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Congress Won’t Vote To Fund U.S. Department of Arts and Culture

June 14, 2016

by:

Joe Patti

I was visiting the website of the U.S. Department of Arts and Culture (USDAC) today and…

Wait a minute you say, there is no Department of Arts and Culture in the U.S. government, that sort of business is handled by the National Endowment for the Arts.

You would right about that, but even though I know that the U.S. Department of Arts and Culture is not a government agency, it takes me a second to remember that. (The first few times I saw it mentioned, it took longer.)

So yes, technically Congress won’t vote to fund the U.S. Department of Arts and Culture.

There is something delightfully subversive about the name because it seems to tap into “lie repeated often enough becomes the truth” aspect of human nature.

Back in 2008/2009 when Barack Obama was first about to take office, there was a lot of conversation about how he should add a Secretary of Arts and Culture to his Cabinet.

While that hasn’t formally manifested within the government, I can’t help but think that USDAC is a fulfillment of that wish and the organizers weren’t going to allow something as pesky as the lack of government imprimatur to be an impediment.

They may not have the name recognition that the National Endowment for the Arts and Americans for the Arts have, (which granted, may not be that widespread either relative to entire population beyond the public television/radio crowd), but there may be more cachet in declaring you are a Agent for the U.S. Department of Arts and Culture.

You may be getting tired of me repeatedly talking about the effort the Build Public Will for Arts and Culture, but it occurs to me that part of the path to success may be found in fooling people into thinking a government agency is actively going out and working to promote arts and culture.

If you have been watching NEA Chair Jane Chu’s Twitter feed, you know she has been doing just that. I am not sure she remembers what her office looks like. But she can use a little help.

A lot of people know about the controversy of government funded smut. They haven’t had personal contact with government agents/employees working to bring them art. Perhaps the perception that they have met such people will help cultivate good-will.

In addition to the writings on their blog and press sections, one of the things that caught my eye a few months back was a piece USDAC Chief Policy Wonk Arlene Goldbard wrote for Grantmakers in the Arts.

For decades I have had conversations with people I meet in dentists’ waiting rooms and on airplanes…I get around to asking if they care about things like how their communities are depicted on television and in the movies, how their heritage cultures are reflected in their kids’ education, and whether their children’s schools still offer theater and music classes along with math, science, and standardized test prep. So far, everybody has said they care.

Then I get around to asking if they care about cultural policy. That usually brings a puzzled look or an indifferent shrug.

[…]

Yet except for aficionados, the phrase “cultural policy” conjures something so dry, obscure, and removed from daily life that the two questions may seem to have no connection.

In reality, everyone makes cultural policy.

When a local planning commission approves the destruction of a long-standing Latino neighborhood for the construction of a new freeway or sports stadium, cultural policy is being made,…

When parents and teachers introduce students to heritage cultures through classes and holiday celebrations sharing music, stories, and food, schools are making cultural policy, prioritizing the school’s commitment to cultural competency.

When music venues ban hoodies, they are making cultural policy, establishing who is welcome to take part in local cultural life — and who is not.

This reminds me of Jamie Bennett’s TEDx Talk where he mentions people have an easier time identifying themselves on a continuum with Tiger Woods and Serena Williams based on their sports hobbies, but have a harder time seeing themselves as artists even though they have creative hobbies, too.

In Goldbard’s examples, it is easier to see the impacts of these decisions in a variety of contexts, but miss the fact that there is a cultural component present as well.

State of the Arts, Working In The Arts

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When The Cool Kids Hung Out At The Museum

June 13, 2016

by:

Joe Patti

As you may be aware, last Friday, June 11 was the 30th Anniversary of the release of Ferris Bueller’s Day Off. To commemorate the anniversary, Vox had an article about how it was a great movie about being a terrible person.

However, a few weeks back Smithsonian pointed out that the movie was, to a great degree, a love letter to Chicago from director John Hughes. Particularly, John Hughes included a scene set in The Art Institute as a tribute to all the time he had spent there.

Because, really even in 1986, how many kids cut school to visit a museum?

Actually, maybe it isn’t so far fetched. Given that Ferris and his friends bluff also their way into a French restaurant for lunch, a visit to the Art Institute could be viewed as experimenting with what they perceived to be post-graduation adult existence.

The museum scene is really quite poignant on its own. There is no dialogue, a little goofing around, some tender moments and some existential angst.

In short, pretty close to what you want a museum experience to be for people. Reading the Smithsonian article, I wondered if that scene in a movie about the quintessential 80s con-artist might have had a lingering, albeit subliminal, positive effect on those of us who grew during that time.

I am just trying to think, other than this scene in the movie and maybe A Night At the Museum, are there any other movies that present a museum in a way that makes you want to visit? I am hoping there are.

Usually museums are places to be robbed, places kids visit on boring field trips or places where a character’s cultural bona fides are established (often in a negative, Bond villain sense.)

General Musings

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Overhead Funding May Not Be Expanding, But The Conversation Is

June 8, 2016

by:

Joe Patti

Something I had meant to mention in my post yesterday was that Priceonomics’ admiration of Yerba Buena’s Dream House Raffle sounded very similar to fund raising philosophy espoused by Dan Pallotta.

Said Priceonomics,

There is something admirable about Yerba Buena’s Dream House Raffle.

Every nonprofit spends a lot of time conducting and worrying about fundraising, and that is time that could be spent on the nonprofit’s mission. The Yerba Buena Center for the Arts identified a new revenue stream and has done well at it. It now raises more money from its raffle than it receives from individual donations or from the city of San Francisco.

Dan Pallotta says something similar in his 2013 TED Talk:

Now, if you were a philanthropist really interested in breast cancer, what would make more sense: go out and find the most innovative researcher in the world and give her 350,000 dollars for research, or give her fundraising department the 350,000 dollars to multiply it into 194 million dollars for breast cancer research?

If you have been following my blog for any period of time, you know that there has been a lot of discussion and examination about overhead ratio as a valid measure of institutional effectiveness.

Of late, the topic has been spilling out of publications focused on non-profit audiences and into the mainstream. This week, FastCompany’s FastCoExist took up the topic in a piece titled, “Demanding That Nonprofits Not Pay For Overhead Is Preventing Them From Doing Good.”

Upon reading the transcript of Dan Pallotta’s talk, I see the FastCoExist article basically says everything he did three years earlier. Except there continues to be more research conducted that is supporting the validity of the claim. FastCo cites a new Bridgespan Group study that shows how uniformly applying a flat rate limit on overhead is undermining non-profit effectiveness.

According to a recent report by Oliver Wyman and Seachange Capital Partners only 30% of New York nonprofits can be considered “financially strong”—and “many trustees do not understand the financial condition of their organization or how it compares to its peers.”

[…]

Part of the problem is that many funders have become obsessed with measuring their impact on a per-dollar basis, which means they’re more eager to give to specific projects than the institutional upkeep that supports them. But the 15% overhead limit doesn’t even parallel what commercial companies shell out. According to Bridgespan’s research, the average S&P 500 firm spends about 34% of their budget on essential behind-the-scenes support. For IT companies it’s more like 78%, the report notes. Some 21st-century nonprofits probably require the same kind of tech firepower.

Similarly Pallotta noted,

So we tell the for-profit sector, “Spend, spend, spend on advertising, until the last dollar no longer produces a penny of value.” But we don’t like to see our donations spent on advertising in charity. Our attitude is, “Well, look, if you can get the advertising donated, you know, to air at four o’clock in the morning, I’m okay with that. But I don’t want my donation spent on advertising, I want it go to the needy.” As if the money invested in advertising could not bring in dramatically greater sums of money to serve the needy.

What Bridgespan did in their research was segment non-profits into four general areas (U.S.-based direct service, policy and advocacy organizations, international networks, and research organizations) and then broke down expenses into five different categories. It probably isn’t any surprise that different segments of the non-profit sector vary widely in their needs.

There is a graphic in the FastCo article that illustrates this, but for example research organizations spent huge percentages on physical assets compared to policy and advocacy organizations. Policy and advocacy organizations didn’t spend any money on field and network operations, whereas the international and research segments did, but in greatly differing amounts.

They use this research to support their assertion that requiring flat-rate reimbursements for overhead costs across the entire non-profit sector is inappropriate. Not to mention that the percentages they set are restrictively low.

Regardless of whether this research brings about change in the immediate future, at least the scope of those involved in the conversation continues to expand.

Advocacy, Finance, Fundraising, Working In The Arts

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Is It Worth Gambling On A High Stakes Raffle Fundraiser?

June 7, 2016

by:

Joe Patti

Via the Marginal Revolution blog, I recently read a piece on Priceonomics about how the Yerba Buena Center for the Arts was using a loophole in California state law to “raise $4 million by selling $10 million in raffle tickets.”

Since the authors note that other states have a similar loophole (or lack thereof), I thought this could be something of interest to arts organizations in general. While it can be something to explore, before rushing out to organize one, you should also be aware that there are some elements to their raffle that have raised more than a few eyebrows.

Essentially what they do is sell $150 raffle tickets for the opportunity to win a $5 million Dreamhome or a $4 million payout.

Yerba Buena does not buy a house every year, and it is unlikely that it has ever given away the dream home that it advertises on fliers and billboards. Instead, as SFGate has reported, the organization finds someone who is trying and failing to sell their expensive home. The homeowner signs a contract with Yerba Buena agreeing to potentially sell their house, which would allow the nonprofit to give it to the winner of the contest.

[…]

Since taking the dream house comes with a big tax bill, winners always choose the money. SFGate failed to find any winners who moved into the San Francisco dream homes, and this seems to be the case nationwide. “I believe that with most, if not all, [dream house raffles] around the U.S., the winner takes the cash,” says Brian Yacker, a lawyer who works in nonprofit law. “I don’t recall a winner taking the house.”

A San Francisco Chronicle piece on the raffle notes,

Often owners of these homes connect with the Dream House Raffle because the nonprofit will pay them to take their property off the market as it becomes a marketing tool.

“Usually, the nonprofit is not given the home,” Pender wrote. “It might lease it from the owner with an option to buy if the winner chooses the home. The owner gets paid for keeping the house off the market during the raffle, and even if it doesn’t end in a sale, the home gets plenty of free publicity.”

This actually sounds like a smart approach and win-win all around, especially if you know that people will generally choose the money.

What raises eyebrows is the fine print. You only get the dream house or the $4 million payout if a minimum number of tickets are sold, in this case, 65,000. According to that same San Francisco Chronicle article, the art center won’t reveal if they ever reached that minimum in the seven years they have held the raffle and have deflected inquiries by the Better Business Bureau saying it was proprietary information.

The SF Chronicle notes though that even if only 70% of the 65,000 tickets are sold by June 24, the winner still gets to claim 50% of the profit from ticket sales which would come to $3,412,500, not an insignificant amount. They also peg the chances to win some sort prize at 1 in 30.

In terms of the operational nuts and bolts of these types of raffles, Priceonomics reports that California law requires 90% of the raffle proceeds go to the non-profits’ programming. (Though they say thanks to legal maneuvers, Yerba Buena actually spends 60%-80% of the proceeds on the prizes and cost of running the raffle.) Other states have looser requirements,

In other states, no loophole is required. Tennessee law, for example, only requires that 25% of the raffle proceeds go toward charitable causes; in Minnesota, it’s 40%. Massachusetts law just states that a “reasonable” amount of the proceeds should fund the nonprofit’s work.

Now before you start pondering the potential to use a raffle of this scale to make money, you should note Priceonomics’ comments the perceptual issues involved.

For one, there is the ongoing discussion of overhead costs. If people feel like the money they have donated isn’t going toward programming that benefits a needy organization or people that they serve, it can undermine donor confidence. Priceonomics cites a number of instances where people felt burned upon learning that only a small portion of what they gave actually benefited the group they were being solicited to help.

They list a number of examples where organizations have abused people’s ability to gain tax credit for donating homes and vehicles. The SF Chronicle article cites a few sketchy situations with dream home raffles.

Though Priceonomics does note in Yerba Buena’s case,

Most participants in Yerba Buena’s raffle probably would not be shocked to learn that a good chunk of their $150 raffle ticket goes toward the cost of the $4 million cash prize. And since the cost of raffle tickets is not tax-deductible, taxpayers are not subsidizing these fundraisers.

Actually, one of the criticisms of the billboard and bus advertisements for the dreamhome raffle is the fact it is a fundraiser for the arts center is downplayed.

The other perceptual issue Priceonomics cites in relation to raffles of this scale it can be equated with gambling. While a $150 ticket is not going to be viewed as exploiting low income people the way state lotteries are, if people feel like too little is going toward programs, it may create a negative view of the organization.

“The original reason for the 90-10 raffle rule—and having those raffles just for nonprofits—is because it’s not gambling but a fun way to support nonprofits you want to support,” says Berlin. “Once you move away from most of the money going to charity, it looks more like gambling.”

If you think you might want to do a raffle of this sort, it is worth reading both the Priceonomics and SF Chronicle pieces.

The former does a good job analyzing the logistics of such a raffle and ends stating their general admiration of the arts center for freeing up their time to focus on programming rather than fundraising. The SF Chronicle article takes a more skeptical view of the whole arrangement, questioning and then physically verifying the house even exists. Between the two, you can get a good sense of all the questions you might need to answer if you choose to replicate this sort of raffle.

Fundraising, Info You Can Use, Legal Topics

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