ART AND THE GOVERNMENT

• This is pretty much the most creative cultural tourism gambit ever.
• The Michigan House approved a plan to contribute $195 million in state money to the “grand bargain” to save the Detroit Institute of Arts from the city’s creditors; this money would join the $366 million pledged by foundations, $100 million pledged by the museum itself, and possible funding from union groups. Some creditors still reject the deal, although the judge overseeing the proceedings has refused their request to remove and appraise every painting in the collection.
• “National and local governments don’t take decisions about arts funding based on evidence, however convincing it is.” The Guardian argues that our only hope for better public funding is to create “the kind of solid public support that makes cuts politically dangerous or, even better, unthinkable” through closer ties to local communities.
• Score one victory for the arts lobby: after a vigorous campaign by organizations such as the League of American Orchestras, the Obama administration has carved out an exception for musical instruments in its new ivory regulations.
• Meanwhile, the FCC is accepting public comments on its latest proposed net neutrality rules, which would seem to allow internet providers to strike deals with content sites for faster service – deals akin to those that already exist with tech companies like Netflix, Google, Amazon, and Facebook. Given the Commission’s recent flip-flopping, there’s no telling where this will lead, and we may not know until after the next election. One thing we do know: the idea of America itself is at stake.

MUSICAL CHAIRS

• Peter Handler will be the new executive director of the Reva and David Logan Foundation, sponsor of the Logan Center for the Arts at the University of Chicago. Handler is currently the program director at the Richard H. Driehaus Foundation.
• Moy Eng, former director of both the Hewlett Foundation Performing Arts Program and Palo Alto’s Community School of Music and Arts, has been announced as the first executive director of the Community Arts Stabilization Trust (CAST), a real estate services provider for artists and arts organizations.
• John Horn, of the Los Angeles Times, will be the new host for an arts an entertainment program on KPCC, Southern California Public Radio.

IN THE FIELD

• Just a year after losing its highly respected director Deborah Cullinan to Yerba Buena Center for the Arts, San Francisco’s Intersection for the Arts has just announced a major restructuring that will result in the closure of several programs and the layoffs of key staff. And NPR is cancelling “Tell Me More,” a little-heard daily talk show aimed at minority audiences, and eliminating 28 jobs. The National Association of Black Journalists blames lackluster promotion efforts.
• The San Diego Opera lives! But along with a full 2015 season, the company has announced layoffs including 13 full-time staff. And now the auditor is calling.
• New York’s Metropolitan Museum of Art is planning to gut-renovate its modern and contemporary wing to make room for a major gift of Cubist paintings and potentially create a new entrance from Central Park. Is this another case of museum hubris?
• The plan to dissolve the Corcoran Gallery of Art has been finalized, with the collection going to the National Gallery of Art and other museums it chooses and the building and design school going to George Washington University.
• When you think of St. Louis, do you think of jazz? A $10 million expansion to Jazz St. Louis—to be called the Harold and Dorothy Steward Center for Jazz—hopes to make the two synonymous, establishing St. Louis as one of the top hubs for jazz in the world.
• Lower Manhattan is home to a new performing arts school. Thanks to three years of significant growth, Pace University’s performing arts program will become a school within Pace’s liberal arts college.
• Thanks to the lobbying efforts of Jonathan Safran Foer on behalf of all of those without enough to read, Chipotle cups will now be adorned with short texts by literary luminaries. Not everyone is enthusiastic.
• Those Colorado Symphony mile-high marijuana concerts are now invitation-only, due to an overlooked regulation banning toking up in public. The Denver Post’s music critic went and got blasted – I mean, had a blast.

ALL ABOUT THE BENJAMINS

• AT&T announced that it intends to buy DirecTV. The “media chessboard is moving more than it has in the past decade,” with Comcast’s February purchase of Time Warner cable and Sprint’s overtures to T-Mobile…
• … and reports that Apple is planning a major new foray into streaming music with an acquisition of Beats Audio and of co-founders Dr. Dre and Jimmy Iovine, though something is holding up the deal.
• Nearly four years after announcing a name change, a new mission, and a new grantmaking strategy focused on impact, Cincinnati’s ArtsWave (formerly the Fine Arts Fund) seems to be seeing results. The united arts fund raised a record $12 million for its annual campaign this year, helped catalyze last year’s creation of a new multidisciplinary arts festival drawing national attention, and is starting to form strategic partnerships with non-arts funders. Retiring CEO Mary McCullough-Hudson deserves a lot of credit for seeing this transformation through.
• The Hewlett Foundation’s Fay Twersky defends the decision to end the Nonprofit Marketplace Initiative as data-driven in the face of William Schambra’s accusation that a leadership change was the primary driver. Let’s hope this public debate doesn’t dissuade grantmakers from following Hewlett’s lead on transparency.
• The Metropolitan Atlanta Arts Fund has announced a new capitalization program, including its largest-ever grant of $200,000 to the Atlanta Contemporary Arts Center. The Fund created the program in response to research showing that even many of the city’s strongest arts groups were constrained by having only three months of financial cushion.

BIG IDEAS

• Is it time for foundations to embrace partisan politics instead of trying to remain above the fray? Writers for the Stanford Social Innovation Review think so. “Partisan conflict is not an external factor that advocates can work around,” they write. “It is the defining axis of American politics today, and funders must be unafraid to reckon with it.”
• The expansion of the Gates-Buffett Giving Pledge – a promise to give away at least half of one’s fortune – to include billionaires from around the world raises questions about different cultural attitudes toward philanthropy (in China, public or transparent giving is eschewed) and about the relative merits of the Big Philanthropy model vs the more distributed community foundation model of giving.
• Arts entrepreneurship aficionados, look out: Barry’s Blog has a stellar lineup, uh, lined up for a weeklong blogathon on the topic starting…today!

RESEARCH CORNER

• The National Academy of Sciences has hard numbers that show students learn better through hands-on activities than through lectures – at least when it comes to the sciences.
• Philanthropy Northwest reports on a year-long peer-learning project on diversity, equity, and inclusion efforts involving 10 foundation CEOs in the region.
• Corporate giving is up again, according to the Committee Encouraging Corporate Philanthropy’s annual tally.
• South Arts has released two research reports on arts education in the South. The first, a survey of nearly a third of all principals in the region, found among other things that Southern students have less access to visual arts and music than other American students but greater access to dance – with significant variation among Southern states. The second, case studies of nine strong arts education programs, found that the successful schools cultivated a shared vision of the arts, incorporated the arts into the core curriculum driven by state and national standards, and exposed students to working artists.
• Bringing the ability to make snazzy charts and tables to the masses, evaluators Stephanie Evergreen and Ann K. Emery have developed a data visualization checklist for the graphically challenged among us.
• In case you ever wondered about the correlation between per capita consumption of cheese and the number of people who die by becoming tangled in their bedsheets, Tyler Vigen has you covered.

• The IRS has proposed a new Form 1023-EZ, which would allow some smaller organizations to apply for tax-exempt status with much less hassle. The National Association of State Charity Officials has objected out of a belief that completing the longer form is an important educational experience and a fear that applications could skyrocket.
• A report from the R Street Institute argues that copyright terms, which have ballooned while patent terms have barely inflated, are so long that they are not only stifling to creativity but actually unconstitutional.
• With the recent passing of Cornelius Gurlitt, hoarder of over 1,000 works of art suspected to be looted from Nazis, the official investigation into the provenance of the artworks in his collection ended. Unexpectedly, Gurlitt bequeathed his trove to the Kunstmuseum Bern, reopening legal and ethical questions surrounding the new acquisitions.

MUSICAL CHAIRS

• MacArthur President Robert L. Gallucci will step down when his term expires on July 1. Julia Stasch, VP for US programs, will act as interim president while the board searches for a replacement.
• Jarl Mohn, chairman of Southern California Public Media and former MTV executive, is the new head of National Public Radio. Mr. Mohn has the enviable charge of pulling NPR out of its deficit, sowing harmony among member stations, and figuring out how to fundraise in the post-pledge drive era.

ALL ABOUT THE BENJAMINS

• The Knight Foundation has awarded Theaster Gates $3.5 million to transform an office space on the south side of Chicago into an incubator “where neighborhood residents will come together with artists, designers and urban planners to work on revitalization projects through art.”
• Reflecting on the Hewlett Foundation’s recent announcement of the end of its Nonprofit Marketplace Initiative, Tony Proscio wonders whether the funder pulled the plug too soon. Meanwhile, in another frank self-assessment, Hewlett undertook a field scan of evaluation spending and found room for improvement in its own practice, particularly regarding embedding evaluation strategies in the early life of programs. As a result, the foundation plans to up its evaluation spending from roughly 1.2 percent to 2.3 of its overall grant budget.
• Bad news for “cultured professionals” looking to buy art at auctions: the average price for fine art has doubled over just four years, leaving many to settle on prints. And in other art market news, between 2012 and 2013 online art purchases increased 83 percent. Total sales have finally exceeded $1 billion.
• Angie Kim summarizes the origins and history of the 5 percent payout rule for foundations and argues a variable payout rate, based on a foundation’s performance over 25 years, would better ensure that foundations’ wealth does not grow disproportionately to their support of the greater good.

IN THE FIELD

• The San Diego Opera’s financial situation is looking up: in the last two weeks, the organization has raised more than $1 million through a crowdfunding campaign and received a $500,000 matching gift challenge – although, in the other column, the city is expected to cut its funding for the opera by $223,000. The Opera’s new board leadership’s desire to save the company now has the vocal support of the members of the San Diego Opera Association and the solo singers’ union. They aren’t out of the woods yet, though, since a 2015 season will still require about $2.7 million in additional funds.
• After seven years, the Seattle Dance Project is shutting down as artistic director Timothy Lynch moves to Ohio’s BalletMet. And the Green Bay Symphony Orchestra‘s next season will be its last after over 100 years of performances in Wisconsin.
• Say what? The Colorado Symphony Orchestra will host a series of bring-your-own marijuana events in collaboration with Edible Events, a pro-pot company, as a way to be more inclusive and raise money for the orchestra.
• We have no idea how much Comcast and Verizon are charging Netflix for more direct access to users’ homes – and that’s not a good thing.
• Some remarkable numbers from the academic field about the extent to which hiring for administrators has outpaced the hiring of professors. A similar dynamic to arts organizations, perhaps?

BIG IDEAS

• As Piketty-mania continues to drive interest in income inequality, a comparison of the prices of various goods in the United States over the last ten years yields grim insights about its effects. While the cost of education and health care — i.e. services that can’t be outsourced — has risen dramatically, the cost of electronics, clothing, and other personal goods has fallen. One commentator sums things up nicely: “Prices are rising on the very things that are essential to climb out of poverty.”
• Mania being what it is, it’s not surprising that some conversations about income inequality have taken an interesting turn, suggesting that the widening gap between rich and poor may be good for artists. As at least one author has pointed out, that argument fails to demonstrate that the arts are “more dynamic under high inequality than… under conditions of low inequality,” and even if great art has been produced in awful social conditions, that by no means justifies those conditions. Add to that mix confusion about the difference between rising wealth creation and wealth inequality, and you’ve got a growing debate on your hands.
• Design methodology is increasingly used to solve unwieldy social problems at a policy level in the European Union, but the US has been slow to catch on. The National Endowment for the Arts contracted the Design Council to organize a webinar addressing how to use design “to create public services around the people who use them, to introduce new methods into the civil service skill set, and as a tool to aid the process of public policy development” as part of the Learning from Abroad series.
• The National Committee for Responsive Philanthropy has launched Philamplify, a collection of in-depth assessments of the top foundations in the country. Assessments of the Lumina Foundation for Education, William Penn Foundation, and Robert W. Woodruff Foundation are included at the moment, though the site plans to add about one hundred more within the next few months. Website visitors can indicate whether they agree with Philamplify’s recommendations for the foundations and add comments.

RESEARCH CORNER

• Arts marketing specialists LaPlaca Cohen released the sixth edition of their CultureTrack report on participation in cultural events and held a panel discussion about it. The report characterizes American audiences as promiscuous (we range across media) and social (we hate to go alone, and personal recommendations and invitations are among the main drivers of participation). The verdict on attendance is mixed: more people are attending museums, musical theater, and classical music each year (though not straight plays, theater, or opera), but overall they are going less often.
• A new study by researchers at the London School of Economics concludes that engaging in the arts makes people happy – as happy as if you paid them $100-150 per month. Michael Rushton, as is his wont, argues caution.
• The NEA has an update on three current projects that aim to support continuous learning in the field: 1) an assessment of the artistic excellence of grantees’ work products, 2) a pilot survey of grantee organizations’ audiences, meant to measure the extent to which they were engaged and moved by arts experiences, 3) a new evaluation by the Urban Institute of the the NEA’s Arts & Livability Indicators.
• inBloom, a massive educational data collection effort supported by the Gates Foundation, is shutting down following mounting concerns voiced by parents regarding their children’s privacy. Besides serving as a cautionary tale of how philanthropic efforts can stumble when they lack appropriate buy-in, the example may portend a backlash against collecting data on children — and arts audiences of all types.
• Of 7,000 Victorian novels, only a few dozen are read today. How does an author pass the test of time? Salon interviews cultural historian Franco Moretti, who uses big data to analyze bad books.
• Speaking of not getting read today, do you ever feel like posting reports online is adding to a virtual wasteland of PDFs that will never be opened? You’re probably right. The World Bank decided to test that feeling by running analytics on its website and discovered that a whopping one-third of its research reports have never, ever been downloaded. Only 13% were downloaded more than 250 times.

ETC.

• Positive reviews on sites like Yelp and Amazon translate into real money for businesses – even though as many as a third of reviewers may be fake and the real ones may not be representative of customers.
• The Gray Lady suddenly appears to find itself in the business of hiring actors, thanks to a new “Verbatim” series that features “recreations of actual events from the halls of law and government” by “transform[ing]… legal transcripts into dramatic, and often comedic performances.” The first one comes courtesy of a 2010 lawsuit involving photocopying public records. It has to be seen to be believed.

Grand Rapids LipDub – photo by Rob Vander Sloot

Each year, Createquity offers a list of the top ten arts policy stories of the past 12 months. You can read the 2009 and 2010 editions here and here, respectively. In addition to the main list, I also identify my favorite new arts blogs that started within the past year. The list, like the blog, is focused on the United States, but is not oblivious to news from other parts of the world.

For the most part, 2011 saw the continuation of trends that had already been set in motion in previous years. The economy continued to be an issue for arts organizations worldwide, affecting government revenues in particular. The NEA moved in directions foreshadowed by its actions in 2010. And the culture wars, while not translating into meaningful policy change for the most part, were waged in the background once again.

10. Federal cultural funding dodges a bullet

The newly-elected Republican House of Representatives made a lot of noise this year about cutting funding to arts and culture, particularly the Corporation for Public Broadcasting after a forced scandal involving NPR’s then-vice president of development. Democrats refused to take the bait, however, and even amid multiple standoffs over the federal budget this year, cultural funding survived largely intact. The NEA escaped with a 13% decrease from last year’s originally enacted funding level, and CPB and the Smithsonian actually saw increases. Notably, the Department of Education’s arts in education budget was also saved (albeit with cuts) despite an Obama administration recommendation for consolidation under other programs. That said, the saber-rattling this past year leaves little doubt about the prospects for arts funding under a Republican Congress and President in 2013 and beyond, and it will surprise no one if the same battles are fought all over again in 2012.

9. Grand Rapids LipDub shows how creative placemaking is done

By now you’ve heard the story: city gets named on a top ten list of “America’s dying cities”; college-aged filmmakers galvanize the community to organize a coordinated response. The result: “the greatest letter to the editor of all time,” also known as the Grand Rapids LipDub. Involving thousands of people and requiring a near-total shutdown of the city’s downtown area, the video went viral over Memorial Day weekend and has received nearly 4.5 million views as of December 31. But more than the feat itself, the video is notable as an incredibly effective example of cost-effective creative placemaking. The mayor of Grand Rapids was very smart to give this $40,000 production (mostly raised through sponsorships from local businesses) his complete support: it is just about the best advertising for his city one could possibly ask for, conveying a completely unforced and compelling charm while fostering community pride among local residents along the way.

8. Crowdfunding goes mainstream

Just two years ago, Kickstarter was a novelty and no one had heard of IndieGoGo. Now, these and other “crowdfunding” platforms that connect creatives with fans and financial backers have become an indelible part of the artistic landscape, particularly for grassroots, entrepreneurial projects. This July, Kickstarter alone reached the milestones of 10,000 successful projects and $75 million in pledges over slightly more than two years, numbers that compare favorably with major private foundations’ support for the arts. Meanwhile, crowdfunding is fast becoming a, well, crowded market, with new entrants lured by the profit-making potential of serving as banker for the creative economy. RocketHub, USA Projects, and the Power2Give initiative are just three of the more significant new entrants of the past two years, and similar platforms are popping up to serve technology startups and the broader charity market.

7. Orchestra unions take it on the chin

The recession has been not been kind to arts organizations of any stripe. But it’s been particularly hard on orchestras, those most tradition-bound of arts organizations, forcing musicians’ unions to cough up big concessions. The resolution of the Detroit Symphony’s six-month strike in April had minimum salaries dropping nearly 25% and a partial incentive pay system introduced. The same month, the Philadelphia Orchestra filed for bankruptcy, seeking to avoid its unfunded pension obligations, and won 15% salary reductions from its musicians in October. The Louisville Orchestra also filed for bankruptcy late last year, hasn’t played since May due to negotiation impasse, and has started advertising for replacement players. The NYC Opera, after abandoning its longtime home at Lincoln Center, is threatening to turn its orchestra into a freelance outfit and cut its choristers’ pay by 90%.  The New Mexico, Syracuse, and Utica Symphonies all bit the dust, costing musicians hundreds of jobs.  The craziest story was perhaps the resignation of two-thirds of the Colorado Symphony Orchestra’s board because musicians took too a few days too long to accept a 9% pay cut. Breaking with tradition, the League of Symphony Orchestras this year sounded the alarm bells with a plenary session titled “Red Alert” at its national conference.

6. Another tough year for state arts agencies

The big headline, of course, was Kansas (see below). But state arts agencies, having already suffered big losses in 2009 and 2010, slipped backwards once again this year. More than twice as many saw decreases as increases, and in total appropriations dropped 2.6% as of August. Horror stories included Arizona Commission on the Arts, which lost its entire general fund appropriation (the agency stayed alive thanks to business license revenues); the Texas Commission on the Arts, which lost 77.7% of its funding; the Wisconsin Arts Board, whose budget was gutted more than two-thirds by controversial governor Scott Walker; and the South Carolina Arts Commission, which made it through with a 6% shave only because the state legislature overrode Governor Nikki Haley’s veto of the entire agency’s budget. Nevertheless, as in previous years, a few states and territories had clear victories: the Ohio Arts Council avoided a cut proposed by the Governor and instead achieved a $1 million increase, and the Utah Arts Council and Institute of Puerto Rican Culture saw increases of 50% or more. Still, state arts agency appropriations remain 40% below their 2001 peak levels – and that’s not even taking inflation into account.

5. Western Europe blinks on government arts funding, while South America and Asia embrace it

Already reeling from the UK’s decision to institute major cuts from Arts Council England and broader pressures on financial markets, Europe continued to see a move toward a leaner, more American-style cultural policy. The wave of change caught up the Netherlands this year, as Holland cut a quarter of its cultural budget. Meanwhile, as with the economy more generally, the balance of power is starting to shift toward former Third World nations. Hong Kong announced that it had hired starchitect Norman Foster to design a $2.8 billion, 40-hectare cultural district in West Kowloon; Abu Dhabi is building a $27 billion mixed-use development on Saadiyat Island featuring two gigantic museums and a performing arts center; and Rio de Janeiro has doubled its cultural budget in anticipation of the 2016 Olympics. Singapore and Shanghai are also seeing gigantic government investments in the arts.

4. Cultural equity #Occupies the conversation

It started small: just a poster in the magazine Adbusters, a ballerina dancing on the Wall Street Bull. But by the time October rolled around, Occupy Wall Street was a household name, changing the national conversation from one obsessed with austerity and the national debt to one that took a serious look at who benefits and suffers from our nation’s economic policies. Around the same time, the National Committee on Responsive Philanthropy, a philanthropy watchdog organization that promotes social justice, published Fusing Arts, Culture, and Social Change by Holly Sidford, a broadside against the longstanding funding practices in the arts that make it hard for organizations representing communities of color to build a strong base of support. It didn’t take long for people to make the connection within both the arts community and the Occupy movement. And when news of the San Francisco Arts Commission possibly cutting its Cultural Equity Grants program hit during a national Cultural Equity Forum hosted by Grantmakers in the Arts – well, let’s just say it’s the most digital ink this topic has had spilled on it in a long time. I suspect, like so many times before, this particular conversation will dissipate without leaving behind any lasting change on a large scale. On the other hand, it’s a good bet that pressure will only continue to build on longstanding cultural institutions to justify the massive resources they have built up over the years.

3. Irvine Foundation gets engaged

About a year ago, I posted a comment on the myth of transformative arts experiences that struck a chord with readers. In it, I told my own “getting hooked on the arts” story and observed that “none of it involved being in the audience for anything….Getting out and seeing a show now and then is always nice. But getting to be in the show – that’s what’s truly transformative about the arts.” It turns out I’m not the only one who’s been thinking along these lines: in June, the James Irvine Foundation announced a wholesale change to its arts strategy that emphasizes audience engagement, including active participation. To support the new strategy, Irvine set up a new Exploring Engagement Fund that serves as “risk capital” for organizations to experiment with new programming strategies that are designed to increase engagement. Irvine is certainly not the first funder to focus its attention on audiences – the Wallace Foundation, for example, has made cultural participation a priority for years, and many have been happy to fund efforts to place cultural programming into context (“talkback sessions” and the like). But Irvine takes the concept much farther by explicitly encouraging programming that places the audience at the center of the experience, offering participants the opportunity to create, perform, or curate art themselves. It’s really quite revolutionary given the history of arts funding, and a lot of eyes will be on this initiative as it develops.

2. Kansas Arts Commission loses its funding

Proposals to eliminate state arts councils have become a dime a dozen in recent years. Just since 2009, Pennsylvania, South Dakota, South Carolina, New Hampshire, Texas, and several others have staved off threats of demise of varying seriousness. Experienced arts advocates, while taking each individual case seriously, tend to brush off the trend as a whole, seeing it as an inevitable part of the game. Except this year, the unthinkable happened: for the first time since the state arts council network was created in the 1960s, one of them actually had to close down shop completely. Kansas Governor Sam Brownback, fighting negative media coverage and his own legislature tooth and nail, followed through on his vow to destroy the Kansas Arts Commission and transfer its activities (but not its funding) to the nonprofit Kansas Arts Foundation. In doing so, he actually cost his state more money in federal matching funds than it saved in direct expenditures. National and local advocates are optimistic that this decision will eventually be reversed, but until then, Kansas has the dubious distinction of being the only state without a functioning arts council.

1. Creative placemaking ascendant

When Rocco Landesman was chosen to lead the National Endowment for the Arts in 2009, he almost immediately signaled his interest in the role of the arts in revitalizing downtown public spaces. Two-plus years into his term, “creative placemaking” has emerged as his signature issue, and the lengths to which he and Senior Deputy Chairman Joan Shigekawa have gone to promote it have been remarkable. Beyond the NEA’s Our Town grants, the inaugural round of which were announced this past summer, the big news this year was the formation of ArtPlace, a consortium of major foundation funders designed to extend Our Town’s work into the private sphere. Headed by former CEOs for Cities head Carol Coletta, ArtPlace has already distributed $11.5 million in grants and has an additional $12 million loan fund managed by Nonprofit Finance Fund. Its recent solicitation for letters of inquiry drew more than 2000 responses. Our Town’s future at the NEA is by no means assured, but by spurring the creation of ArtPlace, Rocco has guaranteed that creative placemaking will be part of the lexicon for quite a while.

Honorable mention:

• #SupplyDemand: the economics lesson heard ’round the world
• San Francisco Arts Commission implodes
• Doris Duke’s new artist fellowships
• LINC begins to wrap it up

And here are my choices for the top new (in 2011) arts blogs:

1. Lee Streby
2. New Beans (Clayton Lord)
3. ArtsFwd (Karina Mangu-Ward and others)
4. Creative Infrastructure (Linda Essig)
5. ArtPlace blog (various) – note the RSS feed on this one is impossible to find, it’s here.

U.S. Capitol. Photo by Andy Withers

As has been previously reported, public funding for the arts is one of the many foci of our national debate over fiscal policy. While funding cuts for the National Endowment for the Arts and the National Endowment for the Humanities (and potential but unrealized cuts at the Smithsonian) all made national headlines, the Corporation for Public Broadcasting, which unwillingly and inaccurately functions as a proxy for NPR in the public imagination, was the hottest of the hot potatoes. The House of Representatives voted to defund the CPB entirely, but in the end, appropriations were essentially unchanged from the year before. This may seem like a dead issue for the moment, but there is an extremely good chance these battles will resurface in the fiscal 2012 budget process.

Federal arts funding is a small share of the budget
So, how much money are we talking about? The CPB is getting $455 million (of which about $90m goes to radio stations). The Smithsonian gets the biggest federal arts allocation, at $761m. If you add all arts-related federal programs together, funding for the current fiscal year totals just over $2.5 billion. Honestly, that number looks pretty large to me. I can’t imagine what a billion of anything really looks like. But the total federal budget for this fiscal year (which runs through September) is $3.82 trillion. So the federal arts funding we’ve identified is 0.066% of the total federal budget. And when we’re only shouting about CPB, we’re talking about 0.012%. That is twelve one-thousandths of one percent.

So, why? Why was this a central topic in budget debates this spring? Was it really all about this James O’Keefe scandal? Are we going to rehash the entire set of arguments again this summer and fall as we debate the fiscal 2012 budget?

Maybe the real reason we keep putting Elmo’s head on the chopping block is because we don’t really understand the numbers, after all. According to a CNN poll, most Americans do not think the CPB gets twelve one-thousandths of one percent of the budget. Actually, only 27% of those surveyed believe the CPB gets less than 1%¹ of the total budget. 40% believe the CPB gets 1-5%. Everyone else believed the appropriation to be greater than 5%, and an astonishing 7% of those surveyed believe the Corporation for Public Broadcasting gets more than 50% of the budget (which would have to be close to $2 trillion). If that were true, it would put the pledge premium tote bag and mug industry completely out of business, and This American Life would be hosted by Robin Leach. The survey also asked whether funding for different funding categories should be increased, decreased, kept the same, or eliminated. 16% of respondents wanted CPB funding to be totally eliminated.

We care about other spending, too, right?
It’s interesting to examine the other spending categories in the poll. The survey asked about Medicare, Medicaid, Social Security and defense. Those are pretty big portions of the budget, so it makes perfect sense they’d be in the list. The rest of the categories are decidedly different: foreign aid (also highly overestimated by respondents), benefits for retired government workers, food and nutrition assistance for poor people, housing for the poor, and federal education funding. And that’s it.

But, what’s missing here? Quite a lot, actually. What about subsidies to the oil & gas industry, which the Obama administration claims add up to $4 billion (about 9 times CPB funding)? What about direct subsidies for farmers, which were about $5 billion last year? Tax exemptions for ethanol production aren’t mentioned, either. Nor are the $8.5 billion in subsidies given to the airlines since 9/11 simply to help them survive. These subsidies went to for-profit industries, which are theoretically subject to the rigor of the free market and exist for the profit of their shareholders. And yet, more discussion is generated by $2.5 billion in subsidies to arts organizations, both governmental and non-profit, that explicitly exist for the public benefit and do not have shareholders.

Why didn’t CNN ask about mortgage interest tax deductions of $88.5 billion in 2008, 200 times this year’s CPB funding? What about first time home buyer and hybrid vehicle tax credits? In 2008, contributions to employee retirement and pension funds, and tax deferrals on the earnings in those funds, lost the federal government $117.7 billion in tax revenue. There are many, many more examples. Decisions to fund and subsidize these sectors of the U.S. economy are just as important as decisions about arts funding. And the amounts are significantly higher than the $2.5 billion of federal arts funding in question.

How is it so easy for Congress to ignore all of this during budget battles, and instead focus on whether Juan Williams should have been fired or not? One reason is that subsidies can easily be swept under the rug, when the rug is the tax code.

Tax breaks: spending with less scrutiny
Tax deductions and credits, also called tax expenditures, are a form of government spending, as we can see clearly from the now-ended hybrid vehicle tax credits. The federal government wanted to provide incentives for the purchase of fuel-efficient vehicles. It would have cost the federal government about the same to send a check directly to hybrid buyers, perhaps processed at the dealerships, as it cost to reduce tax bills by the same amount. (Transaction and processing costs might be different, but the bulk of the cost would have been the same.)

The difference between tax expenditures and direct spending is that the former are not part of large budget bills, the kind that can shut down the government if not passed. Tax expenditures can certainly be treated as political footballs. But they are far less likely to be at the center of a showdown. Not only that, if Congress adds a tax expenditure in some legislation, it is a spending increase that can be framed to look like a tax cut, because it reduces tax revenues. That makes it more politically palatable for both parties, even if it has nothing to do with taxed income, and even if it distorts markets.

Consider a very large tax expenditure: $88.5 billion (2008 figure) worth of mortgage interest tax deductions (almost 200 years of Corporation for Public Broadcasting funding). Interest you pay on your mortgage gets deducted from your taxable income. Thus, if you’re comfortably into the 25% tax bracket, this tax expenditure is worth a quarter of what you paid in mortgage interest during the year. This creates an explicit incentive for people to buy their own homes by borrowing. If creating a home ownership and borrowing incentive sounds a little off to you, you might be recalling the financial collapse that precipitated the Great Recession. Like the repackaging of loans into mortgage-backed securities that contributed to the housing price bubble of the previous decade, this deduction effectively makes borrowing cheaper. If borrowing is cheaper for everybody, then everybody has more to spend, and if everybody would like to buy a somewhat nicer or bigger home if they could, then all the home prices are simply going to increase. This deduction, therefore, distorts the market and leads to increased prices. Who benefits if all prices in the market are inflated to take advantage of this deduction? It helps the realtors, who get paid a percentage of the sale price. And it helps the home building industry.

What is the point? Do I want a repeal of this tax deduction? Personally, no, I’ve already got a mortgage, and of course I want to keep my deduction. It is simply important to understand that this is spending, too. The mortgage interest deduction is really a government spending program that encourages people to buy instead of rent, and has the unintended effect of inflating home prices. And it’s a pretty large one! Why don’t we publicly debate this spending program, which is 200 times greater than the CPB budget, and is of debatable long-term utility? We don’t have to talk about it, because it’s not in the budget. It’s in the tax code, so it looks like a way to reduce taxes, rather than a way to subsidize the home sale industry.

Reframing the conversation
If subsidized arts workers are labeled as something like freeloaders in public discourse, then farmers, homeowners, hybrid vehicle buyers, the airlines, and the oil & gas industry are freeloaders too. Ayn Rand is very popular again among conservatives, so where is the conservative outcry against oil & gas subsidies? Instead, we are offered a redefinition of the “free market capitalist system” as something that requires government subsidy. Oxymorons rule the day when the free market must be subsidized, and arts created explicitly in the public interest, without a profit to distribute, must stand alone.

The issue of arts funding is quite likely to be revived when the fiscal 2012 budget is to be presented this fall. Conservative legislators have been able to score political points with this issue for years. But we have also seen President Obama bring greater scrutiny to bear on oil industry tax breaks, and he was making political progress in April. If uncertainty regarding oil supplies in the Middle East fades by this fall, we can perhaps expect that some part of the government spending conversation will deal with oil and gas tax expenditures.

Arts advocates, however, should not sit on our hands and wait for the President to shift the focus to federal subsidies of other industries in the budget and tax code. We are supposed to be very good at telling stories, so we ought to thoughtfully study our budget and tax code and engage with our citizenry on those issues that are most relevant and significant. It’s not just a matter of self-interest, though that is obviously part of the equation. America’s budget deficit and public debt is ours. And when we only discuss federal budgets when we launch a campaign to save our NEA grants and Sesame Street, we are lending legitimacy to those who would focus on the nickels and dimes while ignoring the big budgetary issues. We have the capacity for wider scope.

Notes
1. If you look at the wording of the poll question, you can see it is potentially a bit misleading. It asks, “Just give me your best guess — you can pick any number from one percent to a hundred percent, or if you think it was less than one percent, you can say that too.” The question first asks people to choose between 1-100%, so it anchors the idea of whole number percentages in the listener’s mind, then offers a less than 1% option as an alternative, after they’ve already framed the question in terms of whole number percentages.

As you might have heard, public funding for the arts has been under pressure at the local and especially state levels ever since the recession hit a few years ago. This year, those pressures have spread to the federal government as well, and during the recent negotiations between Democrats and Republicans in Congress to agree on a budget for the remainder of the current fiscal year and avert a government shutdown, there was worry that the National Endowment for the Arts, the Arts in Education program at the US Department of Education, and the Corporation for Public Broadcasting would face some of the heaviest burden in the drive to cut $39 billion from the current year’s budget.

As it turned out, the arts did suffer as a result of the cuts – but all things considered, it could have been worse. According to Mike Boehm’s excellent roundup at the Los Angeles Times’s Culture Monster blog, the National Endowment for the Arts‘s budget was given a haircut of 7.5% from this year’s approved level of $167.5 million to $155 million. That’s the same amount as was funneled to the Endowment two years ago, excluding one-time stimulus funding, but still below the level from 1981. The National Endowment for the Humanities, whose budget has been informally tied to the NEA’s for a few years now, saw the same cut. A reduction at the Institute for Museum and Library Services was more serious, from $282.2 million to $237.9 million – or 15.7%. Meanwhile, the US DOE’s Arts in Education program, which had been zeroed out in the temporary continuing resolution passed earlier this year due to a misconception among lawmakers that it represented an earmark, was partially reinstated at a level of $25.5 million – 36% below the original appropriation of $40 million for this year.

Other arts-and-culture-related line items were affected as follows:

• The Corporation for Public Broadcasting, which provides partial funding to both NPR and PBS, saw its budget essentially unchanged at $445 million as a result of negotiations. This was a huge loss for conservatives, who had pushed a bill defunding CPB entirely through the House of Representatives earlier this year, only to see it go nowhere in the Senate. NPR had come under attack from the right wing last year after conservative commentator and Fox News contributor Juan Williams was fired for making remarks perceived as anti-Muslim.
• The Smithsonian, another cultural institution that had drawn negative attention from Republicans as a result of a controversial exhibit at the National Portrait Gallery, also did just fine, retaining level funding at $761 million.
• On the other hand, Washington arts groups are scrambling because of a steep, seemingly mean-spirited midyear cut to the National Capital Arts and Cultural Affairs grant program. The agency’s appropriation dropped from $9.5 million to $2.5 million, a 74% drop. The NCACA money had distributed large grants to a limited number of organizations, representing nearly a fifth of some grantees’ budgets, but only two-one-hundredths of one percent of the total savings achieved by the spending bill.
• Two more federal expenditures on the arts, State Department funding for cultural exchange programs and funding for the National Gallery of Art, took modest hits of 5.5% and 7.2% respectively. The John F. Kennedy Center for the Performing Arts saw its funding remain steady.

Meanwhile, at the state level, the last couple of months have been a mixed bag. Three state arts agencies that had been at risk of elimination or drastic cuts look to be in good shape after significant local advocacy efforts on their behalf. First up, the Kansas Senate voted to override Governor Sam Brownback’s executive order to eliminate the Kansas Arts Commission last month and reinstated funding for the agency at the current year’s levels. The House’s version of the budget still zeroes out funding, however, so arts advocates still have their work cut out for them in the Sunflower State. Second, both the Washington State House and Senate have passed budgets preserving $1.1 million in funding for the Washington State Arts Commission, which Governor Christine Gregoire had proposed to cut to $250,000 and eliminate as an independent agency. Finally, both legislative houses in the Palmetto State have proposed budgets calling for essentially level funding for the South Carolina Arts Commission, in defiance of Governor Nikki Haley’s attempt to eliminate the agency.

On the other hand, pressures continue elsewhere in the country. The news is not good for the Texas Commission on the Arts, which has been taking quite a bit of heat this year. After Governor Rick Perry suggested eliminating the arts council in his State of the State address (but not in his budget), the Texas House passed a budget that zeroes out funding for the TCA. It seems the best case scenario for the TCA now is the 38% cut that was proposed in the Senate. And now two new states are on the chopping block for significant arts cuts. Governor Scott Walker, in his spare time between presiding over the most explosive labor relations battle in the country, has proposed the elimination of the Wisconsin Arts Board as a separate agency and a 68% cut for arts funding by the state. And the New Hampshire House has eliminated support for the New Hampshire State Council on the Arts entirely in the budget it has sent to the Senate in that state. The NHSCA’s state appropriation had already been cut almost in half over the past two years.

You can keep up to date with the legislative appropriations process on a state-by-state basis via the Americans for the Arts State Arts Action Network website, which also has links to the arts advocacy organizations in each state.

• If you haven’t been following this story about the Wisconsin Republican Party’s efforts to intimidate University of Wisconsin professor Bill Cronon (and now other university professors in other states), you should be. If this keeps up, state universities are going to face a huge disadvantage attracting both students and faculty, since no one can be assured that their private emails (even about grades, personal issues, and such) won’t be exposed by Big Brother in the course of some political vendetta. But then, maybe that’s the point – one less thing to pay for, after all. (To Wisconsin’s credit, the school administration has mounted a strong and fair response.)
• Shannon Litzenberger, who is something like my Canadian counterpart (she is writing a blog about arts policy for the Toronto Arts Fondation), has written a great three-part series on United States arts policy (covering public investment, advocacy, and the role of the private sector). Even though it’s aimed at a Canadian audience, it should still be educational for American readers – and it’s always interesting to see how we’re viewed by others. (For an update on Canadian arts policy, try this recent post.)
• One of the issues under discussion these days is the budget for public broadcasting. The House recently passed a bill (not expected to reach the President’s desk) that would eliminate funding for the Corporation of Public Broadcasting, which in turn funds NPR and PBS. In response, CNN commissioned a poll that asked Americans what percentage of federal funding is taken up by broadcasting. Turns out the median response overestimated the actual number by a factor of over 400, and — get this — the majority of Americans are just fine with that amount!
• Lots of people are talking about the Google Books decision and its implications for creators’ rights. Meanwhile, a new working paper argues that copyright may only be minimally effective at its original purpose of incentivizing creative production, using evidence from the post-MP3 era. Michael Rushton has more commentary here.

Collective Economic Action

• The long-lost Collective Arts Think Tank is back, more than a year and a half later, with a massive follow-up to their original manifesto that you can read here. In it, they continue to advocate for rank-and-file artists and small presenters taking the initiative to reduce supply themselves. Linda Essig comments.
• Tina Rosenberg provides a good overview of crowdsourcing and crowdfunding models here and here. Much of this will be familiar to Createquity regulars, but odds are you’ll learn something new.
• Even music union members think it’s time for the union to change.
• Project Streamline is making a comeback: the Grants Managers Network and the Center for Effective Philanthropy have announced an assessment tool aimed at helping funders determine if their paperwork requirements are too onerous. CEP’s Amber Bradley provides some analysis of the survey results so far. Given all this, Christopher Madden’s estimate of the deadweight loss (essentially from transaction costs) associated with grantseeking among arts groups in Australia, pegged at $3.6 million, is especially timely.
• Umm….
  

  A quick search through fiverr.com’s database tells me that you can buy as many 100 comments, a single tweet to 25,000 Twitter followers, a negative or positive review in English and Spanish, and unlimited number of blog comments for a full week all for $5 apiece. For a few hundred dollars, you can guarantee a crazy amount of comment traffic and new media attention that would rival culture blogging’s biggest superstars.

The Arts and Urban Life

• “It would be sad indeed if Dallas, having imported some of the world’s best architects, wound up creating the dullest arts district money can buy.” Great reflection on the pitfalls of institution-centric arts-led development.
• Gary Steuer connects the dots between the arts and Philadelphia’s reversal of a longstanding trend toward population decline.
• More on Detroit’s bid for an arts-led renaissance.

Reactions and Pre-reactions

• Clay Lord writes for ArtsBlog on stories vs. data. (I had actually written most of my post on the same subject prior to Clay’s, but it was published afterwards.)
• Christopher Madden offers an Australian perspective on crowdsourcing funding decisions in the arts.
• Michael Rushton responds to my article on supply and demand in the arts.

Research Corner

• Looks like one of the casualties of the budget fight could be the closure of data.gov, which had been a promising attempt to make government data more accessible to researchers and others. The Sunlight Foundation is leading an effort to save it.
• According to the Wall Street Journal, the Institute for Culture in the Service of Community Sustainability (ICSCS) is taking on the hard challenge of counting up NYC’s artist population.
• Nancy Duxbury writes that she has co-edited an issue of the journal “Culture and Local Governance” focused entirely on “culture and sustainable communities” from an international perspective. Check it out here.
• Munira Khapra reports on a survey of students and teachers about education priorities, and the intriguing finding that more than twice the proportion of students as compared to teachers “consider the arts absolutely essential to gaining an understanding of other nations and cultures.”
• Michael Rushton examines the recent NEA report on arts education research by Nick Rabkin, and (shocker alert), doesn’t buy it. I heart Michael Rushton, but think there’s such a thing as being too skeptical when it comes to interpreting research. The comment section on that post has some additional back-and-forth between us on the subject.

Etc.

• A nice article on the ultra-cool Gray Area Foundation for the Arts in San Francisco.
• Good news for journalism: revenues from online advertising exceeded those from print advertising for the first time last year. Bad news for journalism: most of that revenue went to Google rather than news organizations.
• Look out, Gisele: choral composer Eric Whitacre is now a fashion model. (For serious.)

So much fallout from one video (which I encourage you to watch), filmed by a person who has been arrested for tampering with phones at a federal building, who attempted to sexually humiliate CNN anchor Abbie Boudreau, and is the subject of various lawsuits resulting from the ACORN videos (at least the Brooklyn branch of ACORN, btw, has been cleared of wrongdoing). The video also comes at a time when conservatives are agitating for the end of government funding to NPR and public radio. And with yet another two week extension with more cuts to the arts (cuts to the arts for children, even!), that threat is becoming very real.

A lot of people are asking—is what Mr. Schiller said so unreasonable? He points out in the video that federal funding actually makes up only one percent of NPR’s funding and 10% of the station economy, and that NPR is not a government program, which many people believe. He goes on to say that while he thinks NPR would be better off in the long run without government funding (which O’Keefe will no doubt run wild with), if funding were cut now, “a lot of stations would go dark.” Mr. Schiller is also careful to “take off his NPR hat” when he starts to express his own opinion that educated “so-called elite” people in America are now the minority.

There’s not much focus on what O’Keefe and his colleague say in the video—“Jews do kind of control the media,” “what Israel does can’t be excused”—but I suppose he can always say that he was playing a role.

Incidentally, there is now evidence that NPR refused the $5 million donation check offered in the meeting. NPR isn’t stupid- they’re not going to accept money from a donor with no history and who wants to get more favorable coverage on the news.

If you still believe that federal funding is essential for non-commercial radio that promotes local cultural events and offers a public space for discussion, get involved by sending a letter to congress, or just by talking with your neighbors. And maybe just keep in mind what mama said—if you can’t say anything nice, don’t say anything at all.