Sony’s The Interview hits theaters – photo by Travis Wise

The massive cyberattack on Sony Pictures Entertainment, purportedly by North Korean hackers, captured the popular imagination in December. Recent hoopla has focused on Seth Rogen and James Franco’s movie The Interview, one of five Sony pictures leaked in the attack. The movie, which depicts the assassination of North Korean leader Kim Jong-un, provoked threats of violence from the hackers, leading Sony to delay a theatrical release. After much debate — even President Obama weighed in on the mess — Sony moved forward with limited release in theaters on Christmas Day, coupled with a broader (and massively successful) online release. (The debacle made the No. 2 spot on our 2014 Top 10 Arts Policy Stories roundup.)

Lost in The Interview‘s shuffle, however, are revelations about Sony as a business and questions about the journalism and the First Amendment that bear a closer look. Hollywood (heck, lots of major US corporations) has long suffered a gender and race gap. Leaked documents revealed the situation at Sony is pretty stark: only one of the seventeen Sony employees making more than $1 million is a woman, and 88% of these top execs are white. (The pay gap trend extends to actors, too.) More troubling than the obvious, however, is Sony’s efforts to stop the flow of information. Sony successfully took down Reddit content citing copyright infringement, threatened twitter with legal action, and demanded that media outlets to refrain from publishing stories about the hack. In good news for journalism, however, Sony is not in the legal right, as media outlets are generally protected by the First Amendment (as long as they aren’t stealing the data themselves.)

Arts Council England Prioritizes Diversity: In December, Arts Council England (ACE) announced new funding regulations with several strategies aimed at making the arts more accessible. Chief among these is a diversity tenet, in which organizations must demonstrate diversity – of audiences, programming and in their workforce – in order to continue receiving public funding. This “fundamental shift,” presented by ACE Chair Peter Bazalgette, “[places] responsibility on every funded organization to make their programme of work more reflective of the communities they serve.” British theater companies have mostly welcomed this “diversity drive,” though some do question its feasibility. The 670 nonprofits currently receiving ACE funding have some time to get their act together. The Council will not systematically consider diversity data when making funding recommendations until 2018. The monitoring of progress, however, is to begin next year.

Level Funding for Arts Agencies Secured in Cromnibus: The end of 2014 found the “least productive Congress ever” hard at work on eleventh hour legislation, with many implications for the arts. On December 14, the Senate narrowly passed the annual budget bill, this year colorfully nicknamed the “Cromnibus,” thus funding the federal government through next September. The bill, signed into law by President Obama on December 16, includes stable funding for National Endowment for the Arts and the National Endowment for the Humanities; each will receive $146 million. In addition, the Institute of Museum and Library Services, the Arts in Education program within the U.S. Department of Education, and the Corporation for Public Broadcasting will all be funded at previous levels. While a bill to make permanent certain charity tax breaks – including the popular IRA Charitable Rollover – was rejected, the Senate did approve a bill retroactively extending these breaks for 2014, providing donor incentives through December.

Penn Foundation Wipes Out Two Philadelphia Arts Organizations: Philadelphia’s only remaining major arts funder, the William Penn Foundation, has been a driving force behind the push towards capitalization of institutions within the grantmaker community over the past few years. Unfortunately, when you invest in capitalizing some organizations, there’s less left over for others, as a few Philly organizations recently found out the hard way. In November, the Foundation declined to renew its general operating grant to Dance/USA Philadelphia (Dance/UP), which it has funded for the last eight years to the tune of $2.7 million. As a result, Dance/UP announced last month that it would have to close, prompting an angry outcry from the local dance community. The foundation later agreed to provide short-term transition funding to allow Dance/UP to close responsibly by migrating some of its programs to other area organizations. Meanwhile, Penn also declined to fund The Philadelphia Singers; in recent years, grants from the foundation had accounted for almost a full third of the chorus’s annual operating budget. The chorus, founded in 1972, announced that it too would cease operations following its May 2015 concert, citing loss of funding as the major contributing factor in the decision.

US Reaches Diplomatic Breakthrough with Cuba: In a historic breakthrough reversing fifty years of U.S. policy, President Obama announced on December 17 that the US would begin normalizing diplomatic relations with Cuba. The announcement, considered by many to have been a long time coming, offers potentially significant implications for artists. Although the embargo has not prevented cultural exchange between the US and Cuba in recent years, many are hopeful that improved relations will ease logistical headaches around visas and artist payments, encouraging more presenters to book Cuban artists and fostering new relationships with our neighbors to the south.

MUSICAL CHAIRS/COOL JOBS

• The New England Foundation for the Arts has named Cathy Edwards as its new executive director, replacing longtime leader Rebecca Blunk who passed away last year.
• Sharnita Johnson is the new arts program director at New Jersey’s Geraldine R. Dodge Foundation.
• Arts Council England has appointed former Classic FM director Darren Henley as its new chief executive, replacing Alan Davey who is leaving ACE to become controller of Radio 3.
• In two retirements at the New York Times, celebrated music critic Allan Kozinn and veteran arts writer Carol Vogel left the newspaper of record after tenures of 37 and 31 years, respectively.
• William Ruprecht, chief executive of New York-based Sotheby’s, and Steven Murphy, chief executive of London-based Christie’s, departed their respective posts at the end of the year.
• Two staff departures this month came with some public controversy. Matthew Lennon, Houston Arts Alliance’s Director of Civic Art and Design, resigned his post over objections to the city’s handling of a major arts commission. And longtime Artistic Director Ari J. Roth was fired from his position at Washington DC’s Theater J, following a tumultuous tenure that frequently saw him pushing the boundaries of his home institution’s tolerance for free expression. Roth’s ouster prompted a strong protest from his colleagues in the theater world.
• New Yorkers for Parks is hiring a Director of Research and Planning. Posted December 10, no closing date.
• The Barr Foundation is looking for a Program Officer for Arts and Culture. Posted December 15, no closing date.

NEW RESEARCH OF NOTE

• New research published in the journal Urban Studies looks at the economic impact of cultural hubs on urban development nationwide, suggesting that localized, place-specific approach to arts initiatives are the most beneficial to economic development.
• On the other hand, the What Works Network, a government-backed organization in the UK, released a report suggesting that large sports and arts facilities have “zero” economic impact.
• The National Endowment for the Arts has released a summary of its June 2014 symposium, which was titled “Measuring Cultural Engagement: A Quest for New Terms, Tools, and Techniques.”
• Southern Methodist University’s National Center for Arts Research published its second major report on the health of the arts industry, with in-depth data on 26 of 184 previously identified performance indices.
• The American Alliance of Museums published the first-ever field wide survey of compensation in the museum industry, with information on salary, benefits and demographics for 51 positions, broken out by geographic area, museum discipline, governance and operating budget.
• The Hewlett Foundation released an assessment of its regranting intermediaries strategies in San Francisco, which includes key takeaways for the larger field.
• The Irvine Foundation released its third and final study of arts engagement strategies, this time partnering with AEA Consulting to analyze the relationship between arts programming, new audiences and unusual spaces.
• A study released by Grantmakers for Effective Organizations shows grantmakers are shifting support towards general operating & multiyear funding.
• Finally, in less than promising news for this section of the Newsroom, research published in the Journal of Personality and Social Psychology suggests that our beliefs are driven more by psychological associations than by hard facts.

The Detroit Institute of Arts’s Woodward entrance. (Image courtesy the Detroit Institute of Arts)

After a two-year battle, a federal ruling to approve Detroit’s bankruptcy plan brought to an end the threat to auction off the Detroit Institute of Arts’s collection. The plan includes the “grand bargain,” an $800 million deal that partly consists of a $366 million investment from the Ford Foundation, Kresge Foundation, Knight Foundation, and other heavy-hitters. In the bargain, DIA supporters are providing funding to save Detroit’s public pensions, with the caveat that DIA be administered by an independent charitable trust, and not by the City of Detroit, which has owned the museum since 1919. While all hail these developments as positive, DIA still has a tough road to financial stability ahead. As it looks to shore up its finances and secure its future by raising its endowment to $400 million, DIA faces hefty legal bills incurred during the bankruptcy battle, and the daunting task of fundraising from donors whose pockets may have been emptied into the grand bargain. Regardless of what the future holds, the foundations will be keeping a close eye on their investment–the Knight Foundation’s Dennis Scholl has been appointed as an observer of DIA’s board.

Publisher Hachette Wins the Right to Set E-Book Prices from Amazon: In a multi-year agreement, “Big Five” publisher Hachette won the right to set prices for e-books from Amazon, which had attempted to pressure the company to price all e-books at $9.99. The retail giant suffered in the court of public opinion for its strongarm negotiation tactics, including long shipping delays of Hachette books, disallowing advance sales, and steering customers to similar books by other publishers. Some authors are calling for Amazon to be investigated on anti-trust grounds; at the same time, Amazon has questioned the need for traditional publishing houses in the digital era. While all sides seem to be breathing a sigh of relief over the deal, it seems clear that the fight isn’t over–publishers have long had a difficult relationship with digital retailers, and observers are think the next negotiation may be just as acrimonious.

Mid-Term Elections Offer Mixed Results for the Arts: In case you were living under a rock last month, we had some elections and the Democrats lost their shirts. So what does that mean for the arts? With the Republican-majority Congress, Americans for the Arts forecasts the passage of a comprehensive tax reform bill, which will likely impact charitable giving rules. The chairship of the subcommittee that oversees funding for the Arts in Education will change, while Representative Ken Calvert (R-CA) will continue to govern the subcommittee that controls the National Endowment for the Arts budget. Barry Hessenius predicts a possible attack on the NEA’s budget, given its symbolic weight for some in Congress, and recommends that arts leaders work to build stronger relationships with our elected officials. Meanwhile, at the state level, arts-friendly candidates suffered losses in Illinois, Massachusetts, and Maryland. In better news, Rhode Island passed a ballot referendum providing $35 million in bonds to renovate arts facilities in the state, and pro-arts measures passed in Palm Beach County, Salt Lake City, Scottsdale (AZ), and Middlesex County (NJ).

Three Foundations Purchase Pittsburgh’s August Wilson Center: The embattled August Wilson Center for African American Culture now rests in the hands of three foundations, which purchased it for $7.9 million from Dollar Bank, its mortgage holder. The Pittsburgh Foundation, Heinz Endowments, and Richard King Mellon Foundation had attempted to close on an $8.49 million deal by October 31, but the sale was torpedoed when a creditor appealed an earlier $200,000 judgment in the Pennsylvania Superior Court, and the foundations refused to proceed until the debt was settled. Dollar Bank was forced to move ahead with a foreclosure auction on November 3, which cleared the Center of its debt and allowed the foundations to complete their purchase.The Center plans to re-open in 2015 under new nonprofit leadership and will continue its mission as a focal point for African American arts and culture.

Obama Says the Internet Should Be Treated as a Public Utility: Net neutrality supporters got an unexpected boost from President Obama this November. The White House released a plan recommending that the Federal Communications Commission reclassify Internet broadband as a public utility under Title II of the Telecommunications Act, which proponents argue would give the FCC the increased regulatory power necessary to protect net neutrality. The president seems to agree with this line of thinking — his administration’s plan also rejects the FCC’s proposed rules to allow for paid prioritization of Internet traffic. Just after the President’s announcement, though, FCC Chairman (and Obama appointee) Tom Wheeler stated that he favored a different approach, one friendlier to the concerns of large Internet service providers like Comcast, AT&T, and Time Warner. The Washington Post speculates that Obama’s announcement may merely represent shrewd political positioning, since if the FCC enacts strong rules, and the Republican Congress votes to overturn them, a presidential veto would put Obama and the Democrats squarely in the camp of millions of voters who have asked the FCC for powerful net neutrality protections.

MUSICAL CHAIRS/COOL JOBS

• Indonesia has named the U.S.-educated Anies Baswedan as the new Minister of Culture and Elementary and Secondary Education.
• The NEA’s Director of Folk and Traditional Arts Barry Bergey will retire after 29 years of service.
• Chorus America is seeking a new President and CEO. Posted November 22, closing date December 19.
• Kansas City’s Charlotte Street Foundation is looking for a new Director of Artists’ Programs. Posted October 29, no closing date.
• The Foundation Center is hiring for a Director of Community Foundation Services position. Posted November 4, no closing date.
• The Barr Foundation seeks an Arts and Culture Program Assistant. Posted November 20, no closing date.

NEW RESEARCH OF NOTE

• A study by the U.S. Trust finds a big bump in charitable giving among wealthy donors in 2014, and projects further growth.
• New research from the Bureau of Labor Statistics shows that nonprofit employment rose during the recession.
• The BFAMFAPhD collective published Artists Report Back: A National Study on the Lives of Arts Graduates and Working Artists, which asserts that “the fantasy of future earnings in the arts cannot justify the high cost of degrees.”
• The researchers behind the Crystal Bridges field trip experiment that we reported on back in October have released another study, this time focused on high-quality theater productions.
• A report by the U.S. Department of Agriculture looks at how well rural areas with a higher proportion of “creative class” workers fared during the recession.
• Suby Raman takes a deep dive into gender representation in America’s top orchestras.
• New research from Italy indicates that those with a need for “cognitive closure” are less likely to appreciate abstract art.

Flo & Eddie of the Turtles – by ShellyS, Creative Commons license

In what could be a landmark case in the annals of digital music, a federal judge recently ruled that SiriusXM is liable for copyright infringement for failing to pay royalties to performers on pre-1972 songs. Though federal copyright protection applies only to recordings made on or after February 15, 1972, 1960’s band the Turtles successfully argued that the satellite radio giant has played its songs in violation of protections under California state laws. Artists and music industry executives can’t quite pop those champagne corks yet: the decision is limited to California, SiriusXM plans to appeal, and a separate suit by major labels seemed to contradict the Turtles ruling. Even so, the Turtles are continuing to push the envelope, filing a new suit against internet radio company Pandora. As these cases wind their way through the courts, a potentially clarifying initiative waits in the wings in Congress: the Respect Act would offer pre-1972 artists federal legal protection.

Major Tax News for Artists and Wealthy Collectors: In a victory for artists, the United States Tax Court ruled that even those who don’t make much money from their art still count as “professionals” in the eyes of the IRS. The implication is clear: artists with day jobs that partially fund their artistic careers can deduct art expenses from their taxable incomes. Not all artists may qualify, though – the case in question was brought by Susan Crile, a painter and printmaker whose works are held in several museums, and while she makes most of her income from her job as a professor at Hunter College, she has had a robust career, with an average annual haul of $16,000 from sales of her work. In other IRS news, the U.S. Court of Appeals for the 5th Circuit recently ruled that the estates are eligible for discounts on art that is partially owned among heirs, a ruling with potentially far-reaching implications for wealthy collectors. Michael Rushton and Donn Zaretsky provide additional analysis.

Two National Foundations Reboot their Arts Funding: The Wallace Foundation announced Building Audiences for Sustainability, a six-year, $40 million initiative to help up to 25 performing arts organizations expand their audiences and build knowledge in the field as a whole. The effort is based on insights gained from the foundation’s earlier Wallace Excellence Awards and successful practices highlighted in other research papers. Just a few days later, the $6 billion Andrew W. Mellon Foundation announced the results of its 18-month strategic planning process, which will result in the merger of separate programs for liberal arts colleges and research universities and programs for the performing arts, art history, conservation, and museums.

Los Angeles Board of Supervisors Approves Additional $54 Million for the Arts: Los Angeles County cultural organizations will gain $54 million in new government funding, increasing the originally authorized allocation of $84.7 million by a whopping 63 percent. Part of a “supplemental budget” process to divvy up hundreds of millions of dollars that went unspent in 2013-14, $28.6 million is dedicated to the John Anson Ford Theatres renovation. Other big winners include the Music Center ($6 million), La Plaza de Cultura y Artes ($5 million), and Natural History Museum ($1.7 million), all of which will see capital upgrades as a result of the new cash infusion.

Smithsonian Institution Announces a $1.5 Billion Fundraising Initiative: The Smithsonian has embarked on its first national fundraising campaign since its founding in 1846, partly in response to a decreasing appropriation from the U.S. Congress that now funds only 60 percent of its budget. With $1 billion already in the bank from 60,000 donors (including multimillion-dollar gifts from the Bill and Melinda Gates Foundation, Oprah Winfrey, David Koch, and Boeing), it appears that the Smithsonian has a great shot at raising the remaining $500 million by the campaign’s end in 2017. Major allocations will include $250 million to build the National Museum of African American History and Culture, and millions more to renovate the Renwick Gallery, National Air and Space Museum, and the National Museum of American History. A portion will also be dedicated to educational initiatives, including the digitization of many collections.

MUSICAL CHAIRS/COOL JOBS

• The White House announced Danny Marti as the nominee for “piracy czar” position enforcing trademarks and copyright.
• The NEA selected Ann Meier Baker as its new Director of Music and Opera.
• Edwin Torres, formerly of The Rockefeller Foundation, joins the de Blasio administration in New York City as the Deputy Commissioner of Cultural Affairs.
• The Artist Trust announced Shannon Roach Halberstadt as their new executive director.
• Julie Burros, formerly head of cultural planning at the Chicago Department of Cultural Affairs and Special Events, has joined the City of Boston as its new Chief of Arts and Culture.
• Santa Barbara mayor Helene Schneider announced 19 individuals as the board of directors of the new Bellosguardo Foundation.
• The Greater Philadelphia Cultural Alliance has named Maud Lyon as its new president.
• The Rockefeller Foundation seeks a New York City-based Senior Evaluation Officer. Posted September 18, no closing date.
• The Native Arts and Cultures Foundation is looking for a new Director of Programs. Salary: $115,000-$135,000. Posted October 17, no closing date.
• Two jobs are available at the Los Angeles County Arts Commission Arts for All program: Program Coordinator (Salary: $43,000-$50,000; closing date November 7) and Research Coordinator (Salary: $43,000-$50,000; closing date November 30).
• Fractured Atlas is hiring an Arts & Technology Policy Fellow. Salary: $70,825. Posted on October 8, closing date November 14.

NEW RESEARCH OF NOTE

• Drexel University researchers have been using CultureBlocks data to study the development of arts hubs in Philadelphia.
• Grantmakers in the Arts has proposed new national standards for research on individual artists, with work from our own John Carnwath.
• The NEA and WolfBrown released a report on the potential impact of choir participation on residents in a juvenile detention facility.
• New research from Harvard’s Psychology Department suggests that extraordinary arts experiences can actually lead to feelings of exclusion, not joy.
• The colorfully named “Hard Facts to Swallow” report from the UK finds that geographic disparities continue: London-based arts organizations are projected to receive four times the funding of organizations outside the capital from Arts Council England.

Capitol Hill, Washington DC – by Flickr user KP Tripathi, Creative Commons license

Several policy shifts are underway in Washington that may have significant effects on arts nonprofits and funders. First, the U.S. House of Representatives passed the America Gives More Act, which would 1) make permanent three expired tax deductions – including the important IRA Charitable Rollover provision that allows seniors to donate up to $100k of their retirement disbursements without paying taxes on it – while 2) allowing individuals to credit deductions made before April 15 of one year to the previous tax year, avoiding the Christmas scramble for donations before patrons know their tax situation, and 3) simplifying the excise tax rate paid by foundations to 1% (it can currently rise to 2% in some circumstances). The future of the bill is uncertain: Obama Administration and many Congressional Democrats oppose it because it does not contain any revenue provisions to offset the reductions in tax income. The Senate is not expected to consider the bill before the fall.

Second, the IRS has released form 1023-EZ, a dramatically streamlined application for 501(c)(3) status that will allow applicants to become tax exempt simply by filling out a 3-page form (vs 26), paying $400 (vs $850), and swearing under penalty of perjury that they have less than $50k in annual income and less than $250k in assets. Some 70% of applicants are expected to be eligible for the EZ path, and the IRS won’t even review these applications as a matter of course. Some fear this may open the door to abuse, but aspiring nonprofits eying the 60,000-organization line to be reviewed may feel differently.

Finally, in pre-legislative news, the House Appropriations Committee approved level budgets of $146m for the NEA and NEH, restoring $8m cuts made to each in subcommittee, while the artist resale royalty rights bill is gaining momentum, attracting new Congressional co-sponsors in advance of a potential vote this year or next.

More money, more problems at the DIA: As the City of Detroit’s much-anticipated bankruptcy trial looms – it begins on August 16 – two contending valuations of DIA’s art have emerged. Artvest Partners, hired by the city, placed the total value of the 60k-piece collection at $2.8-4.6B; a creditor’s expert, Victor Weiner Associates, at $8.5B. But that’s in theory: Artvest estimated that the works would fetch only $850m to $1.8B in the current market, accounting for a potential glut of masterpieces if the museum were to deaccession en masse. (Victor Weiner acknowledged the actual haul would be lower but did not venture to say by how much.) Meanwhile, donations continue to flow toward the “Grand Bargain” that could spin DIA off as a separate non-profit, if the courts allow it, with a group of business leaders, companies, and corporate foundations pledging $26.8m toward the $100m DIA must raise. Oh, and there is art happening, too: DIA began installing reproductions of its masterpieces in Michigan communities for the fifth year of its Inside/Out project.

The fate of the Corcoran’s collection hangs in the balance: Back in February, the long-troubled Corcoran Gallery of Art and College of Art and Design announced they would be taken over by the National Gallery of Art and George Washington University. The Corcoran’s 17,000-piece collection would be split up, with the bulk going to the National Gallery and the remainder distributed to museums around the country. Now, a group of advocates — including museum donors and alumni of the college — has filed suit to stop the deal, arguing longtime board mismanagement is to blame for the current state of affairs. At issue is whether the Corcoran’s lawyers can show that the proposed arrangement is the “next best” option to maintain the original intent of the institution. While alternative solutions are bandied about and exhaustive arguments laid out on both sides, the Corcoran’s fate should be decided by the end of August.

Another shakeup at the William Penn Foundation: Philadelphia’s only remaining major arts funder is showing alarming signs of instability. Managing Director Peter Degnan, the foundation’s second leader in less than two years, has resigned after less than six months on the job, citing “personal reasons.” He succeeded Jeremy Nowak, whose tenure ended in 2012. Chief Philanthropy Officer Laura Sparks will take over as leader of the foundation with the new title of executive director. While she will likely have broader authority and responsibility than her predecessor, she is not expected to make major changes in the grantmaker’s strategic areas of focus.

Looking for affordable artist housing? Take a number: In a jarring indication of how bad New York’s affordable housing crisis is, a recent lottery for housing slots in one renovated Harlem building generated a whopping 53,000 applications from artists. The building, El Barrio’s Artspace PS 109, is a former public school that was sold to Artplace two years ago. Foundations, politicians, and local departments of housing and cultural affairs contributed $52.2 million in renovations to create 89 housing units — begging the question of how big an investment would be needed to make a dent in artists’ demand for affordable living spaces.

MUSICAL CHAIRS/COOL JOBS

• Andy Horwitz is leaving New York City to launch a new consultancy called Applied Creativity; though he will continue writing in other venues, Culturebot will go on sabbatical indefinitely from September transition to new leadership.
• Reuben Roqueñi will join Hewlett as a program officer in Performing Arts; he is currently program director at the Native Arts and Culture Foundation in Washington State.
• Laura Packer has become ED of the Howard Gilman Foundation in NYC. She had been Arts Program Director at the Geraldine R. Dodge Foundation in New Jersey.
• The Nathan Cummings Foundation has tapped former Trustee Ernest Tollerson as interim CEO while a search gets underway.
• Longtime National Arts Strategies VP Gail Crider will take over as President and CEO from Russell Taylor at the start of the year.

NEW RESEARCH OF NOTE

• The California Film Commission reports that film and TV projects worth $2 billion relocated their production away from California over the last four years, often when other states offered better tax breaks.
• Another bleak snapshot of the writer’s life: median author income in the UK fell by almost a third over the last decade, to $18.5k per year.
• Meanwhile, on stage: Last year, London’s 241 theatres served 22m patrons, earned $1B, and employed 3,000 performers at a time. This was the first quantitative report of this kind, so the historical trend is unclear.
• More than a third of 18-34-year-old tourists to the UK identified culture as a major draw in a new survey; historical buildings and arts institutions got special mention.

Tyler Cowen presents a powerful idea in his 2006 book (reprised in 2010) Good & Plenty: The Creative Successes of American Arts Funding: arts policy is a battle between aesthetic and economic reasoning that can be settled by keeping the American system basically as it is. His sweeping argument draws on a deeply-researched history of arts policy in the United States dating back to the late 19th century. All of his historical analysis is developed in the context of a broader argument for a “decentralized” arts policy, which means moving the responsibility of arts policy decision-making from officials to consumers.

Instead of settling the debate over the role of government in the arts, this admirable attempt at finding a central policy philosophy amenable to free-market types and progressives alike leaves considerable room for interpretation and disagreement. His argument supports policy changes to the NEA’s grantmaking scheme that won’t satisfy conservative hopes of dismantlement. Meanwhile, protecting copyright and expanding State Department arts programs is unlikely to meet arts advocates’ demands. Cowen’s argument does, though, introduce a useful concept for policy analysts as they weigh alternatives.

Summary

Art Lovers vs. Libertarian Economists

Good & Plenty is written atop the backdrop of a hypothesized political discourse divided into two camps: aesthetics and economics. As Cowen explains it, the art lovers are high-minded, cultured people who want to promote the best art. In their ideal world, the government would support the most important artists such that high culture would be sustained. The libertarian economists believe the best art is that which serves paying customers. In this view, every purchase is a tiny message from society to the artist telling her to keep up the good work. All of these whispers reach meaningful volume when the art pleases society and won’t when society isn’t sufficiently pleased. The libertarian economist’s perspective leaves little room for government intervention.

Cowen maps these two groups onto the two major American political parties. He maintains that the fights over arts policy in the 1980’s and 1990’s—including attempts to close the National Endowment for the Arts and arguments over the definitions of decency, censorship, and artistic liberty—were essentially just arguments between art lovers and libertarian economists. Thus, he believes that finding policy instruments that resolve the philosophical conflict between these two stylized positions would help the US, and potentially Congress, reach a political consensus around a single American arts policy.

Decentralization

Cowen believes strongly in decentralization as a policy tool, and advocates for it throughout the book. The philosophy of decentralization holds that decisions made by individuals are better than those made by a committee or, worse, a political process, so we should place citizens in charge of determining the art they enjoy. The list of policies he suggests under this banner is long.

As an obvious and indicative example of decentralized policy, Cowen pushes for a copyright regime that balances access with rewards for widely enjoyed work. His nuanced argument focuses on the ways that copyright is still working in the internet age and suggests that it be left as is: providing an incentive for artists to create, but not foreclosing future technological innovation (even if it may threaten copyright).

Cowen also advocates for other, less familiar distributed approaches to funding the arts. Citing the historical role of private and corporate giving in support of the arts, he argues that the tax deduction for charitable giving acts as a support mechanism for the arts. He writes extensively about the role of education subsidies and government jobs programs in making the artist’s life possible–providing what he characterizes as low-responsibility jobs that lighten the workload on participating artists so they can advance their craft.

Though he does not advocate direct arts funding, he does make a case for two main ways to make it more decentralized: arbitrary and idiosyncratic selection. Arbitrary selection—choosing whom to fund entirely at random—works, Cowen believes, because it is better than the risk-averse selection process that dominates political or committee funding. Idiosyncratic funding choices, which he defines as making a funding choice as an individual according to one’s own taste even if that individual is supposed to be representing others, serves the same anti-conservative goal. He claims that many of Franklin Roosevelt’s New Deal arts programs met the arbitrariness standard. The Works Progress Administration’s (WPA) employment programs for visual artists gave a job worth roughly one third of their income to any artist who could provide the WPA with a framed canvas. The Roosevelt administration saw this as an anti-poverty program, paying people who had skills and could stimulate the economy if they had money in their pockets to do something, even if it wasn’t so useful. When the program ended, the WPA burned thousands of the paintings, and even sold some to a plumber as pipe insulation. Cowen claims that this type of arbitrary government spending on the arts helps to remove the decision-making of which artists are the best from the government and give it back to the people.

On the other end of the spectrum, he praises the historical role of nobility in the arts. He argues that when aristocrats followed their tastes and paid for art accordingly, they were unencumbered by the art-by-committee problem. Instead, they were able to make bold and radical artistic decisions that forecasted landmark innovation. He explains that this approach could be replicated in the US by removing the political burdens on the National Endowment for the Arts (NEA). Removing the NEA’s dependence on the annual appropriations process could free the agency to make more radical decisions. He draws a historical analogue from the aristocratic funding of the arts to the American policy of providing tax subsidies to wealthy folks who make donations to arts institutions.

All of these approaches give us a picture of the patchwork American arts policy from the twentieth century to today. The common thread Cowen identifies is some degree of decentralization, whether it be a laissez-faire, property rights-based approach (as he would prefer) or a more muscular intervention like that of Roosevelt’s WPA. Cowen does not argue strongly for any single adjustment like changing the funding structure of NEA or increasing federal arts education spending. He advocates instead for us to keep doing what we’re doing: promoting the best art with decentralized funding mechanisms.

Analysis

Cowen’s case for a breakdown between art lovers and libertarian economists, who I will call aestheticists and econs for short, seems plausible. It is not uncommon in DC to see two warring parties duke it out over a fundamental philosophical difference. But is that what is happening in the arts? Certainly there are people who believe in sustaining high culture. Many of these groups receive a small but significant portion of their annual budgets from the NEA, and they lobby for more NEA spending. On the other side, there are many libertarian and conservative economists, like those at George Mason University where Cowen teaches, who find government spending counter-productive and potentially destructive when it interferes with private market mechanisms for providing products and services. Cowen likely spoke with many people in each of these camps, and did some extrapolation to arrive at the archetypal aestheticist and econ. Individual advocates on either side may not have arguments as pure and consistent as those Cowen attributes to them, but his simplifications seem reasonable.

If these were the only two perspectives in Washington, his argument would have a sound footing. He dissects more than a century of American arts policy, explaining along the way where it succeeded and failed from the aestheticist’s and econ’s points of view. His case that decentralization works for both sides is backed up by a thoughtful blend of historical and philosophical analysis.

But there’s a problem: there are a lot more than two sides in this fight. Cowen provides hardly any evidence that conservative congressional arguments against the NEA are based on a preference for market capitalism. In the late 80’s and early 90’s, incidents like those involving Robert Mapplethorpe and Karen Finley centered on content at least as much as the means of financing. Similarly, many conservatives are today seeking ways to legislate against violence in popular video games and films, using Quentin Tarantino as a scapegoat. This suggests that many conservatives probably don’t condition their support of particular arts policies solely on free-market principles. Instead, their ideal policy would rein in government financing of the arts without removing their political leverage to define what content is appropriate and what is not.

The corresponding aestheticist model has the same problem. The progressive arguments for government spending on the arts have not only been about the importance of beauty or intrinsic value of art. Instead, they have also focused on the positive role of government in society, the potential for arts as a driver of economic development, and the importance to democracy of giving everyone a voice. Many progressives see the benefits produced by the arts as reason enough for the government to support them.

Finding a point of resolution between the arguments of aestheticists and econs has value—it creates frameworks for thoughtful advocates from the purists in each camp to find common cause—but it doesn’t solve the fundamental problem. Most people have deeper motivations behind their support (or lack of support) for the arts, whether cultural, moral, or politically strategic. There is also a growing body of literature in the field of psychology that suggests we don’t hear—and sometimes can’t even understand—alternative views or evidence against our position, making it compromise even less likely. This appears to be happening in debates about the arts. Framing the argument as he does allows Cowen to sidestep a lot of the complications that are really at the center of why these political debates persist. If only those who are really pure aestheticists or pure econs are moved by a proposed reconciliation, the political movement built on that message is likely to fail.

For a recent analogy, consider the politics over health care reform: a bill modeled on legislation proposed by a leading conservative think tank and enacted by a popular Republican governor was not supported by even a single Republican in the House of Representatives or the Senate. Many of the resistors explained that they were voting against a government takeover of health care or an invasion of government into the free market. The motivations underlying all of these arguments came from a fundamental distrust of government, not from a place of trying to build a health care reform bill that found a compromise between government-free and government-run.

Similarly, when President Obama was Senator Obama, he voted against a bill that would raise the debt ceiling. The outrage his White House has displayed during the debates over the debt ceiling since 2011 make clear what the debt ceiling is really about: flexing political muscle and signaling approval or disapproval of the current direction of policy.

I believe Cowen’s case that arguments over arts policy are really about creating the best environment for the arts to thrive is misguided. As in the health care and debt ceiling debates, the reasons for political opinions in the arts are complex, and that complexity matters if solutions to divisive issues are to be found.

Implications

Though I am not convinced decentralization is a politically feasible solution to the culture wars, its potential as a policy mechanism in the arts is still worth considering. Decentralization’s strength comes from a single argument: people know what they like better than the government. This idea, which is deeply Hayekian (see “The Use of Knowledge in Society”), is compelling because it is almost undeniably true. Paul Ryan and I have very different tastes in music; I wouldn’t want him to be budgeting the money musicians receive.

Hiding in this argument is a hard-to-solve conundrum: what if artists are not responsive to demand? When I was in music school, we all talked about wanting to make a living, and many of us took classes to that end, but most of us bought into the “starving artist” picture of our life. Most artists make art because they love it, not for the money. The argument that individuals know better than the government is used to support the market mechanism and invoke a market logic, suggesting that those who receive money will keep on working at their craft, while those who don’t will quit. In the arts, this mechanism seems to be broken, with people scraping by just to be able to do what they love rather than quitting and putting their efforts into something at which they could make more money.

The above is just one of the problems with a broad, uncritical application of decentralization to all arts policy dilemmas. However, Cowen’s decentralization concept can be a useful tool for systematizing the thinking policy-makers use as they consider ways to improve proposed interventions and look for potential unintended consequences. It also points to a few seemingly peripheral policy items for which arts advocates should be campaigning. Among the most politically salient are:

1. Keeping the academy funded. Ivory towers don’t have a great reputation in many Washington, DC circles, but they are an important tool for keeping artists employed. According to Cowen, many great artists depend on the government-subsidized open intellectual environment to create their best work, and this impact should be taken into account before cutting funding to colleges and universities.
2. Closing down the Internet will not win the copyright war. Artists use the Internet as a critical tool for artistic innovation and distribution. Though copyright and new technology have differential effects across artistic disciplines, art is broadly enhanced by the freedom technology provides. Copyright is not a moral right, it is a legal construction, and Congress should avoid legislating it as the former.
3. Maintaining the charitable giving deduction. Cowen makes a good case for why the charitable giving deduction, despite its drawbacks, is an important tool for funding the arts. Though many of the individuals who are taking the deduction likely have mundane, risk-averse artistic interests, his bet that enough idiosyncratic individuals are takings risks and funding innovative new projects seems like a good one to me.

Further reading:

• Review of Good & Plenty by Shawn Ritenour of Grove City College in the Quarterly Journal of Austrian Economics
• Crooked Timber’s review of Good & Plenty
• “Funding Arts the American Way”, a review of Good & Plenty for Philanthropy Magazine by Rex Roberts

• A lot of people are talking about the news that Detroit’s emergency fiscal manager is exploring whether the city-owned art on display at the Detroit Institute of Arts (which I visited for the first time just a few weeks ago) can be considered an asset in the event of a municipal bankruptcy. I will be shocked if anything like this actually happens, but in the meantime it’s provoking some rare discussion of deaccessioning in mainstream media space. See Tegan Kehoe’s recent piece on Createquity for more on the ethics and debate around deaccessioning.
• Wondering what to make of the IRS nonprofit oversight controversy? The Nonprofit Law Prof Blog has a good overview of commentary and analysis from lawyerly circles.
• A new paper by Roger Colinvaux examines the US tax deduction for charitable giving and comes to many of the same recommendations for reform as John Carnwath in his article on the subject for Createquity. Speaking of charitable giving deductions, countries in Europe that have similar legislation are finding that they have to extend the benefits to other member nations of the European Union, whether they want to or not.
• Next City takes a look at the record when it comes to the subsidies cities pay to Bass Pro retail stores (over $500 million to date!) in hopes that they will generate jobs. (It’s not good.) I’m kind of mystified as to why there isn’t more of this kind of before-and-after analysis of these kinds of policy interventions – it seems like rather fertile ground.
• The NEA Art Works blog has a nice interview with Maryland governor Martin O’Malley.

MUSICAL CHAIRS

• Congratulations to Denise Montgomery, the new executive director of the San Diego Commission for Arts and Culture.
• Joanna Woronkowicz is moving on from the Office of Research and Analysis at the National Endowment for the Arts to become an associate professor in the Indiana University School of Public Affairs working under Michael Rushton, and offers a farewell post in which she touts the idea of an interdisciplinary research cabal focusing on cultural policy.

BIG IDEAS

• Dallas is making a big play to put itself on the world cultural map. Led by Maxwell Anderson, who is the head of both the Dallas Museum of Art and the Dallas Arts District, Dallas officials have launched a new network of “global” cultural districts to be managed by Adrian Ellis of AEA Consulting, assembling an advisory board including representation from New York, Amsterdam, Berlin, and Hong Kong…and lots and lots of people from Dallas.
• Congratulations to Mediuum, a digital marketplace for visual art, which has won the first Creative Arts Competition prize as part of MIT’s $100k Entrepreneurship Competition for student entrepreneurs. The Creative Arts Competition is awarded for the “innovative use of the arts as a core component of business plans.” (h/t Joe Patti)
• Asking funders to be less insular may be a familiar refrain, but no one can articulate the case quite like Arlene Goldbard, and she does so again in a recent doozy of an essay. Meanwhile, Linda Essig has a review of Arlene’s new book, The Culture of Possibility.

ALL ABOUT THE BENJAMINS

• “So, yes, it’s party time in the world of social impact investing.  But it’s a potluck my friends, and you’d better know what dish [you’re] bringing.” Michael Hickey talks turkey about money you have to pay back.
• Corporate giving is back on the rise, according to a new report from the Committee Encouraging Corporate Philanthropy.
• The President/CEO of the New York State Health Foundation offers some perspectives on risk taking at the foundation level.
• Real estate in Detroit is so cheap, it only takes $142,000 to save a historic rock venue from being auctioned and get one of its theaters named after you.

RESEARCH CORNER

• Good rule of thumb for aspiring grad students (especially in the humanities): the more specialized your degree, the more useless it is. Sadly, specialization seems to be the prevailing trend. The University of Nottingham is blazing the trail of single-genre music studies with a two-year course in heavy metal studies. By the way, a study from 2004 indicates a negative correlation between a graduate degree and earnings for jazz players.
• Back when it was super popular, I though Myspace would be an incredible data source for researchers on the music industry. Myspace has largely fallen by the wayside in that regard, but two sociologists from the University of Chicago managed to grab a complete dataset back in 2007 and it’s now showing up in Richard Florida’s blogs.
• According to a new study, people of color tend not to move as much as whites and to stay close to home when they do, which perpetuates spatial inequality.
• A new meta-analysis of studies of art therapy on cancer patients indicates that “the benefits tied to creative arts therapies were small, but similar to those of other complementary techniques such as yoga and acupuncture.” And another study says don’t trust those correlations between music education and SAT scores – smarter students are more likely to take music classes, but that doesn’t mean music classes make you smarter.
• The study of diversity in Bay Area theater that Clayton Lord has been blogging about for a while is finally out; an abbreviated version of the executive summary is here. Five-word version: all the stereotypes are true.
• Sentences to ponder: “Voting is just another survey without individual consequence.”
• First there was Dance Your Ph.D., and now we have JoVE, the Journal of Visualized Experiments – “the first and only PubMed/MEDLINE-indexed, peer-reviewed journal devoted to publishing scientific research in a video format.” ArtScience ascendant!

• Narric Rome tells us about where the arts fall in the federal government’s new tourism strategy.
• After threatening to cap the tax deduction available to donors as a means of raising revenue, the British government has abandoned the plan.

• Barely two years after changing things up last time, the Kresge Foundation has announced a further evolution of its arts grantmaking. Now, all of its considerable funding will be concentrated under the umbrella of “creative placemaking.”
• Kickstarter may be the big name when it comes to crowdfunding in the arts, but its $99 million in pledges last year is only a small fraction of the $1.5 billion crowdfunding platforms raised across all causes worldwide in 2011. And this interesting article argues that crowdfunding (the investing kind, not the donating kind) could create unaccustomed competition for venture capitalists. One observer notes that if every American set aside an average of 1% of their liquid net worth to invest in new ventures, the available capital for entrepreneurs would jump by a factor of 10.
• McKinsey & Co. has published a white paper on social impact bonds, which are currently being piloted in the United Kingdom.
• Is investing in art an asset class? Not yet, according to Felix Salmon, who picks apart a new “index” of artists’ market value put together by Artnet. It seems to me that the art market is not so different from the real estate market, and that investing in artists is rather like investing in a particular home builder. To make art a real asset class, someone would need to build the equivalent of real estate investment trusts (REITs) that buy up particular artworks and then sell shares in the collection. It would be an interesting experiment, no doubt.
• The Council on Foundations conference, an event that’s only open to grantmaking institutions, is becoming more transparent, with resources from the event becoming available online. One such resource is this report from Katherine Miller.
• The Cultural Data Project and Nonprofit Finance Fund are teaming up to offer a new Financial Health Analysis tool to arts nonprofits. When you submit your financials to CDP through the normal process, you’ll be presented with a report detailing your organization’s financial strengths and weaknesses. Congrats to Kim Cook and the other folks at NFF and CDP for what looks to be a useful resource.

• Next American City’s Diana Lind reports from the CEOs for Cities conference, hosted by the Contemporary Arts Center in Cincinnati.
  

  It’s a nice unfiltered window into how the urban planning community views/engages with the arts: [T]here was…no one at all who left the reception on the lobby floor to explore the upper galleries (which were free to the public, by the way). It was just me and three security guards whose boredom was palpable….I went back downstairs where people drank beer and talked about how to make a better city. Somehow that disconnect, right there in the space, seemed like a perfect metaphor. Hundreds of people came to a contemporary art museum to talk about engaging the city’s art scene but missed all the art.

• FSG (the originators of the “Collective Impact” concept) explains how collective impact is like a symphony orchestra:
  

  “It is Sunday afternoon and the musicians have all convened to play a symphony. Indeed, they’ve even agreed to play a Beethoven symphony. But now imagine the following scenario: they have not actually agreed to which Beethoven symphony. None of them have any sheet music. And there is no conductor! This is the setting of isolated impact: wonderful individual efforts that don’t actually add up to a cohesive whole. A lot of noise, but no symphony…”

• The NEA has announced its first-ever round of research grants.
• Don’t miss this sponsored supplement to the summer 2012 issue of the Stanford Social Innovation Review, featuring reflections on evaluation and strategic philanthropy from five major foundations. And Grantmakers for Effective Organizations has just published a manual called “Four Essentials for Evaluation,” one of the readers for which was Jerome Vielman of Houston Arts Alliance.
• Surprise, surprise: self-publishing is a winner-take-all market too: “a survey of 1,007 self-published writers…found that while a small percentage of authors were bringing in sums of $100,000-plus in 2011, average earnings were just $10,000 a year. This amount, however, is significantly skewed by the top earners, with less than 10% of self-publishing authors earning about 75% of the reported revenue and half of writers earning less than $500.”
• We’ve had a strong sense for a while that walkable neighborhoods are more valuable, but just how much more valuable? A new study from the Brookings Institution looking at the DC area puts the price premium at up to $1200 per month. This will be something important to take into consideration when thinking about research studying the effects of creative placemaking: how can we disentangle the contribution of arts amenities when those amenities tend to cluster in areas with lots of other things that people find valuable as well?
• Richard Florida offers a defense of his economic theories against a critique of him on the Forbes website, which serves double-duty as his latest thinking on the composition of creative cities. At the end, he advocates for a both/and approach, encompassing investments in amenities with business-friendly practices. I’m not sure I buy that that’s “been [his] message all along,” but it does make sense – after all, while the “coolness” of a city’s reputation certainly factors in to many people’s relocation decisions, jobs do too.
• What would it mean to quantify the potential value-add to society of a third grade teacher?

(By the way: I’m starting to think that I might standardize the section titles in the round-up. Any thoughts?)

ARTS AND THE GOVERNMENT

• Rhode Island is the newest state to recognize the L3C.
• Tim Mikulski reports on the activities of a new coalition that is revising the 1994 National Standards for Arts Education.
• What would a Republican campaign for higher office be without a little copyright infringement? It’s really kind of inconvenient for them that most of the karaoke klassics out there were written by hardcore liberals.
• The IRS’s list of nonprofits whose status was revoked apparently contained some errors – apparently George Washington University and the University of Michigan were included, for example. Whoops!

THE ART OF GIVING

• The Irvine Foundation has announced its new strategy for the arts focusing on audience engagement. The WolfBrown white paper written about on this blog last week is clearly a part of this. You can watch the video and join the discussion on Irvine’s website – Rocco Landesman has already kicked things off.
• Meanwhile, former San Francisco Foundation program officer John Killacky has something to say to his erstwhile colleagues in the grantmaking world.
• Hewlett Foundation President Paul Brest is back blogging, this time as a guest for Grantmakers in the Arts. In his first post, he points out that despite a major focus (and seeming agreement) within the funding community in recent years on the value of general operating support, there is little evidence of a pronounced upward trend in GOS grants. Change doesn’t come easy in the foundation world, I guess.
• Brian Newman wonders if the crowdfunding phenomenon exemplified by Kickstarter is, uh, crowding out donations from institutional funders.
• Finally, GiveWell offers a perspective on why we should expect giving effectively to be difficult.

MERGERS AND CLOSURES

• Arthouse at the Jones Center is exploring a merger with the Austin Museum of Art.
• Another orchestra down: The Seattle area’s Bellvue Philharmonic is no more after this weekend.
• Diane Ragsdale pays tribute to the now-defunct Florida Stage. The post also features a great and lengthy comment from National New Play Network Executive Director Jason Loewith.

APPOINTMENTS AND PROMOTIONS

• Lisa Philp will be the new Vice President for Strategic Philanthropy and Director of GrantCraft for the Foundation Center.
• Blogger, longtime executive director of the Center for Arts Education, and my former boss’s boss Richard Kessler will be the new Dean of Mannes College The New School for Music.
• Stellar Technology and the Arts blogger Amelia Northrup has taken on a new position as Strategic Communications Specialist at TRG Arts. Not content merely to share the news, Amelia goes out with a bang by sharing some fantastic tips for organizing your job search.

RESEARCH AND READINGS

• According to the latest Giving USA report, charitable contributions were up in 2010, but only slightly: 2.1%. The arts, however, fared better than most, seeing donations rising 4.1% after inflation. You might recall that Giving USA got some egg on its face earlier this year when evidence surfaced that its econometric models drastically underestimated the extent to which individual giving dropped during the recession. Now they say they’ve included another variable in the model that explains the drop, so this year’s estimate should (hopefully) be more trustworthy.
• With all the talk about eliminating or reducing the tax deduction donors receive for their charitable gifts, kudos to Sarah Lutman for digging into the Congressional Budget Office’s recommendations on the subject.
• Theatre Bay Area has published a report on social media use by arts organizations, authored by our friend Devon Smith of Threespot Consulting. Devon has her own account here.

ACROSS THE POND

• Going England one further, the right-wing government of The Netherlands is set to cut its arts funding by 25% and more than triple the tax on tickets to concerts. Sadly, the powers that be have chosen to let smaller arts organizations bear most of the burden – an especially heavy one since unlike here, government funding makes up the vast majority of revenue for most. Recommendations to phase in the cuts were ignored.
• Michael Kaiser reports from a trip to England (part I; part II); Michael Royce checks out the arts scene in Berlin (part I; part II; part III).
• Weirdness: a Chinese firm has contracted Albert Speer & Partner to build an exact replica of the Austrian village of Hallstatt – in Guangdong Province.
• Weirdness: Norway is apparently training its own diplomats how to explain black metal.
• Weirdness: a city in India has no municipal government – and is apparently doing pretty well. Marginal Revolution and Matt Yglesias provide interesting commentary.

BIG IDEA CORNER

• Meant to mention this last time around – National Arts Strategies is launching a cool-looking initiative designed to help CEOs become more effective leaders. Andrew Taylor provides his customary brief summary.
• Lee Streby has an extraordinary three–part exploration on what he would do if he were building an orchestra from scratch. And speaking of orchestras, Greg Sandow has been musing on how we might objectively evaluate the quality of their performances.
• Sasha Anawalt, Doug McLennan, et al. set up a five-day “pop-up newsroom” called Engine 28 last month to cover live theater convenings and events in LA. The LA Times has more.
• Dollars and sense: Assets for Artists is looking to expand beyond Massachusetts. Gary Steuer draws the line between arts education and economic development. Barry Hessenius on a different kind of arts endowment – and how we might fund it. And since I’m always a sucker for people questioning the premises behind microeconomics, here’s Justin Wolfers recounting how being a father has made him question the neoclassical model; and Seth Godin on why coordination, not competition, is the next frontier for economics.
• If you’ve ever played the mobile/tablet game Angry Birds, you know how addictive it can be. Now the company that makes Angry Birds, Rovio, is launching a totally visionary location- and accessory-based scavenger hunt in which visiting various special places in real life activates Easter egg features in the game. This is some seriously creative shit that arts marketers should be paying close attention to.