• Seems that New York City’s recent bill forcing schools to report out on the availability of arts education in its schools comes not a moment too soon: an audit from the state comptroller found that roughly half of seniors graduated from high school without having met arts education requirements.
• Denver is out with a bold new seven-year cultural plan, “Imagine 2020.” Among other things, it seeks to “increase the visibility of local and creative talent” by inventorying and ranking the availability of the arts in all neighborhoods, and supporting micro-art projects that can create new gathering spaces across the city.
• A federal court has ordered Google to remove the infamous “Innocence of Muslims” film from YouTube after an actress who appears on screen for only five seconds – and was told she was appearing in an adventure movie – asserted that posting the film against her wishes violates her copyright in her performance. The injunction is preliminary; Google is appealing.

MUSICAL CHAIRS

ALL ABOUT THE BENJAMINS

• The two latest articles to document artists’ struggle to make ends meet, even once they are established: on writers in London and artists in New York City.
• Hooray for practicing what you preach: the Hewlett Foundation takes stock of the two strategies of its Effective Philanthropy program – and announces that it will wind down and replace the one that the evidence suggests wasn’t working.
• Aditi Kapil from Minneapolis’s Mixed Blood Theater Company unpacks lessons from the company’s free ticket initiative, such as the idea that infrastructure costs make “free cheaper than cheap.” And thanks to to a new grant, all visitors to the Wilma Theater can now enjoy $25 tickets during the first four weeks of a show’s run. The newly flattened price structure will be in place for three years.

IN THE FIELD

• The Future of Music Coalition has been quizzing musicians on their knowledge of current copyright law, and the results are mixed, suggesting “there remains widespread confusion about the difference between musical composition and sound recordings” and musicians are generally unaware of “the changes in the digital landscape that have altered the way that money flows back to creators.”
• After managing to squeeze twelve years out of what was intended to be a three-year program, the USC Annenberg/Getty Arts Journalism Program ended with its final fellows last November.
• Getty Images has released 35 million photos to be used freely for non-commercial purposes, bowing to widespread, often ignorant infringement of its images. There are a few catches: the interface is clunkier than for paying customers, Getty can track usage data, and they reserve the right to put ads in the embedded image viewer. Now that we’ve liberated images and music, are books and movies next?
• Yes, data-driven decisions can come from cocktail napkins: Nina Simon offers a nifty example of how a simple measure of “success” can help draw comparisons across programs.
• The new performing arts center planned for the World Trade Center site, in the works for over a decade, faces an uphill battle to raise hundreds of millions of dollars for construction with former mayor and big-ticket arts champion Michael Bloomberg no longer in office. The project will have to compete with several recently-opened theater spaces of similar size as well as the nearby 9/11 Memorial & Museum.

BIG IDEAS

• An example-driven look at how grantmakers are building innovation into their programs to tackle large social problems in Stanford Social Innovation Review pairs well with this examination by four Boston Consulting Group strategists of what nurtures the “evolvability” of big companies like Google and Netflix. Meanwhile, Andrew Taylor poaches more lessons from the for-profit world by examining what the “Minimum Viable Product” familiar to tech start-ups might mean for the arts.
• March 20 was both the first day of spring and the UN’s International Day of Happiness, co-sponsored this year by Grammy winner Pharrell Williams. The designation of the day was inspired in part by Bhutan’s embrace of Gross National Happiness as a critical indicator of the country’s health. Culture is one of the pillars of GNH, so Createquity readers have special reason to celebrate.
• The Future of Digital Longform Project is out with a whopper of a report on how “long” (i.e. 5,000+-word) pieces of nonfiction are evolving, what “designing a story” can mean, and how and if writers can hope to make money from these efforts.
• Digital platforms continue to creep into the edusphere, with the College Board announcing a plan to (finally) counter the overpriced SAT-prep industry via a partnership with Khan Academy, and EdX, the only major non-profit MOOC provider, expanding its list of course partners to include NGOs and nonprofits ranging from the Smithsonian to the IMF.

RESEARCH CORNER

• Egads! First we learn we can’t always trust research; then we learn we can’t always trust the research that tells us not to trust research.
• The UK’s cultural sector’s hiring practices unfairly stifle diversity, a report from Creative and Cultural Skills finds. CCS calls out a widespread preference for unpaid workers and a tendency to hire people already known to existing employees as particular problems.
• A new report from the National Center for Arts Research has found that well under half of directors of the nation’s largest art museum directors are female, and they earn roughly three-quarters the salaries of their male counterparts.
• Southern California’s “creative industries” are booming with roughly 1 of 7 jobs in the Los Angeles area tied to the creative sector, according to the 2013 Otis Report on the Creative Economy. However, the relationship between the report and the fiscal health of the arts sector — and the economic stability of artists in the region — is murky.
• The international art and antique market, meanwhile, is  almost back to pre-recession levels. The uptick, however, is more due to the rising cost of artwork rather than an increased number of sales, suggesting a continued and worrisome creep toward a “winner take all” economy.
• The Brookings Institute tried out a badass new research methodology — a “survey with placebo” — in a recent attempt to measure the impact of advocacy organizations on the passage of school choice legislation. The method is one of several new and intriguing practices in advocacy evaluation.

Indianapolis’s Lucas Oil Stadium | photo by Just_Bryan

The U.S. has now entered an era of extremely expensive sports stadiums: the new Barclays Center in Brooklyn, NY cost a cool billion dollars for example,while the new Vikings stadium in Minneapolis, MN is anticipated to be similarly priced. While reading up on the professional sports billion dollar building boom I couldn’t help but notice a number of parallels to the building boom in the arts from 1994 to 2008, as studied and documented by the University of Chicago’s Cultural Policy Center.

But does new and big automatically lead to better for an organization and its patrons? For a large renovation or construction project to succeed, certain parameters and rationales have to be put in place from the beginning, such as a clear connection to the mission of the organization and strong, continuous leadership throughout the life of the project. Yet time and time again, it seems that these large capital campaign projects are launched without any adherence to methodologies that have previously led to success.

As Dane Stangler points out at Growthology, renovations to old stadiums or the construction of brand new stadiums often result in more costs than benefits for the communities in which they are housed. These new, large-scale projects come with promises of low real expenses  to local governments, as with the stadium in Indianapolis which officials promised could be paid for through a negligible tax hike. In fact, cities often construct generous, even risky, debt structures in order to help underwrite these structures, despite the fact that there is not a definite assurance of profit, or even repayment. The Atlanta Journal-Constitution notes that “unrealistic revenue projections and the skyrocketing construction cost of sports stadiums, especially football behemoths, is making it increasingly hard for the facilities to generate enough cash to keep pace with expenses, namely debt service.” This can result in higher ticket prices, higher taxes, and depleted services for consumers and non-consumers alike. Stangler notes that public subsidization of stadiums often shifts costs from wealthy owners and players to visitors and tourists, who may not even be visiting the city for sports-related reasons.

In spite of the obvious negatives, legislators and franchise owners argue, perhaps rightfully so, that they need state-of-the-art space to attract talent and remain competitive. That argument sounds awfully similar to those made by nonprofit arts organizations when they decide to undertake expansion projects. New buildings, like Taubman Museum of Art’s new facility, come with enormous costs and can force already cash-strapped organizations to take on more debt and risk the sustainability of the entire organization.

During the boom years, many museums and cultural institutions wanted to take advantage of the deep pockets of their big donors and take on large infrastructure projects. According to the University of Chicago Cultural Policy Center study cited above, this led to significant “overinvestment during the building boom—especially when coupled with the number of organizations that experienced financial difficulties post-building.” Much like their for-profit counterparts, cultural institutions were overly optimistic about the positive returns their efforts would have—yet four-fifths of the projects studied ran over budget, often by significant amounts. This type of development will often alter the business plan for the expanded institution to pay for the increasing expenditures and higher operating cost.  However, the consequences for arts organizations that overextend themselves are often much more dire than for NFL teams that generate billions of dollars in revenue. When is the last time you heard of a sports franchise closing up shop because it was no longer able to sustain itself?

That said, there are examples of cultural institutions that manage an expensive physical expansion and resulting fundraising campaign in ways that not only benefited the organization by helping it to further execute its mission and better serve its constituents. One example cited by the Nonprofit Finance Fund is the Steppenwolf Theater in Chicago, IL. Part of the reason the Steppenwolf has been able to sustain itself in spite of a large real estate purchase is that the institution understood that the real estate itself would not be the main income generator. Instead, as the organization grew physically, it sought out diverse revenue streams, from individual contributions to corporate giving, in order to support this expansion.

At the end of the day, professional sports generate a huge amount of revenue from a variety of sources (broadcast rights, apparel sales, concessions, ticket sales, etc) and public officials are dazzled by the dollar signs–in 2012, professional sports leagues generated roughly $24.7 billion in revenue. That is with one league being on strike (the National Hockey League) and not playing games for most of a season. Many are desperate to get a piece of that fiduciary pie by whatever means necessary. By contrast, the power dynamic is flipped when it comes to cultural institutions; they have to pitch the value of investment and advertising to their funders, not the other way around. I believe this is why cultural institutions are often left “holding the bag,” scrambling to cover the cost of ambitious expansions as opposed to sports franchises, who are often able to walk away from fiscal disasters of their own making.

• 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?

• On the heels of my income-sensitive ticket proposal, I found this interesting: ticket scalping for charity?
• Color me shocked, just shocked: those with the least are the ones who give the most. But it seems some people aren’t getting hit so hard from the recession…or at least are in a better position to absorb the pain. Namely, foundation and orchestra executives, respectively. Increases for both categories in FY2008 outpaced those of the rest of us substantially. Are we surprised?
• What is the more salient fact in this story: the fact that 20% of Harvard Business School students have signed a new ethics pledge, or the fact that 80% of Harvard Business School students declined to sign an ethics pledge?
• Looks like the Massachusetts Cultural Council is going to avoid that 57% cut after all. Thank goodness. In other Massachusetts news, it turns out that MASS MoCA, darling of the creative economy literature though it may be, was hanging onto the edge of the financial abyss until this year.
• Experts to the rescue: Clara Miller from the Nonprofit Finance Fund did a Chronicle of Philanthropy chat last week on recession strategies for the arts. Check it out here. Meanwhile, Doug McLennan from ArtsJournal offers some thoughts on social networking and the arts.
• Craving comparative financial data for your performing arts center, or performing arts centers in general? This resource from AMS Planning & Research may be what you’re looking for.
• Americans for the Arts has released the recommendations from its third annual National Arts Policy Roundtable.
• Building community through the arts: in Russia, in Minnesota, in Seattle.
• Been wondering what the plans are for the new White House Office of Social Innovation? Here’s an interview with two of the people involved.
• Next big thing alert: this week’s version is Google Wave, a new way to integrate email, social networking, blogging, and wiki-style collaboration into one Killer App. Check out the promotional video here.

I can’t afford to finish my works. I can design them, draw them out on my computer, archive them. But to print a giclee, to frame them for show, that runs me about 1500 dollars per image. – Hairy Carrion

Specialized shipping services for artwork can be very expensive-from building crates to fees for the actual carrier. – Richard

Money for visual artists to do their work is almost impossible to find. There are some residencies if you want to go somewhere to work or sometimes there is a little money to give a lecture but there isn’t support to just stay in your studio and make work. And when an artist shows work, there usually isn’t an honorarium or rental fee for showing the work. – jgoldner

In addition, multiple posters (more performing artists, I suspect) mentioned space rental, money to buy equipment as opposed to just renting it, and startup costs like building a website, insurance, demo CDs, legal fees, and so on. Money to “buy time” (i.e., to compose or write or create) was also a popular request.

Essentially all of the issues that have been identified above are symptoms of the winner-take-all economy in the arts. That is to say, it takes a certain amount of startup capital to create a successful artistic enterprise, whether as an individual or organization, and if one doesn’t have access to that startup capital, opportunities to exercise one’s talents are limited. Furthermore, essentials such as space, equipment and materials are in a sense more expensive to younger and smaller organizations because they take up a greater proportion of those organizations’ or individuals’ budgets, leaving less for “luxuries” like, um, paying the artists. This contributes to a feedback loop in which the artists who are already undercapitalized stay undercapitalized, because the system is set up to reward those who supply those basic essentials before it rewards the artistic output of those who use them.

Two of the Ortiz Foundation‘s four programs are designed to work in concert to attack this issue. The first, Building Infrastructure: Giving the Artists the Tools to Strengthen Communities, is designed to lower the costs for all artists by investing heavily in three key expense categories — space, materials, and equipment — and making them available on a non-curated basis at subsidized rates. The second, Supporting Start-Ups: Funding Emerging and Early-Stage Organizations, is a competitive program whose purpose is to provide that key initial capitalization to new projects and organizations that hint at untapped potential, raising the income for emerging artists as a result. Let’s take a look at these two programs in more detail.

Building Infrastructure

This program would be the Ortiz Foundation’s largest, starting off with an investment of $8.5 million a year and growing to $23.5 million per year by 2019. The initial undertaking would be the construction of a new community arts center in an easily accessible neighborhood of Queens with the following features:

• A deep proscenium theater with sprung floors suitable for theater, dance, and musical performance;
• A recording studio;
• A ground-floor gallery that doubles as the lobby of the theater;
• Numerous smaller, acoustically-sound rehearsal and studio spaces;
• Bulletin boards for information about events and training throughout the city; and
• Offices for the foundation itself.

The arts center would have a cache of materials and equipment on hand that would be available for rental at subsidized rates. There would also be a small fund to help artists buy equipment on a competitive basis. The center would be managed by an outside organization (either hired or created for this purpose) which would have a rotating advisory board of local artists to ensure broad community representation.

While this new construction would occupy the bulk of program funds for the first few years, the idea is that over time the Foundation would construct similar spaces in other parts of the city, with some including studio space for visual artists, others incorporating smaller more club-like performance venues, and so on. By consciously increasing the supply of these goods (space, materials and equipment) and directing them to those that need them the most, the Foundation hopes to make it easier for talented emerging artists to get off the ground.

A smaller part of the Building Infrastructure program would be aimed at existing venues and organizations. The first prong of this strategy would involve expanding the NYSCA dance rehearsal space subsidies to theater, music, and visual art spaces. The second is a unique idea: identify key for-profit companies that provide an important service to the arts community and find themselves struggling financially because of it (think Tonic), and offer them a package of management/legal consulting services and up to five years’ worth of bridge funding to turn them nonprofit. This “offer they can’t refuse” would be primarily targeted at organizations that are at severe risk of failing, but the program could also consider comparatively healthy organizations that wish to take a more proactive approach to their situation. (Depending on how the L3C develops, that could be a viable alternative to nonprofit status as well.)

Supporting Start-Ups

The Supporting Start-Ups program is essentially a classic venture philanthropy model writ small. Each organization accepted into the program would eligible for up to a total of $50,000 in funding over a period of up to five years. (The actual amount granted may be quite a bit less, depending on the specific budget needs of the organization in question.) The goal would not be to grow organizations “to scale” in the usual sense, so much as to grow them to the point where they can conduct their operations and programs insulated somewhat from the constant threat of extinction. After five years, organizations will have had ample opportunity to demonstrate their worth to the larger funding world and can continue on to greater heights if appropriate. The Supporting Start-Ups program will provide a significant level of technical support along with the money granted, and set realistic interim goals for each year in collaboration with the grantee. Failure to meet these interim goals on a consistent basis would result in an early termination of funding.

Decisions for Supporting Start-Ups grant awards would be made by an advisory group made up of journalists, curators, booking agents, publishers, mid-career artistic directors, and other individuals whose jobs require them to evaluate unsolicited work on a regular basis. The purpose of this model would be twofold: first, to rely on the expertise of field experts in determining the difference between, for example, a demo CD that sounds bad because it was recorded in somebody’s basement vs. a demo CD that sounds bad because the music stinks; and second, to build a bridge between these emerging artists, whether selected for a grant or not, and influential tastemakers in their field. (It is assumed that because of the low profile of most grant applicants, there will only be rare instances in which a panelist is already familiar with the work of the applicant; thus, conflict of interest is not a major concern.)

The combination of these two programs, it is hoped, would do much to enable emerging artists to overcome some of the systemic disadvantages that cause such burnout and attrition in the field. For our fourth and final installment tomorrow, we’ll look at the Ortiz Foundation’s other two programs, Arts Research and Art and the Public.