Government Relations

Arts and Survival

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This article on CNN about the role music is playing in the aftermath of the earthquake in Nepal caught my eye. There were similar stories and videos after the 2010 Haitian earthquake of people creating a bond of community through singing and music.

The singing isn’t getting anyone fed, clothed or sheltered, neglecting the very bottom tiers of Maslow’s hierarchy of need. But it does help with the next step up by providing a sense of love and belonging.

Though no one wants to see disasters like this happen, the fact that people’s basic instinct is to turn to music and dance to create community illustrates that the arts are not a frivolous luxury. They are an essential part of our identity.

Being able to participate with a group provides you membership in a culture. It doesn’t even necessarily have to be your birth culture. Insisting people speak English and be able to sing the “Star Spangled Banner” using the correct signifiers may seem overbearingly chauvinistic, but it also identifies what songs provide you entree to a community.

The other thing it illustrates is that not only does everyone have the ability to participate and practice an artistic discipline, it is important that they be able to do so. To a degree it is a basic survival tool mentally, spiritually and perhaps even physically if the sense of community it generates gains you food and shelter.

In a less dire circumstance, we had Garrison Keillor do his solo show about a month ago. He had the audience singing at the beginning and end of his performance. While I have read some criticism of his singing voice, it was sufficient to get everyone started. As the show was drawing to an end, I wondered if someone would be able to do the same thing in 20-30 years. With the ability to choose between disparate channels of information, there may be fewer common cultural touchstones in the next few decades.

Potentially it may be good for international relations if people thousands of miles apart can find 10 points of common ground. It may be less beneficial to local relations if neighbors can only find 10 points of common ground.

Would You Trade Board Oversight For Investor Scrutiny?

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The Clyde Fitch Report takes a close look at a bill being proposed in the U.S. Senate to give Broadway investors the same tax break as those who invest in movies.

The goal of the legislation according to a press release put out by the bill’s sponsor, New York Sen. Chuck Schumer is to provide more incentive for banks and investment funds to invest in Broadway shows and therefore spur job growth.

“..Due to the tremendous risk involved, it is very unlikely that any managed fund or banking institution in the United States will lend resources for live theatrical productions, so the majority of capitalization comes from small or independent investors.”

After some analysis The Clyde Fitch Reports’ asks if there really is a dearth of investors and they wonder if banks should really be investing clients’ money in an endeavor widely acknowledged as likely to lose money.

Do you believe banking and investment institutions should gamble their clients’ money to produce Broadway shows?

Do you believe 233 names, sets of names and/or entities listed over the title of a random list of 10 Broadway shows represents a problem generating a “pool of interested investors in Broadway”?

Do you believe investors in commercial Broadway deserve a tax break?

Are there any other individuals in the American theater for whom tax-code tweaks might be desirable?

When I first read the article, I thought it was a proposal to get investors paid earlier in the process. While it isn’t, I wondered with the weight of large investment institutions present, would the arrangement get altered so that investors recouped sooner and “Hollywood accounting” adopted resulting in the creatives getting little.

I also wondered with more money behind them, would Broadway productions become more adventuresome, or even more oriented toward stage adaptations of proven works and revivals.

On the other hand, since I am always keeping my eyes open for alternative funding models, I also wondered if this might provide more options nationally to arts organizations.

When I first read the following from the Schumer press release, I thought perhaps these investment tax breaks might be applicable to artistic projects created around the country.

“On average, Touring Broadway contributed an economic impact to the local economy that was 3.5 times the gross ticket sales. This income is also vital to sustaining our nation’s theatres, as more than 50% of Performing Arts Center’s ticket sales derive from patrons attending the Touring Broadway series. This revenue permits local venues to offer opera, ballet, unique exhibitions and to fund much needed arts education curricula. Without Touring Broadway, all of these vital programs would suffer.”

Then I realized, no, what the release is saying is that Broadway needs the tax breaks so everyone else can present Broadway tours.

I am a little skeptical about the economics cited here. I don’t know about the venues with week long runs, but while Broadway audiences are among our biggest, they are also the shows that tend to lose the most money for us. We ain’t funding anything else off the proceeds.

Now if they were obliged to lower their rates for non-profits in return for this tax break, that would be beneficial to us. But I don’t see that happening.

All the same, I do wonder if the law being proposed could benefit people in other parts of the country looking to run a performing arts center as a commercial enterprise by allowing them to solicit investors.

Or perhaps it could help turn other cities into development centers by attracting investment for works that weren’t necessarily contemplated to go to Broadway but rather stay put in Portland, Minneapolis, Miami, etc. as a significant attraction for the region.

The productions may not gain the same cachet it would from Broadway, but what it did develop might be enough to create regional or national interest in a tour of say a multi-media dance work that generated a respectable return on the investment.

If the legislation is not written in such a way to include non-Broadway productions, is it worth lobbying to have the scope widened?

As the title of this post suggests, it would change the complexion of the way performing arts entities operated.

Info You Can Use: Know Your Funding Rights

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An event of note to be aware of is that last month the federal Office of Management and Budget said “that when governments hire nonprofits to provide services, those nonprofits legitimately need to incur and be paid for their “indirect costs”—which is government-speak for overhead and administrative expenses.”

According to Chronicle of Philanthropy, non-profits should receive at least 10%, if not more, “of the direct costs of their grant or contract to pay indirect costs.”

Given that non-profits are frequently anxious about revealing their true overhead costs for fear of having it count against them with donors and foundations, this mandate is seen as a victory because it starts to institutionalize the practice of covering those costs.

However, according to the Chronicle of Philanthropy story, the enforcement of these rules may depend on the self-advocacy of non-profits.

While the new rules are now the law of the land, the indirect-cost regulations must be interpreted and applied consistently by tens of thousands of individuals in fragmented departments, agencies, and offices at “pass through” entities (usually state and local governments and large nonprofits) that use federal funds to hire nonprofits to provide services in their communities.

The regulations are already in effect, but the multiple levels and layers of government have not learned about or communicated the existence of the new rules, let alone provided consistent training programs, to employees scattered across these pass-through entities.

Making matters worse, there has been no transition time for the thousands of jurisdictions to purge and modernize their outdated statutes and regulations to enable them to comply with the new federal requirements.
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Unless we all take concerted action, it’s quite possible that we will slide back to what had been the status quo: inconsistencies in our nation’s archaic, patchwork government-nonprofit grants and contract “system” that have left nonprofits at the mercy of often contradictory policies and practices of disconnected federal, state, and local government departments, agencies, offices, and employees. Arbitrary, unjustifiable caps on indirect costs could remain routine.

The author of the piece, Tim Delaney, chief executive of the National Council of Nonprofits, encourages foundations to lend a hand with this advocacy. He points out that often grant makers end up filling the indirect cost gap that government entities may refuse to cover. Correct practices could mean a savings for grant makers who would no longer need to provide this assistance.

As an arts organization, you may be thinking that you don’t have any government contracts so this doesn’t apply to you. However, notice that these rules apply to pass through agencies which, depending on the program, may include arts councils and other organizations receiving funding from places like the National Endowment for the Arts.

The Council of Non-Profits has put together a guide to help people know their rights and advocate for them. It presents different scenarios where you may be told these new rules don’t apply and how to respond to them.

Two points brought up in the guide that lead me to think these rules apply to state and regional arts councils: 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.

If you have been required to acknowledge part of the funding is received from the NEA, these new rules are applicable to that program unless specifically excluded by by legislation.

Stuff To Ponder: When Not To Tell Your Story

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Createquity may be in reruns right now while they reorganize, but they have great timing. Today they featured a post from 2011 which was something of a complement to the post about pricing and story I made yesterday.

Where my post yesterday addressed using a resonant story to get people invested in paying a little more to participate in an arts event, Createquity featured a guest post by Margy Waller suggesting that when it comes to public funding for the arts, the lack of a publicized story might be the best bet.

Members of the public typically have positive feelings toward the arts, some quite strong. But how they think about the arts is shaped by a number of common default patterns that ultimately obscure a sense of shared responsibility in this area.

For example, it is natural and common for people who are not insiders to think of the arts in terms of entertainment. In fact, it’s how we want people to think when we are selling tickets or memberships. But, in this view, entertainment is a “luxury,” and the “market” will determine which arts offerings survive, based on people’s tastes as consumers of entertainment. Consequently, public support for the arts makes little sense, particularly when public funds are scarce.

Perceptions like these lead to conclusions that government funding, for instance, is frivolous or inappropriate. Even charitable giving can be undermined by these default perceptions.

The second paragraph aligns squarely with Seth Godin’s thoughts on pricing that “Some goods are difficult to understand before purchase and use, and most consumers undervalue them and treat them like commodities.” And later “In situations like this, our instinct is to assume that the thing is generic, a commodity, not worth extra.”

Waller suggests that given the perception that public support of the arts is frivolous, by making the fight to restore/increase funding public, arts organizations are choosing a battlefield where they are at a disadvantage.

Politicians can leverage public opinion that the arts are a luxury. When the conflict is covered by the media, it is in the context of a political fight rather than say, a matter of societal value, education and cultural identity.

Because the big fight in the default way of viewing the arts is very losable. And in our efforts, we’re forced to expand a precious resource: the time and energy of staff and key supporters who have to work so hard to convince public officials that they won’t suffer consequences in the next election.

Moreover, every time the fight is public, we’re likely to be reinforcing the dominant ways of thinking about the arts that are getting in our way now. When attacked, we rebut with facts, and the media covers the issue as a political fight with two equal sides – both seen through a lens that sets up the arts as a low priority on the public agenda. And as we know, this can have the effect of making people defensive and hardening existing positions. Of course, it should be no surprise that even officials who are friendly to arts funding are reluctant to be in the middle of that kind of coverage.

Waller suggests a strong, but quiet lobbying campaign, citing the success of just such an effort in Ohio. When you think about it, she has a valid point because quiet lobbying is exactly how plenty of entities who would prefer to avoid public resistance to their plans get things accomplished.

I am sure we can all envision some program that slipped by under our radar and we would prefer not to be associated with those sort of tactics. But the reality is, not every act of governance is preceded by a rancorous public debate. I am sure many arts supporters would be happy not to gird for battle every budget cycle if their goals could be accomplished quietly and efficiently.