• A Federal court has overturned the FCC’s “net neutrality” regulations, which have required internet service providers to treat all content equally. Legal details here; implications for artists and ways to get involved here. Meanwhile, AT&T has announced a plan to exempt selected content from wireless data caps; artists are expressing concern.
• How many foundations does it take to keep Detroit’s art in Detroit? Nine and counting: the ad-hoc alliance of funders has pledged to give $330m to reduce the city’s unfunded pension liability if the city’s creditors will agree to allow the Detroit Institute of Art to become a separate non-profit with its collection intact. In a nod to its origins, the Ford Foundation is the largest single contributor. It’s unclear whether this will fly with the creditors, so additional donors are being sought. (This could be part of an alarming trend: the Annenberg Foundation recently had to spend more than $500k to return sacred Hopi artifacts home.)
• Thinking of applying for nonprofit status? You may need to brace yourself for a longer wait time than usual. The recent federal budget agreement gives the IRS $526 million less than last year and mandates the agency spend more time reporting to Congress.

MUSICAL CHAIRS

• With Bill de Blasio having taken office, speculation builds around the next NYC Commissioner for Cultural Affairs, with names such as actress Cynthia Nixon, former Alliance for the Arts head Randy Bourscheidt, and Tom Finklepearl being floated as potential candidates to run what may be the nation’s largest arts funder. Meanwhile, Michael Kaiser praises outgoing Commissioner Kate Levin – and says we need her at the NEA.
• Karen Hanan, Executive Director of Arts Northwest, is transitioning to lead the Washington State Arts Commission effective March 1.

ALL ABOUT THE BENJAMINS

• How are arts organizations handling ongoing, recession-related budget pressure? Some are experimenting with curtain times, guerilla art, and other innovations; others are embracing an organizational cultural of abundance. Still others ask, “what budget pressure?”
• On the heels of the NEA’s decision to support collective impact projects for arts education, Ken Thompson of the Bill and Melinda Gates Foundation observes that despite the flurry of interest from funders, they display an overall “lack of certainty about what collective impact is” and for the most part remain focused on the programmatic rather than systems level. One source of the problem? For all of funders’ efforts to get grantees to collaborate, they aren’t doing much of it themselves.

IN THE FIELD

• After winning hearts and minds across the nation with its making-it-big-in-Idaho story, come this July, the Trey McIntyre Project will disband as a dance company, focusing instead on “other enterprises involving dance, film production, and photography.” Despite TMP’s throwing in the towel, Sydney Skybetter sees a triumph and not a failure.
• In other dance news, choreographer Gina Gibney’s company will take over the former home of Dance New Amsterdam in downtown Manhattan, preserving the space as a hub for dancers from commercial and non-profit companies at a time when space is scarce.
• After a three year lockout (and, as we reported a few weeks ago, an attempt to form their own nonprofit), musicians from the Minnesota Orchestra will return to their orchestra hall next month thanks to a contract settlement that cuts their pay and benefits by roughly 15 percent.
• A painting by Glenn Brown replicating the cover of Isaac Asimov’s sci-fi novel “The Stars Like Dust” has sold for almost $6 million, causing many techies to suddenly find themselves in the unfamiliar position of advocating for copyright enforcement.
• Nonprofit theater makes way for film and television: Atlanta’s Woodruff Art Center has sold its three-stage 14th Street Playhouse to the Savannah College of Art and Design, which will use the space to house TV and film degree programs. Woodruff, in turn, donated $1.9 million of sale proceeds to the Community Foundation of Greater Atlanta to establish a new grant fund to support local performing arts organizations.

BIG IDEAS

• We nearly missed this end-of-year roundup of “10 trends and 10 predictions” for the nonprofit sector from NonProfit Quarterly. You’ll recognize several of the items, like the emerging national security state and general government incompetence, from our list of the top 10 arts policy stories, but NPQ adds several others to the table (including an emerging progressive agenda at the local government level) and gives arts organizations a special shout-out – for their “struggl[ing]…business models.” Woohoo.
• Over at Barry’s Blog, social media guru and recent Arts Dinner-Vention participant Devon Smith delves into the potential roles of user experience designers, Google glass, and 3D printers in arts organizations, and offers some insights on the need for think tanks (including ours) in the arts.

RESEARCH CORNER

• The National Endowment for the Arts has posted a batch of working papers and reports resulting from the inaugural year of its Research: Art Works program. There’s a range of goodies to dig into, including a study of the racial and ethnic composition of arts boards, and another look at the arts as a driver of economic growth.
• The Brooklyn Commune Project is out with a new report “on the state of the performing arts from the perspective of artists.” Researched and written by volunteers, it includes an impressive and cogent summary of the economic challenges performing artists face, and thoughtful recommendations for the sector. At 50+ pages it’s not a short read, but a worthwhile one. (More from Andy Horwitz here.)
  
• Another report from the UK examines how artists can support the development of socially responsible, sustainable economies, and identifies three “vital practices” that allow them to do so: 1) critical reflection around how artists maintain their livelihoods, 2) opportunities for artists to “pool their risk” when embarking on new endeavors, and 3) opportunities for artists to access unused spaces in urban environments.
• Amid increased calls for states to track student access to arts education comes this welcome reminder that determining access is more complicated than counting which schools offer which courses.
• In the latest distant-reading study, analysts have crunched “various linguistic characteristics” of a slew of old books against their commercial and critical success, then applied the resulting algorithms to contemporary writers to find that Dan Brown, William Faulkner, and Philip Roth aren’t very successful. Points for counter-intuitive results, at least.

Photo from Images_of_Money on Flickr

Earlier this year, the New York Times reported on the controversy over the Upright Citizens Brigade (UCB) Theatre’s policy of not paying its performers. UCB is almost universally considered the leading improv theater in New York, and attracts much of the top talent. It’s not a small side project, or an isolated community; it shapes the social norms of the New York improv comedy scene. As such, the question of its role in defining the future of New York improv is real and the conversation deserves to be amplified by places like the Times. This controversy followed a similar uproar over former Dresden Doll Amanda Palmer’s decision to not pay her crowd-sourced band members.

When people discuss the issue of when performing for free is appropriate and when it is not, three logics emerge: utility, community, and justice.

The utilitarian logic suggests that if the artist is getting more out of the experience than the host, the artist should not be paid. Adam Thurman explains that for these professional performers, “the real enemy is being invisible.” If the exposure a professional gets from performing at a certain venue is good enough to get her jobs down the line that she couldn’t get otherwise, she should be willing to work for free because the future returns are high enough. If the exposure doesn’t help the performer get work or some other financial compensation down the line, he suggests that performer not take the gig for free. Amanda Palmer’s plan to not pay her band members makes sense under this logic—they’re all unknown musicians and they’re getting the opportunity to tour with a well-known pop artist. This opportunity is probably a pretty good resume booster for someone looking for a career as a back-up guitarist or a pop drummer. Popular improv comedian Chris Gethard agrees, saying “I owe everything to UCB.”

Following this logic to its conclusion leads to the idea that if performers are really getting a lot out of the experience, maybe they should be paying venues for the opportunity. This is happening in music and theater scenes all over the country.  Though much of this work preys on wide-eyed performers looking for a break, some folks are actually selling a great experience that performers wouldn’t be able to have otherwise.

One of UCB’s founders characterizes the question of whether to pay differently in one of the most important paragraphs on the Times’s report:

There’s a creative vibe at U.C.B., and to maintain it, we can’t pay people,” Mr. [Matt] Besser said in an interview. “If you pay, then you have to assign worth to shows, and then people will resent that.

This argument follows from the community logic. Here, performers are part of a community that a venue keeps alive. Paying performers would destroy the egalitarian we’re-all-in-this-together spirit. A similar ethic is commonly discussed in politics. Paying voters for showing up at the polls, though it may increase turnout, hasn’t yet caught on because it clashes with the idea that voting is something we do because we love our country, not for a few bucks.

But a day’s work deserves a day’s pay, right? The bank won’t hold exposure as equity (most of the time, anyway). Science fiction author Harlan Ellison lays out this problem bluntly, emphatically pronouncing:

By what right would you call me and ask me to work for nothing? Do you get a paycheck? Does your boss get a paycheck? … Do you pay the cameramen? Do you pay the cutters? Would you go to a gas station and ask for free gas? Would you go to the doctor and have him take out your spleen for nothing? How dare you call me and want me to work for nothing!

Amanda Palmer critic Steve Albini makes a related argument that if the person who would normally be paying is making money (i.e., Amanda Palmer or a venue that programs successful improv comedy), the performer should be getting paid.

With these three different logics leading to different answers on whether to pay performers, it makes sense that controversies would arise. We need to be asking what we want: low cost performances as a locus for social connection and creative expression, market-based exchange, or a day’s pay for a day’s work?

• The Detroit Institute of the Arts, having convinced residents in three counties to pass a property tax supporting the institution in exchange for free admission, is facing a lawsuit on the basis that the deal doesn’t include special exhibits.

MUSICAL CHAIRS

• Richard Dare, the head of the Brooklyn Philharmonic (previously profiled here on Createquity) and controversial blogger, has taken the top post at the New Jersey Symphony Orchestra.
• Glenn Lowry, the famously well-compensated director of the Museum of Modern Art, has been elected to the board of the Andrew W. Mellon Foundation.

IN THE FIELD

• RIP Orchestra Nova, a 29-year-old chamber orchestra in San Diego.
• Ouch: the locked-out St. Paul Chamber Orchestra recorded a nearly $1 million deficit last season, its first in a decade. Looks like Sarah Lutman got on the lifeboat just in time.
• The Pave Program in Arts Entrepreneurship at Arizona State University is hosting what looks like a bangup creative placemaking symposium on April 12. And Man About Town Michael Hickey reports on a creative placemaking panel he moderated in New York City.

ALL ABOUT THE BENJAMINS

• Interesting and entertaining perspective on collective impact and the need to support direct-service and backbone organizations simultaneously, with response by FSG’s Emily Gorin Malenfant.
• More examples of transparency in action: Kevin Bolduc and the Center for Effective Philanthropy are revamping their flagship product, the Grantee Perception Report, in response to feedback from customers – and blogging about the process.
• Peter Singer (author, The Life You Can Save) on donating to the arts:
  

  “Philanthropy for the arts or for cultural activities is, in a world like this one, morally dubious,” he writes in his book.

  He has heard two counterarguments repeatedly since the book came out in 2009. One points to the work that, say, art museums do with disadvantaged children. “I can see how that would be a worthwhile thing to do,” he said. “I’m not sure how well it compares with saving kids from dying from diarrhea or malaria.”

  Then, there are the crumbling buildings again. “I’m certainly not suggesting that when the roof of the Met starts to leak that you don’t repair it,” he said. “But I would not give a penny to the Met to buy another painting.”

BIG IDEAS

• Clayton Lord (can I still call you Clay?) is upping the ante with a couple of recent blog posts about support for the arts at the federal level, including this lovely graph showing the NEA’s appropriations history in real and nominal dollars along with percentage of the budget and party in control of the White House and Congress. It seems that who has the House of Representatives may be a bigger driver of the NEA budget than previously acknowledged. Be sure to check out Clayton’s analysis of framing vis-a-vis the charitable deduction as well.
• Meanwhile, the “new models”/future of the arts discussion is flaring again, with a post by Michael Kaiser spurring another round of response by Diane Ragsdale and Adam Huttler, and lots and lots of discussion in the comments.
• Watch a museum exhibition go up before your eyes (in slow motion) at the Santa Cruz Museum of Art and History. Also: Attendance is not the only measure of demand, museum version.

RESEARCH CORNER

• The Strategic National Arts Alumni Project (SNAAP), an annual survey of arts training program graduates, has published “Painting with Broader Strokes: Reassessing the Value of an Arts Degree,” a supplementary report on the 2010 survey results by Danielle Lindemann and Steven Tepper.
• Maribel Alvarez offers a review of Maria Rosario Jackson’s latest for LINC, “Developing Artist-Driven Spaces in Marginalized Communities.”
• The James Irvine Fund has released a report on the its Arts Innovation Fund grants (undertaken under its previous program strategy last decade), conducted by Slover Linett Strategies. The report is accompanied by a nifty tablet-friendly interactive highlighting key findings.
• The Future of Music Coalition is leveraging its Artist Revenue Streams data to engage in some mythbusting regarding how musicians make (or don’t make) money.
• Arts education data in Los Angeles shows a complex picture of trends over the past 15 years.
• Wow. Did you know that more than half of the US patent lawsuits in 2012 were brought by “non-practicing entities” – also known as patent trolls? These companies obtain patents with no intention of actually using them for inventions, but instead to “threaten young companies with lawsuits as soon as they obtain funding; or hamstring older companies, forcing them to divert cash into costly licenses for absurd patents rather than pay for costly defenses in uncertain, patent-friendly jurisdictions.” Good to know for anyone (such as Richard Florida types) relying on patents issued as a measure of innovation. Yuck.
• As mentioned here previously, the Twin Cities is currently suffering a symphony drought, with both the Minnesota and St. Paul Chamber Orchestras shut down in the midst of labor strife. This probably isn’t the most empathetic response imaginable, but my first thought upon reading the headline “Orchestra fans getting restless” in the Minneapolis Star-Tribune was, wouldn’t this be a great natural experiment for measuring the value of orchestras to a community? I mean, you don’t realize how much you appreciate something until it’s gone, right? The evidence presented in the article suggests that some audience members are finding substitutes (“a few classical groups have noticed a spike in ticket sales”), but a substantial number are staying home. Independently organized concerts by locked-out members of the Minnesota Orchestra are selling out quickly, though obviously in an environment of substantially reduced competition. I could imagine all sorts of possibilities – a rare economic impact study that actually takes into account opportunity costs, for example, or a more scientific survey of orchestra subscribers to find out what they’re doing with themselves at night.

• RIP Artnet Magazine; more here. I will always be grateful to Artnet’s Ben Davis for being just about the only arts journalist worth his salt during the whole Yosi Sergant debacle.
• Congratulations to GiveWell, which has announced a not-quite-merger with Good Ventures, an emerging foundation led by Cari Tuna and Dustin Moskovitz (the latter is one of the founders of Facebook). The blog post is a bit thin on details, but it sounds like this arrangement will ensure GiveWell’s financial security for some time to come while substantially enhancing its real-world impact.
• Indiana University is set to open the country’s first School of Philanthropy later this year. It’s early, of course, but these snippets from the article suggest to me that buyer beware: “As with any academic setting, funding is an issue….With the nonprofit sector roughly 5 percent of the nation’s gross domestic product and 10 percent of the workforce, such [a] school could be a profit-center for the university, Rooney said.”
• One of the NEA’s lesser known programs, the Citizens’ Institute on Rural Design, will now be a partnership between the NEA, the Department of Agriculture, Project for Public Spaces, the Orton Family Foundation, and CommunityMatters. CIRD facilitates and hosts workshops on community design in places with fewer than 50,000 people.

BIG IDEAS

• Michael Kaiser has a penchant for inciting digital controversy, and his recent two–part post calling bullshit on “new business models” was no exception. At the core of the debate is this central question: how much is the nonprofit arts sector going to change in the next 50 years? Kaiser says not so much; Adam Huttler, on the other hand, thinks quite a lot. Huttler’s second post on the subject, in particular, is one of his most thought-provoking and brilliant in quite some time. EmcArts’s Richard Evans and Sarah Lutman also weighed in.
• Whither the future of open data and philanthropy? The Knight Foundation is currently considering a proposal to digitize 10 years of IRS 990 nonprofit data and make it available to the public for free. GiveWell’s Alexander Berger, writing on his personal blog, argues that this presents a clear opportunity to GuideStar’s next president to reform its business model around open data. (GuideStar’s current president, Bob Ottenhoff responds in the comments.) And the Foundation Center’s Brad Smith makes a passionate case for data standards and greater transparency among foundations.
• We’ve now entered an era in which college-age students have never known what it’s like to have to pay for music. Casey Rae and J. Holtham have more.
• What is the future of museums?

BIG MONEY

• The Irvine Foundation has announced its first set of grants under its new arts strategy that emphasizes audience engagement.
• Jon Silpayamanant makes the interesting point that sports teams have a performance income gap (i.e., expenses that outpace ticket revenue) just like symphony orchestras do.
• Wait, nonprofits are allowed to have shareholders?
  

  The deal will settle a lawsuit the Koch brothers filed in February over shares that determine control of Cato. It results from the original division of shares between the two Koch brothers, Crane and late Cato Chairman William Niskanen. After Niskanen died of stroke complications in October, the Koch brothers claimed a founding shareholder agreement gave them the option to buy Niskanen’s shares. Crane held they should go to Niskanen’s widow, which would leave him in effective control of the organization.

  The settlement involves dissolving the shareholder agreement. In addition, Crane is expected to retire under an agreement that allows him to select his successor, though the Koch brothers could veto the hiring.

RESEARCH (AND EVALUATION) CORNER

• FSG’s Valerie Bockstette points out the dangers of measuring what’s easy to measure instead of what’s most important.
• The Colorado Health Foundation’s Anne Warhover describes her organization’s approach to impact assessment.
• If you thought the theory of change and measurement framework for ArtsWave was ambitious, just take a look at this new comprehensive sustainability plan for Rockford, IL, which intends to measure economic, social, and environmental outcomes in 16 categories including cultural life and the built environment. The transportation category alone tracks 43 indicators.
• Kudos to the Cultural Policy Center at the University of Chicago for the most blockbuster release of an arts research study so far this year. Called “Set in Stone: Building America’s New Generation of Arts Facilities 1994-2008,” the report takes a critical look at the billions of dollars thrown by arts institutions at new buildings, museum wings, expansions, renovations, etc. during the decade and a half in question. Authored by then-grad-student Joanna Woronkowicz (as her dissertation), Carrol Joynes, and about a half dozen others, “Set in Stone” argues that much of that building boom was of questionable wisdom. The report is available in full multimedia regalia, even including an animated video, and scored a feature in the New York Times, along with reactions from The Atlantic Cities, Lucy Bernholz, the Nonprofit Finance Fund, and Sunil Iyengar (now Woronkowicz’s boss at the NEA’s Office of Research and Analysis). Elizabeth Quaglieri has a helpful summary over at Technology in the Arts. Congratulations, Chicago, you sure know how to get our attention!

ETC.

• Umm, please apply for the Createquity Writing Fellowship, Delali Ayivor?

Photo by Dave 3024

In April, the Saint Paul Chamber Orchestra (SPCO) announced the launch of a Netflix-style membership model where you could “get all the SPCO you want for $5 a month.” Still relatively untested in the arts world, this pricing model allows subscribers to see an unlimited number of performances for a low monthly fee. Additional perks may be included, but the key differentiator between this membership model and traditional subscriptions is that subscribers cannot select their seat and can choose to go (or not go) at the last minute.

The Netflix model, although currently under the gun due to strategic misfires, was the go-to in the home movie business for most of the last decade due to the convenience of mail delivery, Netflix’s wide selection of DVDs, and affordability. Its success was a disruptive innovation that permanently changed the video rental market. The Netflix model is now the superlative example for new or existing businesses that want to increase share of wallet (and time) of existing customers.

So how does Netflix translate into the world of the performing arts? The existing subscription model ties a customer to an annual fee for a fixed number of pre-determined performances. We’re well aware that audiences are increasingly reluctant to commit to 12 or even 6 concerts ahead of time. Although choose-your-own subscriptions allow flexibility in the subscription package, they still demand commitment to a set program far in advance as well as substantial upfront costs. A Netflix model allows subscribers to attend any performance on an organization’s schedule at the last minute and importantly, spreads out the financial burden.

What makes this model really interesting is the psychology behind it. The approach captures an individual’s desire, not commitment, to attend more arts events. Arts marketers know that in order to become a subscriber, an individual must first have been a single ticket buyer, then a multi-ticket buyer. The Netflix model’s purchasing psychology is different; people decide that they can part with a small amount of their monthly earnings to have the opportunity to see art. There is less upfront financial commitment than a subscription and a lot of promise that they will become closer to the art form. Latent demand may be captured in ways that single tickets or traditional subscriptions do not.

Another interesting facet of the Netflix model is that memberships are able to capitalize on excess capacity. On any given night at the theater or concert hall, seats go unused. If there are too many seats left available, marketers will try to paper the house with free tickets. The membership model doesn’t necessarily address the issue of empty houses, but it does allow arts organizations to sell unoccupied seats at a discount, acting as an additional source of cash when the monthly memberships come in. Even if no subscribers of a monthly membership attend a performance, a fraction of their monthly fee can be attributed to the performance. Similar to gym memberships, you can have many more members than can actually attend the concert because 1) there is no guarantee that you will get a seat and 2) it is highly unlikely that all members will attend the same performance.

So where’s the rub? Essentially free money for seats that you had anyway?  Arts marketers have plenty to say about why this won’t work. Just like Netflix or any subscription, after a while, if it goes unused for too long, members eventually cancel their account. Additionally, the amount of staff time it takes to run such a program might not be worth the incremental revenue it would bring in.

Research by TRG Arts shows that people who attend once are only 30% likely to return, but if they attend twice, that number doubles. If purchasing a membership encourages repeat attendance, those who are able to attend even twice within a season are more likely to become loyal to the organization. You can almost think of the membership model as trial pricing. It can be a low-cost entry to increasing the lifetime value of an audience member.

In Seattle, this model has been working for the ACT Theater, which has created a Netflix-style subscription called the ACT Pass. Becky Lanthrop, marketing director for ACT, says that two-thirds of their members who have an ACT Pass use it on a monthly basis. Launched in 2009, the program started with 40 subscribers and grew to 1200 in 2011. At $25 a month ($20 if you are under 30), this fee is more expensive annually than ACT’s subscription for 4 performances for $200. Thus, the ACT Pass could cannibalize the theater’s traditional subscribers, and yet the company would not lose revenue. In fact, ACT might even reduce marketing costs, as annual renewal campaigns are no longer be necessary when subscribers have to opt out of the program in order to end their subscription. Regardless of whether the ACT Pass becomes the primary model for subscriptions, it’s clear that the goal of the ACT Pass is to increase revenue and loyalty to the theater company.

The SPCO’s goals are quite different than ACT. At only $5 per month, the SPCO claims the goal is to increase access, not revenue or members. Ticket sales are a marginal source of revenue and the SPCO is not focused on increasing earned revenue from subscriptions. Marketing Director Jessica Etten has this to say about the project:

Over 80 percent of our revenue is related to philanthropy and less than 20 percent comes from ticket sales. We exist because people come to the concerts and fall in love with what we do and want to support the organization. So, we’ve always said that what we need to do is make it possible for people to come to concerts and come often and come over a long period of time, so the SPCO becomes a big part of their lives.

With prices for single tickets starting at $10, this new program seems to be aimed at audiences who already know they want to see the SPCO multiple times per season. Although the program is well positioned to increase access for existing audiences, it may not be as successful in attracting newcomers. There is nothing wrong with this, except that increasing access in the arts typically refers to broadening participation rather than deepening it.

There is another major difference between the ACT’s and SPCO’s model. ACT’s inventory of performances is a bit larger than the SPCO’s. ACT works with other venues and companies to produce additional shows, significantly expanding their choice of offerings. In addition, they produce shows all year, so subscribers do not run the risk of not having enough selection during the summer months. Although SPCO presents concerts in ten venues across the Twin Cities, there is no summer season and its typical season has 100 concerts. This is the biggest issue for any performing arts organization considering the Netflix model. Unless an organization has a large and diverse selection of productions or partners with other arts organizations to increase its offerings, the value proposition just isn’t strong enough. Netflix’s model hinges on its inventory – even now, one reason Netflix is struggling because its streaming business does not have as large a selection of new movies as its DVD business.

Lastly, targeted marketing and compelling pricing is necessary when adopting a membership program. The ACT Pass had a very clever marketing campaign, including videos, clear pricing, and purchase channels. The ACT Pass is listed separately across the top navigation of the webpage, and you can start ordering online with one click. Although not too difficult to find, the SPCO’s membership is listed under “Concerts & Tickets”, and you can purchase online, after clicking through 2 or 3 pages. I did find a zinger in the SPCO model  – you have to keep with the program for a year or accept a $50 cancellation fee. The ACT Pass only requires that you stay on 3 months. This latter approach is in better alignment with the commitment-phobes who are likely attracted to this program in the first place.

After years of working to expand audiences, it turns out that performing arts organizations’ problem is not with attracting new people; it’s getting them to come back. The membership model can be part of a retention strategy for certain performing arts organizations with a wide selection of offerings and excess seat capacity. Regarding the SPCO, it’s likely their program will increase attendance by loyal audiences, but I’m not convinced the new pricing structure or marketing messages are going to broaden their audiences as they claim. Even so, if the program does increase loyalty of current audiences and increase attendance, it will send a strong message to other orchestras that this model is worth trying out.

• Remember that debate a while back about whether video games qualified as art? Well, the NEA just declared it over by including support for “digital games” in its new Art and Media program.
• To Scott Walters’s everlasting chagrin, however, the NEA is still providing funding to organizations in New York, LA, and Chicago disproportionate to the population level. Scott has more here and here. I think this is helpful and important analysis; the one thing to keep in mind is that it focuses only on grants in one discipline of one round of one the NEA’s grant programs.
• The Library of Congress, in partnership with Sony Music, has unveiled a “National Jukebox” of early sound recordings – and it got a million page views in the first 48 hours.
• Kudos to the Future of Music Coalition for staying on top of the potential implications of the AT&T/T-Mobile merger for artists. And speaking of mergers, don’t miss FMC’s collaboration with Fractured Atlas looking back at the Live Nation/Ticketmaster merger, one year later.
• A window into Finnish cultural policy.
• So now Congressmen want to micromanage the Smithsonian’s gift shops?

COMINGS AND GOINGS

• Rahm Emanuel has announced that Michelle T. Boone, formerly of the Joyce Foundation, will serve as the next Commissioner of the Chicago Department of Cultural Affairs and Special Events.
• Marc Vogl is out as program officer for the William and Flora Hewlett Foundation, and in as executive director of the Bay Area Video Coalition.
• Heather Hitchens has quit as director of the New York State Council on the Arts to take the top job at American Theatre Wing, which presents the Tony Awards. NYSCA’s budget has declined from $55 million to $35 million over the past four years.
• Blueprint Research + Design, a major consultant to foundations, is being bought out by Arabella Philanthropic Investment Advisors. As part of the transaction, Blueprint founder Lucy Bernholz will become a half-time managing director of Arabella, spending more time on writing and in her partnership with Stanford’s Center for Philanthropy and Civil Society.
• The Sloan Foundation, whose main focus is science and technology, is now getting into arts funding.

MULTI-PART BLOGSTRAVAGANZAS

• ARTSBlog has a great-looking discussion on tap this week about new business models, the 501(c)(3) legal form, and potential alternatives. The lineup of bloggers is stellar, including Diane Ragsdale, Adam Huttler, and Janet Brown.
• The indefatigable Barry Hessenius was blogging up a storm earlier this month at the 98th Arizona Town Hall focusing on arts and culture. The convening, which included addresses from Marian Godfrey and the suddenly ubiquitous Rocco Landesman, comes at a poignant moment for the state, given recent cutbacks in public funding for the arts in Arizona. Here are Barry’s reports from Day 1, Day 2, Day 3, and the final wrap-up. There’s also a 268-page background report in case you’re looking for some further light reading.
• The staff at GiveWell, the charity rating agency, spent three months living and working in Mumbai last year. They have now posted thoughts and impressions from the visit, which provide an interesting check against their working assumptions going in. Here are the notes from staff members Holden Karnofsky, Elie Hassenfeld, and Natalie Stone, as well as thoughts on evaluating local charities in India.

RESEARCH CORNER

• The long-awaited Strategic National Arts Alumni Project (SNAAP) study has finally been published. The press release puts a positive spin on the findings, noting that 92% of alumni of arts training programs who responded to the survey have work (of any kind) and that two-thirds indicated that their first job after school was a close match for what they wanted. However, I’m more intrigued by the stat that only 57% of the over 13,500 respondents have ever been a professional artist, and only 41% currently are (keep in mind that most of the survey pool graduated within the past five years). We’ll be taking a closer look at this one.
• Meanwhile, last August, student loans surpassed credit cards as the largest source of debt in the US.
• The NEA has a new research note applying data from the American Time Use Survey to the performing arts industry.
• At ARTSBlog, Lynne Kingsley reports on the unequal distribution of arts education programs by discipline (a lot more visual art and music than theater or dance). And Tim Mikulski shares recommendations from the new report on arts education from the President’s Committee on the Arts and Humanities.
• The Alliance of Artist Communities has a new study on support for dance through artist residencies.
• Rosetta Thurman reports on a new study of perceptions of diversity in the nonprofit workplace.
• Americans for the Arts aren’t the only ones doing economic impact estimates. Google says that it benefits the American economy to the tune of $64 billion – in pure profits. Take that!

CONFERENCE CRANNY

• The Cultural Policy Center at the University of Chicago has been on fire lately, and held a great-looking Emerging Practice Seminar last month. Materials from the session (including lots of video!) are available here.
• Matthew Guerrieri provides a dispatch from the Rethink Music Conference in Boston.
• Beth Kanter reports from the Center for Effective Philanthropy Conference.
• Trista Harris has video from the “Philanthropy On Trial” event at the Council on Foundations Conference.

TRENDWATCHING

• Wow. For the first time since 1992, the rate of television ownership in American households has declined. To 97%.
• Crowdfunding isn’t just for donations and loans anymore; MicroVentures is now taking tiny equity investments for new startup companies.
• The Daily Beast on Amazon.com and the future of book critics.
• Composer Jeff Harrington offers a personal history of his reliance on free content distribution as a career strategy, and relates it to the issue of class in the arts.

ETC.

• Really fascinating indictment of today’s urban planning field and the (unintended) legacy of Jane Jacobs.
• Barry Hessenius interviews Kristen Madsen, Vice President of the GRAMMY and MusiCares Foundations.
• I have to say (and no, I am not being paid for this), I am so glad I signed up for the free trial of the New York Times’s digital subscription service sponsored by Lincoln when I had the chance, and I will certainly be renewing when it runs out. Without it, I’d be missing out on great reporting like this piece on a “pop-up” restaurant that served a six-course lunch to a dozen passengers on the L train, and this exposé of some shady-sounding business practices on the part of Columbia Artists Management promoting foreign orchestras who aren’t what they seem.

Playhouse Square (photo by Ron Dauphin)

“Sustainability” and “community development” are ideals that many arts organizations strive to uphold. They want to stand on their own two feet financially, and they also want to play a role in revitalizing communities that have been abandoned by urban sprawl. Some arts centers, such as the New Jersey Performing Arts Center in Newark and PlayhouseSquare in Cleveland, are accomplishing both of these goals with one activity: non-arts related real estate investments.  We know from many, many studies (like this one from The Reinvestment Fund and another from the Center for Creative Community Development) that there is a strong connection between arts activities and real estate values. Is this the sustainable business model we’ve been looking for?

Well, it certainly can bring in the money. Carnegie Hall Tower in New York generates over $2 million a year in revenue for Carnegie Hall. NJPAC, with its holdings of 12 acres, “has an annual operating budget of $30 million, [and] has been in the black five years running. It has built an endowment of more than $55 million and raises about $11 million a year.” In Cleveland, a full 30% of the PlayhouseSquare Foundation’s revenue is tied to real estate.  And why shouldn’t these arts organizations be benefitting from the value they create? Thomas Kean (former governor of New Jersey who ushered in NJPAC) viewed the opening of Lincoln Center across the river in 1981 as a cautionary tale. Lincoln Center went in and transformed the surrounding area into a commercially successful one. Subsequently, Kean says, the Center itself missed out on that value because it hadn’t invested directly in the neighborhood property. By investing in surrounding property, these organizations are able to capture that value and channel it towards their mission-related activities. One might even argue that capturing this value is a responsibility of the organization in order to ensure its financial sustainability.

But should the role of an arts organization in community development extend to directly buying, selling, leasing, and planning the real estate development of large amounts of property? It’s a very deep question whose answer probably depends, among other things, on what the organization’s mission statement is. For example, when PlayhouseSquare was founded in 1970, its purpose was to save five historic theaters downtown. But after those theaters reopened, private investors didn’t rush in as expected. So Playhouse Square jumped in, taking a risk where the private sector wouldn’t. The result has been revitalization for the neighborhood and money in the bank for the non-profit.

Not all arts organizations who deal in real estate have such cozy relationships with their city, however. The Pittsburgh Cultural Trust, whose mission is promoting and developing the city’s downtown Cultural District, is currently appealing a ruling that would force them to pay taxes on two properties it owns but hasn’t developed (one is the site of the CMU Arts Management program’s Future Tenant Gallery). Two years ago it faced a lawsuit by a developer with whom it was partnering over control of the project site.  Large-scale real estate development is not for the faint of heart or the short of cash. The Pittsburgh Cultural Trust’s mission is to develop the Cultural District, so it has made the decision that real estate investment is a risk worth taking. However, that’s a choice that each arts organization must face.

The Old Town School of Folk Music in Chicago chose not to take that risk, and it seems to have worked out pretty well for them. The city gave the school the old Hild Library in Lincoln Square to renovate back in 1998. Since then, the area has gone from tired-looking neighborhood to a pedestrian-friendly paradise, with a surprisingly low number of chain stores.  New Mayor Rahm Emanuel has praised the School for bringing the area to life. According to sources at the organization, Old Town School certainly worked (and still works) with business owners and government to encourage the development of the neighborhood, but it didn’t buy up property like other arts centers.  Then again, its mission is to “teach and celebrate music rooted in tradition,” not to redevelop a neighborhood.

Like any method for diversifying income, real estate investment has its pros and cons. There are also a lot of questions it raises that haven’t been addressed here, like gentrification, real estate monopolization, and whether an arts organization is really the best entity to plan urban revitalization. Do you know of other examples of arts organizations getting involved in non-arts-related real estate investments? How has it worked out for them?