Under its former director, the San Francisco Arts Commission failed to properly track spending and had a fearful workplace, according to a city controller’s audit released Tuesday.

The report lays bare financial and management problems that festered in the $10 million city agency under Luis Cancel, former director of cultural affairs. Appointed by Mayor Gavin Newsom, Cancel resigned this summer when he came under fire for clocking in from Brazil and mistreating staff.

[…]

Among other conclusions, auditors found that the Arts Commission was spending money that violated the city’s reimbursement policies – money held in accounts by Intersection for the Arts, the commission’s nonprofit fiscal sponsor.

(Wait, did I just read that right? The San Francisco Arts Commission, an agency of city government, was using one of its own grantees as a fiscal sponsor? Nothing against Intersection, which does great work, but…huh?!)

Anyway, things just get more bizarre from there. According to the audit in question:

Surveyed employees consistently reported that they did not feel that they could report misconduct or a human resources issue without retaliation. Over one-third (35 percent) of respondents indicated that they felt that staff could not report misconduct without fear of retribution. One response stated, “I certainly don’t feel safe or comfortable lodging a complaint,” while another stated, “historically, we’ve all been terrified of retribution (since 2008) because we all witnessed it in action.”

[…]

Employees reported little to no relationship between the duties they perform and those in their official job classification descriptions. A large majority (62 percent) of respondents indicated that job classification specifications often do not match the employee’s responsibilities and workload. For instance, one response identified a case in which a person hired as an intern continued to work for SFAC for over three years, taking on responsibilities that far exceeded those of an intern, with no change in classification or compensation to reflect the increased responsibilities.

Yikes! So when I tell you that there’s a huge uproar in the San Francisco artist community about the San Francisco Arts Commission, you gotta figure it’s about the gross financial and employee mismanagement of the previous administration, right? Think again.

Among the [audit’s] 12 recommendations, two, dealing with the Cultural Equity Grants (CEG) program, are the most controversial. They say that the program should:

• Cease funding and administering four of its eight initiatives, on the grounds that the program’s enabling legislation authorizes only the “Cultural Equity Initiatives Program (CEI), a Program for Commissions to Individual Artists (IAC), the Project Grants to Small and Mid-size organizations (OPG), and the Facilities Fund (CRSP). The other four are recommended for elimination because they are not cited by name in the city Administrative Code: Native American Arts & Cultural Traditions (NAACT), Innovations in Strengthening the Arts (ISA), Arts & Communities: Innovative Partnerships (ACIP), Arts for Neighborhood Vitality grant categories (ANV)
• Ensure that no recipient receives more than one grant at a time, on the grounds that 14 of the 172 grant recipients received multiple grants in FY 2010-11. The guidelines say no recipient may receive more than one grant for the same project, but the Controller finds “some risk that the same recipient may use multiple grants for one project” sufficient grounds to limit eligibility further. Over the last five years, the Galeria de la Raza, a long-lived and highly respected, Latino visual arts organization deeply rooted in San Francisco’s Mission District, received 12 grants totalling just under $237,000, an average of $47,000 a year.

That’s from an article last week by Arlene Goldbard, a Bay Area blogger and longtime champion of the community arts. Her lengthy and excellent post goes on to defend with great passion the CEG program, which despite its small size has been an important national model in reaching immigrant and other underserved communities through arts funding. To Arlene and others in the California arts community who have been contributing their opinions on the anonymous pop-up blog Cultural Equity Matters, the Controller’s audit, which was ostensibly intended as a means of helping SFAC clean up its act, is only making things worse. Artist Guillermo Gómez-Peña goes so far as to call the report a “racist” attack on community arts funding, and even Goldbard criticizes the report for seeming “to have been written by a computer—or human beings impersonating a computer’s pristine disinterest in human events” and “respond[ing] with bureaucratic solutions that would be identical for any city agency, whether it regulated a fleet of trucks or cleaned the streets.”

I’m not in the middle of this thing, and I can’t speak to the motivations of those who instigated the inquiry. From a disinterested vantage point, though, my sense is that some of the criticism being leveled against the Controller’s audit is unfair. Sure, it’s bureaucratic; but look, these people are accountants. That’s like criticizing the San Francisco Mime Troupe for not properly considering the upsides of corporate personhood. On first glance it does seem strange that CEG is singled out, but given that it’s SFAC’s only major competitive grant program it’s perhaps not that surprising. I do think there’s a legitimate argument to be made about whether the audit should have sought to micromanage program operations at all, but once you get into considering specific financial transactions I can understand how it would be hard to know where to draw the line. In any case, the good news is that nowhere in the audit do the authors make a normative statement that CEG as a whole should get less funding, or that the specific organizations receiving multiple grants from CEG did anything wrong; it’s pretty focused on some narrow technical and legal concerns about how the program is operated and administered.

After initially saying that she supported the report’s recommendations (including eliminating those four “illegal” grant categories), interim director JD Beltran has sought to quiet the storm, publicly standing behind CEG and promising that no funds will be cut from the program (emphasis in the original):

The SFAC’s responses to the audit indicated that all programs will be made legally compliant.  It is most important to note, however, that our responses in no way indicated that any funding to the community through our grant programs would cease or decrease.…The report does not suggest or dictate agency policy, it simply recognizes shortcomings in certain agency fiscal, administrative, and staffing practices, and its findings also observed issues in the Cultural Equity Grants Program.

The SFAC remains steadfast in its mission, policies, and full support of its highly valued programs, and especially its groundbreaking Cultural Equity Grant Program.

So at this point, it looks like CEG is likely not in any real danger; that’s the good news. The bad news (although it may ultimately be for the best) is that this whole debacle has laid bare some things about cultural funding in San Francisco that are not, well, so equitable. The Cultural Equity Grants program gave out less than $2.4 million to 172 recipients in the most recent fiscal year, according to the report, or a bit under $14,000 per organization. By contrast, according to Goldbard, the San Francisco Symphony and Opera each received over $600,000 in government funds in the last fiscal year alone through San Francisco’s other city arts program, Grants for the Arts. On top of this, SFAC has an annual contract with the Symphony to “produce a concert series that is intended to appeal to youth, families, and the diverse demographics of the City.” It turns out that in FY11, the size of this contract ($2 million) makes up nearly a quarter of the Commission’s annual budget, and represents almost as much money as that spent on the entire Cultural Equity Grants program!

The dustup with the Arts Commission takes place at a time when cultural equity has been occupying, if you will, a large chunk of the national conversation about the arts, ever since the publication of Holly Sidford’s report Fusing Arts, Culture and Social Change. Grantmakers in the Arts even has a whole blog salon going on about it right now. I’m not suggesting that the concerts that the City of San Francisco produces with the San Francisco Symphony are unworthy of public funding, or that $2 million is not a reasonable amount to pay for the Symphony’s services; I have no reason to make such presumptions. But it does seem to me a perfect example of how large-budget, historic cultural institutions have privileges of access at their disposal that few arts organizations founded within our lifetimes (including, therefore, hardly any organizations founded by or primarily serving racial and ethnic minorities) could ever dream of. Sure, Galeria de la Raza got 12 grants in 5 years from SFAC. But most of those grants had to be won with the approval of a panel of fellow citizens, with panel discussion taking place in public (CEG has one of the most radically transparent review processes in the country; see page 11 of the pdf). The San Francisco Symphony, to my knowledge, does not have its contract up for public review by a panel of citizen peers every year. It just gets the money.

There’s a bit of a chicken-and-egg issue with such things. The SFS offers world-class artistic programming. Of course the city should be honored, grateful even, to be able to offer that programming for free to its citizens, especially people who are less likely to take in the orchestra’s regular subscription series. But here’s the thing: the Symphony is able to offer that world-class programming in large part because it offers its artists and administrators a lot of money to come from around the world to San Francisco. And it’s able to offer people that kind of money in large part because, like the marquee orchestra in every city, it has friends in high places.

I’ll end with this rant from Maria X. Martinez, posted on the aforementioned Cultural Equity Matters blog:

[T]his report points out 2 small grants (we are talking very small) that do not use peer review…really? In my 15 years of civil service, I have only seen one department employ an open peer review: the SF Arts Commission. Hundreds of millions of dollars in grants are awarded by CCSF without one peer at the table, and we put a light on the tiny-by-comparison small grants within the Cultural Equity Endowment Fund? How many peers were at the table when deciding to bail out and guarantee to keep the Asian [Art] Museum afloat with a $99 million loan this year? […]

Would not our brain trust…be better spent by auditing WHY La Galeria, for example, has to spend their extremely limited, precious time and energy to apply for 12 small grants over the course of 5 years (not to mention the overhead for SFAC to award and administer those same small [12] grants)? This study chooses, rather to focus on a very small percent of organizations for a very small amount of money who are awarded by their peers (!) because they are deserving.

Oh dear, we must get our priorities straight.

[UPDATE: The San Francisco Arts Commission staff has released a statement in support of the Cultural Equity Grants program.]

MUSICAL CHAIRS

• Steve Gunderson is stepping down as CEO of the Council on Foundations.
• Social justice groups are freaked out that the previously-reported departure of Gara LaMarche from Atlantic Philanthropies will mean less money for social justice.
• Will Miller is the new President of the Wallace Foundation.
• Luis Cancel is out as head of the San Francisco Arts Commission. There’s apparently some intrigue around this one, as Cancel was under pressure for his treatment of staff and for working too much from home – his second home, that is, in Rio de Janeiro. Vice President JD Beltran has been named interim director.
• Congratulations to Arts Council for Long Beach Executive Director Craig Watson, who has been announced as the new director of the California Arts Council. Culture Monster has more.
• The Joyce Foundation in Chicago has a new senior program officer for culture: Angelique Power. Power replaces Michelle T. Boone, who left earlier this year to become the new commissioner of the Chicago Department of Cultural Affairs.
• Dave Dombrosky is no longer the executive director of the Center for Arts Management and Technology at Carnegie Mellon University, proprietors of the Technology in the Arts blog.
• Finally, a special thanks to Grantmakers in the Arts, from whom I get most of my foundation personnel announcements. Tommer, Steve, Abigail, and Janet have seriously been doing a great job over there this year.

ART AND GOVERNMENT

• The NEA has announced the inaugural round of Our Town grants. Rocco’s signature program got an extra $1.5 million in the end despite midyear cuts to the agency, and a total of 51 awards were announced rather than the 35 originally anticipated.
• In a new partnership with the Knight Foundation, the NEA is funding a new arts journalism challenge grant program. On the NEA’s Art Works blog, Kerry Lengel offers a post-mortem on the recent pop-up journalism experiment Engine28.
• Unfortunately, the NEA’s funding is being chipped away at again by the committee in the House of Representatives that controls appropriations. They’re now looking at $135 million for FY2012, which would be the largest cut in 16 years. Not only that, Congresscritters are now trying to micromanage the NEA’s awards programs. There’s still time to act.
• Finally, some good news from the states on arts agency appropriations: Ohio is looking at a 30% increase, Pennsylvania avoided a drastic cut, and in New Jersey a Republican governor actually removed budget language that would have reduced appropriations by a further 27%. ARTSBlog has the skinny, and the National Assembly of State Arts Agencies looks at the big picture.
• Wise words from Think Progress’s Alyssa Rosenberg, in response to those who might think fighting for public arts funding isn’t worth the trouble: “If you’re thinking strategically about the long-term argument between progressive and conservative worldviews, it’s conceding a lot of ground to walk away from programs where government investment is small as long as we think it might still be useful.” Alyssa has been doing the yeoman’s work of looking up the arts records of each of the 2012 Republican candidates or potential candidates for President. I wish there were more of interest to report, but basically they all suck for the one-issue arts voter (of which there are, like, dozens I’m sure). If Mike Huckabee were running, it’d be a different story. Anyway, here are Alyssa’s profiles of Mitt Romney, Michele Bachmann, Jon Huntsman, Sarah Palin, Herman Cain, Tim Pawlenty, Gary Johnson (who?), Ron Paul, Rick Santorum, and good ol’ Newt Gingrich. (Speaking of Alyssa, she kindly picked up our Createquity Arts Policy Library block party and offered some commentary.)

ARTS POLICY ACROSS THE WORLD

• Arts Council England unveils a plan to increase private giving to the arts in the UK.
• Simon van den Berg gives a great first-person perspective on the why, how, and what it’s like of recent cuts to arts funding in the Netherlands.

GIVING NOTES

• Alec Baldwin takes to ARTSBlog to talk about a giving campaign from CapitalOne to support Americans for the Arts. I was impressed to read that CapitalOne is actually including an insert with the monthly statement (with him on it) to get the word out.
• Phil Buchanan notes that foundations can’t expect grantees to measure effectiveness without help.
• The fact that the Gates Foundation has a philanthropy program is news to me, but it’s welcome news. Gates’s Darin McKeever posts on Tactical Philanthropy about an 18-month planning process for the program as well as the directions in which it is heading (part I; part II).
• There’s a new Awesome Foundation chapter in Seattle, and this one features Grantmakers in the Arts Deputy Director Tommer Peterson. Read all about it here; the blog is worth reading for other reasons as well.

ETC.

• Wondering what a millennial generation’s approach to dealing with our budget deficit would look like, since they’re the ones who will be most affected by it? The Roosevelt Institute and Peter G. Peterson Foundation did too, and convened a gaggle of 18- to 26-year-olds to come up with a plan (which has been scored by the Congressional Budget Office). Freakonomics has the details here; from the highlights, it sounds center-left and quite sensible.
• Chad Bauman points out differences in how nonprofit and commercial arts organizations approach dynamic pricing.
• Over at Technology in the Arts, Createquity Fellowship alum Crystal Wallis walks us through some examples of participatory performing arts.
• Alex Ross finally weighs in on the NYC Opera meshugas, which seems to be getting uglier by the day. My take: I don’t know that NYCO has much choice but to move from Lincoln Center or drastically change its union contracts, given the disastrous financial situation that George Steel inherited from Gerard Mortier and Susan Baker. I have a great deal of respect for Steel, but he does seem to be losing the PR war, which is an important leadership task. I suspect it would help matters greatly if there were a clearer, longer-term artistic vision expressed than what has been shared to date – and if Steel offered to take a (temporary) pay cut.
• Want.