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“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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