The President
The White House
1600 Pennsylvania Avenue
Washington, DC 20500

Dear Mr. President,

There are many calling for you to create a cabinet level position for arts and culture. There are certainly many factors involved in such a decision. There is a necessity to exhibit how the country values arts and culture by providing leadership, but also revising the way we fund these disciplines. You may not be aware, but the section of the tax code under which many non-profit arts and culture organizations operate, 501 (c) (3), does not mention the arts and culture at all. Despite this, it is fortunate that the generosity of the American people, businesses, foundations and endowments flows to arts and cultural organizations under the auspices of this section of the tax code. Whether or not arts and culture find a greater representation within your administration, you can do a great service to the community by creating an improved, more focused way for the arts to acquire support.

For a sense of why the current method of funding the arts is in need of change, one might read John Kreilder’s “Leverage Lost The Nonprofit Arts in the Post-Ford Era.” In the third section of the piece, Kreilder notes that the theory employed by the Ford Foundation was that support they provided could be leveraged by stimulating donations from other sources. This same approach has been used by the National Endowment for the Arts, many state arts agencies and some private funders.

But as Kreilder notes:

“Any student of biological, physical or economic systems would immediately recognize the flaw in the logic of funding leverage, as it has been practiced not only in the arts, but also throughout the nonprofit sector. One of the fundamental tenets of systems studies is the “free lunch” principle: no system can depend on the unlimited growth of resources. The leveraged funding strategy of the Ford era can be likened to a chain letter, a Ponzi scheme, or any other pyramidal growth system. The initiators of chain letters and Ponzi schemes often claim that, for a small effort or investment, a virtually limitless return will be realized, and though initially this prophecy may appear to be feasible, inevitably all such arrangements must fail because resources are finite. In other words, there is no perpetual free lunch. Ultimately, funding leverage will become unsustainable.”

Five years ago the Independent Sector issued a statement calling on foundations and endowments to shift their focus to long term broad support of organizational core programs rather than the short term project support prevalent today. The Independent Sector felt this short term emphasis keeps non profit organizations focused on reinventing their programs to comply with narrow guidelines rather than investing their energy in building institutional capacity.

If your administration were able to provide leadership and incentives to encourage longer term, core support of non-profit organizations, it would be a boon for the entire sector. But for non-governmental funding of non-profits to thrive, there needs to be greater opportunities both in the way these entities can incorporate themselves as well as the mechanisms by which they can raise money. The origins of both these solutions will be found in the tax code.

One of the ways this might manifest is by providing increased options for the formation of non-profit entities. Among the possible processes by which a company might form could be as hybrids between the current 501 (c) (3) and for profit methods of incorporation. It might be necessary for such an entity to pay more taxes than a current non-profit but such arrangements will expand the avenues by which people can pursue serving myriad constituencies while facilitating opportunities for greater self-support.

As for diversifying the means for garnering support, Douglas K. Smith had an intriguing idea a few years back he termed, Dynamic Deductibility The piece he authored explains it in detail, but simply, a person would buy X amount worth of shares in an organization but doesn’t take a deduction until he sells the shares. If the share value goes up, he takes a bigger deduction than he would have had he donated directly. If not, he takes a smaller deduction.

The primary way this would differ from the stock market is a non-profit would get money every time the stock changed hands rather than the one time infusion a for-profit gets at its initial public offering. This option doesn’t exist as yet because there are no laws creating or governing such transactions. Certainly there is much to be considered in how the tax code and laws might be written to accommodate such an arrangement and guard against abuse. When I first read the article, I wondered if the activities of non-profits would be substantial enough to attract investment interest. Having since learned of the financial instruments in which people were investing that lead to the current financial crisis, I am convinced these organizations offer more than enough tangibility. Donors employing this avenue to support an organization realize returns in the form of both observing how the non-profit is able to serve its constituencies and tracking how the organization is valued via its shares.

My hope would be that smaller non-profit organizations who did not feel they could garner significant interest on their own, or even larger organizations looking to enhance their value, would come together to offer shares in partnership with one another. I am an arts person so my immediate vision is of visual and performing arts organizations cooperating to increase their shared value. It doesn’t take much effort, however, to also imagine social work and health care organizations working together to improve the value of their shares by improving the lives of the communities they serve.

I hope you have noticed, President Obama, that while our endowments and savings, small as they were already, have shrunk severely we in arts and culture have not asked for a bailout. Certainly it has been suggested. It is difficult not to want a portion of the billions of dollars being distributed. Yet the loudest cries right now aren’t for you to increase the budget of the National Endowment for the Arts, but rather to create a cabinet position. We don’t want a bailout as much as we want the esteem and respect of our government and our countrymen. We want to be better organized and educated so we can achieve and serve with greater efficiency.

What I ask is in the same vein. Assist us in becoming more viable and integral contributors to the economy, the national cultural and social identity.

Most respectfully,

Joseph Patti

There has been a real big push in the last month or so between articles and email exhortations to have President Elect Obama appoint a cabinet level secretary of culture. As I read these things it really appears that no one has really stopped to consider what the implications of such a position might entail. There was an article that appeared right after the idea came up at the National Performing Arts Convention (NPAC) this summer. I have spent about 8 hours over the last three days, alas to no avail, trying to find it because it made a convincing case for being wary about instituting such a position. It might be that I am misremembering when it appeared and that is preventing me from finding it.

From what I do recall of the article, one of the points it made was that the effort would cost the President a huge amount of political capital because there is no national popular support of the arts. Education, Health, Defense, Homeland Security, Interior, etc can all have cases made for their importance and people will go along. Government support for the arts has often been a contentious issue disproportionate to the actual funding it receives. It certainly isn’t a reliable survey method, but when you read comments on the articles about a cabinet level culture position, those against pretty much unanimously mention not wanting their tax dollars to go to the arts. If the Obama administration pushes for the creation of this position, there is going to be a great deal of public debate on the topic.

Now I will be the first to admit that short of some transformative incident, national support and appreciation for the arts will likely never emerge on its own. I don’t anticipate there will ever be a good time to institute this position so there may be no point in waiting. If the next phase of the economy is going to be creative, then we certainly want strong leadership in that direction. Arts and Culture could absolutely benefit from stronger central leadership and advocacy. I would welcome a scenario where everyone working in an cultural organization was better educated and equipped, working collaboratively with other entities and enjoyed the confidence of having support on the national level.

A Secretary of Culture would also benefit the country internationally since we don’t have a central person with whom foreign officials of similar portfolios can meet. There would be much rejoicing if Visa processes for artists were facilitated and that pernicious 30% tax on foreign performer income was adjusted.

The thing to remember is that the agendas of the government, no matter how sympathetic an administration might be to one’s cause, is unlikely to be synchronized with the agendas of the arts and culture organizations of the country. It is one thing to disagree with the initiatives of the National Endowment for the Arts because the worst impact they can have on you is to decide not to fund you. When you have a person making cultural policy decisions for the entire country, that is a different matter. And if you stepped up to call for this cabinet level position, your cooperation will certainly be expected.

There is the question of whose interests will this person predominantly represent. Both Hollywood and folk artists are home grown and national treasures, but money buys access and influence. Will the Secretary of Culture press for greater freedoms of artistic expression or fight to preserve and extend copyright and intellectual property protections at the behest of large corporations? Will live experiences and interactions with art be valued or more virtual experiences like television, film, internet and video games?

If one thing is supported, other areas end up lacking by simple default. What happens though if an administration decides something should be actively censored or undermined? Things can be declared as unrepresentative of the culture of the United States or simply un-American and we will have asked that someone be placed in the position of doing so.

Don’t think it will happen? Last year British Culture Minister, Marge Hodge, criticized The Proms of…well actually being too British and not inclusive enough of the multi-ethnic backgrounds of the country. Yes, multi-cultural focus is to be desired, but it could have easily gone the other way and people were still miffed at her comment. In 2002 another British culture minister, Kim Howells, stated the contenders for the visual arts Turner Prize had produced “conceptual bullshit.”

It is one thing if a senator stands up and criticizes a work of art but quite another when someone whose job it is to eat, drink and sleep arts and culture and theoretically knows what they are talking about makes damning statements.

Finally, don’t forget, there is no guarantee arts and cultural institutions will get any additional money. The budget can be cut regardless of the title the nation’s top arts official holds. In fact, for a number of years Congress will be able to claim they quintupled the arts budget without grant awards increasing a penny because all the money will be directed to the bureaucracy of this new Department of Culture.

So the question is, are you willing to accept the possibility of all this? As cynical as I may sound here, honestly as soon as I read about the NPAC proposal to have a cabinet level position, my first thought was of Gilberto Gil. In my mind, he is the Culture Minister to emulate in terms of striking a balance between the interests of the creators and consumers and promoting creative expression.

But I am also cautious. Given how we have discovered that the Justice Department and Inspectors General of many government offices have been subverted and suborned in recent years, there are no assurances anyone can offer me that my gravest concerns can be warded against.

I guess for me, it comes back around to where I started this post. If there is enough political will to make the position effective and credible to accomplish all the positive things we hope for, then I am generally willing to accept the potential for the negatives.