Thoughts on “Thoughts on Effective Philanthropy”: Lessons from my Summer Internship

As the twenty or so regular readers of this blog will note, I debuted Createquity last October with a rather brash six-episode litany of “Thoughts on Effective Philanthropy” in the realm of the arts. I say brash because, at the time, I had no experience running a philanthropic program; all I had were my outsider impressions as a practicing artist and a seeker of grants on behalf of organizations with budgets ranging from a few thousand dollars to nearly $4 million per year. So I thought it would be telling to look back at those posts, nearly one year later, and see how my impressions may or may not have changed after a summer working for one of the more prominent arts funders in the country. For the sake of simplicity, I’ll address the essays in order in which I wrote them.

Thought I: The Nature of the Arts and Their Impact

Original Thesis: Measuring impact in the arts is totally different from measuring impact in other nonprofit areas, in part because the arts occupy a strange netherworld between the nonprofit and for-profit sectors.

The arts, on the other hand, are a field primarily comprised of organizations that produce a product for consumption, much like for-profit companies. In fact, they are basically for-profit companies without the profit. Their value to society (and selling pitch to funders) presumably lies in their ability to bring products to market that would not have otherwise seen the light of day; otherwise, why fund them at all? However, this definition of value doesn’t match up so well with our traditional notions of social responsibility and moral imperative. Think about it this way: if a mission-driven nonprofit were to be wildly successful, so successful that it had entirely solved the problem it was created to address, it would have no choice but to shut down. For presenters, museums, galleries, ensembles, and the like, there is no such consideration: wild success is merely an invitation and an opportunity for more activity. And why shouldn’t it be? Arts organizations, much as they might like to believe otherwise, don’t really exist to solve some urgent problem in society. At some level, like for-profit companies, they are self-serving: they promote the art itself (the product) rather than who experiences the art (the customer).

Post-Internship Analysis: As part of the Performing Arts Program’s Year-in-Review process, we actually spent a good chunk of the summer thinking about the purpose of the arts and how to measure impact. Although I still think the basic insight quoted above is an important one, my dialectic greatly oversimplified the nature of the nonprofit sector. For example, there are many arts organizations whose primary mission is social rather than transactional in nature, though these tend to be the exception rather than the rule. And certainly there are whole classes of non-arts nonprofits that are not set up to achieve the kind of “total success” that would enable them to shut down (such as schools, hospitals, or community organizations). That said, the larger point seems clear: measuring impact in the arts is a challenge precisely because there isn’t a lot of agreement or clarity in the field about what it is, exactly, that the arts “should” be doing. Is it enough for them simply to exist? Does it matter if it’s “good art” or “bad art,” or if one can even tell the difference? And if they do provide ancillary benefits to society, as a growing body of research suggests, does highlighting those benefits diminish the so-called “intrinsic” value of arts experiences? These are extraordinarily challenging questions that a single internship could not hope to address. At the moment, the answers largely remain up to individual choice and preference among supporters of the arts, though we did try to answer them for the Hewlett Foundation.

Thought II: Philanthropy and Experimentation

Original Thesis: While evaluating impact is important, more is generally better when it comes to the arts. Therefore, a narrow focus on supporting only “successful” or “proven” organizations misses the point, because the true value of an arts scene lies in the interactions and network effects made possible by thriving clusters of arts organizations.

So if I’m an agency funding the arts, in some sense I’m not so incredibly concerned with the specific effectiveness of each individual organization I’m supporting. Of course you want your money to be used wisely, but it’s a good thing for the size of the art scene to be able to accommodate the full population of artists who want to work in your geographic area of interest; in other words, to grow according to the supply of artists, not audience demand. So it does not make sense, I would argue, only to fund the blue-chip institutions like the art museums, the symphony orchestras, and the major theater companies in hopes (for example) of lending international prominence and legitimacy to the community. Such a top-down approach potentially leaves out a much larger underground network of artists doing their best to scratch out a living with no institutional support, despite creating significant value for their local communities and economies.

Post-Internship Analysis: As it turns out, the notion that smaller, community-oriented arts organizations are undervalued or represent the future is a common theme in creative economy literature, expressed in various forms by Mark Stern and Susan Seifert at Social Impact of the Arts Project, Duncan Webb of Webb Management Services, Richard Florida in The Rise of the Creative Class, and others. And the importance of experimentation and risk-taking in philanthropy writ large has been highlighted by Sean Stannard-Stockton, Lucy Bernholz, the Skoll Foundation, and plenty of other thought leaders in the field. So it’s heartening to know that my views on this are, if not exactly mainstream, at least echoed by actual professionals who are working in this space. With that said, there are still plenty of donors out there who just want to give to the symphony and the art museum, and that is their prerogative. What we really need is more research to understand the effect that multiple organizations in the same geographic area have on each other and the community, and how that varies systematically across different settings.

An analogy came to me this summer when I visited Yosemite National Park. While exploring one of the giant sequoia groves, I came across a placard explaining that until recently, workers would suppress fires in the park that they thought were endangering the sequoias. They changed the policy when they realized that the fires actually help the sequoias grow by improving conditions for young seedlings and reducing competition from other species. I’ve come to believe that arts policymakers tend to their communities’ art scenes much like park rangers, constantly learning the ways of the forest and implementing strategies to ensure a thriving and diverse environment for public enjoyment.

Thought III: (Dis-)Economies of Scale in the Arts

Original Thesis: Narrowing the argument from the previous essay, I contend that giving to large organizations specifically represents a suboptimal use of most foundations’ resources. Many large organizations have high administrative costs or bloated artist fees that are hard to justify, and are only driven higher by the perception that those organizations can raise money hand over fist. (This, of course, puts pressure on those organizations to deliver on those perceptions, increasing competition for fundraising personnel and raising administrative costs yet further.)

In contrast, small arts organizations are extraordinarily frugal with their resources, precisely because they have no resources to speak of. It’s frankly amazing to me what largely unheralded art galleries, musical ensembles, theater companies, dance troupes, and performance art collectives are able accomplish with essentially nothing but passion on their side. A $5,000 contribution that would barely get you into the sixth-highest donor category at Carnegie might radically transform the livelihood of an organization like this. Suddenly, they might be able to buy some time in the recording studio, or hire an accompanist for rehearsals, or redo that floor in the lobby, or even (gasp) PAY their artists! All of which previously had seemed inconceivable because of the poverty that these organizations grapple with. Foundations concerned with “impact” should remember that it’s far easier to have a measurable effect on an organization’s effectiveness when the amount of money provided is not dwarfed by the organization’s budget.

Post-Internship Analysis: This really comes down to thinking about overhead in terms of percentages versus absolute dollars. It makes sense if you buy that the impact of an arts organization is proportional to its budget. But is that true? Is a $10 million organization at least twice as important and successful as a $5 million organization? There seems to be an assumption among many in the field that (on average, at least) it is, but I’m not so sure. An orchestra is only going to employ so many musicians regardless of how big its budget gets. There are only 365 days in the year that a theater company can put on a show. Not to mention that the more money an organization raises, the more connections and relationships it builds in service of raising future money. People like to give to winners, after all. I may be biased by my belief in distributive efficiency, but it still seems to me that we’d be wise as a field to fight against this impulse, and look for those high-risk, high-reward, small-dollar investments that can make all the difference.

Thought IV: Funding Activity, Not Individuals

Original Thesis: Awards or European-style blanket subsidies for artists are problematic because they tend to increase stratification and reward artists more for being visible than for being good. Instead, foundations should look to build and sustain a marketplace in which the currency is artistic merit rather than the ability to draw a crowd.

Where foundations can add value instead is in setting up and supporting systems by which artistic activity is generated in their communities. How might this be accomplished? The first place I would look is what I would call nexuses for art. Where is art shown, produced, performed, bought, sold, consumed, marketed, supported? It’s not just the museums and the concert halls. It’s the dive bars, the galleries, the coffee shops, the off-off-Broadway theaters, the bookstores, the record stores, the radio stations, and the occasional entities that serve as all of these things and more. Finding a way to get money to these organizations is tricky because many of them are set up as for-profit entities. Yet, from the artists’ perspective, many of these tiny businesses fulfill just as important a function as the city’s performing arts center or marquee theater company, despite being labors of love for their proprietors that often operate completely outside of the support structures that exist to make art available to a wider public.

Post-Internship Analysis: I’ve softened my stance a bit on funding individuals, since there are some artists whose activity is not well served by any marketplace, but I still don’t see any reason to be giving out $50,000 grants to established artists. I continue to believe fervently in the second point of the essay, the need to focus on infrastructure in arts communities. Particularly, the connections between nonprofit arts organizations and the for-profit arts industries are not well understood in any sort of systematic way. This is a great opportunity for further research.

Thought V: Meeting the Artists Where They Are

Original Thesis: Arts funders should let artists do their work, and not get too involved with the subject matter or specific details of their creations.

A composer or a playwright is not like a graphic design shop or an IT consulting firm that will create something to a customer’s specifications, no questions asked. The whole point of supporting the arts, to my mind, is to encourage innovation, expectation-challenging, and all what goes along with leading a creative life. Laying out the path ahead of time with too-great specificity potentially squashes the very thing that makes the arts special….I’ve seen projects in the music world greenlighted for little reason other than the possibility of getting a grant for them. Were those always the best projects to undertake, either for the organizations/artists themselves or for the field as a whole (e.g., audiences)? For example, if the most talented artists are unwilling to create works to specification, does that mean that less talented artists receive those opportunities instead and ultimately become better-known to the public as a result? Or if a high-dollar-value grant also includes an educational workshop component, will the panel end up selecting a fine composer who is terrible in the classroom?

Post-Internship Analysis: Luckily for me, this issue just didn’t come up very much during my internship, thanks primarily to the Hewlett Foundation’s philosophy of funding most organizations with general operating support. In general, though, I continue to advocate thinking carefully about how up-front restrictions on grant opportunities can mess with the fundraising and (sometimes) programming strategies of arts organizations.

Thought VI: The Philanthropist as Speculator, Not Gatekeeper

Original Thesis: Grantmakers enjoy a special privilege and thus shoulder an exceptional responsibility to the field by virtue of their access to resources. This isn’t Monopoly money we’re playing with: these are real decisions that affect the lives of real people. As such, grantmakers should seek familiarity with the entire arts community, not just funded organizations.

With that in mind, I would be heartened to see a more proactive approach toward outreach and community presence from grantmaking organizations, particularly foundations. From my perspective as someone representing two small, newish performing ensembles in New York, it seemed like staff members of funding entities attended only events presented by current grantees, if they even attended those. A few, such as NYSCA, had formal “artistic audit” processes by which a potential applicant could request attendance by program staff at a particular performance, but this process had to be initiated by the applicant organization. I knew and still know of no funding organization that makes significant, formalized outreach efforts to more fully understand the arts community that it serves. By “outreach,” I specifically mean measures to amass institutional knowledge, intelligence if you will, about the widest possible range of players in the arena, including organizations that are neither current grantees nor current applicants. To my mind, that’s the only way an organization tasked with supporting an arts community can truly have its “ear to the ground,” so to speak.

Post-Internship Analysis: This was my polite way of saying that funders need to work hard and get out of the office once in a while. In theory, I absolutely stand by this, maybe more so than anything else I’ve written. All through the summer I keenly felt that sense of responsibility of which I speak above, fully aware of the weight my opinions and recommendations suddenly held. However, I found it harder to live up to my own standards in this regard than I anticipated. Even with my very limited portfolio of grant applicants (most of my time was spent on the cultural asset map initiative), it was a challenge to inform myself as much as I wanted. The main stumbling block is the sheer volume of information that must be tracked, prioritized, and deeply understood on a daily basis. Reading a grant application is only the beginning–there’s analysis to be done, facts to be checked, context to be gathered, conversations to be had, performances to attend, and summaries to write up. Multiply that by a few hundred organizations, and you’ve got yourself a pretty decent chunk of work even without considering nonapplicants. This is not to say that a more proactive approach of the kind I envisioned isn’t possible, but it does beg the question of what information is most important and how to gather it efficiently. I wonder if we could learn anything from our equity analyst friends about this. Good thing I go to business school and can find out! (update: hmm, given this week’s events, maybe not so much…)

Thoughts on Effective Philanthropy: Part I – The Nature of the Arts and their Impact

Thoughts on Effective Philanthropy: Part VI – The Philanthropist as Speculator, Not Gatekeeper

Thoughts on Effective Philanthropy: Part III – (Dis-)Economies of Scale in the Arts

Thoughts on Effective Philanthropy: Part IV – Funding Activity, Not Individuals