rather than funding in proportion to their budget. If organizations are chosen based on effectiveness rather than prestige, smaller arts organizations may be more likely to benefit as well.

The potential downside of this approach is that because it is an investment, the desire for a return may dictate many elements of the program.

  • Diversion of more cost-efficient direct government and philanthropic funding of sure-bet programs to address social problems…
  • Investors may dictate strategies of service provision to maximize their opportunity for a high economic return on their investment instead of a high social return.
  • Funding will be restricted and likely prevent nonprofits from using such funds to build the necessary infrastructure to support new or expanded programs to achieve the social outcome result.
  • Funding for innovative and long-term strategies may be stifled by investors willing to fund only the strategies with the most proven track records of success and/or easily measured, short-term returns.

Even if your organization doesn’t participate in a Social Impact Bond program, I foresee some potential repercussions in government granting and funding taking their cues from investors. If a government entity sees that companies are investing in certain programs, they may either view it as a type of imprimatur of those programs without doing any research or developing any criteria of their own. Or the government entity may wish to curry favor or stimulate greater investment in the community by supporting investor agendas with grants and favorable rules.

Part of the process to be qualified to invest in a Broadway show is that your personal wealth be such that you can afford to lose money. That is essentially what Takagi suggests in the analysis at the end of his piece. Only true social investors who are prepared to lose money or only gain a small rate of return in order to effect a social good should be allowed to participate in the Social Impact Bond program.

I bring up the Broadway investment scheme because the same potential for damaging investor influence exists there but the agreements have been structured so that it is clear the majority of investors don’t have any say in the way the show is executed. A basic framework exists that could be applied to Social Impact Bond funding.