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No Simple Solutions

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While I was out in the middle of the Mongolian steppes gazing out from my yurt, I happened upon a copy of the Oxford Business Group’s report on Mongolia in the dining hall. I put aside the novel I was reading and devoured the report. It was intensely interesting to me to read about all the factors that contribute to the emergence of a developing nation. In many respects, I saw some parallels to the arts and culture sector.

As I mentioned yesterday, one of Mongolia’s greatest assets is its land. The people are largely nomadic and their large herds of horses, sheep, goats and cows benefit from the grazing land. Tourists such as my friends and I come for the natural beauty. And the country has large mineral wealth.

There are many factors that must align for the country to be economically successful in each of these areas. The banks must have enough capital to support investment; insurance companies must have the resources to insure the industry; the government must be stable and generally unified in its vision; people must be confident that laws will be fairly applied and agreements honored; work force must be well trained and industrious; a quality transportation infrastructure must be in place.

This is no small task for a country that moved from Soviet style communism to a parliamentary republic in the early 1990s. The report mentioned that even countries like Canada which has a more mature and practiced economy and political system were challenged in trying to exploit their mineral wealth.

One of the things the report made clear is all these elements are interrelated. Success depends on addressing deficiencies in all theses areas and that balance is necessary. For example, there is a growing concern that the rise of the mining industry with its good salaries not develop to the detriment of other industries like manufacturing and tourism leaving the economy too dependent one segment. The impact of copper prices falling sharply a couple years ago is still fresh in people’s minds.

In the same respect, problems faced by the arts and culture sector in the U.S. and elsewhere won’t be simply fixed solely by achieving one of the following: more government funding, better cultural policy, more corporate donations, better board governance, changes in foundation policy, arts education in schools, new business model or marketing to younger audiences.

Its all of these and no one thing. We all generally know there are no simple answers, but it is difficult to remember when we are told the solutions to our problems can be achieved with a simple pill; in as little as 30 minutes a week; or just cutting/raising taxes.

Certainly when you are operating in perpetual crisis mode, or at least a low grade state of emergency as seems to be the case in the arts and culture sector, thinking the solution lies in achieving progress in one fairly significant goal provides the hope you need to carry on.

While it shows the reality of the situation to perhaps be more overwhelmingly complex, in the context of the factors necessary for developing the Mongolian economy, it is obvious that a more holistic and balanced approach to improving the operating environment is necessary.

It only makes sense that financing, infrastructure, law, education, etc are all important to a developing country. Progress won’t be made if one area is deficient. Trying to convince others to stop trying to advance conditions and policies in other areas and devote their time to what you think is important may ultimately be counter-productive.

Something to remember if you are making the rounds of conferences and such this summer and you are getting a lot of messages about what is absolutely the most important thing to do.

In Which I Have A Belated Realization

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The lovely people at my state arts foundation sent me some information about National Endowment programs today that I thought I would share. The first is that there will be a webinar for the Challenge America FastTrack program on April 18. If you are thinking of applying and have questions, sign up!

The second thing I got was a PDF of the Our Town application guidelines webinar. I was interested to see that the program encompassed more than I originally assumed. The focus is on Creative Placemaking which means they are looking to improve quality of life, encourage creativity, support artists and engender a sense of community.

I had assumed they would support arts in public places, creation of arts districts and cultural facilities. I know some projects have included artist housing. I was pleased to learn that they would also support creative entrepreneurship, the development of creative hubs, design of public places and wayfinding systems. I hadn’t realized they were interested in cultivating an entire infrastructure. I guess it shouldn’t surprise me given the NEA is a partner in ArtPlace. There seems to be a desire to re-purpose existing spaces rather than new construction.

As you might imagine, they won’t support anything that doesn’t have arts and culture–and their practitioners–as central elements. At the same time, they also require local government at the city or county level as a partner to the non-profit. A government entity can only submit one proposal, which they define as:

“Eligible local government partners include counties, parishes, cities, towns, villages, federally recognized tribal governments, local arts agencies, local education agencies (school districts), or local government-run community college.”

Soooo….. as I got to finishing this entry, I realized that the deadline for this grant was March 1. I suspect the folks at my state arts organization didn’t realize this either when they sent the information out with a “please share” request. The Our Town link from the NEA home page isn’t working so it wasn’t immediately apparent the deadline had passed. I did find the application information page through other means.

If nothing else, it is a good resource for planning for the next cycle. (Which they indicate there will be.) This year the application window was December 1 to March 1. Unless you already had something in the works with your local government, it would have been a real crunch to get an application together. Let’s face it, few people are really going to be working on a grant application during the Christmas holidays.

Intrinsic Value As A General Value

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Recently there has been a sentiment that the arts community shouldn’t use economic benefits as an argument for supporting the arts. I agree with this because there are a lot of problems with the argument which can weaken your position. The difficulty is that in trying to reframe the argument in other terms, you are fighting a sort of cultural inertia.

Arts Alliance Illinois Executive Director, Ra Joy retweeted lobbyist Dan Johnson who wrote “Instead of using the phrase “I’m a taxpayer” to legitimize a comment about government, we should use the universal phrase “I’m a citizen'”

We have a consumerist mentality which leads us to feel we get a say in how all our money is used and should expect a certain level of satisfaction. Businesses we make purchases from extend money back guarantees to assure our satisfaction so there is a tendency to apply a similar outlook to other areas of our lives. In addition to those addressing concerns to the government, students often use the my taxes/tuition pays your salary argument with their teachers.

The problem is, people often over estimate how much of the cost their share actually covers. Hamilton College recently launched a campaign at their students showing that after February 23, someone else was paying for their education. As most of us in the arts world know, a taxpayer’s share of the National Endowment for the Arts funding is below fifty cents.

And, of course, in many cases the price of a ticket to a performance at a non-profit organization only covers about 1/3 of the cost of the production.

Johnson’s suggestion to use “I’m a citizen” is essentially the argument for the intrinsic value of the arts. It harkens back to the social compact theories of Hobbes, Locke and Rousseau that influenced the Founding Fathers of the United States. (My first major was Political Science.) It is an argument that the government owes us based on the intrinsic nature of our relationship rather than our dutiful payment of taxes.

The influence of money which drives the concerns over the Citizens United decision and those of the Occupy Movement illustrate the problem of equating economic influence with general worth and merit. It is probably time to emphasize intrinsic value in general and not solely in the arts.

Arts Funding and Diversity in Oregon

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The Oregonian reported this weekend that the city of Portland would start to tie arts funding to the diversity of the art organization’s board, staff and ultimately audiences.

Specifically, arts groups will be asked to increase the ethnic makeup of their staff, boards and contractors. Their audiences, too, may become more diverse through marketing and outreach. Organizations will also be expected to spend more of their budget — 30 percent being the ideal — on communities of color.

It appears the hope is that by shifting the composition of the board and employees, the type of programming will shift to be more inclusive. Though I think there is some potential for problems, I appreciate the intention behind the plan. Change the culture of your city through its arts and cultural institutions. The arts and culture community is probably a good place to start with such efforts because they are likely to regard the goal as a worthy one.

There are some practical problems as mentioned in the article. First, federal law prohibits making hiring decisions based on race.

Another problem noted is the lack of resources arts organizations have to perform the assessments and programs to which the money is tied. That said, the article notes there are plans for a new levy to fund arts organizations and arts education in the schools. This is encouraging because it acknowledges that the arts require a more supportive environment in which to operate and pursue these programs.

One thing I am most concerned about is that the programs offered to communities of color be appropriate to those communities and not simply extensions of activities which appeal primarily to Caucasian audiences. While some programs may be equally well received by all audiences and it is just a matter of making them more widely accessible, we already know that the demographics who have traditionally comprised arts audiences don’t view traditional arts programs has having relevance to them. There is a good chance that people outside of those demographics will perceive the programs as even less relevant to them.

Designing a program that is meaningful to different communities is possible. It just takes additional time and resources, two things arts organizations have in short supply. It is much easier to use a similar approach in all instances. Is there enough funding being offered by the city of Portland to make it worthwhile to customize programming?

However, since many arts organizations currently have no choice but to change their approach to their audiences and communities if they wish to continue operating, perhaps this is the most suitable time to implement this policy. If you are struggling to discover how best to engage your community, you might be open to considering expanding the definition of your community.

Do you think Portland’s plan can succeed? Not all the guidelines have been set, but do you think this is the correct approach.

One last thing to ponder. In the article Mayor Sam Adams is quote talking about the criteria they will use.

“Adams says organizations shouldn’t be intimidated by the measures. Increasing racial diversity on staff and boards and spending more money on communities of color will be just two of several factors that determine public funding. And when they are used, they’ll be interpreted flexibly. Different groups face different challenges, he says. “

I felt a little relief knowing there wouldn’t be a hard benchmark for funding. I think there has to be flexibility. On the other hand, I am a little concerned about how flexibly the criteria will be interpreted. It is one thing for private foundations to favor the same organizations with large amounts of funding. But there needs to be a higher degree of equity and transparency in the process of disbursing public funding.

Better to have clear guidelines from the outset about the type of outcomes are valued by the funding program than to sanction loose interpretations which allow the rationalization why an organization should be funded.

My perception is that this is the toughest part of funding. How do you allow for both a small organization that works with the same 20 people once a week for 9 months and a large organization that reaches 20,000 people once in the same time frame? Which is valued?

Now throw issues of race/ethnicity in as a factor and it becomes more complicated. (Yes, I am aware that diversity encompasses more than just race, but race is generally the most volatile aspect and is one of the stated criteria.) The stakes become a lot higher when you say racial composition matters and people can see where the money is going. If a medium size organization increases diversity by three on their board of ten and a large organization only increases their diversity by one on a board of 25 and the latter gets more funding in proportion to their budget, what will people think?

Does it matter that the one person on the larger board is more influential than the three on the smaller board and will potentially increase the reach and effectiveness of the organization? Well, I guess it depends on the way the funding criteria is written.

And as I said, with race as a measure, the criteria needs to be very clearly written as do the awards panel’s justifications. Leave too much ambiguity in the rules or the funding justifications and you open the whole process to accusations of racism, raising tensions rather than alleviating them. Funding for the arts is enough of a political issue as it is.

Are Gov’t Caps of Non-Profit Salaries On Horizon?

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The Stanford Social Innovation Review (SSIR) notes that the governor of New Jersey has placed salary caps on non profit executives who do business with the state and the governor of New York has started a non profit salary review.

While governments have a right to be concerned over non profit scandals and society might properly have an expectation that a good portion of the funding going to a non-profit organization will be directed toward serving the appropriate segments of the community, there is a inequality in the expectations. In an article linked in the SSIR blog, Doug Sauer, CEO of the New York Council of Nonprofits notes,

““The State government contracts to buy services from nonprofits just as it contracts with the for-profit sector; except that the nonprofit is often expected to unfairly perform at below the actual cost of doing business. Perhaps it is also time to order an extensive review of the executive compensation of ‘taxpayer supported for-profit businesses’.”

Additionally, John Brothers notes in the SSIR blog post that most non-profit executives don’t even approach the $141,000 cap that NJ is imposing.

“According to the 2010 Guidestar Compensation Study, human service executives earned a median annual pay of just over $122K. What is more interesting is that of the over 3,000 nonprofits surveyed, just 0.004% earned more than a million dollars and only 4 percent earned more than $500K, with sizes of organizations peaking in the multi-billions. I would say that this is hardly a national epidemic of nonprofit jet-setting executives.”

You may look at these stories and think that they only apply to social/human service organizations. However, Gov. Cuomo of NY doesn’t make as clear a distinction regarding those organizations that NJ does. While the initial round of inquiry letters went to social service organizations, the fact the NY governor said all non-profits receiving state funding will be reviewed raised the question,

“Does this mean that the task force will examine compensation at hospitals and other health care providers – where CEO salaries of $1 million or more are not uncommon? What about major arts organizations and institutions of higher learning where that is also true?”

This move to evaluate non-profit salaries provides a potential avenue for those who oppose the funding of arts and culture. Lacking the ability to accuse artistic content of being obscene, they can seek to limit funding to organizations whose compensation is perceived to be excessive.

Fortunately, there are a number of objective measures and loads of data one can employ to prove compensation is fair. This situation underscores the need for non-profits to become better organized to advocate for themselves before it comes to that though.

Info You Can Use: Does Friending A Candidate Endanger Your Non-Profit Status

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The Non Profit Law blog linked to a really great publication put out by the Alliance for Justice that explains whether your online activity might run afoul prohibitions in your 501 (c) 3 status. This is the clearest explanation of these issues I have read.

“This guide aims to answer the questions nonprofit managers most frequently face regarding the Internet and social media.”

The document covers situations that don’t involve online activity, but really it is the social media element that comprises the uncharted territory that people aren’t clear about. The document makes a distinction between lobbying, which a 501 c 3 non-profit can do and supporting a candidate, which they can’t.

Though sometimes the distinction is very subtle. For example, you can make a post on Representative X’s Facebook account, “Rep X, support the arts by voting Yes on Bill 123.”and that is direct lobbying. If you post a slightly different message, “People of My State, tell Rep X, to support the arts by voting Yes on Bill 123, ” and that is considered grassroots lobbying because it is a general call to others to take some action. If you post, “We love Rep X because she supports the arts and voted Yes on Bill 123,” that is promoting a specific candidate.

Except in some very specific circumstances, you can’t link to a candidate’s website. In fact, you can’t link to any website that promotes a candidate and you are responsible for making sure the content of the site doesn’t change since you first linked to it.

For example, you are doing a renovation and link to the website of the company that is providing you with sustainable wood as a way of proving to your constituency that you are acting responsibly. If the supplier changes their website to criticize a candidate’s stance on logging, your organization might be in trouble.

There are also restrictions on allowing employees to use company equipment, even on their time off, to express support for a candidate.

In answer the question posed by the title of this entry, no, you can’t friend a candidate on Facebook or follow them on Twitter. They are free to friend and follow your organization. Even though etiquette suggests you follow them in return, the IRS suggests you don’t.

About the only time you are safe to have a promotion of a candidate on your website is if you allow Google to place ads on your website and have no control over what they are placing.

There are a lot of other questions answered in the document as well. Since a lot of 501 (c) 3 organizations are associated with 501 (c) 4s which have looser restrictions, they provide some detailed guidance about how closely connected their activities can be. The guide also deals with setting policies for renting your mailing lists, guest bloggers, moderating blog commenters, using photos, hosting videos.

It is clear that there are going to be a lot of nuances specific to the activities of different organizations. However, if you have had questions about what is permissible as lobbying and prohibited as campaign support, and don’t have a tax lawyer immediately available, this is a good place to start to find your answers.

Ford’s Fresh Angle On The Arts

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One of the activities the Ford Foundation is engaging in as part of their celebration of 75 years is a series of forums focused on issues of social justice. The first of these, held on May 4 had an arts focus. I have been watching the videos of the sessions on the site and still have a few more to go but I wanted to reflect on what I have seen. The event utilized Cover It Live to aggregate the observations of the social media people who were present so you can review their record of the proceedings as well.

In the lunch time discussion between NEA chair Rocco Landesman and former NY Times journalist, Frank Rich, called “Roccing Out: A Lunch Conversation” (sorry, no direct link you will have to scroll down the page), they went over a number of issues, including Landesman’s now famous comments about supply of arts exceeding demand. What I found most interesting was Landesman’s discussion of his efforts to create a private-public partnership between the NEA and private foundations to better serve the arts constituencies.

I found myself wondering if the association would constrict private foundations’ vision toward that of the U.S. government since they are obviously an influential player or if the NEA’s vision would broaden to more encompass the myriad aims of the private funders. I could see the NEA funding possibly expanding as its chair goes before Congress to mention that influential foundation X was bringing Y amount to their partnership. Or it could backfire and Congress could decide it only proved there was plenty of private money out there. Though if GE and oil companies can make billions, not pay taxes and still receive subsidies, there has to be a way to successfully frame the argument.

Landesmann also discussed how he is trying to work with other departments of the federal government to get them to emphasize and use the arts in their programs. He described his efforts as being the coo-coo bird who lays his eggs in other bird’s nests for them to raise since they have more resources than he does. Two examples he used were aligning the arts with transportation projects and housing and urban development.

The other session I watched was “Sharing the Stage: Globalization and Cultural Might.” The thing that grabbed me was the discussion of how construction of arts and cultural centers were seen by countries as a symbol of having made it. Having such buildings were seen as conferring credibility as an accomplished, modern culture and society upon the country. The problem is that some countries haven’t thought about actually inhabiting the buildings with art.

Michael Kaiser of the Kennedy Center talks about traveling to Riyadh, Saudi Arabia and walking around a magnificent art center located far from the population that has never really had any performances in its 15 years of existence. He mentioned another large facility being constructed in the same country where they have projected no operating costs because it will be run entirely by volunteers. Vishakha N. Desai, President of the Asia Society, mentioned that China has plans for building hundreds of museums, but when she asked the mayor of Shanghai what would be put in them, she was told they would figure that out.

The point they were making was that there was something of a misunderstanding in governments in whether the value in art resided in the buildings or the artists. There was some discussion, especially when they opened up the floor for questions and comments, about the importance of having places to exhibit and perform work as well as to train managers to properly empower and enable the work of artists.

My first reaction to this talk about the building bringing prestige was the thought that this is what comes of promoting the economic value of the arts. This came mostly as a result of thinking about all the money and resources that went into the construction. I soon realized though that what the governments really sought was not the tangible value, but to trumpet the intangible value of their country’s culture. They have world class facilities in which to feature world class artists, heavily represented by artists of their own country.

In the US we have been arguing that arts and culture are one of the things about our country that make it great and strengthen the national character. It is difficult to criticize a government who agrees with that and wants to invest huge amounts of money to draw world wide attention to that fact.

Except, of course, that the Field of Dream expectation that if you build it, the artists will come to inhabit the facility and bring life to it is somewhat erroneous. It takes some significant effort and planning to cultivate an artistic life for a facility. My strong suspicion is that the construction of these facilities didn’t involve a lot of input from artists who represented the type envisioned to perform/use the building and the facilities may not be suitable to their needs at all necessitating some immediate renovations.

Info You Can Use: Beware Non-Profit Identity Theft

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Non-Profit Law Blog editor Gene Takagi encourages all non-profits to take note of a recent investigation by Forbes magazine that uncovered someone redirecting non-profit registrations to a post office box in Las Vegas. The majority of the registrations have been for religious organizations, but the weakness in the IRS’ system could be exploited to hijack nearly any non-profit’s registration.

Someone has hijacked the tax identity of more than 2,300 tiny or defunct nonprofits, apparently taking advantage of a hole in a new electronic Internal Revenue Service filing system to list the same person as a charitable official at the same mail box drop in Las Vegas.

[…]

A search on Melissa Data of nonprofits in that zip code produced 2,370 listings. A random spot cross check by Forbes of dozens of them on the official IRS site listed Alexander and the N. Rainbow Blvd. address in every instance. The nonprofits originally were located elsewhere all across the country.

[…]

Another nonprofit listed by the IRS as being led by William Alexander out of Las Vegas is Godsline Ministries. The clothes-donation charity used to be located in McMinnville, Ore.–and died there about seven years ago, according to Rob Rabon, who ran it with his then-wife. “It only lasted two or three years,” he said. “We went to the state and filed papers dissolving it.”

Yet the IRS proclaims Godsline alive and well, with the same tax identification number as when the Rabons ran it.

The problem has its roots in the recent requirement that non profits making less than $25,000 file a statement to that effect. If you recall, there was a big panic last year that these small non-profits would lose their status because they were unaware of the requirement. Since these small entities don’t have a lot of resources, the IRS endeavored to make it easy for them to verify their status with a simple postcard or online filing.

Because so few details are required in the filing, there isn’t a lot of verifiable data being supplied to the IRS. This makes it easy to slip in and replace the authentic organization. The Forbes articles notes that the names of the small non-profits in danger of losing their status were published in an attempt to make people aware of the impending change, but in fact may have been serving to let fraudsters know which organizations were vulnerable to identity theft.

Info You Can Use: Insurance Pocket Guides for Artists

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As part of their never ending battle to become the best friend of everyone in the arts profession, Fractured Atlas has created a website for a series of pocket guides to insurance for performing and visual artists they have developed. There is a specific guide to each discipline- music, teaching artists, theatre, dance, public artists, visual artists, craft artists and film. There is a note that guides for other groups like independent contractors and radio producers are on the way.

The guides are short and pretty easy to understand. There are fun little prompts to get you to read further

“Since this is a solo operation, I don’t have anyone I pay but I do shamelessly ask friends to move my gear. Done under duress or not, that’s still considered volunteering. Do them a favor. Volunteer Accident [Insurance]

And the answers found on those pages also employ a little humor:

“In a claim, you pay the first $250 and the insurance company will cover the rest. That’s to keep you from filing a claim for the $30 of Medicated ChapStick you bought your trumpet player after your six hour rehearsal. “

The guides cover everything from general liability coverage for groups and individuals, volunteer accidents, workers’ comp, property coverage (including instrument insurance), touring, disability, health and insurance for boards of directors.

But probably of most value is recent guide they have added about the new health reform law and how it relates to artists. I had been wondering what the implications of the law might be for the arts. Though there is clearly still work to be done, from what the guide says, many artists can breath a little easier and should be able to have insurance and a place to live instead of choosing between them.

Fractured Atlas encourages everyone to participate in getting health insurance:

If we’re going to hold insurance companies accountable, then we must also ensure a stable risk pool with full participation by everyone in the United States workforce. We are all players in the system, and our actions impact its economic balance.

That’s why the law includes an individual mandate which requires that all Americans have health insurance or face tax penalties. The only way to prevent a spiral of ever-increasing premiums is to ensure that we’ve all got some skin in this game.

Advocate For The Real Artistic You

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Many people I follow on Twitter made note of the flashmob activity that happened on Capitol Hill as part of Arts Advocacy Day. I clicked the link to see what interesting thing the arts people converging on the Capitol to talk to their representatives had done.

I have to say, I was pretty disappointed. I am generally not very critical here and rarely directly critical of a specific effort so I think this is saying something.

The whole idea, the thing that is exciting, about arts flash mobs is that they occur in places you don’t expect them providing an arts experience out of the context of the space. Singing a patriotic song like “America, The Beautiful” on Capitol Hill doesn’t really push that boundary and give the thrill of experience that makes you think about the value and place of the arts in your lives the way the Knight Foundation’s Random Acts of Culture program does.

It might not be entirely appropriate, but the first song that entered my mind as an alternative was Kate Bush’s “Running Up That Hill.” The title has the sense of converging on Capitol Hill and the lyrics talk about a man and woman switching places to gain an empathy for the other. That sort of understanding being a desired outcome for the day’s efforts.

Yeah, it is easy for me to criticize sitting at my computer 5,000 miles away rather than participating in the advocacy efforts. I just think something so safe does a disservice to all those artists who are walking into the offices of representatives who are hostile or indifferent to their cause. A flash mob of arts people should make a statement about all those things we say the arts do–bring change, push boundaries, make people think, excite, etc. At the very least, it should be a statement that the arts people are in Washington and be a source of morale and courage for those who have the face the steely gazes, dismissive smiles and condescending tones of various politicians.

It should be be manifestation of Amy Scheidegger’s Artistic Rebuttal Book which made the trip to D.C. There are a lot of disruptive pokes and prods in that book. But an artist walking into a representative’s office is a more disruptive presence than this flash mob was.

Perhaps the decision to do a flash mob thing was an actual flash effort organized at the last minute and wasn’t really thought out or organized. And granted, you can’t make a lot of sudden unexpected moves in the Capitol without making security very nervous. In the future maybe something more engaging can be planned and executed in another forum. To me it just kinda came off as an attempt to assure legislators that arts people are good patriotic Americans rather than subversive socialists as is widely believed and that they won’t do anything upsetting during their visits.

Arts people shouldn’t have to make any statements about their loyalty. While a legislative office visit isn’t the time to exhibit your “Musings on an Abattoir,” there is nothing to be lost by making people nervous that the work might appear. That is just an illustration of the power of the artist in society.

Info You Can Use: Good Governance Policies

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There is an old adage about the cleanliness of a restaurant restroom being indicative of the care being used in the kitchen for food preparation. There really isn’t an actual relationship between these two facts, but a dirty restroom is enough to give one pause.

The Non-Profit Law blog says the IRS takes a similar stance on whether you check Yes or No on your Form 990 about the presence of policies in the following areas:

* Conflict of Interest Policy (Part VI, Section B)
* Executive compensation approval process (Part VI, Section B)
* Document Retention and Destruction Policy (Part VI, Section B)
* Gift Acceptance Policy (Schedule M)
* Meeting minutes document practices (Part VI, Section A)
* Review process of Form 990 by the Board of Directors (Part VI, Section B)
* Whistleblower Policy (Part VI, Section B)
* Joint Venture Policy, if applicable (Part VI, Section B)
* Policies regarding chapters, affiliates, and branches, if applicable (Part VI, Section B)

It is not illegal to lack these policies, but their absence can be a sign of poor governance and therefore contribute to a decision by the IRS to subject an organization to greater scrutiny.

Emily Chan notes that just because you have policies in these areas doesn’t mean you are covered. It is important to evaluate the policies to ensure they are appropriate for your organization and its ability to adhere to them, comply with the law, are understood and actually practiced.

She supplies the following helpful info: “Note changes to policies are not required to be reported to the IRS unless such polices or procedures are contained within the organizing documents or bylaws and regarding certain subject matter such as conflicts of interests. See Form 990 Instructions.”

If an organization doesn’t have a policy, Chan advises not rushing to formulate them out of a desire to appear to be exercising good governance for public relations reasons (and to perhaps avoid the IRS’ steely gaze). Poor policy being nearly as bad as no policy. Proper policy takes time to formulate so give yourself the time to develop it. In her tips for evaluating existing policies there is an implication that one should avoid adopting the policies of other organizations in any significant degree.

The guidance she provides for creating new policies is:

Thoughtful considerations about how to get to “yes” can include questions such as:

* Which policies have a higher priority based on the circumstances of the organization? For example, an organization that frequently accepts non-cash gifts may have a more pressing urgency to adopt a useful gift acceptance policy as opposed to an organization that hardly, if ever, accepts donations from the public.
* What are anticipated governance issues or past governance issues that these policies should address?
* What kind of capacity limitations – staff, financial resources, or otherwise – should we be mindful of in drafting and adopting a new policy?
* What is the projected timeline for drafting such policy and presenting it to the board?
* If anticipating a prolonged delay (due to resources, time, etc.) before formally adopting such policies, what problems might this cause and what can the organization do to help mitigate these risks?
* Is the organization prepared to explain to the IRS, its constituents, or others why it currently does not have a certain policy and articulate its action plan moving forward to adopt one?

Additionally, it is important to note an organization lacking the recommended policies is not without any recourse on the Form 990. For example, Schedule O (2010) allows for supplemental narratives to further explain the policies or processes used at the organization to address these governance concerns.

Deserve Is Not Part of the Equation

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Yesterday I speculated on the possibility of an arts education tax credit in the U.S. that mirrored one being proposed in Canada. Someone commented anonymously asking why the arts don’t just produce a product people will pay to see and support themselves.

Well, I hate to break it to you, but whether you can or should support yourself is not a primary criteria for tax credits and subsidies. Taxes and subsidies are a matter of politics and policy. The United States provides subsidies to every segment of the energy industry- oil, coal, gas, nuclear, ethanol, wind and solar. Now I just paid over $4.00/gallon for gas. Exxon/Mobile earned $30 billion in 2010 and paid $19 billion to their shareholders during that year. So why are subsidies needed? They cost the government over $20 billion a year and 70% of it goes to oil, gas and coal. Less than 5% of that goes to solar, wind and geothermal. I read a piece a few months back suggesting getting rid of the subsidies so that the renewables can operate on a more level playing field.

The same is true for farm subsidies, which also total $20 billion a year. Most of that goes to large corporations rather than supporting the small farmer.

No one would claim that energy and food producers aren’t generating products that people won’t pay for so why is it that the arts keep getting held up to this criteria? Why is no one squawking about these big expenditures to fuel and food producers? Granted, President Obama has proposed cutting about $4 billion in fuel subsidies and $2 billion in agriculture subsidies in 2012, but there is still a lot of money left on the table. A lot of it was put on the table in the first place and complaints about it were generally muted as a result of strong lobbying efforts and political pressure. The arts lack this and end up repeatedly demonized even though the benefits they realize are eclipsed by those of these other industries.

Tax credits are also a matter of policy. I did my taxes yesterday and among the tax credits available on the state and federal level were solar heating, film production and first time home buyers. Now given the big mortgage crisis only a few years ago, is it responsible for the government to continue to encourage people to buy homes? And doesn’t that discriminate against renters like myself? The production of Lost was successful enough that didn’t need tax credits, but they were available.

Hawaii, like many other states, wanted to attract productions and provide employment to residents. (Though it is something of a zero sum game.) Home ownership is seen as a sign of economic health and so the government encourages their purchase.

It will be the first to admit that it is rather cynical to say that it doesn’t matter whether you deserve a subsidy or not, it matters whether you have the political clout to get it and political will to pursue it. Like it or not, that is the fact of the matter.

Saying that there are worse things to have subsidized than your child’s piano lessons, tuition at arts summer camp, or trip to the museum, is a pretty weak rationalization to encourage people to advocate for such a subsidy. But you know, even outside the context of everything else that is subsidized, that is kinda true too.

Looking North: Tax Credits For Arts Education

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Americans for the Arts blog has just finished up a week long blog salon on arts education. On the last day of discussion, AFTA staffer Tim Mikulski reported that Canada’s Prime Minister Stephen Harper announced that the government would provide a tax credit to parents whose children participate in some form of arts education. I tried looked around the web trying to find out more details, but there really isn’t much more than what Mikulski notes. There was a similar tax credit passed for children’s fitness programs in 2007 and that the arts education tax credit was promised during the 2008 election campaigns but hadn’t manifested.

Mikulski wonders what would happen if the President introduced a bill like this to Congress at the close of his entry. Actually, off the top of my head, I would say it shouldn’t be too contentious. Tax credits and rebates seem to be a tool Congress likes to use at the moment. The culture wars have always been about having tax monies spent on things that one finds offensive. In this case, one is making their own choices. The arts have always received a bigger subsidy via tax deductible donations than through grants from the NEA and NEH. In this situation, unlike with most donations, you would receive a deduction even though you had received a service in return and presumably, it would not matter if the money was spent at a non-profit or for-profit entity. If the NEA is suggesting that people’s arts experiences outside of a formal setting should be regarded as participation, then it only seems fair that all educational efforts be eligible regardless of the vendor’s tax status.

While making any arts education expenditure deductible might mean all that money won’t get directed to non-profits, it has the potential for increasing audiences for the non-profit sector if purchase of tickets to performances and museums count toward the credit. And it gets younger people in the doors. It could even increase demand for the arts in K-12 schools if purchase of supplies for art class, make up and costumes for drama, shoes and clothes for dance and instruments for music were all eligible.

What I think would be most important is the way the tax credit was structured. As one of the commenters to this story on the CTV website points out, this type of policy can tend to favor those with the money to provide their children with lessons. Just as there are those who don’t make enough to ever qualify for a tax rebate, there are going to be people in the lower end of the income bracket who will never be able to provide their children with an art experience. On the other end of the spectrum are those who will provide for their children in the absence of any sort of tax credit.

A well designed program would target those who can do so, but aren’t, or are doing so but would certainly be able to afford it better with a credit. A good sized credit and a low enough threshold to earn it, (need to spend at least $100, but you get $30 credit, for the sake of an example), that makes it easy to decide to arrange for some classes can help eliminate the perception that this is a policy that rewards an elite class. At a certain level of expenditure, the credit would cease to be applicable.

While it would be great to have parents required to expose their children to a diversity of experiences rather than spending $300/ticket to see Spiderman on Broadway and earning a big credit for a single experience, there really is no way to legislate people’s choices.

Info You Can Use: What Is Lobbying and Can I Do It?

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I wasnʻt looking for it, but I fortuitously stumbled across a post from last year on Charity Lawyer Blog regarding lobbying and what sort of activities constitute lobbying and what doesn’t. There are a number of activities that don’t constitute lobbying, many of which are obvious such as sending your season brochure to people or efforts made with one’s own resources and time. There are other nebulous areas which may leave one wondering if they qualify as lobbying or not that are addressed by writer, Ellis Carter. I have only included a short list of the permitted activities.

# Some communications with executive or administrative officials. Communications with executive or administrative officials or their staff where (i) there is no reference to a specific legislative proposal; (ii) no view is expressed on such a proposal; or (iii) the official or staff person will not participate in the formulation of the legislation are not lobbying.

# Attempts to influence regulations or other administrative or executive action. Attempts to influence regulations or other administrative or executive action (including those that are implementing legislation) are not considered lobbying, even if the recipient of the communication is a legislator. This is because the action sought is not itself legislation.
[…]

# Responses to legislators asking for technical advice. Responding to written requests from a legislative body, committee or subdivision (not a single legislator or informal group of legislators) for technical advice or assistance on pending or potential legislation is not lobbying.

# Nonpartisan analysis, study or research on legislative issue. Making available the results of nonpartisan analysis, study or research on a legislative issue (with no direct call to action if it is communicated to the general public) is not considered lobbying. This must constitute an objective, educational presentation but may express an opinion or conclusion as to the desirability of legislation.

# Discussions on broad policy issues. Discussions of broad policy issues requiring a legislative solution are not lobbying, so long as the merits of the specific legislation are not discussed.

While I knew that 501 (c) 3 organizations could lobby, I didn’t know that the amount they could expend was determined on a scaled percentage of the organization’s total exempt purpose expenditures. This gets a little complicated because there are different percentages for direct lobbying and grassroots lobbying and what sort of funds those percentages apply to so I will direct you to the Charity Lawyer blog entry for more detailed information.

The definitions of direct and grassroots lobbying, according to the blog are:

* Direct lobbying. Direct lobbying is a communication with a legislator, an employee of a legislative body, or any other government employee who may participate in the formulation of the legislation that both (1) refers to a specific legislative proposal and (2) reflects a view on that proposal.

* Grass-roots lobbying. Grass roots lobbying is a communication with one or more members of the general public that: (1) refers to a specific legislative proposal, (2) reflects a view on that proposal, and (3) includes a “call to action”, directly or indirectly encouraging the recipient of the communication to engage in direct lobbying.

Carter points to the Alliance for Justice website as a resource for more information on lobbying and advocacy.

Info You Can Use: Board Minutes

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Emily Chan over at Non-Profit Law Blog has written a two part series on board minutes. Both entries comprise a fantastic resource for anyone who has questions about the format and content of board minutes and the laws surrounding them. I was fortunate enough to be working on my most recent board minutes when part 1 was published and made some changes in response to the suggestions she makes. I am also a big arts administration geek and excitedly awaited the second installation of the series so I could post about it.

Part One is mostly about the format and content of the minutes. In it, she enumerates some common mistakes that are made.

* Failing to document a quorum was present;
* Failing to document or provide a clear description about a board action taken;
* Drafting a transcript of everything said at the meeting, including information that might be harmful to the organization if read by someone with access to the minutes (e.g., employees or members) or by a court reviewing a board action;
* Drafting and distributing minutes to directors after a lengthy period of time has passed;
* Waiting to approve minutes from past meetings until a substantial period of time has passed, decreasing the likelihood that mistakes will be caught and corrected; and
* Failing to maintain a reasonable document management system, resulting in the loss of minutes from past meetings.

The format of the minutes can vary, but a person unfamiliar with the organization and the issues it faces should be able to easily understand what happened in a meeting and what decisions were reached. Chan outlines what specific information that should appear in the minutes. She also discusses what information should be kept confidential, how a board should proceed into executive session to keep that information confidential, how the minutes should reference the executive session and how the minutes of the executive session should be kept.

The format should be standard from meeting to meeting, including the detail in which decisions are recorded. Minutes should be issued before the next meeting or within 60 days of the last meeting and kept forever. I always wondered about that last part. Minutes are among the items the IRS advises a non-profit keep for ever.

Which provides a segue to Part 2 of the series which deals with the legal aspect of board minutes. Directors and members both have a right to access the board minutes. The rules relating to access vary from state to state, Chan deals with California’ laws.

The IRS also has an interest in seeing the minutes. The bulk of the entry is devoted to discussing what practices are important to stay in compliance with rules and regulations for non-profits related to governance, tax code and audits.

Different agencies of your local and state government may also want access to minutes, especially if the organization is involved with legal actions associated with decisions made by the board. In the course of the merger my presenters consortium is seeking to pursue with a sister organization, the secretary of state requires copies of board minutes where different decisions and resolutions were discussed and passed.

Interconnected Fates

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You may have heard that the police in Madison, WI are in sympathy with many of the union members who have gathered to protest their governor’s push to end collective bargaining rights for state workers. Over the weekend I heard an interview on NPR that mentioned both police and firefighters were turning out in support of the protest even though the governor wasn’t proposing to take away their right to collective bargaining because they figured it was only a matter of time. The fire fighter interviewed said they viewed it as an effort to divide and conquer.

Earlier this month Louise K. Stevens who writes the “Arts Market On..” blog made a similar observation regarding the need for the arts to advocate in areas outside of their immediate concern. (my emphasis)

No doubt that you have and will be getting emails and calls to action about this. But probably those calls are piecemeal, asking you for you to advocate for one or another of these line items while ignoring the whole, and that’s the problem. We a splintered sector that has never to date united around the concept of our culture, and now each splinter may be too small and too isolated from its compatriots to build a coalition to save federal support for any of the splinters.

We have a few weeks to save the half century-plus of infrastructure that modest as it may be demonstrates our public commitment to the breadth and majesty of our American culture, our shared story. If we stand splintered now, we may never get a chance to regroup. If we think that saving orchestras or contemporary dance is more important or that saving library funding and museum funding matters more than poetry, or that history and heritage and historic architecture should out trump theatre…well, how will it end?

Around the same time, Arlene Goldbard (h/t to Ian David Moss) wrote a three part series titled “Life Implicates Art” which while long, I think does the best job in summing up the challenges facing the arts and the wrong turns that have been made. Other bloggers, myself included, have touched upon these issues at times but her entries are timely in the context of all the movement nationally in Congress and state legislatures in regard to arts funding. (Also, every entry she makes has an embedded music video which is kind of a cool little hook.) Her ultimate conclusion, much like that of the firefighters in Wisconsin is that there is a high degree of interconnected interests among seemingly disparate groups.

In the first entry, she addresses the problem which is mostly that arts people think that the failure to secure funding is directly related to a failure to make a strong enough case for the arts when it is often more about politics rather than money. In some respect there is actually a weakness in the way a case for the arts is made. She notes, as I have pointed out a few times, that pretty much every industry can make a claim about the economic benefits of their activity. She notes, as most of us know, that with all the money spent on combat troops in the Mid-East, maintaining a nuclear arsenal and imprisoning a large portion of the population, the expenditures on the arts is pretty minuscule but there is not enough support for the arts nationally to make it politically difficult to make cuts there first.

In the second entry, she expounds upon the forces at work that determine politician priorities. She labels the arguments suggested by Americans for the Arts recent mail-in campaign to Congress as “so bloodless and soporific that I can’t imagine anyone actually reading all the way to the end of an op-ed based on them. Yet these have been the talking points for more than three decades. The result? The real value of the NEA budget has fallen by more than half. But hey, it’s all we’ve got, right?”

Instead she suggests a more strongly worded, speaking truth to power letter to all those who voted to support the recent extension of tax cuts to millionaires the revenue of which could cover the budgets of the NEA and NEH twice over.

Here’s an open letter along the lines I’d like to see circulating in every district represented by someone who voted for the recent extension of the Bush tax cuts:

Dear Senator/Representative:

Less than two months ago, you voted for tax breaks for the wealthiest Americans. They reduce tax revenues by an amount equivalent to paying out twice the combined budgets of the National Endowments for The Arts and Humanities, every single day of the year. At a time when our nation’s polarization of wealth is extreme—the top 10% own 80% of all financial assets; and the top 1% own more than the bottom 90%—I am shocked to think you care more about the wealthiest political donors than the well-being of the rest of us.

By cutting arts funding and other social goods, you are making the rest of us pay for millionaire tax cuts. It is wrong to sacrifice our children’s access to music and art classes to save millionaires from paying their fair share. It is wrong to abandon artists who have dedicated their lives to working in schools, hospitals, senior centers, and other places where their skills of imagination, beauty, and meaning lift spirits, build community, and help people find resilience. It is wrong to defund creativity at a time when we it is precisely what we need to excel in science and business, to align our spirits with hope and recovery.

It is embarrassing to be the richest nation on earth with the highest incarceration rate, prison population, and expenditure on war, and the lowest public investment in creativity. You want us to believe that you’re concerned about the economy and taxpayers, but really? Tote up the tax breaks included for millionaires: you just put $225 billion of taxpayers’ well-being into the pockets of people who already have more money than they know how to spend.

This is a shame and a scandal, and I’m going to do everything I can to let my fellow voters know about it. Restoring arts funding would be a tiny gesture to show you actually care about what the rest of us want: it’s literally the least you can do. You were elected to serve everyone, not just big donors. Here’s your chance to prove it. Don’t let America down!

Sincerely,

John/Jane Q. Public

In the third entry, she talks about reframing the arts. As you might imagine, the burden lays upon the arts community, especially in terms of expanding the definition of art beyond what is produced by non-profit arts organizations. There is an image of the arts as elitist that people who want to cut funding have evoked that many people in the arts chafe against because we know there aren’t people in black ties sipping champagne and making obscure literary references at our performances and exhibits. Except that there are some aspects of the elitist imagery we are responsible for perpetuating.

“It’s abstract, one step removed from things people really care about: many people who happily embrace words like music or movies, who sing or draw or love to dance, will respond negatively to the idea of “the arts”—Oh no, not me, you hear them say, I’m not into the arts. Ask that same person, “Do you like to dance?” or “Do you play an instrument?” and the answer will be “Yes,” with no evident awareness of contradiction.

That’s because they pick up on the exclusionary subtext. Many people who consider themselves part of “the arts” use that label to distinguish the work of subsidized organizations from commercial cultural industries and entertainments. An enormous industry generates multibillions each year from sales of music, movie tickets, video rentals, concert tickets, and the like; and enormous numbers take pleasure from making music, taking photographs, writing poems and songs, taking part in dance competitions and poetry slams, and so on.

Yet, except when they want to summon impressive figures about the scope of the cultural economy, mainstream arts advocates don’t mention any of this. There’s an embedded snobbery that presumes the superiority of nonprofit arts organizations and the work they support, a kneejerk dismissal of the rest. This discourse often has an air of unreality: I hear advocates saying that “the arts” are in decline, yet—to pick just one example—almost everyone I encounter integrates music into daily life, almost as a kind of medicine, self-prescribing the sounds and feelings that will support them through the day.”

Goldbard feels this can be reversed, of course, if efforts are made to change practice and national cultural policy. She derives hope from the fact that people are realizing that assessing value based on numbers doesn’t work in healthcare or education and that short term savings results in a long term cost. Care and education of the whole person today prevents more expensive problems down the road. Her suggested approach to employing the intrinsic value of the arts is no less holistic and intertwines with education, healthcare and commerce to bolster all these areas.

In an homage to Goldbard’s posting style, I embed the following video. It isn’t explicitly about art and many wouldn’t consider the singing to be art because it employs autotune, but that’s sort of Goldbard’s point.

If Everyone Is Gathered In The Middle of The Road, You’re A Freak On The Sidewalk

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I was catching up on some of the TED Talks I had marked on the old Google reader today when I came across a fun, short talk dissecting what makes a TED talk work vs. what elements people don’t respond as positively. The speaker, Sebastian Wernicke, even created a web site with a TED talk generator utilizing the best (and worst) words according to his statistical analysis.

It’s all tongue-in-cheek, but it also sort of falls into the category of “its funny, because its true” which in some respects isn’t so funny. A similar analysis is used to determine television and radio programming. The algorithms Pandora.com uses to suggest songs you may like based on songs you already like isn’t much different from the analysis many corporate owned radio stations use to determine whether to add a song to their play list. Even in a niche area like Hawaiian music, corporate has to evaluate and approve what gets played locally. I know because I tried.

I know it is not news that people gravitate toward the middle of the road stuff that challenges and excites just enough to keep people engaged but goes no further. Anyone who finds a new format to present this in gets copied. It strikes me that this may be part of the problem the arts face. The definition of the middle of the road has become concentrated around such a narrow point by analysis and replication that areas of the arts which used to be considered more mainstream suddenly find themselves of fringe interest.

I’ll grant that the arts suffer from a certain lack of nimbleness and we are seeing the result of that. I wonder though if the view of the arts as an interest of a fringe population is what has helped to lead to calls for defunding time and time again or for Rocco Landesman’s claim that there are too many arts organizations. There aren’t calls to evaluate organizational effectiveness and allocation of resources. The assumption seems to be that the nation is ill-served by the arts as a whole. Borders bookstores announced they were closing down stores last week. Starbucks did a similar thing a year or so ago and closed many of its stores. People may have said there were too many Starbucks around, but no has said we needed to have fewer coffee shops or book stores. The respective companies evaluated which areas were under performing and made a decision.

I will concede that governments aren’t currently in the business of evaluating arts organizations and so don’t have the data the head office a private sector company would have so they can create the criteria for cutting funding. I am certain most of us would be a little nervous about what sort of criteria might be set. Our return on investment in some areas is likely stronger in some areas than in others and it would be easy for someone who wanted to defund us to focus on our deficiencies. Or worse yet, compare us to the big impressive organization over yonder.

What I have noticed though is that no one who wants to reduce or remove funding has really made it an issue of quality. No one has even decided to call the arts on all the things arts leaders claim their disciplines provide at budget hearings. Which makes me think it isn’t a matter of the arts doing valuable work, it is matter of the arts no longer really being a mainstream concern. There are certainly other factors and it isn’t really a revelation that the arts aren’t as mainstream as they once were. It is a little depressing to recognize that no one is out there saying if we want their money, we need to do a better job at providing a benefit. Andrew Taylor noted this in an entry last week.

In terms of what the answer might be. It could lay in the direction of the random acts of culture program I wrote about the Knight Foundation sponsoring. I followed a trackback to that entry from The Waltzing Porcupine blog and discovered a link to an entry on the Asking Audiences blog that reinforced the idea that flash performances may be part of a strategy for arts organizations to become more nimble and find increased relevancy in audience’s lives. (emphasis from the original)

“What struck me most forcefully, watching videos of Random Acts of dance, poetry, classical music, and opera from around the country, was that the bystanders (well, they start as bystanders but soon become an audience) are obviously experiencing a range of real, pleasurable human emotions. That’s something you can’t usually see on the faces of arts audiences sitting in concert halls and auditoriums.

Why is that? Not just because they’re not expecting an arts attack and are thrown off balance, although clearly that’s part of the fun. I think it has to do with the fact that, in these Random Acts, the performers and the audience are in every sense on the same level. The performers are dressed like you and me. They’re in our midst, not on a stage. We’re together in this crazy business (opera, life).

[…]

But the Random Acts program is more ambitious and, from the looks of it, more dramatically subversive. It almost makes you think the arts have been in hiding all these years, playing it safe in their own cultural caves instead of venturing out to where life is really going on. Hence the feeling of celebration surrounding these performances: the arts are coming out of the closet, redefining themselves as things regular people do, in regular places — no longer “hallowed” experiences set apart from daily life.

[…]

But there is a subtle chipping-away effect. You can see the bystanders’ identities being challenged by their own reactions to the performance: “I’m not a dance (or classical music, or poetry, or opera) person. But wait a second. This is fun!”…

Info You Can Use: More Foreign Artist Withholding

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The issue of the 30% with holding the United States levies against foreign artists doesn’t seem to be going away. Last year I wrote about my victory, with some help from the IRS, in educating my disbursement office about reading tax treaties with other countries. I thought between this new found knowledge and preparing the paperwork well in advance of a performance, most of the problems would be behind us.

Boy was I wrong.

When I returned from the Christmas holidays about two weeks ago, I had a letter from the IRS specifically directing us to withhold 30% from the payment we were making to an artist and then send them proof of having done so. You would think from such a letter that the performers were absconding from the country with huge amounts of cash, but we really aren’t relatively paying them all that much. Especially when you consider their agent gets a cut too. I don’t want to imply that the laws should be applied inconsistently, but it seems like the IRS is either focusing undue attention on small potatoes or they have shifted resources to scrutinize all foreigner artists’ activities. (I still say they would get more bang for their buck going after everyone sheltering money overseas.)

This story has a happy ending, at least for my organization. We received a letter from the IRS today saying the group has entered into an agreement with the IRS and we were specifically directed by name not to withhold the money. Still, the whole incident shows that the IRS is apparently stepping up their activities in this area and you need to be more aware of the laws surrounding withholdings. Artists from Abroad is a good place to start.

Speaking Art to Power

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Tonight we hosted a retirement party for one of the art professors on our stage. We were sort of the victims of past success. About 7-8 years ago, a professor had her retirement party on stage and it fired the imagination of the art professor. But this woman has had a 40 year history with the school which is no insignificant thing so when she asked us to host it back in August, we found a date we were dark for Nutcracker and penciled her in.

There were a lot of other art professors and some of her former students getting up to talk about how she impacted their lives and what the experience of taking her class meant to them. One woman had sustained an injury that prevented her from continuing her work in healthcare and she went back to school to study art and ended up winning some awards thanks to what she learned.

And the best part of it all was that the governor was sitting there the whole time. The retiring professor (who is not at all retiring personality-wise) was a long time friend and supporter of the governor since before either of them moved here. She supported him when he started running for office nearly 45 years ago and stood behind him on his first run at governor this past year. I knew he was coming, but I expected him to be in and off to another event. Instead, he stayed the entire night, got up, spoke about the value of the artist in society, signed his first proclamation as governor commending her and sat right back down.

The night unfolded essentially just as I had it should in my post yesterday when I advised talking about the value of the arts over and over again in front of decision makers or get them to talk about you. I have never had something I suggested in a post manifest itself so quickly and without so little effort on my part. Though it will likely still be hard going from this point forward, I will take the gift.

Talk About Your Org Before Someone Else Does

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Last week Americans for the Arts held a Private Sector salon on ARTSblog where they discussed where the interests of the arts and business intersected. Much of the discussion was very interesting, but one entry by Margy Waller stuck with me for a few days. Part of it was the timeliness of her subject. She cited the recent controversy at the National Portrait Gallery (NPG) about a video that included ants crawling on a crucifix. She quoted a commenter on the NPR story about the controversy calling art the leisure pursuit of the elite.

It immediately made me wonder if the commenter was aware that admission at the NPG, like most of the Smithsonian museums, is free and that the gallery contains very accessible works of historical significance from portraits of Presidents, First Ladies, Founding Fathers and Cornwallis’ surrender to Washington at the end of the Revolutionary War to Stephen Colbert. I am not sure what more someone needs to feel that museum has something to offer them rather than deciding it is only in the purview of others. Even with the exposure provided by people like Stephen Colbert and millions of people wandering through the NPG for free every year, people are unaware of the experience the museum offers. The museums really only get national attention when there is controversy and at that point, no one is interviewing the person talking about the benefits of the arts or the thousands of other works hanging in the galleries.

This weekend when the Honolulu Symphony decided to ask a judge to allow them to dissolve rather than undergo Chapter 11 reorganization, (a request which as of this writing, the judge has granted), the 140+ comments people made on the initial newspaper article revealed just how uninformed and unaware about the symphony’s operations people were. I am not referring to people making spiteful comments about how elitist classical music is who weren’t making any effort to learn. There were plenty of them. But there were others conducting conversations in which people were learning about the business aspects of the symphony for the first time.

A commenter with the handle 1SWBP wrote:

“Shamonu–mahalo for the explanation. That makes more sense now. I appreciate your taking the time. My empathy now runs much more deeper and the union stuff makes perfect sense. I guess I never realized how ‘large’ our symphony was. I do regret not being able to get out more and enjoy them more often.”

What made Margy Waller’s post most inspiring however was a video of Cincinnati mayor Mark Mallory talking about the economic benefits the arts have brought to his city in his State of the City address last year. It reinforces the idea that you have to talk about what you bring to the table, and talk about it, talk about it some more and then get others to talk about it when people get sick of hearing you. A little depressing though that there are only 113 views so pass it on if you like it.

Political Philanthropy

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Via the ever interesting Non Profit Law Blog and apropos to the portion of Barry Hessenius’ interview with Fractured Atlas’ Adam Huttler I recently focused on, is a piece by Ezra Klein in the Washington Post about politicizing your giving to non-profits.

In a piece titled “Giving is personal. Make it political,” Klein paraphrases Shakespeare, “I come not to praise charity. I come to politicize it. Or at least make it more aware of the political world around it.” He essentially takes the “give a man to fish…teach a man to fish” approach by suggesting while giving to a organization focused on helping the community assists them in their immediate purpose, giving to a non-profit that does policy advocacy helps change the operating environment for all the non-profits pursuing that goal.

He ends the piece saying,

“The point of this isn’t to polarize philanthropy or to warn anyone away from traditional charities. There’s room – and need – for an array of approaches. But at the end of the day, the government is the central player in many of these spheres, with the scale and power to make changes that other actors simply can’t contemplate. Charities that work to make the government’s policies better have a unique ability to take small investments and turn them into tremendous outcomes. If you’re looking for bang for your philanthropic buck, they’re the place to start.”

I have to admit a fair bit of skepticism when I read this. Klein writes for a paper in a town where lobbying makes the world go round so his view about effective use of money is necessarily tainted by that.

On the other hand, he writes for a paper in a town where lobbying makes things happen so he has first hand expertise on the subject.

And as I noted as I began this post, there is a lot of discussion these days that the arts need to assert themselves in the political arena. It is a sentiment being repeated so often of late that I wonder if this has become the equivalent of the stereotyped artist who doesn’t want to be bothered with the dreary details of handling the business side of their career and gets cheated. Politics can be a dirty, intimidating business that most right minded folks don’t want to get involved with. You need only read a little further in Mark Antony’s speech where he keeps referring to Brutus and those who stabbed Caesar as honorable men to recognize this is a situation which has endured in politics for a very long time.

Many lobbyists tend to be a little unsavory too. It is enough to make you wonder if the lesser evil might be to give to a local charity who may have high overhead costs versus paying large amounts to a lobbyist and getting little in return. Is it better to be cheated locally? Granted, the arts have a number of national and regional groups who perform various advocacy functions and the arts world is small enough that we can interact with the leadership and gauge their trustworthiness.

But would you encourage your supporters to donate to them rather than to you? Would you try to convince them to support the national group so that things would be better for your organization five or ten years down the road? People give to people, not organizations so your local supporters would likely prefer to give to you. Do you then pass some of their support on to an advocacy group? Even if their gifts are not designated to a particular use, most donors likely give because they believe the donation will have a direct benefit in their community. Do you tell them your plan is to create a better environment for all the arts in your state/city/county through political activity of some sort when you solicit their donation?

Perhaps these are conversations people will start to have with those that provide support. Some may have a sophisticated understanding of the process already and can provide assistance. A minimal benefit of such effort may serve to raise the profile of many advocacy groups in the public’s mind in the process shifting them from a logo in the “We Thank Our Supporters” section to the guys fighting for policy decisions. Granted, it might be difficult to explain why the local arts organization wants to give funds to the regional organization which gives the local guys funds for the summer concert series. It can be tough to understand why the regional organization can’t use NEA grants dedicated to free public programming for advocacy efforts.

Little More About Politics and Art

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I finally got around to reading an interview I bookmarked where Barry Hessenius conducted with Adam Huttler, Executive Director of Fractured Atlas. There was a lot of interesting things said, but I thought I would focus in on some sections related to some recent posts I made.

At one point Huttler touches on the topic I discussed yesterday. The NEA doesn’t get much funding and what it does get is subject to contentious scrutiny. Huttler points out however there are other areas in which people can advocate which can greatly impact the arts.

“Meanwhile, policymakers – on both a local and national level – have countless other levers for impacting cultural vitality. Zoning laws can determine whether urban cultural enclaves remain dynamic hubs of creativity or gentrify into sterile swaths of Starbucks and bank branches. Immigration rules can facilitate or inhibit international cultural exchange…We need to take a more holistic view in which the arts play a role in projects funded by the Department of Housing and Urban Development, the Department of Transportation, or the Department of Homeland Security.”

Hessenius points out that the NEA is not the only source of funding for the arts and in addition to those departments Huttler mentioned, there is also the National Endowment for the Humanities and the Smithsonian. The conversation moves toward the idea that the arts need to exercise their political clout a lot more if they expect better results. There is a discussion of 501 (c) (4)s and political action committees as a tool and some of the complications relative to those structures.

As conversation in this area continues, Hessnius talks about an option I had mentioned as a possible consequence of people turning their back on NEA funding and perhaps 501 c 3 status–performance to benefit political ends. I actually didn’t know that it was permitted under current status as apparently many don’t.

“Some have argued (me included) that the nonprofit arts sector (by taking advantage of its ability to do performance benefits to fund its political activities) ought to be one of the most powerful special interest groups on the playing field – with real political clout that might not only help us to obtain more funding, but pass diverse legislation on all the levels as you suggest – from tax laws to zoning regulations. Yet we do not.”

Huttler notes that laws governing political lobbying and activity make things a little more involved than that, but still an under utilized option that Fractured Atlas will be exploring.

Where Your Duty As A Non-Profit Lies

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I had to wonder if people were intentionally misreading the post I made about the Arts Council of England requiring applications for funding. My declaration that “Once again, Europe proves their arts policy is superior to that of the U.S.!” was meant to be read a little tongue in cheek lampooning the constant refrain that the arts policy and audiences in Europe are better than in the U.S. And even if that tone didn’t come across, I would have thought that when I wrote sentence or two later that the reality was that the policy is exclusionary and then spend 500 or so words talking about how it will be improved, it would be clear that I wasn’t seriously supporting the old way of doing things.

But I wasn’t really put off by the comments on the entry or by Leonard Jacobs post criticizing this view on The Clyde Fitch Report. In my mind, I was guilty of the age old failing – If you have to explain the joke, you didn’t deliver it correctly. Besides, I figured my blog would get some traffic from the Clyde Fitch Report post.

But then I got to thinking about it. No arts organization ever forms for the purpose of filling out grant applications. Yes, you know when you form your non-profit, it is something of a necessity for doing business. It isn’t a surprise that filling them out does indeed divert energy from the core purpose of the organization. So yes, on second thought, I do think it is pretty much the duty of every non-profit organization to gain funding with the least effort possible so they can get on with their core purpose. It isn’t just me saying this. The biggest measure of non-profit effectiveness is the ratio of how much raised goes toward programs vs how much goes toward overhead and expenses. This is the measure Charity Navigator used to rate my local United Way dead last among local non-profits.

Charity Navigator admits their evaluation doesn’t look at the quality of programs non-profits offer, a fact those at the bottom of the list are quick to cite when they decry the legitimacy of the rankings. But this is a measure that is gaining more and more traction, especially among politicians who are questioning the salaries of those few non-profit executives who actually make enough worth noting.

No surprise politics plays a big part in who gets government funding and who doesn’t. In that context it is get tougher to say that the old policy for funding by the Arts Council of England is really worse than that of the NEA. There are categories of people who were once eligible for funding by the NEA who no longer are due to changes in laws and policies made in reaction to political pressure. We have had mayors of New York City who have unilaterally declared that arts organizations will not receive funding because of program content. Are situations where individuals have the power to rescind funding awarded by a small group of people based on an application any more egalitarian than a situation where a small group of people are empowered to decide who will receive funding based on their own judgments (as well informed as they may be by the vastly superior arts environment which exists in Europe)?

Actually, on the face of it, I would say yes since the criteria being used by the NEA to award grants are clear from the outset, regardless of the pressures exerted to shape those criteria. As I mentioned in my original post, the process and criteria by which the Arts Council decided which organizations to fund and how an organization might even enter the council’s consideration was murky at best. Politics are going to tinge any decision making process where judgments are present. Lets not pretend though that the lengthy application process, be it an electronic or paper submission process, is the best and only way for governments to disburse funds.

When my consortium met last week, one of the aspirations we had for our fledgling merger was right in line with the regional partner initiatives the Arts Council of England hopes to implement. We are looking to become organized enough to propose becoming a partner organization to the state arts foundation and receive annual funding for our activities outside of the normal granting process. To my mind 10-15 performing arts entities coming together to work in partnership is an approach worth funding in an alternative manner. I believe it would be counterproductive to require each of us to submit a separate applications because it would perpetuate the idea that we needed to compete as individuals for funding rather than to collaborate.

Let’s be honest, there is a lot of self-interest when non-profits are seeking funding. As Leonard Jacobs notes, many funders have restrictive criteria about what they will fund based on interests, geography and shifting priorities. Our interests in the criteria for government funding is based immediately on whether we and perhaps our close partners qualify. A desire for an egalitarian arts policy that benefits everyone else is more philosophically abstract, based generally on creating an environment in which our potential audience base comes to appreciate the arts. If our perceived rivals gain significantly more largesse, our attitudes can become less charitable.

I am all for any system that encourages a shift toward group interest and responsibility–especially if the group shares in the paperwork rather than just me. But more importantly if you haven’t guessed, I would welcome a shift away from the damn paperwork. Leonard Jacobs says to stop whining about the paperwork and do some work for it. Well, it is the art that is the work you are doing for the grant, not the paperwork. Nobody is interested in funding paperwork. Though reviewing written applications may be efficient in terms of cost, the paperwork is really about the least effective way to measure the worth of a project. It is just a measure of good writing ability, which granted is an art itself and deserving of support. But that is just the genteel way of saying that someone knows how to bullshit well and use all the correct phrases and keywords. Many of the online application forms don’t let you submit them if your costs exceed your income and therefore require that you lie to complete them even if the truth is that you spent $50 more than you made. The whole process is dishonest before anyone even looks at the application.

The arts by their very nature are meant to be seen and experienced. Yes, sending people out to visit grantees is expensive, but perhaps it would be done if there was better funding. Yes, the visiting team might make subjective judgments about the worthiness of your organization, but they are doing that already when they read your grant application.

Colleges and universities are accredited by regional bodies who send people to evaluate them on a regular basis to bring them into compliance with current standards. Now I will readily admit that compliance translates into paperwork. I will also concede that the schools probably pay quite a lot to be part of this process. And even though they aren’t part of the government, members of Congress have been criticizing the accrediting bodies. So I won’t even pretend this idea would satisfy the NEA’s biggest critics.

But if arts groups were organized under regional bodies, then the cost could be borne by many just as it is with the schools. The experience of those participating as visiting evaluators would be much more valuable than sitting on a grant review committee. Instead of learning what committees were looking for in a grant application, the committee member could actually learn about the best practices by groups in their region and share that information with their home organization. Not to mention they would be sharing information and developing deeper relationships with other arts professionals beyond what can be accomplished at conferences.

Granted so much of this is pie in the sky idealism currently, but that doesn’t mean we have to complacently accept the current way of doing things. Really, it may not be that the written application is a bad format, but rather the criteria it looks to evaluate is flawed. The visitation process I am suggesting would change the evaluation criteria out of necessity. But as an alternative, as our ability to record and share our accomplishments on media improves, it can be just as valid a tool in shifting what criteria is emphasized too.

Though I really think that that an extensive program of visits by well trained teams would go an incredibly long way in improving arts leadership and management. While I think the sites that hosts the visits might receive some excellent guidance, were I designing the program, my focus would be on cultivating the abilities of the visiting team over telling the host what they are doing wrong.

Death To Funding Arts Related Acromyns!

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There are a lot of people calling for the end of federal funding of the arts this past week. Only it isn’t coming from politicians or groups opposed to having tax dollars devoted to the arts. It is coming from people within arts disciplines. Last week fellow Inside the Arts blogger Bill Eddins posted an entry calling for the end of the National Endowment of the Arts. Leonard Jacobs at the Clyde Fitch Report expanded on Eddins’ theme. On Friday the NPR show On The Media had an interview with the editor of Reason.com, Nick Gillespie, who suggested ending funding to the Corporation for Public Broadcasting (CPB) as a means of denying politicians a perennial bugbear needing to be slain.

Gillespie’s interview was in reaction to an editorial, Steve Coll wrote in the Washington Post suggesting the big networks like Fox News should be charged more to broadcast and the proceeds directed to the support of the CPB. Coll’s editorial was in response to one that South Carolina Senator Jim DeMint wrote calling for NPR to support itself.

Common to both Eddins and Gillespie was the idea that the funding support to individual arts organizations and broadcasters that trickled down from the NEA and CPB was such a small portion of the total funding, it might be better to lose the money altogether and be free of the recriminations and accusations about how poorly the money was being used. Nevermind that it is only about 42 cents per taxpayer, the perceived rate is so much greater and so ingrained in people consciousness that contradictory evidence finds no purchase.

Some who commented on Eddins’ post point out that the indirect impact of NEA funding actually provides more support than is immediately perceived. State art foundations pass along funding and may actually owe some of their continued existence to NEA funds as states cut back funding in that area more and more. I know that many in my state wonder if our foundation would still be in operation if not for administration of stimulus funding that necessitates it existence.

Gillespie felt that the cut in funding to radio stations wouldn’t impact them that much and they could either thrive without it or might find an increase in funding from other sources. I was a little skeptical at that since I wondered what sources have been holding their dollars back in reaction to federal funding.

For all the resistance part of me feels toward the idea of spurning federal funding, there is another part of me that wonders if the current situation isn’t a little like that faced by 20somethings living with their parents after graduating college. The support the parents provide isn’t a whole lot, but they keep complaining about the resources being diverted toward supporting their generally responsible adult children (as opposed to those slacker kids). Most of those bills they would have to pay even if you weren’t living in the house but they keep talk as if it is all due to you! At the same time, moving out and giving up that little support is pretty scary first step to take.

For some arts organizations, not receiving federal monies may actually open their programming up and embolden them. All that money flying around during political campaigns may end up directed their way as political action groups hire groups to paint murals and organize flash mobs to either support their view or embarrass the opposition. Though most arts groups’ aversion to being perceived as selling out might preclude that sort of thing. And of course this is based on the assumption that the dearth of funding from both public and private sources will make non profit status and the attendant restrictions on political activities less desirable to have.

Even if they aren’t engaged in politicking, knowing that they won’t have to rein in controversy could result in more experimental fare once people move past the “we can’t do that” mindset that the culture wars surrounding NEA funding has created. As the song says, “freedom’s just another word for nothing left to lose.” That might result in the creation of things that will really scandalize politicians, only they won’t have a carrot or stick to wield any longer.

While money does equal access and control in the world of politics, it tends to be a little divisive in the arts scene -> who has it – who doesn’t = who has sold out – who does “pure art.” Maybe if there was more money available on a dependable basis this wouldn’t be the view. But right now the best thing to do to keep the arts community divided may be to give out a lot of money. Because in an environment where there is no money, the seeds of a unified vision seem to be sprouting.

End of No Application Required Funding In England

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So learn something new every day. I discovered that until recently an arts group did not have to fill out an application to receive funding from the Arts Council of England. Once again, Europe proves their arts policy is superior to that of the U.S.!

I say this having just spent a lot of time filling out applications for funding. In actuality, the old policy was pretty exclusive. According to BBC arts editor Will Gompertz,“If you were in the club, you tended to stay in the club; if you weren’t, there was no obvious way of joining.” Apparently this was the way the Council was set up when it was established during the Second World War. Funding was solely based on the council members’ judgment that an art organization had a reasonable chance of success.

Now the process will be opened up to any who want to apply. Partnerships and collaborations are being encouraged. According to one report by the BBC, “Some successful applicants will also be asked support smaller companies by providing facilities and expertise. ” The Guardian quoted Arts Council executive director Alan Davey, “A few will have a “strategic relationship” with ACE, meaning they will be expected to deliver for the wider good. Davey said: “We might ask them to take responsibility for talent spotting or helping smaller organisations with fundraising expertise or offering back office services.”

I will fully admit these are the type of relationships that should be encouraged in the U.S. I have referenced the duplication of effort I see in many communities. I do want to point out that the United States is a whole lot bigger than England though so this can’t be applied uniformly across the country. While Davey does talk about potential strategic partners as those having valuable skills, he also mentions relationships based on geographic proximity a couple times. If arts funding policy in the US was going to look to leverage strategic hubs, it would have to acknowledge that this is easier to accomplish on the coasts than in other places.

This change in funding policy by the Arts Council of England was precipitated by a deep cut to the Council’s budget. Even though the process is more accessible to a greater number of organizations, it is anticipated that about 100 organizations would lose their funding. In that environment, you would expect that people would want to work to make sure that they weren’t one of those hundred. A different article quotes Alan Davey. “Davey also said that organisations should not be looking to change their remit in order to secure funding, but should build on their existing strengths and character. He said: “‘I would hope that they would see things within the goals that we’ve got that they would be able to latch on to.'”

Shifting priorities or creating programs that don’t quite fit the organization for the purpose of getting funding has long been a problem in the U.S. It is a pity to see the possibility that arts organizations may be driven to that practice in the hopes of competing for support.

Be True To Your Arts Council*

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Yesterday was the deadline for grant proposals for to our state arts and culture foundation for the next biennium. Due to budget cuts by the current governor, we don’t know if we will be getting any money from the foundation this year which possibility makes applying for funding in the next two years an time consuming exercise in futility.

On the other hand, today is election day so we will have a new governor very soon. I wondered if that had any bearing on the grant deadline being the before the election. Actually, it occurs to me that it did in a way. The grant deadline is usually on a Friday but with budget cuts, the foundation staff is furloughed on many Fridays. The staff probably felt it was better to move the deadline to Monday rather than deprive applicants of a day to prepare by making it Thursday.

There wasn’t much talk by either of the candidates about restoration of arts funding that I read or heard about this campaign season. I know at least one of the candidates is an avid arts attendee because I have seen him in my venues as well as others around town. I am hoping he wins, but we shall see.

Despite not knowing if we will get any funding this year, we are crediting the foundation for funding both in our print and web materials and thanking them from the stage in the curtain speech. They have provided support for us in the past and it doesn’t take much effort on our part to tell people that they are benefiting from the funding when they attend our performances. Besides, if we do get funding at some point this year, the foundation requires the credit so it is better to have it from the start.

And as I said, politicians attend performances so it is useful to have them sit in a crowded theatre and be reminded that funding the arts does a lot of good for their constituencies. In turn, they can tell the public that they work to provide those sort of experiences.

*Apologies to the Beach Boys

Alec Baldwin Hates NPR and Turning STEM into STEAM

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If you have been listening in on the public radio fund drives occurring the past couple weeks, you probably heard Alec Baldwin issuing various over the top threats about pledging to your public radio station. If you haven’t some of his greatest hits are collected on the KPLU website. In the first, he channels his character from 30 Rock and in a later one, reprises one of his speeches from the movie, Glengarry Glen Ross. Not included is an extremely frank, but very funny bit he did on This American Life this weekend. I have been trying to find it to no avail. If anyone has a link, send it my way.

Alec Baldwin has come a long way since his first appearance on NPR. (Warning, double entendres)

In other news, I got in to work just as the President’s Council on the Arts and Humanities started a live streaming chat this morning. Chuck Close, Margo Lion, George Stevens, Jr. and Damian Woetzel were talking about the place the arts have in the US and what can be done. You can watch the archived video here if you missed it. There was a simultaneous chat on the White House Facebook page so you could watch and discuss at the same time. (And let me just say, apropos to yesterday’s entry, as I listen to the archived video I realize how much I missed while trying to stay abreast of the comments.)

Chuck Close seemed to carry the day among commenters with his dismay/disgust with the lack of the arts in schools. He mentioned, as he often does, that the arts gave him hope in school and he credits the arts with keeping him out of jail. After the subject how the focus of education is on STEM courses, someone in the chat suggested it be changed to STEAM to include the arts.

It got me thinking that acronym would really lend itself to some good slogans. – STEAM drives America’s Productivity and Creativity; STEAM Powers The Economy. Not the most imaginative perhaps, but I am sure the products of STEAM education can generate some inspirational ones. It provides a good shorthand to use during advocacy because it binds the arts in with concepts in which many policy makers are already intellectually invested in advancing.

Are You Getting Your 24 Cents Worth?

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Daniel Pink had an entry this weekend where he presents a taxpayer receipt created as part of a policy paper by some gentlemen at Third Way. David Kendall and Jim Kessler who wrote the piece for Third Way start their paper by pointing out that we know the breakdown in the nutritional value of the food we buy, but we haven’t the faintest idea what sort of value we are getting for our taxes.

Given that so many politicians promise to control spending without touching Social Security and Medicare, they wanted to create an easy to understand listing of where all that money was going and what would likely need to be cut to make good on those promises. Since the median taxpayer in the U.S. earns $34,140 and assuming all that income is taxable, they created a graphic breakdown of where the $5,400 in taxes paid in 2009 went.

Of course, I gravitated directly to arts spending – 24 cents. Now remember, this isn’t the amount spent on arts per person, just what the median tax payer’s share is. Those with higher incomes are paying more and those with lower incomes are paying less. The amount per person is probably closer to the usual rule of thumb of the cost of a postage stamp. I was a little surprised to see that benefits and salaries for Congress fell below the arts at 19 cents until I remembered there are only 535 of them compared to all the arts organizations that seek funding.

If you visit Pink’s site, you will see that Social Security, Medicare and Medicaid top the list at $1,040.70, $625.51 and $385.28, respectively. Next down on the list is interest on the national debt and military operations. Cutting spending on the arts isn’t going to vastly improve the lot of any other area. Above arts spending is the Smithsonian Museum at $1.12. Giving all the arts money to the museum doesn’t improve their budget by a quarter.

When people complain that they don’t want their tax dollars going to support degenerate art, the truth is more money was likely spent powering their computer while emailing those sentiments and then paying a Congressional staffer to read and perhaps print it out than is spent on the arts. If a person mails their complaint, well they have already spent more on the stamp than they probably paid in taxes to the arts.

Will Taxes Be Known As Manadatory Donations?

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While non-profit arts organizations are looking into alternative structures under which to organize themselves like the L3C, it seems at least one municipality is looking to the non-profit model for their government structure.

Back in July, I came across an article about how Hopewell Borough in NJ is considering the non-profit model as a way to avoid state mandates. Mayor Paul Anzano posted a letter on the borough website in December:

“This would not be about seceding from the state, abandoning our responsibilities or failing to maintain the highest goals,” he wrote. “But it would most certainly involve exploring new options for delivering services based on the unique character of our borough. … Let the discussion begin.”

He was motivated by frustration he felt when the state mandated services but forbade raising taxes.

According to the newspaper article, “Under Mayor Anzano’s plan, the community would be run on a corporate model, and a board of directors, rather than a borough council, would hold residents responsible for municipal fees much like those in a co-op.”

The government wouldn’t be organized under 501 c 3 like arts organizations are so there wouldn’t be an opportunity to write off your property taxes as a deductible donation. There are a few non-profit categories under which you can organize which supporting would not be tax deductible (neighborhood associations or condo co-opts, for example).

The mention of co-opt association raised a momentary red flag for me as I recalled a recent story about how Texas Homeowner Associations can foreclose on your property without a judicial proceeding. This is the case in 33 states. I wondered if NJ were one and if Hopewell Borough might end up structured in such a way that they were exempt from any eminent domain prohibitions that usually face governments.

I was waiting to see if there might be any more development on the story, but other than the borough meeting a few days later to discuss this, I haven’t been able to find much more news on the matter.

So at this point, there is no sign that this will ever come to fruition. But if a borough of 2000 people can get a discussion started on the topic among various state government units and the associations to which they belong, maybe the charitable non-profits should get together, the hospitals, social service agencies, arts organizations, etc, and push for an alternative structure–either a new one or a new hybrid non-profit category that provides more options for operation.

1099s For Everybody!

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I was idly skimming around Inc.com today when I came across a story which raised some concern for all the already overburdened arts organizations out there.

Apparently, a provision of the new health care law will require that any company making a purchase of more than $600 issue a 1099 form to the seller. Even for arts organizations who don’t generally have a lot of money, it is pretty easy to spend $600 with a single company in the course of a year. I can see a lot of arts organizations being driven to distraction trying to comply with this. Especially since arts organizations may also end up receiving as well as giving because of rentals or blocks of tickets people may have purchased for their business.

This law actually may provide a disincentive to shop around for the cheapest price. If it is easier to keep track of everything you spent on hardware at one store, you may avoid the other stores even though they often have good prices on certain items.

Non profits may be exempted for all I know, but there was no mention of that in the six different articles I read trying to get more information on the subject. There are a few amendments that have been proposed. One was voted down today because it tried to dismantle a couple other elements of the bill along the way.

This is supposed to go into effect in 2012 so more information may emerge as Congress tries to sort all the intended and unintended consequences out.

“The Monster Outside The Door”

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No, the title of this entry is not another riff on my new lizard mascot in the blog header. Last month I made a post quoting Robert Hewison in an article from The Art Newspaper saying citing the economic value of the arts is bad because “But the Treasury doesn’t buy it. They can see through the “multiplier” calculations of the cultural boosters.”

Today I came across a link on Artsjournal.com to economist John Kay’s website wherein he expounds upon that subject and advises valuing art for its cultural and commercial value.

“Thousands of people build hospitals and surgeries, and many small and medium-size enterprises manufacture hospital supplies. Illness contributes about 10 per cent of the UK’s economy: the government does not do enough to promote disease.

Such reasoning is identical to that of studies sitting on my desk that purport to measure the economic contribution of sport, tourism and the arts. These studies point to the number of jobs created, and the ancillary activities needed to make the activities possible. They add up the incomes that result. Reporting the total with pride, the sponsors hope to persuade us not just that sport, tourism and the arts make life better, but that they contribute to something called “the economy”.

The analogy illustrates the obvious fallacy. What the exercises measure is not the benefits of the activities they applaud, but their cost; and the value of an activity is not what it costs, but the amount by which its benefit exceeds its costs. The economic contribution of sport is in the pleasure participants and spectators derive, and the resulting gains in health and longevity. That value is diminished, not increased, by the resources that need to be diverted from other purposes.

Similarly, the economic value of the arts is in the commercial and cultural value of the performance, not the costs of cleaning the theatre….

…The relevant economic questions are whether the cultural and commercial value of the performance offsets these costs and whether these benefits can be translated into a combination of box office receipts, sponsorship and public subsidy. The appropriate economic criterion, everywhere and always, is the value of the output.”

I have often felt that economic benefit surveys often seem to grasp at straws in an attempt to find any activity tangentially related to arts events. Though I will grant you that if a downtown area empties out at night, it doesn’t matter how scarce parking is, the spaces in a garage are worthless. Activities that put cars in that lot help keep people employed. But then, the parking company can claim they provide economic benefits to the arts by providing a safe place to park within walking distance of the venue in an area with scarce parking. Your audience may even value the close parking enough to factor it in to their attendance decision. But as the arts organization in question, do you see the parking lot as keeping you employed? You might. But if everyone starts adding up the reciprocal value they offer to each other, the result may end up being ten times the actual amount of money changing hands in that particular business district.

When you think about it in that context, then Kay’s insistence that the only appropriate economic measure is the value of the specific output becomes more apparent. And it is logical to think that value only exists when the benefit exceeds the costs. The problem the arts have is that the measure of the benefit is so nebulous that we are driven to find some concrete method with which to prove that benefit does exceed the amount granted and donated.

Plenty of people are willing to say that the arts aren’t worth very much in today’s environment. Many are just as willing to listen and believe them and that makes all of us in the arts really nervous and sends us scrambling for evidence. Kay doesn’t offer much help in making that argument and in fact, he raises the stakes a little by adding commercial success as a measure of the value. That doesn’t leave much hope for the group that only had 80 patrons, but touched them incredibly and deeply, only it is tough to demonstrate the degree.

Which is not to say he doesn’t wholly believe there is an intrinsic value to the arts.

“We need to put out of our minds this widely held notion that there is such a thing as “the economy”, a monster outside the door that needs to be fed and propitiated and whose values conflict with things – such as sports, tourism and the arts – that make our lives agreeable and worthwhile. Activities that are good in themselves are good for the economy, and activities that are bad in themselves are bad for the economy. The only intelligible meaning of “benefit to the economy” is the contribution – direct or indirect – the activity makes to the welfare of ordinary citizens.”

I am not quite sure if he is differentiating between economic value benefit to the the economy since presumably having a job cleaning a building would directly contribute to the welfare of an ordinary citizen. Assuming he is separating the two, I would use those concepts to make the following point—

Ultimately, economic benefits are replaceable and interchangeable. Back in 2007, I covered an article that noted that a group seeking funding for the arts in England cited priorities that would be served by the grant that were among the exact same benefits then Prime Minister Gordon Brown promised the 2012 Olympics would provide.

Studio 54 contributed to the economy by employing cleaning people when it was a Broadway Theatre, radio and television studios for CBS, a disco, and then back to being a theatre again when it was purchased by Roundabout Theatre. Let say all these entities existed at the same time and are arguing which gets to use the building based on economic benefit they bring. Who gets to use the building?

Now lets say the criteria used is the cultural value each organization brings. Now who gets to use the building? Maybe it is CBS both times. In the first example, they might win because they would be spending the most on payroll and other expenses. In the second, they might win because their programming reaches more households and thus touches more lives. But when it comes to determining the value offered by a night club notorious for its hedonism and excess versus theatres, the decision may be tougher to make.

My point is, while it is hard to define in concrete terms, cultural value is a much more specific property of an organization than economic benefit and is worth citing as a reason for others’ support.

Mandatory Non-Profit Salary Caps

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Last week, the NY Times had a story about how lawmakers are really scrutinizing the salaries of non-profit leaders. The paper notes that New Jersey recently passed a provision that “includes a limit on what nonprofit groups can pay their chief executives if they are providing social services under state contracts. The cap, based on a formula that also applies to for-profits providing such services on behalf of the state, is part of a broader effort by Gov. Chris Christie to rein in salaries on state workers.”

It seems to me that it may not be a very long jump to apply the same scrutiny to arts organizations who receive government funding. It may not be in the next few years, but it could be coming. It wouldn’t surprise me if NJ was the first to do it too given their “cut off your nose to spite your face” attempts to reduce arts funding a year and a half ago.

My initial impulse was to write something about how the government was coming after the non-profits because they couldn’t rein in the salaries at big corporations which made big campaign contributions. I also wanted to moan about how money equals access and the need for more visible and active advocacy if the arts didn’t want to be victimized by such unwarranted scrutiny. Charity Navigator is cited as saying only 2/10th of 1% of non-profits in the U.S. actually pay their leaders six figure salaries. But you get one story about Joe Dowling making $680,000 at the Guthrie Theatre and suddenly everyone else is eyed suspiciously despite their 10 year old car that has clearly needed a new muffler for the last 6 months.

And you know, I may still follow that impulse and further rant. But I want to ask. If the NJ state government is so concerned about efficiency and effectiveness in their contracts with social service agencies, are they also going to look at whether people are being paid too little? There is likely much more waste in employee turn over due to retraining costs and time spent than there is with paying the executive too much. Charity Navigator President Ken Berger is said to disagree “with the argument, popular among many nonprofits, that to attract top talent to manage complex organizations, they must compete with for-profit businesses.” A six figure salary is often cited as outrageous in the article so lets grant that you can find and retain talent for about $90,000. But is the government concerned that non-profits may be losing a series of talented to the for-profit world because those organizational leaders are only being paid $25,000?

There is an argument often made that the government should be turning over a lot of its functions to non-profits because they can do the work more efficiently. If that is the case, the government is likely to be increasingly concerned about the salaries of the top executives. But if they are going to depend on non-governmental social service agencies, they should also be sure that there is a certain standard of care being provided to people. That requires good training, but also appropriate pay to help maintain the continuity of delivering that standard. If they are going to care what is being paid at the top, they should also be concerned what is being paid at the bottom. But it is likely the government will focus more on the results than the process the company follows to obtain them. It is much simpler and more popular to target executive pay as the reason for substandard service delivery than other harder to quantify measures. Cost cutting is equated with money well spent but what works for sneakers has a different result in social services.

But in the arts, other than educational outreach, governments have a different agenda than they do with social services. Unfortunately, it is often appropriateness of content that often raises concerns rather than quality of services.

In any case, even though most of us have no fear of being accused of having too high a salary, the examination of non-profit salaries appears to be a continuing concern. It bears watching how it all unfolds.

Do You Fight For Your Rights?

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Artsjournal is doing another one of their special week long conversations on a topic. This week it is the issue of artists and intellectual property rights. There are too many topics being bandied about to summarize them all, but as you might imagine one of the central themes is in regard to the whole tension between wanting to protect your creative rights and the ability and desire of the public at large to integrate or reimagine your great ideas into their own.

Bill Ivey does a good job of summing up the need for changing how rights are controlled.

“The notion that artists and companies share the same values when it comes to the character of our arts system is a crock. Companies worry about the theft of assets; artists worry about obscurity. These two concerns overlap at times, but often they don’t. What’s the real benefit to an artist of copyright protection that reaches beyond three-quarters of a century? What’s the real benefit to an artist if your publishing company or record company uses licensing fees to prevent your composition from being sampled. or prevents your film clip from being part of a documentary. We need to begin the organizational conversation Marty envisions by figuring out what an artist-oriented regime of laws and regulations would look like.”

There is also a discussion about whether artists are investing appropriate time and attention into protecting their rights. There was actually some pretty extensive discussion, tied together by Tim Quirk, refuting the idea that artists are/should be primarily focused on their art and can’t be bothered with mundane details of business and rights management. Quirk says:

“I had always assumed this ridiculous idea that artists are delicate otherworldly creatures who can’t and shouldn’t concern themselves with prosaic business or policy matters was being fed to them (along with other helpful notions, such as being a drunk or an addict is all part of being creative) by malicious middlemen and mendacious media.

But now I’ve read Vickie’s insightful analysis of how this dynamic is perpetuated by art schools and universities, and Bill’s observation that “things like intellectual property, media policy, unions, performance rights, and so on not show up in art schools or music conservatories, they have precious little traction in arts management programs.”

He goes on to acknowledge that intellectual property laws and the convoluted system of entities that administer them are really tough to comprehend and can be frustrating, but it is something that is worth mastering. It was interesting to me to read Bill Ivey’s thoughts on how this was an area that arts training programs fell short in. When I was pursuing my MFA, I had direct experience with different contracts, including negotiating music performance rights. Even still, the first thing I mentioned at my degree defense when asked what additional instruction would have been helpful during my studies was more contract and rights law. This was 15 years ago so I am surprised to learn that more isn’t taught given all the challenges technology presents in this area.

Though to be fair, as Brian Newman notes, there is a lot to be taught already. I was intrigued to learn in one of his posts that in film at least, the very people who are now clamoring for film makers to become involved in policy debates helped to dismantle the organizations which could have been instrumental in driving that discussion. I wonder if that is the case in other disciplines.

“In the world of film, we used to have a very strong network of media arts centers around the nation. As foundations shifted priorities (and the NEA’s support changed dramatically), however, many of these organizations have shut down or refocused energies to where the money is – social issue action, youth training or corporate support for large activities, like film festivals. When attending a Grantmakers in the Arts conference a couple of years ago, I was amazed that there was a group of funders upset that they couldn’t get filmmakers active in the policy debate – but they had helped disband the very network that could have served to rally filmmakers around these issues.”

Intellectual properties rights is likely to continue as an important topic for years to come so it is worth following the whole conversation. I have barely represented the breadth of it here. They are covering nuances between people who live or die by the strength of protections versus people who need loose protections to thrive and further develop their work. There is also the inevitable discussion of how money determines whose voices and interests are being heard and transformed into policy and law.

Bringing Hope In A Hopeless World

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Interesting piece in The Art Newspaper on why the arts should be funded in austere times. The article is basically an argument about the value of the arts. What immediately caught my eye was the story author Robert Hewison tells about the Council for the Encouragement of Music and the Arts, the UK’s predecessor of today’s Arts Council. In 1940 when some felt it was illogical to be doing so, the British government committed £2 million in today’s money to the council ““to show publicly and unmistakably that the Government cares about the cultural life of the country. This country is supposed to be fighting for civilisation.” The end of the article notes that the creator and first chairman of the council was “the economist John Maynard Keynes. He believed that in a recession, governments should stimulate the economy.” It was Keynes approach that many were encouraging the Obama Administration to follow to deal with the current economic environment.

Hewison summarizes why the economic benefit of the arts doesn’t work-

“But the Treasury doesn’t buy it. They can see through the “multiplier” calculations of the cultural boosters. They understand the meaning of “opportunity cost”. The money spent on artistic steel and glass could have been spent on an arms factory—and created more employment.”

and notes why the prescriptive argument of how the arts help solve myriad ills isn’t desirable-

“The New Labour government liked this argument, and directed that the arts council should use the arts “to combat social exclusion and support community developments”. The ACE found itself having to meet targets for health, education, employment and the reduction of crime—not truth, beauty or a sense of the sublime….

…. It is difficult to demonstrate a value-chain between art and social enhancement, and difficult to measure the social enhancement itself. Ministers for culture became embarrassed by this…”

Granted the conditions in the US aren’t the same as in the UK. For one thing, I could only dream of a funding structure that had “47% box office, 31% from the arts council, 12% from local authority sources and other public funding, and 9% from trusts, foundations, donors and business sponsorship.” Yes, that is 53% government funding.

The same weaknesses in those arguments exist on both sides of the Atlantic. Right now people are pondering how to make a case for the intrinsic value of the arts backed up by some measurable results for policy makers. While I think there is potential for making the case, it isn’t as easy to do as with previous arguments. There aren’t talking point lists being circulated for the intrinsic value the way they have been for the economic and prescriptive value arguments. It takes a person skilled in persuasive speech or writing to make a compelling argument in this area.

Some of Hewison’s arguments seem tinged with a desperation to employ the arts to preserve society through war or some other cataclysm.

“The value in use of the arts is that they help a society make sense of itself. They generate the symbols and rituals that create a common identity—that is why art and religion are so closely linked. Like religion, the arts give access to the spiritual. Art is a link to previous generations, and anchors us to history. Culture is a social language that we would be dumb without. “

and

“The precautionary principle tells us we have a duty to future generations to ensure that our cultural assets are passed on to them. We also have a selfish interest in sustaining the richness and diversity of those assets.”

and

Culture creates social capital, expressed as trust generated by a shared understanding of the symbols that the arts generate, and a commitment to the values they represent. It sustains the legitimacy of social institutions by ensuring that they are accepted, not imposed. Societies with an equitable distribution of cultural assets will be more cohesive, and more creative. Wellbeing, which is the true end of economic activity, depends on the quality of life that culture sustains.

My only qualms with that come in the context of Ben Cameron’s speech that I covered yesterday. I have this sense is that the manifestation of art and culture that Hewison wants to preserve differs from the direction the arts are going. I think Hewison links culture and religion in a manner that evokes monasteries preserving knowledge through the Dark Ages. I think the reality is closer to the religious reformations Cameron referenced. Both can seem pretty cataclysmic as the unfold. Even though a great deal of what is being created seems ephemeral at best, there are things being created with longevity which can serve to anchor us in history.

The question is, will the government want to support these new manifestations. Perhaps even more importantly, will people whose whole success is due to operating outside of the traditional structures want that support? I am sure it would make many in the different levels of government happy if they could find enough people to say so. (Just for the record, I am not ready to give it up yet!) Right now I think everyone dreams of a either a new operating method that doesn’t require so much funding or a new funding method that will sustain their operations. Perhaps one or the other will emerge to relief the situation.

Even though it seemed to me that Hewison was looking for a hedge against the collapse of society in some post-apocalyptic world (and perhaps I was just imposing my own fantasies on his words), he isn’t wrong to say that expressions of arts and culture do provide stability and that governments have an interest in sustaining them.

Rationally, the government should be putting more funding into the arts because of the social capital they generate. There is a sound economic argument that when the market fails to provide certain kinds of goods thought useful, then it is necessary to intervene—health and education are the usual examples. The economics of the arts are particularly prone to market failure, for it is not easy to make the advances in productivity that technology facilitates in manufacturing

Info You Can Use: Considerations Before Forming A Non-Profit

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Last month, as many non-profits were faced with losing their status due to a change in the tax filing laws, Board Source President/CEO Linda Crompton suggested the situation might be good for the non-profit world by removing duplicative and ineffective/inactive non-profits. Because non-profits really aren’t required to generate a business plan or survey the need and competition before filing for status, she feels there may be too many non-profits in existence.

No for-profit company would start up without doing a thorough analysis of the competitive landscape; that analysis would be baked into the business plan and would inform all other decisions — one of which might be “not here, not now.” It’s incumbent upon our sector to school itself on this point: just because we have an idea, and a mission, and a great, good heart, does not mean that we need to start our own, brand-spanking new organization to fulfill that mission. The same truth applies to organizations in all stages of their lifecycle. Boards should be asking themselves: are we still relevant? Are we fulfilling our mission effectively and sustainably? Is there another organization across town doing the same thing, only better? Should we be discussing merger, or even dissolution?

I have mentioned a number of times over the years that I have often many arts organizations have been started that could have easily been part of an existing group or that could have merged with other groups when it was clear that their service area couldn’t support both groups very well. I will admit that I have seen many more groups in merger talks over the last few years since the economy has gotten worse than I had during previous economic down turns. It was good to see people considering this route. But I have also seen new groups peel off because of personality differences or a desire to perform a slightly different genre. Admittedly there is a difference between classical and modern realism, but Shakespeare festivals manage to produce both without compromising their souls.

To be honest though, I don’t know if the IRS would be in a position to evaluate whether there was or wasn’t a need for any type of non-profit, be it an arts organization or social service agency. Imagine the work involved in developing criteria to measure if there was a sufficient support base for the organization in a community. Imagine the bad press the IRS would get for denying someone non-profit status for a social service organization serving a very emotionally charged cause.

Which doesn’t mean due diligence shouldn’t be done. In a comment to Linda Crompton’s entry, Don Griesmann links to an entry on his blog in which he enumerates all the considerations that should be made before creating a non-profit. He also footnotes his arguments with the largest number of stories on the difficulties faced by non-profit organizations I have ever seen.

His entry came at the end of 2009 and he proposed that no new non-profits should be allowed to be created in 2010 unless a whole multitude of conditions were met. A brief sampling:

•Unless you understand the nonprofit will not be “your nonprofit” and you have enlisted an incorporating board that is interested in the concept and capable of performing the necessary tasks of incorporating and operating the organization and

•Unless you understand there is no “free money” from the federal or state governments. The federal government distributes funds through scholarships, fellowships, contracts, grants and loans. Each requires an application, meeting eligibility requirements, demonstration of a task to be undertaken, proof that the task was performed and the money used appropriately and in many instances a report evaluating the use of their funds…

….•Unless you have a concept of what it costs to develop and operate a nonprofit in terms of shared leadership, time, thought, study, serious planning, hard work, evaluation and annual reporting as well as money and
•Unless you have no intention of attempting to raise more than $5,000 a year for the next 5 years…

…•Unless you have performed due diligence and created a board of mixed talents, diversity, shared passion and vision concerning a truly unserved issue or need supported by some empirical evidence. If the need is an underserved need, why not join with the current providers and increase the service or product? And
•Unless you understand that there simply are not grants available to pay for the incorporation process. If you and others cannot raise the first $1,000 or so to incorporate, then where do you think you will get the money to run the organization? When someone asks, as many do, does anyone know where I can get a grant to start my nonprofit, we should either not respond or tell the truth – you are not ready to start a nonprofit. Go volunteer at a local nonprofit….

One of his next “unless” includes having a business plan that answer 19 different questions. One of his other conditions might be that you shouldn’t form a non-profit if you don’t have the patience to read his whole entry. While it is very long, it asks many pertinent questions and raises many points that ought to be considered. It is good to see people starting to advocate for this level of consideration prior to forming a non-profit.

Of course, non-profit status covers a lot of situations, including block associations and other purposes that wouldn’t necessarily be competing for grants from a shrinking pool of resources. These will certainly benefit from being well planned, but aren’t likely to struggle to stay in existence or become a drain on their community if they don’t meet every criteria.

Effecting Change After The Meeting

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Two entries today and sort of long.

Many of us are dubious about attending meetings because we aren’t sure any action of value will result. In two entries entitled Useless Meetings and Useless Meetings 2, I explore the monograph, The Measure of Meetings: Forums, Deliberation, and Cultural Policy.

I talk about their thoughts on why it is so hard to create cultural policy and why conventions are a poor place to attempt it–currently. They make suggestions on how to alter that situation.

Info You Can Use: Foreign Guest Visas

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Arts Presenters has recently alerted their membership to a proposed change in the way visas for foreign artists are evaluated. According to Artists From Abroad, O Visas are given to “only one alien of extraordinary ability in the arts entering the U.S. to work in his/her area of expertise. “Extraordinary ability” for purposes of the arts is not an especially high standard. It means “distinction” which, in turn, means a high level of achievement in the field, substantially above that ordinarily encountered.”

This differs from the P-1 and P-3 visas, the first of which applies to groups of note with a long term association and the latter which requires cultural uniqueness.

The nature of my work is such that I don’t use O visas. As I understand it, the problem with emerging with the O visa is that Customs and Immigration are proposing “45-day cap on the amount of time allowable between engagements.” Since an O visa can be valid for up to three years, it is feasible there would be gaps in activity of 45 days here and there during this time.

If you do use O visas or have the potential of doing so, you may want to review the page Customs and Immigration has set up soliciting feedback on the proposed changes.

If you need help framing your feedback, Arts Presenters is encouraging people to contact Leah Frelinghuysen, Director of Public Affairs.

Even if you don’t use O visas, Arts Presenters is advocating for changes in the whole visa process because it has been incredibly frustrating and problematic for people trying to bring tours together. Keep your eyes open for opportunities to provide feedback and comments as those policies (hopefully) come under review.

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Butts In The Seats by Joe Patti is licensed under a Creative Commons Attribution-NonCommercial-NoDerivs 3.0 Unported License.
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