The Office – photo by flickr user Nick Chapman

In 2013, unpaid interns everywhere won a major victory when Judge William H. Pauley III of the Federal District Court in Manhattan ruled that plaintiffs who had worked without compensation on the Fox Searchlight movie Black Swan should have been classified as employees. The ruling resulted in a slew of lawsuits leveled by other unpaid interns, many settled out of court for large sums. This month, that decision was vacated by the United States Court of Appeals for the Second Circuit, which argued that the proper way to determine a worker’s status is to apply a “primary beneficiary test,” in which the worker can be considered an employee only if the employer benefits more from the relationship than the intern. Crucially, the decision also states that an internship can be legal even if it doesn’t meet the traditional six-factor checklist set in place in 1947, especially if it is tied to the receipt of school credit and helps the student fulfill academic commitments. As a result, a number of commentators have expressed concern that the decision encourages employers to  continue to exploit interns under the guise of education. 

The Beginning of the End of the No Child Left Behind Era: Speaking of education, thirteen years after the Bush Administration passed the No Child Left Behind Act (NCLB)–ushering in an age of highly criticized, high-stakes standardized testing–the Senate voted 81 to 17 to reauthorize the Elementary and Secondary Education Act (ESEA). The Senate bill, nicknamed “Every Child Achieves Act,” includes many welcome provisions, including doing away with the adequate yearly progress (read: serious standardized testing) mandate of NCLB. Earlier this month, the House of Representatives passed its own reauthorization, the Student Success Act, with no support from Democrats and under the threat of a White House veto. The House and Senate will now begin working on a final bill for approval. What that might ultimately look like, and when it might come to pass, is anyone’s guess. To start, U.S. Secretary of Education Arne Duncan has stated that the Senate’s bill falls short, and there is still much work to be done.

Film Tax Credits Get the Axe: Last year, we reported on the growing disenchantment in some states with film tax credit programs due to their questionable track record of impact on employment and economic prosperity, at least when it comes to big Hollywood studio productions. This month, two more states decided such incentives were no longer worth it: Governor Bill Walker repealed Alaska’s film tax credit in its entirety, and Governor Rick Snyder signed legislation ending Michigan’s program (though he did keep the Film Office, for the time being.) More unsettling to the film industry was Louisiana’s capping of its film tax credit program at $180 million, with an additional stipulation that limits credits per film to $30 million. This new limit is almost $100 million less than what the state has spent on credits annually in the last few years. Louisiana’s move is notable, as it has long been one of the most important places to film outside of California. The film industry is working on proposed reforms to the legislation, but the clear trend for the time being is towards greater consolidation back in Hollywood’s home state.

Hard Times for the Arts in Britain: The UK saw some serious threats to its cultural climate this month. UK’s Chancellor of the Exchequer George Osborne announced that, in order to make the government’s goal of £20 billion in savings, it would “prioritize spending that achieves the best economic returns.” In literal terms, this means that “unprotected” departments (that’s everything other than health, schools, defense and foreign aid) would face significant budget cuts. The Department for Culture, Media and Sport will face the most significant of cuts: 40%. This will be the third time Arts Council England has suffered a significant budget reduction since 2010, and the impact will be felt throughout the country: on the local level, councils are looking at forecasted cuts averaging 12%, and many will be forced to reconsider their arts budgets. Meanwhile, facing financial pressure of a different sort, the BBC announced this month that it will cut 1,000 jobs as it struggles to close a $294 million budget gap projected for the coming fiscal year. The gap is only expected to widen as more individuals move from TV to the internet, costing the BBC its network licensing fees, which account for more than 70% of its revenues. The government has appointed a committee to review the BBC’s Royal Charter, which expires in 2016.

SESAC Buys the Harry Fox Agency: After a year more than a year of exploration and discussion, SESAC, one of the three performing rights societies operating in the US, has finalized a bid to buy the Harry Fox Agency, the US’s primary collecting agency for mechanical rights. SESAC collects royalties whenever a song in its catalog is played on the radio, streamed online or otherwise played in real time. The Harry Fox Agency, currently under the aegis of the National Music Publishing Association, handles the mechanical licenses that record companies need to sell CDs and downloads (which was, in the heyday of record sales, quite lucrative.) The acquisition gives SESAC the ability to issue both licenses, thus handling digital rights more efficiently. It also, according to the New York Times, will give SESAC “control of the valuable data that is generated from digital outlets like Apple, Spotify and Pandora, giving it an advantage over ASCAP and BMI, its much bigger rivals in the American performing-rights business.” The question on everyone’s mind: what’s next for ASCAP and BMI now that SESAC is stepping up its game? And perhaps more importantly, what’s next for the creators of all this music?

MUSICAL CHAIRS / COOL JOBS

Lots of activity this month!

• Clifford Murphy has been named the National Endowment for the Arts’ new director of folk and traditional arts.
• The Andrew W. Mellon Foundation announced two new appointments this month: Ella Baff, until recently the executive and artistic director of Jacob’s Pillow Dance Festival, was hired to a new position of senior program officer in the Arts and Cultural Heritage program, and Karen Brooks Hopkins, former president of the Brooklyn Academy of Music, was named Senior Fellow in Residence.
• Erik Takeshita, currently Director of Creative Placemaking for the Local Initiatives Support Corporation, will join the Bush Foundation as its new portfolio director for Community Creativity.
• After 23 years with the Henry Luce Foundation, Ellen Holtzman will retire from her position as program director for American art in September. She is to be succeeded by Teresa A. Carbone.
• Ruby Lerner, founder and executive director of Creative Capital, has announced she will step down at the end of 2015 after seventeen years.
• Colleen McDonough has been promoted to executive director of the ASCAP Foundation. She succeeds Karen Sherry, who retired after seventeen years in this role.
• The George Gund Foundation named Jennifer Coleman its new Senior Program Officer for the Arts, replacing the retiring Deena Epstein.
• Allyson Esposito has been appointed Director of Arts & Culture at the Boston Foundation.
• Jessica Booth was appointed Georgia Department of Education’s first-ever fine arts specialist.
• Dr. Sanjay Kabir Bavikatte has been named executive director of the Christensen Fund.
• Sarah Martínez-Helfman was appointed new president of the Samuel S. Fels Fund.
• Diana Aviv is stepping down as CEO of Independent Sector to become CEO at Feeding America.
• The David and Lura Lovell Foundation seeks an Executive Director. Posted July 31; no closing date.
• The Nonprofit Finance Fund is hiring for ten positions, including positions in business development, financial services, marketing and more.
• Philanthropy New York is hiring a Director of Learning Services. Posted July 15; no closing date.
• Vilcek Foundation seeks a Program Officer. Posted July 23; no closing date.
• Crown Family Philanthropies seeks a Program Analyst. Posted July 6; no closing date.

NEW RESEARCH OF NOTE

• Cultural Value and Inequality, a report commissioned by the Arts and Humanities Research Council’s Cultural Value Project, examines hard questions: who gets to make culture, who gets to consume it, and the impact of inequality.
• The National Endowment for the Arts published the first representative analysis of arts participation patterns among people with disabilities.
• The Andrew W. Mellon Foundation, in partnership with Association of Art Museum Directors and the American Alliance of Museums, released the results of a new survey gauging the ethnic and gender diversity of art museum staffs across the United States.
• In 2005, the Center for an Urban Future published “Creative New York,” the first comprehensive analysis of the economic impact of the city’s many nonprofit arts organizations and for-profit creative businesses. This month, the Center published a follow-up to this seminal study, which looks at what has changed in the past decade. Meanwhile, statistics released by the UK’s Department for Culture, Media and Sport show that employment within UK’s creative industries is increasing twice as fast as the wider economy.
• A new study published in the American Economic Review looks at how behavioral tendencies can affect grant decisions.
• July was the month of music research. Researchers at Cambridge University released a study suggesting that one’s taste in music reflects the way one thinks. Across the pond, On the business end, Berklee College undertook to analyze the many disparate elements of the music industry in an effort to fix the aging, fractured business. Finally, a new study published in the journal Self and Identity shows that, despite the naysaying and hand-wringing around metal music in the 1980s, so-called “metal kids” turned out pretty well, reporting higher levels of youthful happiness and fewer regrets.

The Diego Rivera Mural at the Detroit Institute of Arts – photo by Quick fix

Each year, Createquity offers a list of the top ten arts policy stories of the past twelve months. You can read the previous editions here: 2013, 2012, 2011, 2010, and 2009. The list, like Createquity itself, is focused on the United States, but is not oblivious to news from other parts of the world. This year, we distributed creation of this list amongst our editorial team more widely than we ever have before, and this is truly a group effort. Authorship of individual items is noted at the end of each paragraph.

In our annual top 10 list of arts policy stories, we often like to point out the implications that non-arts world events have for the arts. In an unusual twist this year, we had a couple of stories in which the art itself was at the center of significant world events. We always knew that art has the power to inspire wonder, hope, greed, fear and anger; 2014 taught us that we can add bankruptcy negotiations and terrorist threats to the list. –Ian David Moss

10. Trey McIntyre Project disbands

In a move that shocked fans and fellow arts administrators alike, Trey McIntyre announced this January that his celebrated eponymous dance company, known as the Trey McIntyre Project, would disband this season, letting him shift focus to new artistic pursuits involving film production, photography, and less frequently, freelance choreography. Begun as a summer touring company in 2005, TMP launched a full-time dance troupe in 2008-09. TMP had been recognized for its innovative choreography and as a model for audience engagement, but most of all for its unusual relationship to the city of Boise, Idaho, which was selected as the new company’s unlikely home after a nationwide search. This arrangement provided TMP with an affordable and livable community, while Boise in turn embraced the company wholeheartedly, treating the dancers like local celebrities and naming the company as its official ambassador. Drawing national attention and funding from creative placemaking initiatives including the NEA’s Our Town and ArtPlace America, TMP had been hailed by many as a model of engagement for the future. Yet McIntyre has said that ending the company was always part of the plan, which is why he decided to call it a “project.” Speaking to Dance|USA, McIntyre said that “the dance company actually went on longer than I had intended. But things were going on really well and I felt it was important to see it through to its fruition and explore every possibility.” From the outside it might look like plenty of possibility was left on the table, but perhaps even in its demise TMP is still a model for the future – that is to say, a model of an organization that knows how to quit while it’s ahead. –Carlyn Madden

9. Transition and renewal for cultural agencies in New York, LA and Boston

In 2014, three major US cities saw a shift in local government leadership, in each case bringing promise and questions for the arts. New York City’s election of Bill de Blasio as its first Democratic mayor in twenty years coincides with a push by the City Council to undertake the Big Apple’s first ever cultural plan. The proposed law charges the city’s Department of Cultural Affairs, led by newly appointed Commissioner Tom Finkelpearl, with developing recommendations for increasing participation in cultural activities throughout the city. NYC is the only one of the country’s top ten municipalities to not have some sort of cultural plan; this bill will hopefully change that when it comes up for a vote in 2015. In Los Angeles, Mayor Eric Garcetti – the city’s first Jewish mayor, and its youngest in a century – opened the year by reshaping the arts conversation, putting emphasis on the fact that the arts are “a value for the entire city government.” In June, he appointed Danielle Brazell, who had previously headed up the city’s arts advocacy organization Arts for LA, to lead the city’s Cultural Affairs Department. But the greatest excitement belongs to Boston, which elected its first mayor last year following the 21-year reign of Tom Menino. The statewide arts advocacy coalition MassCreative took the transition as an opportunity to put culture at the center of the electoral conversation, and its efforts paid off this year in dramatic fashion. In September, newly elected mayor Marty Walsh appointed Julie Burros as Boston’s first Chief of Arts and Culture in more than 20 years, and tasked her with stewarding the creation of the city’s cultural plan. Adding to the sense of momentum, Boston’s Barr Foundation has taken on a newly assertive role in guiding the future of the arts in Beantown, bringing in former Irvine Foundation president James E. Canales and joining the ArtPlace America coalition. –Clara Inés Schuhmacher

8. State arts councils come back with a vengeance

State arts councils had their best year since the turn of the millennium with a nearly 20% increase in funding for FY2015. Total appropriations for arts agencies reached $367.4 million, the highest total (in nominal terms, don’t get too excited) since 2002. The biggest winner was the Florida Division of Cultural Affairs, which had suffered a crippling 94% budgetary cut over a three-year period ending in 2009. The Sunshine State’s arts council roared back this year with a 433% increase, unseating the New York State Council on the Arts as the most formidable state arts council in the country – and with a conservative governor at the helm, no less. California and Michigan also received significant increases in funding, and South Carolina governor Nikki Haley apparently got tired of trying unsuccessfully to veto funding for the state’s Arts Commission as she had done in each of her previous years in office.  With the improving economy, unplanned midyear cuts to state arts agency budgets saw a marked decrease, down to eight states in 2014 from 41 in FY2009. –Louise Geraghty

7. The landscape for film tax credits gets reshaped

After years of what resembled a high-stakes poker game in the competitive environment for film and TV tax incentives, 2014 saw several significant shifts that involved some states upping the ante and others folding their hand. California led the way, more than tripling its tax credit program to $330 million annually in a bid to reassert dominance and keep Hollywood productions in Hollywood. New Jersey’s state Senate decided to play along too, passing a bill that would raise the annual cap for film tax credits from $10 million to $50 million. States weren’t the only ones in the mix: Austin’s City Council approved reimbursement of up to 0.75% of production companies’ wages. Not everyone is drinking the Kool-Aid, however; as John Carnwath writes in “The Bottom Line on Film Tax Credits,” the benefits of film & TV tax incentives to the state and its citizens are not always clear. This year saw North Carolina, Michigan and New Mexico scaling down their programs, citing “concerns [that] the cost to taxpayers outweighed the economic benefits.” Meanwhile, skeptical lawmakers tried to derail Maryland’s tax credit program, prompting a high-stakes standoff with Media Rights Capital and its Netflix show House of Cards that brought out a lobbying appearance from Kevin Spacey himself. An eventual agreement kept House of Cards filming in the Old Line State, but only at the expense of $2.5 million that was transferred away from the state arts fund (and thus many deserving nonprofits!) in a troubling precedent. And even after all that, a nonpartisan analysis from the state’s legislative staff concluded that every dollar invested in the tax credits brought back only 10 cents in revenue. –CIS

6. Bring on the era of Jane Chu!

With the NEA chairmanship open since Rocco Landesman’s retirement in November 2012, the confirmation of Jane Chu to the post was welcome news this June. Chu established her arts career in Kansas City, where she led a $414 million campaign for the establishment of the Kauffman Center and was a key player in the city’s transformation into an arts leader. With a midwestern background, a track record with the business community as a board member for the Greater Kansas City Chamber of Commerce, and previous fundraising success, Chu seems well-chosen for the task of establishing bipartisan support for the arts and countering the impression that the NEA serves a coastal cultural elite. Nevertheless, some wonder if her limited tenure as result of the administration’s long delay in appointing a new leader will give her much opportunity to drive policy at the agency. Chu has not yet announced any new initiatives in her first six months on the job. Meanwhile, the National Endowment for the Humanities also saw a new chairman confirmed this year. William “Bro” Adams comes from a career in academia, most recently as the president of Colby College in Maine, but he may find himself taking on a similar agenda of garnering broad based support and bolstering funding for the humanities. Adams has already announced a new initiative entitled “The Common Good, Humanities in the Public Square.”  –Katherine Ingersoll

5. The IRS haltingly embraces the 21st century

In July the IRS announced major changes to the process of applying for 501(c)(3) charitable status, including a streamlined three-page 1023EZ form for most organizations with gross receipts under $50,000. This bodes well for the backlog of nearly 60,000 organizations waiting for their applications to be processed who will see a dramatic decrease in wait time. The move is in line with a larger trend towards more streamlined processes for the exempt organizations division at the IRS – and, quite possibly, more relaxed enforcement of the rules. The changes come at a time when budget cuts, staff reductions, and political scandals, have stoked concerns about the agency’s regulatory oversight. Government transparency advocates have noted that the dilemma of providing effective regulation with fewer resources could be solved by offering 990 data in an open, searchable format online, distributing some of the IRS’s watchdog responsibilities to donor advocates and the public. (Currently the forms are only available on CDs; GuideStar offers the documents on its website with a 1-2 year delay.) Will the IRS be able to modernize its operations while protecting the public interest? Will your tax forms become shorter, and will there be any staff left to process them? Only time will tell. –KI

4. Russia and Turkey crack down on free expression

Although Russia’s aggression toward the Ukraine has occupied many a news cycle this year, the oppressive measures that Vladimir Putin’s government has taken to reaffirm authority at home, many of which affect artists, have not been as widely reported. Among the more troubling developments is what appears to be a return to the witch-hunt tactics of the Soviet era, publicly naming (and ostensibly shaming) “subversive” artists in print and on television. In July, Putin signed a law prohibiting swearing in public performances (these are the four main offenders), leaving presenters struggling with how best to present planned repertoire. International tensions have affected programming in the US as well – most notably, in April, Washington DC’s Woolly Mammoth Theatre canceled a months-in-the-making festival of Russian theatre, citing loss of previously committed tour funding from the Moscow Cultural Ministry for the 90 artists slated to appear. Putin is not the only national leader to attempt to bend public expression to his will, of course, and he seemingly is inspiring some copycat behavior by Turkish president Recep Tayyip Erdoğan. Coinciding with a sweeping consolidation of power this year, Erdogan’s government proposed a bill in April that would establish an arts council to centralize the disbursement of state funds for artistic activities, effectively giving the government absolute artistic control. The proposed bill has drawn outrage from both the arts community and Turkish citizens, and though still in draft form, the effects of its line of thinking are already being felt, with world-renowned pianists blocked from national performances, and mysteriously cancelled productions at the State Theater. –CIS

3. Net neutrality hangs in the balance

It’s been yet another rough year for net neutrality. In January, Verizon challenged the Federal Communications Commission (FCC)’s 2011 “Open Internet Order” and its authority to promulgate such rules. Verizon won, effectively overturning regulations that require internet service providers to treat all content equally, and setting off a maelstrom of concern around innovation, democracy, and the idea of America itself. Under fire, the FCC proposed new net neutrality rules in March, then again in April (these critics claimed were unworthy of the name), with yet a third draft presented on May 15th. The May proposal, which garnered a whopping 3.7 million public comments over a five month period (680k of which the FCC recently “lost,”) would allow broadband companies to provide a “fast lane” for content providers willing to pay a “commercially reasonable” fee, similar to those that already exist with tech companies like Netflix, Google, Amazon, and Facebook. In December, President Obama and The White House released a plan recommending that the FCC 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. Looming large over the debate is the proposed merger of Time Warner Cable and Comcast – the country’s two largest cable companies – and the access implications if approved (the merger would give the new company a stake in 60% of US broadband households.) For now, it’s wait-and-see. The FCC has said it will implement net neutrality rules as early as February 2015, though that likely won’t bring an end to the debate. Whatever happens, someone is likely to sue. –CIS

2. “The Interview” provokes an international incident

Few arts stories in recent memory have involved as much bizarre spectacle as the recent Sony Pictures hack and subsequent fallout. Hollywood is no stranger to poking fun at North Korea (whose leaders are known film buffs); when Team America: World Police lampooned Kim Jong-il in 2004, life went on without much incident. Ten years later, it’s a different story with Seth Rogen and James Franco’s The Interview, which depicts the assassination of Kim’s son Jong-un. After hackers who may or may not have been aligned with North Korea exposed embarrassing emails and data from Sony Pictures, the producer of the movie, the studio and major movie theaters distanced themselves from the film. When the group claiming responsibility for the cyberattack threatened violence, Sony went further, deciding to delay The Interview’s theatrical release and provoking stern words from President Obama himself in response. Subsequently, Sony reversed its decision and released the film online and in select theaters on schedule. Buoyed by the controversy, it is now the most downloaded Sony Pictures film of all time and earned $15 million in its first three days of digital release (along with $3 million through its limited theatrical run) – and no one has yet been injured in a terrorist attack. Now, some people are even speculating that Sony and other major studios might forego a traditional theatrical release in the future in favor of going directly to online outlets. One thing we’re pretty sure about: never before has a story engaged computer geeks, homeland security experts, celebrity gossip hounds, and arts marketers with such equal intensity. –LG

1. Detroit’s art leads the Motor City out of bankruptcy

News about the Detroit Institute of Arts (DIA) made our “Top Ten” list in 2012 and in 2013. Let’s hope 2014 – as it reaches the dubious honor of No. 1 – marks its last appearance for a while. After two years, Detroit’s long and painful bankruptcy battle finally came to a close in November with a federal ruling in favor of the city’s bankruptcy plan. For this Detroit has, in many ways, the DIA to thank. Under the so-called “Grand Bargain,” an $816 million deal developed by the Ford, Kresge and Knight Foundations, among others, the foundations will provide funding for Detroit’s public pensions – a key component of the negotiations. The only catch? Control of the DIA must be transferred from the City of Detroit (which has owned the museum since 1919) to an independent charitable trust, thus protecting the art from being auctioned off to the highest bidder. Previously, Detroit’s state-appointed emergency manager Kevyn Orr had included the museum’s art collection among city assets available for liquidation, and contracted Christie’s to appraise portions of the 60k+ piece collection. Detroit city creditor Financial Guaranty Insurance Co. even went as far as to solicit bids for the DIA’s entire collection, receiving four separate offers to buy the art outright for as much as $2 billion. That a museum and its art could become the linchpin of a federal bankruptcy negotiation, soliciting intense interest from creditors and rallying outside philanthropic interests to its rescue, is truly remarkable. Would a “Grand Bargain” — and a Detroit with its dignity left intact — have even been possible without the DIA? Luckily, we won’t have to find out. –CIS

Honorable mentions:

• Drama at the Metropolitan Opera, Atlanta Symphony, and San Diego Opera
• The Cultural Data Project’s strategic reboot
• August Wilson Center sold to Pittsburgh foundations
• US Department of Arts and Culture gets up and running

Happy 2015 to all!

Metropolitan Opera House – Photo by Flickr user Zio Paolino, Creative Commons license

Never fear, Wagner lovers: the largest opera company in the US will open its season on time. Faced with what it called an unsustainable financial strain, management had threatened a lockout this fall if labor representatives refused to accept drastic pay cuts. In the end, General Manager Peter Gelb was able to secure the first pay cuts for the Met’s unionized employees in decades, but the cuts were by no means as deep as initially proposed. Singers and orchestra members agreed to a 3.5% pay cut, effective immediately, and an additional 3.5% cut in six months’ time. That’s a far cry from the 17% reduction that Gelb had previously sought, and will be partially offset by a 3% raise in the fourth year of the union’s contract.

From the standpoint of the larger nonprofit arts field, the most significant part of the deal is a clause that allows an independent financial analyst to monitor the financial management of the organization on behalf of the employees. Experts claim this highly unusual provision could have ripple effects throughout the industry. This agreement came about when the unions, faced with the drastic cuts proposed by Gelb, developed a list of alternative cost-saving measures. While the management didn’t adopt those proposals outright, it agreed to let the employees have a say in how the overall savings are achieved.

California turns to tax breaks to reassert film industry dominance
Just as North Carolina decides to follow the examples of Michigan and New Mexico by scaling back its support of the motion picture industry, California is doubling down (actually, tripling down) on its incentives in an attempt to keep Hollywood productions in Hollywood. Governor Brown and the state Legislature have expanded California’s tax credit program from $100 million to $330 million per year. While the ability of film tax incentives to increase employment and stimulate the economy remains highly questionable (as previously discussed here at Createquity), California lawmakers have described the expanded tax program as a demonstration of their commitment to the film industry. California may indeed be in a somewhat different position than most other states in that a lot of film industry professionals are based in and around Los Angeles and would presumably prefer to work closer to home if the production costs, which can be significantly reduced by tax incentives, are roughly on par with other states.

International cultural agencies shake things up
The Australia Council for the Arts has announced what it’s billing as the most sweeping overhaul of its grant programs in 40 years in order to make them more inclusive and reduce the administrative burden on applicants. Each of the newly created funding categories will be open to artists of all areas of practice and applicants will be able to choose which discipline’s peer panel they want to assess their application. Meanwhile in the UK, the Arts Council England has rebalanced its portfolio of funded organizations to direct more funding to organizations outside of London at the expense of such venerable institutions as the English National Opera. Nevertheless, critics say the plan to devote 53% of the Arts Council’s budget to regions outside of London (up from 49%) doesn’t go far enough. Finally, the French Minister of Culture, Aurélie Filippetti, has resigned in protest of austerity measures that led to cuts in her Ministries budget. She will be replaced by Korean-born Fleur Pellerin.

New foundation to support American classical composers
The Chicago music critic Lawrence A. Johnson has launched a nonprofit foundation that will provide grants to ensembles and presenters that perform American classical music and commission new works by American composers. The American Music Project is still in the early stages of fundraising, but it’s already commissioned its first new work and is set to start awarding grants for the 2015-16 season. Johnson hopes to have raised $500,000 by next spring and eventually establish a standing endowment of $1 million. There’s no word yet on the size of the grants that will be doled for performances of rarely heard American works or how many organizations will be supported each year. While some might question the need for another nonprofit dedicated to classical music, Mike Scutari argues that the American Music Project will fill a gap in current support mechanisms with its focus on increasing the breadth of the American repertoire featured in concert halls around the country.

Corbett Foundation closing
Cincinnati’s Corbett Foundation, which has provided more than $70 million to arts and education nonprofits in Ohio and Kentucky since 1955, is finally closing its doors. The dissolution of the foundation has been planned for years; indeed, it was never intended to persist beyond the founders’ lifetimes. Explaining why it took until now to wrap things up after Patricia Corbett’s death in 2008, Executive Director Karen McKim said in effect that rising markets had foiled plans to spend down the foundation’s funds despite best efforts.

MUSICAL CHAIRS/COOL JOBS

• The Pittsburgh Foundation has announced its new president & CEO, Maxwell King.
• The National Association of Media Arts and Culture has a new executive director, Wendy Levy.
• The Center for Cultural Innovation’s board chair Angie Kim has been appointed interim leader as the organization’s search for its next President & CEO continues.
• Oregon Cultural Trust has hired Brian Rogers as executive director.
• Grantmakesr in the Arts has chosen Jim McDonald to be its new deputy director and director of programs, replacing the retiring Tommer Peterson.
• ArtWorks, an art therapy service provider in New York & New Jersey, is looking for an executive director. Posted August 15, no closing date.
• National Network of Consultants to Grantmakers seeks a project director; work virtually. Salary: $30-35k for 20 hrs/wk.
• McLean Project for the Arts (DC area) is in the market for an executive director. Salary: $55-70k. Posted August 6, no closing date.
• The Boston Globe is seeking an arts reporter. Posted August 21, no closing date.

NEW RESEARCH OF NOTE

• Research on the effects of video games is booming; much is unknown, but apparently Grand Theft Auto promotes bad behavior in real life and playing Voldemort makes you evil. But it’s not just video games: watching reality TV can make you a worse person, too.
• Rhetoric about a “universal language” aside, it turns out that about 3% of people just don’t like music at all, and they’re amazingly not monsters.
• A new study finds that true stories aren’t any more emotionally resonant than fictional ones, despite expectations to the contrary.
• Hollywood still lags behind in diversity. According to a new study, whites had 74% of the movie roles despite making up only 64% of the population.
• A Kennedy Center evaluation found that 4th- and 5th-graders in arts integrated classes displayed more creativity and better problem-solving skills than peers.
• A college-aged mathematician has put together a linear regression model predicting the length of Broadway show runs.

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.

crown – Photo by Flickr user Jason Train, Creative Commons license

Both the NEA and the NEH have new official leaders this month: Jane Chu, head of the Kauffman Center for the Performing Arts in Kansas City, Missouri, will be the 11^th chair of the NEA; William “Bro” Adams, formerly president of Colby College, will be the 10^th chair of the NEH. Respected internal acting chairs had been manning the ships since Rocco Landesman’s resignation from the NEA at the end of 2012 and Jim Leach’s resignation from the NEH in April 2013. The new appointees are just in time for the Congressional debate over the President’s budget, which requested essentially flat funding for the cultural agencies.

In her previous job, Chu oversaw the mid-recession capital campaign that built the Kauffman Center, a major performance venue that is now home to the Kansas City Ballet, Symphony Orchestra and the Lyric Opera of Kansas City. She has a background as a grantmaker, with a PhD in philanthropic studies and a previous post as the vice president of community investment for the Greater Kansas City Community Foundation. A former member of the Greater Kansas City Chamber of Commerce, she may also be well equipped to reach across the aisle – or at least to continue making the case for the economic impact of the arts.

Adams, a Vietnam veteran and intellectual historian, has led arts and humanities initiatives at several colleges, including the Great Works in Western Culture Program at Stanford and a major expansion of the Colby College Museum of Art. His long and varied resume of experience in academic administration marks a shift from Leach, who had been a Congressman for thirty years at the time of his appointment. We hope he will continue his tradition of open forums entitled, “Yo, Bro.”

Glimmers of hope in state and local arts budgets: For the first time in many years, public arts funding is increasing in notable areas of the country. The Florida state budget now officially includes $56.4 million for the state’s Division of Cultural Affairs, vaulting the Sunshine State past New York to take the prize of most generous state arts council overall – even if you exclude the $12.4 million in line-item funding from that total. Not to be outdone, New York City’s 2014-15 budget includes a $23 million boost for arts education, to be directed toward arts specialist positions, facilities, and partnerships with cultural institutions. On the opposite coast, the California Arts Council received a $5 million boost from the state, bringing its total appropriation to about $9 million. Paltry as it may seem compared to Florida’s investment and California’s size, that $5 million is the first significant increase the CAC has received since it was gutted by more than 90% more than a decade ago. Michigan allocated an additional $2 million for the Michigan Council for Arts and Cultural Affairs, and South Carolina Governor Nikki Haley gave arts advocates reason to cheer by refraining from vetoing funding for the South Carolina Arts Commission for the first time since 2011.

Debate over equity in arts funding adds to Bay Area arts turmoil: In what may be a harbinger of feuds in other parts of the country, arts advocates in the City by the Bay clashed with one another over funding for arts organizations serving communities of color. A recent report from the Budget Analyst’s Office claims the bulk of funding distributed by San Francisco’s Grants for the Arts/Hotel Tax Fund goes to organizations serving primarily white audiences. Amid calls to address the disparity by boosting funds to the Arts Commission’s Cultural Equity Grants, which target underserved and culturally specific communities, sharp words flew between sub-groups of arts advocates, some of whom felt the Arts Commission and Grants for the Arts were being pitted against each other. The budget for Cultural Equity Grants is now poised to receive $119,000 previously allocated to Grants for the Arts, with further action by San Francisco’s Board of Supervisors expected in July. This is all on top of the recent shutdown of the San Jose Repertory Theater after 34 years and the dramatic shrinking of San Francisco’s Intersection for the Arts announced last month.

The Detroit Institute of Arts continues on its escape path from the city’s bankruptcy proceedings: The Detroit City Council unanimously approved the museum’s plan to privatize as a charitable trust. The so-called “grand bargain” would ransom the DIA from the bargaining table in exchange for more than $800 million in public and private funds to be paid to the city’s pensioners over 20 years. Foundation money currently accounts for more than $350m of that, including major gifts from Ford ($125 million) and Kresge ($100 million). The museum itself is required to raise $100m of the money; they’re about 70% of the way there, thanks to recent donations from the Big Three automakers ($26 million total) and from Mellon and Getty ($10 million and $3 million, respectively). Even if the funds are raised, the deal must still win the approval of pensioners and the presiding judge – which is not guaranteed, as some creditors are calling for part or all of the museum’s collection to be in play to settle the city’s debts.

Creative hubs compete to offer tax credits for film and TV production: A large majority of states offer tax incentives for film and TV production, but the last several weeks have seen several governments advance the arms race. New Jersey’s state Senate passed a bill that would raise the annual cap for film tax credits from $10 million to $50 million; Austin’s City Council approved reimbursement of up to 0.75% of production companies’ wages; and, not to be outdone, the California state assembly passed a “Film and Television Jobs Retention and Promotion” Act that would add an undefined amount to the current $100 million annual kitty. In Pennsylvania, lawmakers may clarify their tax credit rules to better attract feature films and TV series specifically; the shopping network QVC has received more than $26 million under the program since 2008. Meanwhile, Boston is kickin’ it old-school: the state legislature is considering incentives to lure live theater headed to Broadway or Off-Broadway to Beantown and the rest of Massachusetts. As we noted in January, the ultimate benefit of incentives like these to citizens is not always clear.

MUSICAL CHAIRS/COOL JOBS

• After seven months, Los Angeles has a new arts czar: Danielle Brazell is Mayor Eric Garcetti’s nominee to head the Department of Cultural Affairs. Brazell, who has spent the last eight years corralling the region’s arts advocates as executive director of Arts for LA, will take up the reins in August.
• Los Angeles also added a high-profile art education leader to its ranks: Rory Pullens, head of Washington, DC’s Duke Ellington School for the Arts, will take over Los Angeles Unified School Districts’ arts education branch in July.
• After fourteen years as Deputy Director and Director of Programs, Grantmakers in the Arts’ Tommer Petersen will retire at the end of 2014. GIA has announced a national search for his replacement.
• Simon Greer has left the Nathan Cummings Foundation following a two-and-a-half year stint as president and CEO. Greer noted he and the Board were “increasingly unaligned around the hard choices that are inevitably part of implementation.”‘
• Sad news: Rebecca Blunk, former Executive Director of the New England Foundation for the Arts, passed away on June 22 at the age of 60.
• The San Francisco Arts Commission is hiring a Senior Program Officer for Community Investments. Deadline: 6/16. Salary: $73-89k.
• Artist Trust (based in Seattle) is looking for a new Executive Director. Deadline: 7/3. Salary: $85-95k.

NEW RESEARCH OF NOTE

• Three new studies examine the link between arts participation and individuals’ sense of life-satisfaction.
• A University of Messina psychologist has linked creative capacity to hormones. Examining a small sample of visual artists, she found evidence of high prenatal testosterone rates among both males and females. A 1999 study of musicians suggested a similar correlation.
• Music education has been linked to increases in mathematical ability – might it help students with reading as well? Unfortunately, it may not do as much for your kid’s skill with the oboe as Malcolm Gladwell believes: a new study finds a strong genetic component to musical talent.
• Last year we outlined best- and worst-case scenarios for the impact of MOOCs on public education. Now, research on the use of educational technology in affluent vs. non-affluent communities suggests the worst-case scenario may be winning, as children from mid- and high-income families benefit more from fancy gadgets and internet access than their low-income peers.
• The National Assembly of State Arts Agencies offers a snapshot of how its members handle fellowships for individual artists.
• Arts Midwest has released a report on its leadership and strategy development program, ArtsLab, including case studies of eight grantees.
• Researchers affiliated with the Cultural Policy Center are preparing a book on the impact of major cultural facilities projects and the mistakes that can drive unwise investment by cities. The book expands on the authors’ previously-released study.

In her previous job, Chu oversaw the mid-recession capital campaign that built the Kauffman Center, a major performance venue that is now home to the Kansas City Ballet, Symphony Orchestra and the Lyric Opera of Kansas City. She has a background as a grantmaker, with a PhD in philanthropic studies and a previous post as the vice president of community investment for the Greater Kansas City Community Foundation. A former member of the Greater Kansas City Chamber of Commerce, she may also be well equipped to reach across the aisle – or at least to continue making the case for the economic impact of the arts.

Adams, a Vietnam veteran and intellectual historian, has led arts and humanities initiatives at several colleges, including the Great Works in Western Culture Program at Stanford and a major expansion of the Colby College Museum of Art. His long and varied resume of experience in academic administration marks a shift from Leach, who had been a Congressman for thirty years at the time of his appointment. We hope he will continue his tradition of open forums entitled, “Yo, Bro.”

Glimmers of hope in state and local arts budgets: For the first time in many years, public arts funding is increasing in notable areas of the country. The Florida state budget now officially includes $56.4 million for the state’s Division of Cultural Affairs, vaulting the Sunshine State past New York to take the prize of most generous state arts council overall – even if you exclude the $12.4 million in line-item funding from that total. Not to be outdone, New York City’s 2014-15 budget includes a $23 million boost for arts education, to be directed toward arts specialist positions, facilities, and partnerships with cultural institutions. On the opposite coast, the California Arts Council received a $5 million boost from the state, bringing its total appropriation to about $9 million. Paltry as it may seem compared to Florida’s investment and California’s size, that $5 million is the first significant increase the CAC has received since it was gutted by more than 90% more than a decade ago. Michigan allocated an additional $2 million for the Michigan Council for Arts and Cultural Affairs, and South Carolina Governor Nikki Haley gave arts advocates reason to cheer by refraining from vetoing funding for the South Carolina Arts Commission for the first time since 2011.

Debate over equity in arts funding adds to Bay Area arts turmoil: In what may be a harbinger of feuds in other parts of the country, arts advocates in the City by the Bay clashed with one another over funding for arts organizations serving communities of color. A recent report from the Budget Analyst’s Office claims the bulk of funding distributed by San Francisco’s Grants for the Arts/Hotel Tax Fund goes to organizations serving primarily white audiences. Amid calls to address the disparity by boosting funds to the Arts Commission’s Cultural Equity Grants, which target underserved and culturally specific communities, sharp words flew between sub-groups of arts advocates, some of whom felt the Arts Commission and Grants for the Arts were being pitted against each other. The budget for Cultural Equity Grants is now poised to receive $119,000 previously allocated to Grants for the Arts, with further action by San Francisco’s Board of Supervisors expected in July. This is all on top of the recent shutdown of the San Jose Repertory Theater after 34 years and the dramatic shrinking of San Francisco’s Intersection for the Arts announced last month.

The Detroit Institute of Arts continues on its escape path from the city’s bankruptcy proceedings: The Detroit City Council unanimously approved the museum’s plan to privatize as a charitable trust. The so-called “grand bargain” would ransom the DIA from the bargaining table in exchange for more than $800m in public and private funds to be paid to the city’s pensioners over 20 years. Foundation money currently accounts for more than $350m of that, including major gifts from Ford ($125m) and Kresge ($100m). The museum itself is required to raise $100m of the money; they’re about 70% of the way there, thanks to recent donations from the Big Three automakers ($26m total) and from Mellon and Getty ($10m and $3m). Even if the funds are raised, the deal must still win the approval of pensioners and the presiding judge – which is not guaranteed, as some creditors are calling for part or all of the museum’s collection to be in play to settle the city’s debts.

Creative hubs compete to offer tax credits for film and TV production: A large majority of states offer tax incentives for film and TV production, but the last several weeks have seen several governments advance the arms race. New Jersey’s state Senate passed a bill that would raise the annual cap for film tax credits from $10m to $50m; Austin’s City Council approved reimbursement of up to 0.75% of production companies’ wages; and, not to be outdone, the California state assembly passed a “Film and Television Jobs Retention and Promotion” Act that would add an undefined amount to the current $100 annual kitty. In Pennsylvania, lawmakers may clarify their tax credit rules to better attract feature films and TV series specifically; the shopping network QVC has received more than $26m under the program since 2008. Meanwhile, Boston is kickin’ it old-school: the state legislature is considering incentives to lure live theater headed to Broadway or Off-Broadway to Beantown and the rest of Massachusetts. As we noted in January, the ultimate benefit of incentives like these to citizens is not always clear.

MUSICAL CHAIRS/COOL JOBS

• After seven months, Los Angeles has a new arts czar: Danielle Brazell is Mayor Eric Garcetti’s nominee to head the Department of Cultural Affairs. Brazell, who has spent the last eight years corralling the region’s arts advocates as executive director of Arts for LA, will take up the reins in August.
• Los Angeles also added a high-profile art education leader to its ranks: Rory Pullens, head of Washington, DC’s Duke Ellington School for the Arts, will take over Los Angeles Unified School Districts’ arts education branch in July.
• After fourteen years as Deputy Director and Director of Programs, Grantmakers in the Arts’ Tommer Petersen will retire at the end of 2014. GIA has announced a national search for his replacement.
• Simon Greer has left the Nathan Cummings Foundation following a two-and-a-half year stint as president and CEO. Greer noted he and the Board were “increasingly unaligned around the hard choices that are inevitably part of implementation.”‘
• Sad news: Rebecca Blunk, former Executive Director of the New England Foundation for the Arts, passed away on June 22 at the age of 60.
• The San Francisco Arts Commission is hiring a Senior Program Officer for Community Investments. Deadline: 6/16. Salary: $73-89k.
• Artist Trust (based in Seattle) is looking for a new Executive Director. Deadline: 7/3. Salary: $85-95k.

NEW RESEARCH OF NOTE

• Three new studies examine the link between arts participation and individuals’ sense of life-satisfaction.
• A University of Messina psychologist has linked creative capacity to hormones. Examining a small sample of visual artists, she found evidence of high prenatal testosterone rates among both males and females. A 1999 study of musicians suggested a similar correlation.
• Music education has been linked to increases in mathematical ability – might it help students with reading as well? Unfortunately, it may not do as much for your kid’s skill with the oboe as Malcolm Gladwell believes: a new study finds a strong genetic component to musical talent.
• Last year we outlined best- and worst-case scenarios for the impact of MOOCs on public education. Now, research on the use of educational technology in affluent vs. non-affluent communities suggests the worst-case scenario may be winning, as children from mid- and high-income families benefit more from fancy gadgets and internet access than their low-income peers.
• The National Assembly of State Arts Agencies offers a snapshot of how its members handle fellowships for individual artists.
• Arts Midwest has released a report on its leadership and strategy development program, ArtsLab, including case studies of eight grantees.
• Researchers affiliated with the Cultural Policy Center are preparing a book on the impact of major cultural facilities projects and the mistakes that can drive unwise investment by cities. The book expands on the authors’ previously-released study.

In the recently released federal budget for fiscal year 2015, President Obama proposes a meager increase in allocations for the arts compared to last year. Federally-backed museums will enjoy the bulk of that increase, while funding for NEA and NEH is essentially unchanged after factoring in inflation. Speaking of those agencies, President Obama also announced his plan to appoint William “Bro” Adams as head of the National Endowment for the Humanities. Adams is currently President of Colby College; he is also a member of the Board of Directors of the Maine Film Center and the Maine Public Broadcasting Corporation.

Democratic Congressmen have introduced a revised version of a droit de suite bill that would require payment of royalties to the creators of visual art when it is resold at public auction. The bill, American Royalties Too (ART), is less generous than its stalled predecessor – reducing the rate from 7% to 5% and adding an overall cap of $35,000 – but may gain momentum from a December report from the Copyright Office supporting resale royalties. California’s royalties bill, recently declared unconstitutional in federal court, may offer useful lessons for how not to implement the policy.

STATE AND LOCAL

Tom Finkelpearl, head of the Queens Museum and former director of NYC’s Percent for Art program, will be the city’s next cultural-affairs commissioner. Among his innovations at Queens, Finkelpearl hired a community organizer to build ties between the museum and the borough. Mayor de Blasio used the announcement to wax lyrical about the importance of access and the power of the arts to strengthen neighborhoods; we’ll get a sense of how this translates into arts policy when his capital budget is released in a few weeks.

The city of Atlanta has proposed an ordinance that would make it much more difficult to display public art on private property- or “areas of private property which are visible from the public right of way or other public spaces.”

And how’s this for a nonprofit/for-profit smackdown? Maryland’s General Assembly, eager to keep production of Netflix’s political drama House of Cards in the state, tried to swipe $2.5 million from the state’s arts fund to secure additional tax credits for filming. Lawmakers argued the decision came down to simple economics, claiming the show “contributed $250 million to the economy and 6,000 jobs during the past two seasons.” (Too bad the research on the economic impact of tax incentives for film and TV suggests those benefits are less attractive than they seem.) In the end, the legislators held firm – or maybe they just didn’t have their act together – and now, we’re all waiting to see whether a change of venue is in the cards for House of Cards.

(Update: According to an email newsletter from Americans for the Arts, the $2.5 million did end up getting transferred from the arts fund after all. “Governor O’Malley originally allotted $7 million in his budget proposal, which then grew to $11 million.  The amount proved to not be enough….To raise more money, the General Assembly authorized applying the Special Fund for the Preservation of Cultural Arts, a fund of $2.5 million on reserve for supporting local arts organizations, toward film incentives. The Senate pushed for the amount to be raised to $18.5 million and requested $3 million from the general fund, which the House rejected. The final agreement stood at $15 million.”)

INTERNATIONAL

Lots of news from Britain this time around: Maria Miller, the UK Culture Secretary whom some accused of not being especially interested in culture, has resigned amid a scandal over her expenses. She will be replaced by Sajid Javid, the current Treasury Financial Secretary. As the EU eases copyright law to make it easier to transfer purchased music from one of your personal devices to another, most countries are simultaneously levying a tax on device manufacturers; the money would go to a fund to support young musicians. In Britain, the potential tax is being fought strenuously by manufacturers. Meanwhile, the UK has closed a tax loophole on domestic music, book, and app purchases; the move could raise as much as half a billion dollars, which retailers may pass on to consumers. In more local news, the Mayor of London has released a revised cultural strategy, which includes support for smaller arts organizations and your friendly neighborhood busker.

Italy has pledged to spend €135 million to restore 46 heritage sites in the southern portion of the country, following an earlier distribution of €222 million last September. On the other side of the Adriatic in Athens, the Greeks are not so lucky: their cash-poor government is thinking about selling off public landmarks near the Acropolis to private investors. Protestors have been staging angry demonstrations to tell the pols to leave their built heritage alone.

Good news for Dubai’s 137 million metro riders: now they can add a little culture to their wait.  Thanks to a new public art project launched by the Prime Minister of UAE, four metro stations throughout the city will be transformed into museums.

And the government of South Korea is digging a little deeper into cultural exchange through a new project set to introduce Korean culture into emerging markets around the world. The NEXT Project to Dispatch International Cultural Exchange Experts by Region sends staff abroad as both representatives and students of the host cultures and are responsible for managing each regional Culture Centre.

JUST ABOUT EVERYWHERE

Finally, the entire Anglophone world suddenly seems to be slashing taxes on live performance. New York State passed a theater tax credit to induce Broadway producers to prepare for touring shows upstate. (Producers and tour operators had lobbied for the incentives, which are already offered in states like Illinois, Louisiana, and Rhode Island.) Within days, Senator Charles Schumer proposed a more ambitious national tax rebate of up to $15 million per production – benefits already extended to film and TV. Both initiatives appear to be driven by the Broadway League. Meanwhile, the UK opened a consultation period for its own plan to provide generous credits for live performing arts; the exact policy objectives of the subsidy remain unclear. This last plan opens out into the world: as long as at least a quarter of the expenditures are in Europe, costs may be incurred in any country.

Photo by vancouverfilmschool. Some rights reserved.

About a year ago the New York Times ran a series of articles on corporate tax breaks, complete with a web-accessible database of state tax incentives for businesses. All in all, the Times discovered 1,874 state and local incentive programs that give out a combined $80.4 billion to corporations each year. To put those figures in perspective, the tax breaks doled out by Oklahoma and West Virginia are worth about one third of those states’ entire budgets. Manufacturing is the most highly subsidized industry, receiving about $25.5 billion in tax breaks annually, followed by agriculture and oil, gas, and mining. Fourth on the list? Surprisingly, it’s the motion picture industry, which nets about $1.5 billion in state and local tax credits per year.

What’s behind this $1.5 billion tax rebate for filmmakers? While industries such as agriculture have been subsidized for decades, state and local tax credits for film productions are relatively new. Louisiana was the first state to introduce such an incentive in 1991, and other states were slow to follow suit. Only four states offered incentives to movie producers in 2002, but once the idea caught on it spread like wildfire, and by 2010 forty-four states offered some form of incentive to filmmakers. The specifics vary from state to state, but typically the financial incentives (for which TV productions, industrial videos, commercials and sometimes even video games are eligible) consist of some combination of tax credits, cash rebates, employment rebates, sales tax and lodging exemptions, and fee-free use of shooting locations. In order to qualify, productions must generally satisfy certain conditions, such as spending some percentage of their total budget locally, shooting a certain percentage of the footage in-state, employing a certain quota of local residents, or exceeding a minimum amount of in-state spending. In addition, some states require that the action of the films take place in a local setting or even demand that the film depict their state in a positive light in order to qualify for tax credits.

To be clear, the film industry isn’t supported out of any particular concern for cinematic art, nor are politicians incentivizing the production of films because they think we’d be better off as a society if we had more movies and TV shows to watch. As is the case with many other corporate tax breaks, the main reason for offering tax credits for filmmakers is simply jobs, jobs, jobs. State officials don’t particularly care if a company is making movies, auto parts, or toothpaste—if it has the potential to create a lot of jobs for local residents, officials want those jobs in their legislative district rather than someone else’s. They are willing to dangle tax breaks as bait on the assumption that the jobs created by the firm will bring more money into the local economy than the government will lose by providing the tax break.

So how effective are the tax incentives for film and TV productions in generating jobs and/or revenue? That depends on whom you ask. Or who funds the research you’re looking at.

The ROI of film tax credits

Reports funded by the Motion Picture Association of America (MPAA), the main lobbying arm for the movie industry, consistently show a positive return on investment for state treasuries. For example, a recent study of the New York State Film Production Tax Credit commissioned by MPAA found that “for every $1.00 of credit distributed, the State and City received a combined $2.23 in taxes.” In Florida, a research firm that was hired by MPAA found that $118.7 million in tax credits yielded $140.44 million in 2011/12, for a more modest return of $1.18 to the dollar.

By contrast, a recent report on Louisiana’s Motion Picture Tax Credit by the State Auditor found that the state supported the film industry with $196.8 million in tax credits and only received $27 million in additional taxes in return (about $0.14 for every dollar spent), and the Massachusetts Department of Revenue found its return to be only marginally higher at $0.16 per dollar spent. A 2011 article by the Tax Foundation lists several other studies by state agencies and a few that were funded by MPAA exhibiting the same discrepancies.

How do these studies arrive at such vastly different numbers? To get some insight into this question, we can take a look at two conflicting reports on Massachusetts’ Film Industry Tax Incentives that were published this year: one by the Massachusetts Department of Revenue (mentioned above) and the other by HR&A Advisors for MPAA.

* This is not explicitly reported as the number of jobs created, but is implied by the statement, “Massachusetts motion picture production employment increased 46.1 percent from 1,630 jobs in 2006 [the year the tax incentives were introduced] to 2,380 jobs in 2011.”

As far as I can tell, the disparity, most notably in the estimated economic impact, results primarily from the following differences in the models and their underlying assumptions:

• Opportunity costs: Since the state is required to maintain a balanced budget, the Department of Revenue assumes that any incentives that are provided to the film industry have to be paid for by saving money somewhere else in the budget. So instead of just calculating the positive effect that the tax credits have on creating jobs, their analysis factors in the number of jobs that will be lost in other areas of the state’s budget due to cuts. Of course, these cuts have negative ripple effects throughout the economy just as the newly created jobs have a positive impact. By contrast, the MPAA report only looks at the positive effects of the new jobs that are created.
• Wages paid to non-residents: Both reports acknowledge that some of the jobs that are created by film and television productions in Massachusetts will be held by people whose primary residence is in another state; however, the manner in which the studies correct for that varies considerably. The MPAA report merely exempts “individual employee salaries over $1 million, as it is assumed the majority of these employees are non-residents, so multiplier effects associated with this spending are not realized within the Commonwealth.” The Department of Revenue similarly excludes all payments to recipients earning more than $1 million per production, but in addition it excludes 95% of all other wages paid to non-residents. The rationale is that most of the lodging, food, and incidental expenses for non-resident employees are paid for by the production company, so that only a small portion (estimated at 5%) of the non-resident workers’ paychecks gets spent in-state.
• “New” spending vs. total spending: The Massachusetts Department of Revenue is careful to exclude the production of TV shows and commercials that would have been produced in-state even in the absence of the incentives. This wasn’t of great consequence in 2011 (the latest year included in the study), since $174.6 million of the $176 million spent on TV and movie productions was deemed to be “new” (i.e., induced by the tax credit). However, in 2010 41% of the total film production spending ($29.5 million out of $71.6 million) would have been expected to take place in Massachusetts even if no tax credit had existed. (The large difference between 2010 and 2011 was attributed to the discontinuation of some long-running TV programs that were produced locally). The MPAA study doesn’t factor pre-existing film production into the equation, preferring to attribute all of the current film production activity to the incentive.

Despite the considerable differences between the studies’ findings and their disagreement about whether the incentives produce a net benefit for the state treasury, everyone agrees that the tax credits have a positive impact on the economy. For example, the 2013 audit in Louisiana found that every dollar of film tax credits resulted in $5.40 in economic output. However, that’s not really saying much, since almost any form of government spending is likely to have a positive impact on the economy. The question is how the impact of the tax credits compares to other things the state could have done with the money.

What about those jobs?

As mentioned above, in most cases the objective of these tax incentives isn’t necessarily revenue generation but job creation. Are film tax credits efficient means of creating jobs? One way to consider that question is how many tax dollars are being spent for each job that is created. According to the Department of Revenue, Massachusetts’s taxpayers had to fork out $128,575 in tax credits for each job that was created in the film industry in 2011. Seeing as the median wage for jobs created by the film industry in Massachusetts was $70,657, that doesn’t seem like a very good deal. The state could have employed almost twice as many people at the same income level if it had simply hired those people directly, instead of subsidizing motion picture companies. The picture looks somewhat better if one uses MPAA’s numbers, but it’s still not great. Assuming (generously) that all of the jobs that were created by TV and film productions between 2006 and 2011 can be attributed to the tax incentives, 750 jobs were created in 2011 at a cost of $37.9 million. That comes out to $50,533 in state spending for each new job. So even using MPAA’s more favorable numbers, it seems that the state paid more than two thirds of the wages for the film industry’s new employees.

Film-induced tourism

One factor we haven’t considered yet is the effect that film and television may have on tourism and the public perception of the locations where they are produced. There are certainly a number of cases in which blockbuster films have led to significant increases in tourism, as The Lord of the Rings trilogy did for New Zealand. And once local residents get past the street closures, traffic delays, and general nuisance that come with a major movie shoot, I’m sure many would agree that there’s some excitement in spotting Hollywood celebrities at local restaurants. There’s also some satisfaction to be gained from recognizing familiar landmarks on the big screen when you see movies that were shot in your hometown. In that sense, local film productions may promote a sense of pride in and attachment to a location, so that tax credits could be justified on the basis that they improve the quality of life for local residents. If nothing else, they give them something to talk about.

Both the tourism and public opinion arguments are valid reasons to support tax incentives for movies. It therefore seems appropriate that MPAA includes film-induced tourism in its recent reports on state tax incentives (in Florida and Massachusetts); however, the measurement of this effect remains problematic. Having consulted twelve representatives of Florida’s tourist industry, MPAA figures (conservatively, it claims) that 5% of all tourism in the state can be considered film-induced tourism and can therefore be added to the economic impact of the film tax incentives. The MPAA-commissioned study of Massachusetts’s film tax incentives uses a different methodology that was employed to assess the value of New Zealand’s exposure in the Lord of the Rings and Stockholm’s exposure in the Millennium trilogy. This approach equates each recognizable shot of the location where the film is set with the publicity that is achieved by a 30-second paid advertisement for the destination on primetime television. The cost of purchasing enough airtime on television to reach an equivalent number of viewers is then assumed to be the value of the advertising that the film provides for the location.

However, if tourism is the objective, the tax credits shouldn’t be granted to all movies indiscriminately. Only those that showcase the location prominently and identifiably should be eligible. I wouldn’t doubt that ABC’s Nashville is having a positive effect on the psyche of that city’s residents as well as on tourism and the local economy. As the assistant commissioner of communications and creative services for the Tennessee Department of Economic and Community Development noted, “You’re not only getting the 20-plus episodes per season”: every advertisement and preview for the TV show is essentially advertising Nashville. By contrast, it’s hard to imagine how shooting Homeland in Charlotte, NC, would do much to increase public awareness of North Carolina’s attractions, given that the show is supposed to be taking place in Washington, DC.  Incentive programs that require films to be set in-state and/or depict the location in a positive light make a lot of sense from this perspective (though the latter condition may seem dangerously close to censorship).

So where does that leave us?

In December, the Bureau of Economic Analysis, which among other things is responsible for determining our nation’s Gross Domestic Product, for the first time released a calculation of the economic value of the arts and cultural production in the United States. According to the BEA, arts and culture contributed $504 billion to our GDP in 2011. To put that in perspective, that’s almost twice the $289.9 billion generated by mining (which includes all oil and gas extraction). The motion picture industry alone added $83.2 billion to the US economy, which, believe it or not, is more than the total value added by automobile manufacturing. The motion picture industry has long been touting its economic significance to argue for more favorable tax treatment, and these latest numbers will only bolster its case.

Yet critics of film tax credits claim that these policies do nothing to stimulate the economy and merely pit states against each other in a race to the bottom. Even some people within the movie industry acknowledge that if the tax credits are the only thing that a certain location has going for it, business will likely move somewhere else as soon as the financial incentives are rolled back or some other state offers even bigger tax breaks. Once the states have foregone all tax revenue from movie producers in the rush to compete with other locations, the playing field will once again be even and the industry will settle where it was to begin with—the only difference being that the production companies no longer pay taxes and state budgets are even tighter than before.

I haven’t found any data to indicate whether or not the incentives are increasing due to competition between states, but from a theoretical perspective the race-to-the-bottom argument is compelling. Even if one believes the MPAA studies that show a positive return on the states’ investment, if the states keep raising their tax incentives to compete with their neighbors, the public benefits of attracting motion picture productions will eventually approach zero.

In the material I’ve reviewed for this article, there is little to suggest that the current incentives offered by state and local governments are optimal in any sense. I have yet to come across calculations that show that a certain level of tax incentives creates the greatest number of jobs per tax dollar forgone. So why do some states offer 15% tax rebates while others offer 20%? Are the expected returns really higher in some states than others, justifying the additional investment? Or are the higher tax incentives necessary in states where the conditions for filmmaking are otherwise so poor that no producers would go there if the rates were any lower? Since I haven’t been able to find a convincing rationale for the levels of the tax credits, I assume the levels are indeed set according to inter-state competition, which is consistent with the race to the bottom scenario. If that’s the case, I’d say it’s a poor justification for public spending. (This situation isn’t unique to the motion picture industry, by the way. The same doubts about inter-state competition and the race to the bottom hold true for all sorts of corporate tax breaks that try to bribe corporations into setting up shop – or keeping current plants open – in particular locations.)

So how might we improve the current system of incentivizing film and TV productions? Even if the economic argument offered up by MPAA doesn’t hold—and, personally, I’m inclined to believe the governments’ internal audits that show a net loss for the states—I don’t think one must abandon the idea of incentivizing motion pictures entirely. The system might just need to be improved to target those productions that are likely to generate the greatest public benefits.

The fact is, the current tax credits already target specific types of motion picture productions. Minimum requirements for the production budget and/or the amount of money that is spent in-state are presumably designed to ensure that the tax breaks go to big-budget productions that will employ a lot of people. The large corporations behind those productions are the ones most likely to respond to incentives, moving their operations to whichever state offers the lowest costs, whereas a small film production company in Massachusetts is likely to work in Massachusetts whether or not the state offers any incentive. However, for that same reason one might argue that the large corporations are precisely the wrong place to invest public money: they operate nationally (or internationally) and will fly in people from around the world to work on the production, so relatively few of the jobs created will go to local residents. Furthermore, as soon as another state offers bigger tax rebates, they’ll pack up shop and move there. Any spike in economic activity from a big-budget production coming to town is therefore likely to be short-lived. Wouldn’t it be better to give the tax breaks to smaller firms whose production budgets are too modest to fly in talent from out of state? Those productions might not hire a whole lot of people, but at least the paychecks will be going to local residents, and if the production does well and the company grows, that growth will happen in-state.

The one argument that does work in favor of giving tax breaks to big budget productions is their ability to reach a wide audience and potentially increase tourism or improve public opinion of a certain location. In order to fully endorse this approach, I’d need to see more credible research on the economic value of the exposure that shooting locations receive, preferably coupled with a greater capacity to predict which films are going to have a significant impact in that regard. As tempting as it is to reduce the conversation about film tax credits to a simple thumbs-up or thumbs-down, it would be smarter to consider how to determine which productions to incentivize with tax credits and where such tax expenditures would be wasted. That’s speaking from the perspective of job creation, of course. If the objective were to improve the quality of cinematic art, an entirely different set of selection criteria would be necessary.

More than nine months after former chair Rocco Landesman announced he was stepping down, the search for a new National Endowment for the Arts chairperson has stalled – just in time for the fall budget debates to ramp up in earnest. Sphinx Organization founder and president Aaron Dworkin confirms in the article that he was one of the candidates considered for the position earlier this year. Former NEA Senior Research Officer Joanna Woronkowicz tells us not to worry about the delay. Meanwhile, remember that kerfuffle last year about how Kickstarter was on track to provide more funding for the arts than the NEA? Well, not that this is a surprise, but by now it’s actually happened.

The United States cut off its support of Unesco in 2011 after the international cultural agency recognized the Palestinian Authority as a member nation. The measure was required by U.S. law, but was never supported by the Obama administration, which is now trying its darndest to be supportive of Unesco anyway.

STATE AND LOCAL

At long last, we have had a good year for state arts agency funding. With the economy rebounding and the pall of uncertainty lifting over state budgets, a number of arts councils have managed to claw back a measure of compensation for the dramatic cuts endured over the last four years, though there is still a long way to go. State arts budgets in the aggregate are up nearly 11% or $30 million, the largest nominal dollar increase in over 13 years. Notable success stories from this fiscal cycle include:

• Texas, whose Commission on the Arts got nearly double its appropriation from last year;
• Delaware, which received $1.6 million for a new Arts Trust Fund to provide general operating support for large institutions;
• Arizona, which eked out $1 million in general fund appropriations for its Commission on the Arts for the first time in three years;
• Florida, continuing its climb back to relevance with $5.7 million in new funding, mostly from line items;
• Michigan, also continuing a remarkable climb back from near-death with the second year in a row of multi-million-dollar increases;
• and South Carolina, whose arts commission defeated a gubernatorial veto for the fourth time in four years and on top of that got a hefty 52.4% increase.

California arts advocates did not succeed in dramatically changing the landscape for the California Arts Council, but at the last moment Assembly Speaker John Perez ensured a nearly $2 million increase to the agency’s coffers, bringing California out of the cellar as the cheapest state supporter of the arts on a per-capita basis. Other states with notable increases included Arkansas, Colorado, Illinois, Maryland, Massachusetts, Minnesota, Montana, Ohio, Utah, and Vermont.

Not all the news was good for state arts advocates, though. The Kansas Creative Arts Industries Commission, only a year after coming back from being the first state art agency to be vetoed out of existence, has now been slashed almost entirely to the bone again with a paltry appropriation of $200,000, the lowest in the country. Arts councils in Tennessee, Louisiana, Rhode Island, Connecticut, West Virginia, and Wyoming also endured double-digit cuts.

In other state news, a tale of two tax policies: Rhode Island is eliminating taxes on the sale and purchase of artwork, while North Carolina is introducing a new 4.75% “privilege tax” for “admission charges to any live performance or event, any movie screening, any museum, cultural site, garden, exhibit, art show or guided tour.” The North Carolina tax applies to both nonprofit and commercial groups but carves out a number of confusing exemptions for certain festivals, state-supported museums, etc.; basically it sounds like terrible legislation. With that kind of environment, it will be interesting to see if the state extends its sunsetting film tax credit beyond 2014.

INTERNATIONAL

My goodness, the blows just keep coming for arts funding in England. The cuts to Arts Council England over the past few years were bad enough, but it turns out that local funding for the arts will fall another £124 million next year, even though local government budgets in general are up!  Better to be an artist in Britain than Portugal, however, which eliminated its ministry of culture two years ago and shows what happens when you pull the rug of government funding out from under a society that has no tradition of private philanthropy.

The giganta-budget West Kowloon Cultural District Authority in Hong Kong is running into trouble, with construction costs (surprise!) almost double the amount originally planned. The authority has decided to postpone seeking an additional $3.2 billion (I told you it was giganta-budget) payment from Hong Kong’s Legislative Council, presumably until things are in better shape.

Three profiles of new/new-ish culture heads: in Canada, Shelly Glover is settling into her new role as Minister of Canadian Heritage and Official Languages; in France, embattled French Culture Minister Aurélie Filippetti presides over $3.2b in government spending on culture, which is down 2.8% from last year. France also has gone ahead and ended the “three strikes” provision of its copyright enforcement policy. Finally, Ines Abdul-Dayem is the new culture minister for Egypt. She has quite a story: earlier this year, she was dismissed from her post as head of the Cairo Opera House along with many other cultural officials by Alaa Abdel-Aziz, the man she is now replacing. In June, though, “artists stormed the Ministry of Culture and began an open-ended sit-in to demand the removal of the [now former] minister and the revocation of his decisions.” Shortly thereafter, following the ouster of president Mohamed Morsi, Abdel-Aziz resigned his position.