“I am the walrus” by Steven Coutts | via Flickr (Creative Commons)

A controversial editorial published by the Writers’ Union of Canada’s magazine Write has resulted in resignations from the author of the piece, Hal Niedzviecki, and an editorial board member, as well as a formal apology from the union and statement from its Equity Task Force. Niedzviecki had made the interesting choice to publish an editorial brushing off the harms of cultural appropriation and calling for a tongue-in-cheek “Appropriation Prize” as the introduction to an issue of the magazine dedicated to the voices of indigenous Canadian writers. Niedzviecki’s prize would have encouraged writers to reach outside their personal experiences to “imagine other peoples, other cultures, other identities.” The backlash was swift, but many top members of Canada’s literary community defended Niedzviecki’s statements on Twitter – which in turn led to editor-in-chief Jonathan Kay’s resignation from The Walrus, a highly esteemed literary magazine. Debates about cultural appropriation and representation in the arts world appear to be only intensifying in recent months. Also in May, the Walker Arts Center in Minnesota decided to work with Native American elders to dismantle a sculpture by a white artist evoking the hanging of 38 Dakota men in 1862 that it had started to install in a public park, following a public outcry that echoed the strong opposition to a white artist’s painting of Emmett Till’s casket showcased at the Whitney Biennial earlier this year. Meanwhile in the theater world, the Edward Albee estate’s decision to block the casting of a black actor in a production of Who’s Afraid of Virginia Woolf? is likewise stirring widespread contention.

Terrorists make arts and culture targets the new normal. The May 22 suicide bombing killing 22 and injuring more than 100 people outside an Ariana Grande concert in Manchester, England signaled a direct attack on young people enjoying a cultural event and engaging in leisure activities. On the heels of the one-year anniversary of the Pulse nightclub massacre in Orlando, Florida, the Manchester atrocity came just days before terrorist attacks – with responsibility claimed by ISIS – on an ice cream parlor in Baghdad and unassuming pedestrians on London Bridge. The attacks point to a larger trend: the desire to bring chaos to cultural products and turn places of joy into tragedy. It remains to be seen whether and how heightened security measures at live events and heritage sites will alter the ways in which people engage in arts and culture.

Federal arts agencies get a boost – for now. Despite the potential threats of federal slashing of agencies such as the National Endowments for the Arts, National Endowment for the Humanities, and Corporation for Public Broadcasting that made headlines in January, February, and March, arts organizations can breathe a small sigh of relief: the final federal spending bill for fiscal year 2017 spares the CPB and actually increases the budgets for both the NEA and NEH through September. The Trump administration had sought to cut the current year’s budget as well as next year’s, but those recommendations met opposition on both sides of the aisle, with several key Republicans among those fighting to maintain arts funding. Nevertheless, with President Trump’s proposed 2018 budget officially released this month. Entitled “A New Foundation for American Greatness,” the budget, if enacted, would take deep bites out of funding for the arts, education, scientific exploration and scholarly research – it remains to be seen whether the future will be sunny on Sesame Street.

Seattle’s art tax goes to the ballot box. King County residents will vote in August on whether or not to raise sales taxes in an initiative intended to fund more than 300 arts organizations across the region. Modeled after the Scientific and Cultural Facilities District in metropolitan Denver and other tax initiatives in places like St. Louis and Cleveland, the bill imposes an additional 0.1% sales tax hike, yielding approximately $67 million a year toward Seattle-based arts and culture. Amid concerns that the arts would get a bump over critical issues such as homelessness, poverty, and the criminal justice system, council members ultimately altered the measure to ensure the county’s outlying areas see an equal share of the money in an effort to encourage Washingtonians to start and maintain arts organizations in rural locations.

New rights and protections for NYC and Hollywood freelancers. On May 15, New York became the first U.S. city to enact a law aimed at shoring up protections for freelance workers. The Freelance Isn’t Free Act places harsh penalties on employers who withhold payment from independent contractors or fail to pay on time or in full. The law rose out of an extensive 2015 report created by the Freelancers Union illustrating the impact of freelancers and the high percentage of workers who have struggled to receive payment. Under the new law, New York freelancers stiffed by their employers can file a complaint with the city, which will intervene on their behalf. The news follows the announcement earlier in the month of a new labor agreement between the Writers Guild of America and Hollywood studios which was widely seen as a win for struggling television and movie writers.

MUSICAL CHAIRS / COOL JOBS:

• Chairman of the National Endowment for the Humanities William D. Adams unexpectedly announced his resignation on May 22. Deputy Chair Margaret Plympton will serve as acting chair until a replacement is named, which could be a while since that replacement would have to be nominated by the Trump administration.
• Publisher Françoise Nyssen has been appointed the new Culture Minister of France.
• Jaime Dempsey will be the new Executive Director at the Arizona Commission on the Arts in August. Previously deputy director of the agency, she succeeds Robert Booker, who will retire after 40 years in the arts.
• Rose Ann Cleveland will retire from the D.C.–based Morris and Gwendolyn Cafritz Foundation in October.
• Executive director Eloise Damrosch of Portland’s Regional Arts & Culture Council will retire at the end of June.
• The Hartford Foundation for Public Giving announced its new president, Jay Williams, will begin in July.
• Motion Picture Association of America chief Chris Dodd will leave his post five months before his contract ends, to be replaced by Charles Rivkin. Rivkin was an assistant Secretary of State for economic and business affairs during the Obama administration.
• Juilliard has named Damian Woetzel as its seventh president. The former New York City Ballet star was previously the director of the Aspen Institute Arts Program.
• The New York Review of Books named Ian Buruma as its new editor after the death of founding editor Robert B. Silvers.

NEW RESEARCH OF NOTE:

• A recent study from Berlin promotes incentives for donors, with results indicating that those provided with a certificate stating the quality of the charitable product or organization gave approximately 10 percent higher contributions. However, a study by the Indiana University Lilly Family School of Philanthropy indicates that President Trump’s proposed tax reforms could reduce charitable giving by as much as $13.1 billion in the United States.
• The first ever World Cities Culture Finance Report analyzes how cities fund cultural activity. Results indicate that Paris, Moscow and London spend the most on arts and culture.
• A new report analyzes results from a pilot program by the National Endowment for the Arts aimed at increasing access to arts education in rural areas. Access is proving to be key: A deeper analysis of the 2016 National Assessment of Educational Progress in the Arts indicates that access and opportunity take precedence over achievement in the arts.
• A policy briefing from the Brookings Institute provides a framework for implementing the goals of the Every Student Succeeds Act and measuring success in arts education.
• Aesthetic Perspectives is a new framework produced by Americans for the Arts’s Animating Democracy program. It establishes 11 attributes that may be used to describe and assess creative work intersecting community engagement and social justice.
• Across the pond, the UK’s Department for Culture, Media & Sport published an in-depth review of Arts Council England’s priorities and positioning. A House of Lords report indicates that theater patronage in the UK is “still dominated by rich, white people.” These findings are supported by additional survey data indicating a 7 percent drop in participation among Asian audiences across all artforms in the UK over the last 10 years. And MyCake founder Sarah Thelwall completed her fourth annual ‏report on the Arts Council’s grantees, analyzing income sources across creative organizations, and differences between small and large organizations.
• George Windsor and Cath Sleeman have completed an analysis of job advertisements in the country to determine what skills creatives need to be successful professionals in the UK.
• A new publication explores the current status of urban cultural policy at local levels across Europe and outlines the challenges that lie ahead.
• People from working-class backgrounds tend to view themselves as relatively more interdependent with and connected to others, according to new research.
• Some librarians really hate those cute “Little Free Libraries.” Research indicates that they are most present in upper-middle class, white neighborhoods – areas that already have increased access to public libraries.
• Apparently rainy days motivate people to visit museums, but more so if storms ease up in the afternoon. And though tourism and leisure are many visitors’ primary goals when visiting museums, measurable learning occurs even when it’s not their intention.
• UNESCO-funded initiatives safeguarding and rebuilding indigenous architecture in Vanuatu following the 2015 Tropical Cyclone Pam are evaluated in this final report.
• New data indicates that automation will affect jobs in Las Vegas and California’s Inland Empire more than the so-called “Rust Belt.”
• A visual interpretation of research spanning three years, 75,000 concerts and 7,000 bands analyzes the chances of a band “making it” big in New York City. The odds? Roughly 0.3 percent.
• The fiction books you read can shape your world view and tilt your moral compass, according to newly published research in the journal Psychology of Aesthetics, Creativity, and the Arts. Poetry may also have a profound effect: scientists researched physiological responses to “this is your brain on poetry” and discovered that responses differ from those of music or movies.
• Research suggests a gap between fact and myth in what music teachers believe about music and the brain.
• Last but certainly not least, is the Biebs responsible for killing the good, old fashioned love song? According to the journal Sexuality & Culture, hit songs are more likely than ever to be all about sex.

Marche Républicaine in Paris on January 11, 2015 – photo by flickr user Maya-Anaïs Yataghène

On the morning of January 7, two masked gunmen – now known to be brothers Cherif and Said Kouachi – attacked the offices of the French satirical weekly magazine Charlie Hebdo, killing twelve, including the paper’s editor, Stéphane “Charb” Charbonnier. In the wake of the attack, which was apparently a retaliation for the magazine’s repeated depictions of the prophet Muhammad, the surviving editorial staff decided to publish a subsequent issue, with a cover featuring a weeping Muhammad framed by “I am Charlie” and “all is forgiven.” The issue sold millions of copies, a far cry from the weekly’s usual 60,000-piece circulation, and further incensed the Muslim world — with protests in Afghanistan, Pakistan, Chechnya, and Niger. Other cities rallied instead in support of free speech; a solidarity march held on the Sunday after the attack drew almost four million citizens and some forty world leaders. (The U.S. presence was notably lacking.)

This is by no means the first time that art in general and satire in particular have become targets for Islamic fundamentalists. (Createquity has covered several such incidents in the past, notably in September and November of 2012.) Still, the scope of the attack prompted an avalanche of news coverage and reactions exploring all sides of the issue, including the growing backlash across Europe against Muslim immigrants, Islamist terrorism and Islamic fundamentalism, and importantly for this forum, freedom of expression. Artists around the world responded most immediately, many drawing up their own cartoons in support of the magazine specifically, and of the role cartoonists play in moments of conflict. Jordan Weissman cautioned against an either-or-approach, suggesting in Slate that Charlie Hebdo’s work is both “heroic and racist.” Oliver Tonneau, a radical French leftist, made a case for freedom of speech by noting that the considerable body of work put forth by the magazine was squarely within the French satirical tradition and, crucially, intended for an audience with the cultural context to see it as so. Others, like Marguerite Debaie, Maz Jobrani, and Karl Sharro, amplified the conversation by shining a light on the tradition of cartooning and satire in the Middle East and in Islam. Back in Paris, new editor-in-chief Gérard Biard has made it clear that Charlie Hebdo will continue on, albeit with a delay of the magazine’s 1,179th issue.

Net Neutrality’s Chances Suddenly Looking a Lot Better: The net neutrality battle, which landed at No. 3 on our Top Ten Arts Policy Stories of 2014, is kicking into high gear, and for the first time in quite a while things are looking pretty good for those in the “pro” camp. On January 7, Federal Communications Commission (FCC) chairman Tom Wheeler hinted in an interview that new net neutrality rules would in fact be crafted under Title II of the Telecommunications Act, a move President Obama himself called for in November (and which he reiterated in his State of the Union address.) Net neutrality supporters welcomed the announcement – a reversal of Wheeler’s previous stance – as such a classification would provide the greatest degree of protection for content producers within the strongest legal framework. Piggybacking on Wheeler’s announcement, Senator Patrick Leahy (D-VT) and Representative Doris Matsui (D-CA) reintroduced the Online Competition and Consumer Choice Act, which would unambiguously authorize the FCC to issue net neutrality rules under whatever framework it deemed appropriate. (In response, Representative Fred Upton (R-Mich) along with Senator John Thune (R-S.D), the head of the Senate Committee on Commerce, Science and Transportation, released their own draft legislation contesting the FCC’s legal authority to enforce online competition.) The biggest win for the pro camp in January, however, came from an unexpected ally:  mobile telecommunications provider Sprint circulated a letter to the FCC in which the company argued that “light-touch” regulation under a Title II framework would not harm investment or deployment, and that the open Internet has benefited consumers and businesses alike. On January 29, the FCC voted to change the definition of “broadband internet” in the hopes of expanding access in the rural United States. This vote is but a prelude to the final one, which is set for February 26 (though a draft of the proposed rules should be available as beginning February 5.)

Uncle Sam Busts the Overhead Myth: The nonprofit starvation cycle got some much-needed disruption in January in the form of new Office of Management and Budget rules on overhead spending in federal grants. The new rules include many benefits for nonprofits, such as broadening “direct cost” allocations and increasing the single audit threshold. The most welcome, however, is the rule regarding reimbursements for “indirect costs.” The guidance states that “when governments hire nonprofits to provide services, those nonprofits legitimately need to incur and be paid for their ‘indirect costs’,” i.e. their overhead and administrative expenses. In concrete terms, this means that nonprofits are now able to apply at least 10% of a grant or contract to pay indirect costs; the percentage increases for those organizations following new cost allocation rules. The federal adoption of these rules is only the beginning. The real work lies in communicating and consistently applying its tenets to the tens of thousands of organizations that stand to benefit. This will require a bit of advocacy work on behalf of the field which is sure to pay off.

Film and Theater Industries Continue to Struggle with Diversity: Hollywood’s diversity problem reared its (ugly) head again this month when the coveted Oscar nominations were announced: the twenty contenders for lead and supporting actor and actress were all white, the director category was dominated by white men, and not a single woman was nominated in either of the screenwriting categories. Worse yet, a recent study from the Directors Guild of America revealed that in the past five years, from the 2009-10 season through the 2013-14 season, 87% of first-time TV directors were white, and 82% of them were male. However bleak it may look on screen, in other corners of the arts world people are starting to take action. In December, Arts Council England announced an aggressive plan to engender diversity among its grantees – so aggressive that those who fail to meet the agency’s (as yet unspecified) standards risk losing their funding. This month, New York City’s Department of Cultural Affairs announced an initiative to measure the diversity of the city’s cultural organizations on the staff and leadership side. While there’s no penalty (yet) for those who come up short in this case, the initiative is seen as the first step in developing a plan to address diversity more broadly. Back in LA, a coalition of Southern Californian theater companies, led by Tim Dang of the East West Players, has proposed an initiative that calls for at least 51% of those employed by SoCal theater companies by 2019 to be people of color, women or those younger than 35. Though the initiative has encountered some concern that it runs afoul of anti-discrimination laws, supporters argue that finally doing something about diversity necessitates starting somewhere.

FAA to Enforce Instrument Carry-On Legislation: In a big win for touring musicians, a full three years after congress formally ordered airlines to allow passengers to carry on their instruments without charging them additional fees, the Federal Aviation Administration (FAA) has finally taken action to implement these rules consistently across all airlines. There are caveats, of course: the instrument has to fit in the overhead bin (looks like tubas and upright basses are out of luck), and there has to be room in said bins for said instruments at the time one boards (no longer a given in the era of charging-for-checked-luggage.) Still, the rules are welcome news. They go into effect on March 6 – plenty of time to figure out your personal boarding-with-an-instrument game plan.

MUSICAL CHAIRS / COOL JOBS

• ArtPride New Jersey has named Adam Perle as its new president & CEO. Ann Marie Miller, who has served ArtPride as executive director since 1995, will assume the new position of director of advocacy and public policy.
• Christa Blatchford is the new CEO of The Joan Mitchell Foundation.
• Sofia Klatzker will assume the role of executive director of Arts for LA in March.
• Detroit Institute of Arts director Graham Beal has announced he will formally retire when his contract ends in June, following an eventful sixteen-year tenure that culminated in securing the institution’s art collection from the bankrupt City of Detroit.
• After twelve years with the Ford Foundation, Roberta Uno is moving on to become the director of Arts in a Changing America, a new national project based at the California Institute of the Arts.
• Creative Scotland, the national body that supports the development of arts, screen and creative industries across Scotland, has appointed Richard Findlay as its new chair.
• China’s top legislature, the National People’s Congress, has appointed Luo Shugang its new minister of culture.
• Julie Fry, program officer with the William and Flora Hewlett Foundation’s Performing Arts Program since 2007, will join Cal Humanities, California’s statewide humanities council, as president and CEO. Fry’s old position has been posted as of January 6 with no closing date.
• TurnaroundArts California seeks a Program Coordinator. Posted January 6, no closing date.
• The Center for Effective Philanthropy is hiring a Research Analyst for its San Francisco office. Posted January 21; no closing date.
• National Endowment for the Arts is hiring for two positions: Theater and Music Director and Media Arts Director. Both are for two year terms with the possibility to extend. Posted January 29; deadline March 7.
• And across the pond, Creative Scotland seeks a Director of Creative Industries. Deadline February 8.

NEW RESEARCH OF NOTE

• The National Endowment for the Arts released three new studies last month looking at arts engagement and its economic impact in the United States. One study looks specifically at motivations for and barriers to arts attendance  (and is the focus of Createquity’s recent Research Spotlight); a second study looks at public participation over twenty years (which reveals that three quarters of Americans use electronic media to view or listen to art); and the third looks at the cultural sector’s contribution to the nation’s GDP. The reports touched off a flurry of responses, some which called out the NEA for suggesting insufficient next steps.
• Two reports from Wallace Foundation, “Road to Results,” and “Thriving Arts Organizations, Thriving Arts,” released this month look at effective strategies for developing arts audiences and plans for the foundation’s next phase of research and funding in this area.
• A recent survey of arts attendance in Hong Kong shows only modest growth, though interestingly, Xiqu, Chinese opera, shows the most dramatic increase.
• The Community Development Department of the Federal Reserve Bank of San Francisco published a review of research and best practices in providing capital to low- and moderate-income communities through creative placemaking approaches.
• Local Initiatives Support Corporation released an evaluation of its own work in 63 communities nationwide, and suggests that the best strategy for improving low-income communities is long-term investment across multiple needs, such as affordable housing, safety, education, employment, and other basic services.
• An article in Urban Studies has found a wide (and concerning) gap in the definition and application of the term “gentrification” between the New York Times, census data and major academic studies over the past three decades.
• The OMG Center for Collaborative Learning released a report outlining eight strategies for facilitating diversity, equity, & inclusion among foundations, their grantees and the communities in which they work.
• A new report from the Emily Hall Tremaine Foundation looks at arts business training programs across the United States.
• A report from the Wyncote Foundation tracks how 40 legacy cultural organizations in the United States are successfully embracing digital media in their work.
• A recently released Independent Library Report for England, commissioned by the UK’s Department for Culture, Media and Sport, includes a series of recommendations for how libraries can attract a younger, digitally-savvy crowd.
• Two recent reports look at the effects of the arts on children. Northwestern University released a study that suggests that the cognitive benefits of music are most significant when children actively engage with music, and a study from the children’s book publisher Scholastic shows that being read aloud to as young child correlates strongly with being an avid reader later in life.
• Culture at Kings, the Cultural Institute at King’s College in London, released a review of arts education policy in the UK over the past seventy years, and urges policy makers to look more closely at lessons learned over time.
• A survey by the industry group Stage Directors UK found the average salary for UK directors is £10,000, less than half average national wage.
• And finally, a rather bizarre study out of DePaul University finds evidence to suggest that surrealist art is more emotionally reassuring than non-surrealist art to individuals contemplating their own mortality.

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

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

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

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

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

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

MUSICAL CHAIRS/COOL JOBS

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

NEW RESEARCH OF NOTE

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

• In a reversal, the FCC has drafted new net neutrality rules that critics claim are unworthy of the name: they would allow broadband companies to provide a “fast lane” for content providers willing to pay a “commercially reasonable” fee. The FCC’s public comment period opens on May 15. Related: if the Comcast-Time Warner merger is approved, “the combined company’s footprint will pass over 60% of US broadband households.”
• A belated tax tip for artists: emigrate to Mexico. Or, for those committed to staying in the US of A, consider launching a worker cooperative as a means of upping income while maintaining time for artistic pursuits. For those on the collector side, there’s always lending your new purchases to a museum in Oregon, Delaware or New Hampshire first.
• Several record companies have filed suit in New York against Pandora to secure royalties under state law for the use of recordings made before 1972, which are not protected by federal copyright. Sirius was targeted by a similar lawsuit last fall.
• Classical musicians may now have a harder time leaving and re-entering the United States thanks to a ban on ivory meant to protect African elephants.

MUSICAL CHAIRS

• Grant Oliphant, former Pittsburgh Foundation leader, will begin a new role as president at Heinz Endowments this June.
• Also in June, the Canada Council for the Arts will welcome its new CEO and president Simon Brault. Brault was previously vice-chair of Canada Council’s board before moving to the National Theatre School Montreal, and will serve in his new position for a five-year term.
• Michael Kaiser, a man who wears many hats, will add another one in co-chairman of IMG Artists, which will also involve managing a new cooperation between IMG Artists and DeVos Institute of Arts Management at the University of Maryland.
• Jonathan Fanton, former president of the MacArthur Foundation and of the New School, has been named President of the American Academy of Arts and Sciences. Former president Leslie Cohen Berlowitz resigned last July in the wake of a scandal over her compensation and qualifications.
• Lorin Dunlop will join the M. J. Murdoch Charitable trust this June as Program Director. Most recently, Dunlop was responsible for public safety grant programs of the Oregon Criminal Justice System.

ALL ABOUT THE BENJAMINS

• PonoMusic, a new high-def digital audio business, raised $6.2 million on Kickstarter to become the third-best-funded project in the site’s history. Neil Young, who started Pono to provide a higher-quality alternative to current digital formats, set the initial goal at $800,000.
• Yet another contender is trying to elbow its way into the crowdfunding game: Crowdrise, a new(ish) platform dedicated exclusively to nonprofits, just received an additional $23 million in financing.
• The Walter & Elise Haas Fund, working together with the Foundation Center and Mission Minded, has developed an open-source, free solution that any grantmaking entity can use to make its grantmaking data searchable, publishable, sharable, and fully accessible. You can see “Open hGrant for WordPress” in action on the Haas site.

IN THE FIELD

• The San Diego Opera has outlined a new fundraising strategy to avert closure and announced a meeting on Monday of its 850-person membership. It’s been a bumpy ride: half of the 58-member board has resigned; a new chair, Carol Lazier, has taken over and personally pledged $1m to save the organization; general and artistic director Ian Campbell has been placed on indefinite leave; and protests by unions and members have added financial and legal complications. The opera’s plan includes a new $1m crowdfunding campaign with a deadline of May 19; it is actually only one of several San Diego cultural institutions that have been shuttered or are imperiled.
• A closer look at the end of the Trey McIntyre Project.
• A bid by a group of philanthropic organizations to buy out Pittsburgh’s failed August Wilson Center for African American Culture was dropped, with the foundations claiming a preference on the part of the Center’s court-appointed receiver for a commercial developer.
• New York City is facing a sudden rash of failing institutions. The Incubator Arts Project is closing, citing — you guessed it — difficulties raising revenue. The Brecht Forum, a Marxist educational and cultural space, is buckling under the weight of a lawsuit for back rent. And Manhattan’s legendary Canal Street art supply store Pearl Paint has shut its doors and is mourned.
• Is an arts-centric Coursera in our future? Barry Hessenius decries the state of professional development in arts administration and calls for a virtual “one stop shop” of on-demand courses, articles, and networking/mentoring opportunities.
• A handful of arts organizations have been experimenting with a lesser-known organizational structure called the “disregarded entity,” which may offer non-profits a more flexible alternative to independence on the one hand and fiscal sponsorship on the other.
• In The Foundation Review, authors Gary Cunningham, Marcia Avner, and Romilda Justilian of the Northwest Area Foundation note declining philanthropic investment in communities of color and make a pointed call for foundation leaders to commit to reducing racial inequality. And across the pond, British comedian Lenny Henry is leading an effort to secure better representation for minorities on the BBC.

BIG IDEAS

• National Arts Strategies’s Sunny Widmann suggests arts organizations create their own Skunk Works® divisions — originally conceived by Lockheed Martin and not as stinky as the name suggests — to nurture innovate programs and practices.
• We hear a lot about the intersection between creative placemaking and gentrification, but is dealing with it just a matter of saying hi to your neighbor and identifying your privileges? At The Atlantic Cities, Daniel Hertz suggests that if we really care about gentrification, we should be paying a lot more attention to housing policy.
• Global inequality of wealth is at a 100-year high, with the infamous 1% owning half of the planet’s wealth, according to a hot new book by French economist Thomas Piketty. One consequence: “professionals have now been priced out of the [art] market and it’s shifted more toward investment bankers.”
• Barry Hessenius is looking for the next set of big ideas – and the people behind them – with another edition of the Arts Dinner-vention. Nominations are due May 15.

RESEARCH CORNER

• A music psychologist found that introducing random repetition into a piece of music makes it more appealing – and makes people think it was more likely to have been composed by a human being.
• Research suggests literary fiction can help short-circuit ethnic stereotypes.
• A new paper examines the intersections of the arts and health via case studies from Cleveland on interventions including art therapy and the artistic design of healthcare facilities.
• The NEA is out with a new report on the Education Leaders Institute Alumni Summit, a five-year effort on the part of the NEA to strengthen arts education policies at the state level. The Endowment’s Arts Education director Ayanna Hudson discusses the report in the context of the agency’s new strategy.
• A new center at Stanford will focus on meta-research in the medical sciences and examine how much publication bias — which raises questions about all research fields, including the arts — really is a problem.
• The Pew Research Center has published a new report on demographic and generational trends in America. The findings themselves are what you might expect – our population is aging, becoming more diverse, and moving away from religion; immigration and interracial marriage are on the rise; and Democrats and Republicans are at odds – but the presentation brings these and other trends to life.
• Seen any good movies at the theater lately? Probably not, according to new data on film reception by month of release as aggregated by Rotten Tomatoes and Metacritic. The numbers show that the summer and holiday seasons have the best pickings. Don’t believe it? You can play around with the data yourself.

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.

photo by Martha Soukup

(I first met John Carnwath when he came to a talk of mine at the University of Chicago Cultural Policy Center last year and asked questions that immediately identified him as a smarty-pants. John is currently finishing up his PhD at Northwestern University, where he has studied the development of municipal arts funding in Germany and teaches courses on cultural economics and organizational structures in the performing arts. He serves as the “Dean” of the Chicago Chapter of The Awesome Foundation and was previously a staff researcher for the Chicago Artists Resource. As I was following the federal tax reform negotiations this winter and thinking about what might happen to the charitable tax deduction, John seemed like an obvious choice to lead the investigation on behalf of Createquity. Enjoy! -IDM)

In his most recent budget proposal, President Obama is seeking to impose a cap on itemized deductions in the personal income tax return – which includes the deduction for charitable contributions. This provision, part of  the administration’s strategy to raise revenue to pay for government spending, has been a part of every White House budget proposal since 2009, and every year arts advocacy organizations join the rest of the nonprofit sector in opposing the changes. So far, the cap has been successfully warded off, but there’s growing concern that if Republicans and Democrats ever agree on sweeping tax reforms, the charitable deduction will be on the chopping block. The fear that limiting the tax deduction will lead to reduced donations to charitable organizations is particularly great this year due to the tax increases that were passed at the end of 2012, prompting the Charitable Giving Coalition to step up its resistance with a new website: protectgiving.org.

While it’s become a popular strategy on Capitol Hill to complain about the lack of progress while refusing to budge from one’s own policy positions, a case can be made that the nonprofit sector’s lobbying on behalf of the charitable deduction has neither improved the financial stability of the sector nor created greater legislative security. At best, it has limited the declines in individual giving in recent years. So rather than simply digging our heels as we head into the next round of budget debates, let’s take a moment to explore a broader range of policy options and see which might make the most sense for the arts.

Before we get to that, though, here’s a refresher on the mechanics of the charitable tax deduction for anyone who needs it.

What is the charitable deduction and how does it work?

The tax deduction for charitable donations was established in 1917, just four years after the federal income tax was introduced. While there have been some changes over the years, in its basic form this provision allows taxpayers to deduct donations to nonprofits and charities from their taxable income. So if a taxpayer earns $50,000 and gives $2,000 to charity, she only has to pay taxes on $48,000. The rationale behind this provision was initially that the taxpayer who gives away $2,000 doesn’t have that money available to spend on herself, so it shouldn’t be counted as part of her income. Nowadays, the deduction is more commonly thought of as an incentive dangled before taxpayers to coax them into donating more money to charity. By allowing taxpayers to deduct charitable donations from their taxable income, the government essentially agrees to pay for a portion of the donation.

Think about it this way: If you earn $1,000 and you’re taxed at a rate of 30%, you have to pay $300 to the IRS and you end up with $700 in your pocket. But if you donate $100 to charity, your taxable income is reduced to $900. Your tax bill then comes to $270 ($900 x 30%). In return for giving $100 dollars to charity the government reduces your taxes by $30, so in the grand scheme of things that  $100 check that you write to your favorite opera company really only sets you back $70.

Who benefits from the charitable deduction?

While this all sounds great in principle, there’s a big catch: not all taxpayers benefit from the charitable deduction. Initially the income tax only applied to a rather small number of wealthy Americans, but during World War II it was expanded to affect roughly 75% of the population. Instead of having all of these tax filers list their deductions individually—$42 for prescription medicine here, a $100 donation to a museum there—the IRS introduced the “standard deduction” in 1944. The standard deduction lets all filers lower their taxable income by a fixed amount. For the 2012 tax year that amount is $5,950 for single taxpayers and $11,900 for couples. That means that you only have to keep track of your deductions and itemize them on your income tax return if they exceed $5,950 (or $11,900 if you’re married). That saves a lot of taxpayers (not to mention the IRS) a huge headache, but it also means that the 70% of filers who take the standard deduction don’t get to write off their charitable donations. (One might argue that the non-itemizers benefit from the charitable deduction in a roundabout way, since a typical deduction for charitable donations was factored in when the standard deduction was calculated back in 1944, but the fact remains that the current deduction for charitable contributions and any changes to it are only relevant to about 1/3 of American tax filers.)

For those who do itemize deductions, the amount of the government’s subsidy towards charitable donations depends on the filer’s marginal income tax rate. If you’re in the 35% bracket and you donate $100 to a good cause, the government gives you $35, but if you’re in the 10% bracket you only get $10 back from Uncle Sam. Economists say that the “price of giving” is lower for the individual in the 35% bracket than for the one in the 10% bracket (e.g. note 1 here). Giving $100 to charity “costs” the former (presumably richer) person $65 and the latter $90. While this seems sort of unfair, it’s the result of having a progressive income tax system in which those who earn a lot pay a larger percentage of their incomes into the public purse.

This means wealthy taxpayers not only have more money in their bank accounts to give away, but when they donate to charity the government covers a larger portion of their donations. It is therefore no surprise that the rich are responsible for a large share of charitable giving. Although only 3% of tax filers have annual incomes over $200,000, those households contribute 36% of the money that individuals give to charity every year—a total of $73 billion in 2008. However, the federal government foots the bill for about a third of those donations through the deduction for charitable contributions (assuming that most of the individuals with incomes over $200,000 are in tax brackets with marginal rates over 30%).

One might say, “well it’s all for a good cause, so it doesn’t really matter if the government is paying for a portion of the donations,” but it turns out that taxpayers with high incomes choose to give their money to different causes than those who are less well-off, and the charitable deduction allows them to divert large amounts of government funds to their favorite organizations. The wealthy support educational institutions and the arts to a much greater extent than poor people, who tend to focus their giving on basic needs and religious organizations. The extent to which the arts depend on donors with high incomes for their contributions is quite striking. In 2005, 94% of the funds that arts organizations received through individual contributions came from households with annual incomes over $200,000.

Of course, the donors are not the only ones who benefit from the tax deduction. All of the people who receive services from nonprofits and charities may be considered indirect beneficiaries of this provision in the tax code. However, to determine whether the charitable deduction is the best way for the government to support the work of nonprofits we must take a closer look at the incentives that are created and how people respond to them.

Do donors respond to tax incentives?

The deduction for charitable contributions affects taxpayers in two different ways. On the one hand, we have the “price effect.” As noted above, higher marginal tax rates reduce the price of giving, creating a bigger incentive to contribute to charities. However, high marginal tax rates also mean that people have less money left in their pockets after paying their taxes. In general, if people’s incomes are reduced, one would expect them to become less generous donors. After paying for rent, food, and utilities, they have less money left over for nonessentials like vacations and charitable donations. This is called the “income effect.” Note that the income and price effects work in opposite directions. Higher marginal tax rates incentivize donations through the price effect, but they simultaneously create a disincentive through the income effect.

Several economists have examined donors’ responsiveness to tax incentives over the past few decades, but the results remain inconclusive. Most studies find that donors respond to tax incentives, but the historical record shows that the level of charitable contributions remains relatively constant over time when measured as a proportion of GDP regardless of the available tax incentives. Some studies suggest that higher-earning taxpayers are more responsive to the incentive than those who are less well-off and that there are differences between types of charities (religious, social, educational, etc.) that receive donations. Many policy analyses (CRS, CBO, TPC) therefore calculate the upper and lower limits of a range into which the effects of proposed policy changes are expected to fall rather than a specific estimate.

Considering policy options: goodbye deduction?

To establish the worst-case scenario as a baseline, one might ask what would happen if the charitable deduction were eliminated completely. Independent Sector, an advocacy organization for nonprofits and charities, recently put out a list of FAQs according to which “with no deduction for charitable gifts, itemized charitable giving would drop by between 25 percent and 36 percent total.” This assertion is rather misleading. The study from which Independent Sector gets these numbers states that a taxpayer in the 30% income tax bracket might reduce his contributions by 25-36% if the deduction were eliminated. Since the incentive to donate depends on the filer’s marginal tax rate and 98% of households face rates under 30%, the reduction in the total amount of individual contributions is likely to be much smaller than Independent Sector suggests.

The truth is, we have no idea what would happen if the tax deduction were eliminated. Not only have studies of the price and income effects been inconclusive, but they are all based on observations of how donors have reacted to incremental changes in tax rates and deductibility in the past. These estimates may be useful in predicting the effect of small changes within the range of what’s been observed in the past, but there’s no reason to be believe that the response would be the same once the government’s incentive approaches zero. In fact, economic theory would predict that it’s not the same.

For example, if the deduction were eliminated completely, one might expect some donors to dig deeper into their pockets to keep their favorite charities afloat. However, some wealthy Republicans might cease all charitable donations to protest the fact that they’re having to pay more taxes, secretly hoping to blame the financial hardships of the charitable sector on the Democrats in the next elections. These types of reactions are difficult to predict. One thing is certain: if the indirect subsidy that the government provides through the charitable deduction were eliminated in order to reduce the deficit, individual donors would have to dig deeper into their pockets to sustain nonprofits at their current level of activity. And if the entire nonprofit sector were in severe financial distress, one can easily imagine that some donors would reallocate their gifts towards hospitals and basic social services, compounding the impact on the arts.

Capping the deduction

The good news is that no one has proposed eliminating the deduction altogether. Obama’s 28% cap on deductions, on the other hand, remains a very real possibility.

Obama suggests that the government could increase its revenue by capping deductions at 28% of the donor’s AGI. As mentioned above, the size of the tax incentive is generally determined by the marginal tax rate that taxpayers incur, but Obama’s proposal sets 28% as the maximum anyone can claim. For the vast majority of households, this would be of no consequence. If you’re in the 10%, 15%, or 28% tax brackets, you still get your deduction as normal. But the 2% of filers who itemize their deductions and face marginal tax rates over 28% would no longer be able to reduce the tax on their donations to zero. People in the 30% bracket, for example, would still have to pay a 2% tax on their charitable gifts. They owe 30% according to their tax bracket and they only get 28% back on the donated amount (due to the cap), so the IRS gets to keep the 2% difference.

How might this cap affect contributions to charitable causes? The short answer is that it will most likely result in a minor, but noticeable reduction in contributions. Here’s what people are saying:

• The Center on Philanthropy at Indiana University estimates that the cap will lead to an $820 million (0.4%) reduction in charitable giving in the first year of implementation, increasing to $1.31 billion (0.7%) in the second year.
• In 2010 the Congressional Research Service put the decline in charitable giving in the 0.16 – 1.28% range.
• In a back-of-an-envelope calculation for the Washington Post, Harvard economist Martin Feldstein estimates that the 28% cap could reduce charitable giving from individuals by $7 billion, which amounts to a 3% decline (relative to the $230 billion in charitable contributions from individuals reported in Giving USA 2009).
• Len Burman of the Tax Policy Center and the Center on Budget and Policy Priorities came up with similar figures in 2009.

Taking all of this together, it seems we’re talking about a 0.5% to 3% decline in gifts from individuals.

The impact on arts nonprofits is likely to be a little bit higher than that, since the cap will primarily affect the wealthy taxpayers who contribute most to the arts. The 2010 study by the Congressional Research Service includes an analysis of how the 28% cap would affect different segments of the nonprofit sector. It estimates the reduction in individual giving to the arts to be around 2.4% (compared to 0.16-1.28% overall).

The figures above were calculated based on the tax rates that applied between 2003 and 2012, but as we know, the tax rate for the highest income bracket was increased from 35% to 39.6% at the beginning of this year. How does that change things? If charitable contributions remain fully deductable, we would expect the higher marginal tax rates to increase donations due to the price effect. However, if Obama’s proposal to cap total deductions goes through, the reverse is to be expected—the higher tax rates actually exacerbate the decline in charitable giving caused by the cap. That’s because the higher tax rates reduce the taxpayers’ disposable income, bringing the income effect into play, while the cap on deductions holds the price of giving constant.

The Congressional Research Service estimates that the combined effect of the 28% cap on deductions and the higher marginal rates that Obama sought to impose on taxpayers earning more than $200,000 would reduce giving by 0.28% to 2.27%. That’s almost double the decline that they estimated for the cap on deductions alone (see above). The Center on Philanthropy arrives at similar figures when including Obama’s proposed tax hikes. Those projections still fall within the 0.5% to 3% range mentioned above. If we take the worst-case scenarios for the 28% cap and the largest estimates for the impact of the of the higher tax rates, we might be looking at a 5 or 6% decline in charitable giving.

So it looks like we don’t need to fear that individual contributions will drop by a quarter if the 28% cap were introduced, with or without increases in the top marginal tax rates. Nonetheless, a 5-6% decline is nothing to take lightly, and for organizations that are already reeling from the recent recession even a modest reduction in individual contributions could be the final straw. Moreover, the estimates apply to total charitable donations nationwide, but individual organizations could be unlucky and find that several of their major benefactors scale back their contributions more drastically than the national average, leaving gaping holes in their budgets.

Other options: expanding to non-itemizers and adding “floors”

Faced with this uncertainty, the response from arts advocacy organizations has been to dig in their heels and demand that the deduction for charitable contributions remain intact. However, as Michael Rushton notes, there’s little reason to believe that there’s anything magical about our current tax code; in fact, the charitable deduction has been criticized in the past for several reasons (notably for being inefficient, regressive, and having an unclear theoretical justification). So instead of clinging to the status quo as our only hope for survival, we might ask: what changes to the current system would lead to the best outcomes for arts organizations? How might we incentivize charitable donations while supporting the government’s goal of reducing the federal deficit?

In 2011 the Congressional Budget Office came up with 11 different policy scenarios and estimated their likely impact on tax revenue and charitable giving. These included:

• allowing all taxpayers to write off charitable gifts on their tax returns, rather than just those who itemize deductions
• creating a minimum donation (either a fixed dollar amount or a percentage of the donor’s AGI) which would have to be exceeded to qualify for the deduction
• converting the deduction into a tax credit (which would give all taxpayers the same 15 or 25% tax break on charitable contributions instead of linking it to the donor’s marginal tax rate)

This study found that by extending the deduction to all filers and simultaneously establishing $500 ($1,000 for couples) as the minimum donation required to qualify for the deduction the government would be able to increase revenues by $2.5 billion annually, while boosting contributions to charitable causes by $800 million. Or even better, by replacing the deduction with a 25% tax credit for all taxpayers, the government would save almost the same amount, while driving up donations by 1.5%.

Since the government’s objective right now is to reduce the deficit, presumably without harming the nonprofit sector unnecessarily, Eugene Steuerle of the Tax Policy Center has advocated for expanding the tax deduction to all filers, with a minimum contribution of 1.7% of the donor’s AGI required to qualify. This would net the government between $10.4 billion and $11 billion per year without reducing charitable donations by a dime. The argument for establishing a minimum contribution to qualify (often referred to as a “floor”) is that people are likely to give a small amount of money to charity regardless of whether they receive a tax break or not. It’s therefore not necessary for the government to forgo any revenue for that portion of their contributions. Further, at a certain point the administrative costs of tracking small donations—acknowledging their receipt, submitting documentation to the IRS, checking for fraud—is not worthwhile. For those who object that a $1,000 donation is a far bigger sacrifice for a couple that only earns $20,000 a year than for a millionaire, a floor that is linked to the taxpayer’s AGI might pose an attractive alternative. With a 2% floor, someone earning $20,000 could claim the deduction by making a $400 donation, while someone earning $500,000 would have to donate $10,000 to qualify.

Beyond the bottom line

Reforming the charitable tax deduction might offer other benefits as well. For example, it could provide an opportunity to change the composition of our donor lists. By giving those in lower income categories greater incentives to support our work and allowing them to leverage some of the indirect subsidy that the government provides through its tax breaks, arts organizations might be able to diversify the ranks of their donors, so as to be less dependent on a small wealthy elite. Based on the CBO’s estimates, by replacing the tax deduction with a 25% credit that is subject to a low floor (say 1% of AGI), it should be possible to maintain charitable donations at their current levels or even increase them slightly while saving the government several billions of dollars annually and allowing donors from lower income categories to acquire a bigger stake in nonprofit arts organizations. A more diverse pool of donors, both in terms of their economic status and their tastes, would reduce the financial risk of artistic experimentation and could allow companies to diversify their programming in ways that their current (predominantly wealthy) donors might not support.

All in all, reforming the deduction on charitable contributions isn’t necessarily a bad thing for the arts. There are ways of changing the tax code that could actually increase revenues and diversify the sources of income for arts organizations, even while helping to reduce the federal deficit. Since any change creates uncertainty and will likely produce losers as well as winners, I can understand arts administrators and advocates who would rather stick with an imperfect status quo than commit their careers and their organizations to an uncertain future. However, I believe that participating in the discussion and shaping the outcomes to fit our sector’s interests will ultimately prove more productive than trying to block change from the start.

After a long lull, we’re starting to see some action on the arts and related topics at the federal level. First, the House and Senate have passed a continuing resolution enshrining the “sequester” cuts in the rest of Fiscal Year 2013, meaning that the National Endowment for the Arts and other federal agencies are sustaining a 5% decline from their originally enacted budgets. For the NEA, this means that the new budget is approximately $139 million instead of $146 million, which puts it at the lowest level since George W. Bush was president. (At the first link above, Americans for the Arts has a short video touting the importance of getting involved in Arts Advocacy Day. It’s nicely put together, but as with other videos of this type I can’t help but feel the message might be more compelling if it were accompanied by some music that the NEA actually funded.)

Second, President Obama has released his FY14 budget request. While this still needs to get through Congress, it’s significant in that it sets a likely upper bound for the budgetary appropriations of various arts-related agencies. The LA Times’s Mike Boehm reports that Obama’s budget is relatively generous to those agencies compared to previous years, providing a 4.5% increase in the aggregate above the pre-sequestration levels. The budget allocates $154.5 million to the NEA, which is right about what Americans for the Arts was pushing for but is still well below peak levels. The Smithsonian and National Gallery of Art do relatively well under the President’s proposal, while the Institute for Museum and Library Services and the Kennedy Center get lower priority. Despite the reasonably good news, Obama’s budget request also brings back a much-derided proposal to cap deductions at 28% of adjusted gross income – including the charitable deduction. (More on the charitable deduction later this week.) Watch AFTA President Bob Lynch discuss the budget proposal on PBS here.

In non-appropriations-related items, the Supreme Court has ruled 6-3 in favor of Supap Kurtsaeng, the Cornell math student who made bank by reselling Wiley textbooks purchased overseas at a cheaper price, thus preserving what’s known as the first-sale doctrine in copyright law (i.e., that you’re free to sell used items without first getting permission from the copyright owner). An ongoing legal battle between network television broadcasters and a startup called Aereo, which uses micro-sized antennas to rebroadcast over-the-air content to tablets and smartphones for a monthly fee, could have implications for internet TV more generally. Amidst all this, Federal Communications Commission Chairman Julius Genachowski has announced his retirement from his influential position affecting issues like low-power radio and net neutrality; Future of Music Coalition issues a statement on his departure, and as a bonus offers a review of Maria Pallante’s appearance before the US House to testify about potential updates to the Copyright Act. Finally, many of the critical measures in the America Invents Act patent reform legislation went into effect earlier this month; Keith Sawyer offers some analysis.

STATE AND LOCAL

This isn’t quite “news” since it’s still highly speculative, but for the first time in several years, there is a serious bid afoot to restore the California Arts Council to its former glory. The CAC had its budget cut by 94% a decade ago in the face of financial pressures on the state budget, and has languished among the worst-funded state arts councils per capita ever since. AB 580, sponsored by lawmaker Adrin Nazarian, is a bid to raise the CAC’s state appropriation from $1 million to an eye-popping $75 million, which would easily take the prize for biggest state arts funding story of the year if successful. California’s budgetary situation is arguably no better than it was when the CAC was cut in the first place, but arts advocates are hoping that Governor Jerry Brown, under whose leadership the Arts Council was brought into being back in 1975, will be the difference between this effort and three previous ones that failed (the most recent in 2009). I enjoyed this excerpt from the article:

At the hearing Tuesday, John Gallogly, executive director of L.A.’s Theatre West and a board member of the statewide advocacy group Californians for the Arts, presented each committee member with a crayon that cost 3 cents — the amount per resident that he said state government now funnels to the Arts Council if the federal and license plate money are excluded.

“We’re trying to say ‘give us a small box of crayons,'” instead of just one, Gallogly said. “You can’t create a rainbow with just one color.”

In other state news, the newly reorganized Connecticut Office of the Arts is receiving some bad press from the Connecticut Mirror. A number of arts organizations are apparently unhappy with the new creative-placemaking-oriented system for awarding grants, which relies on a cumbersome application process and out-of-state panelists who evaluate the proposals asynchronously. And Washington State has hit venues where patrons “are given the opportunity to dance” with thousands of dollars in back taxes on the basis of an obscure law dating from the 1960s that hadn’t been enforced in decades.

With the economy now four years removed from the official end of the Great Recession, we’re starting to see some recovery in local government budgets and with it, some welcome increases in arts funding revenue streams – particularly in the West. In Nevada, Clark County (which contains Las Vegas) voted to create a Percent for Art program for the first time, which will “divert 5 percent of annual room tax collections and 5 percent of the county’s share of property taxes into the Arts Fund, not to exceed $1.25 million.” In Utah’s Salt Lake City, increased tax revenues have boosted city arts funding by 14% over last year. California’s San Bernadino County, part of the fast-growing Inland Empire region, lost its arts council in 2006, but as of this year it’s back, with a budget of almost $300,000. And in Atlanta, mayor Kasim Reed seems to be proposing a 25% increase in the budget for the city’s Office of Cultural Affairs, though no one seems sure exactly what he means by that.

Meanwhile, the LA Unified School District has declared the arts a core subject for its 660,000 students but is finding that the devil is in the details, and things have gotten so bad in the Saint Paul Chamber Orchestra labor dispute that the Mayor’s office has gotten directly involved in the negotiations – though to no avail as yet.

INTERNATIONAL

What a bizarre story from Australia: just 11 days after arts minister Simon Crean unveiled the country’s new cultural policy to great acclaim, he is out of a job following a failed coup attempt aimed at Prime Minister Julia Gillard. Crean’s departure leaves the new plans in significant doubt, despite the fanfare with which they were announced. Ben Eltham has more.

Elsewhere, the news is still mostly bad but at least it’s letting up a bit. Arts Council England is taking it on the chin with yet more cuts, this time of just over 1%. In Spain, where the arts community has been deeply affected by austerity measures, arts groups are coming up with some innovative ways of coping – for example, by handing patrons carrots instead of tickets to protest/get around a punishing 21% sales tax on the latter. And in Romania, a national museum has had to partially shut its doors due to a lack of funds.

ART AND THE GOVERNMENT

• Three perspectives on the fiscal cliff deal: from Nonprofit Quarterly; from Americans for the Arts; from the Performing Arts Alliance.
• Musicians vs. airlines – and government security. One wonders if the more cello-friendly attitude musicians report encountering in days of yore has anything to do with declining rates of arts education?
• A window into the Turnaround Arts initiative, a high-stakes gambit to amp up arts programming in a few select low-performing schools around the country.
• Rocco offers Barry’s Blog some last words on his way out the door.
• Exotic dance = art? Judith Lynne Hanna makes the case (and part 2).

MUSICAL CHAIRS

• Senior program officer Lynn Stern is leaving the Surdna Foundation’s Thriving Arts and Cultures program.
• The New York Times‘s veteran culture editor Jonathan Landman has accepted a buyout from the Gray Lady.

ALL ABOUT THE BENJAMINS

• Mark Zuckerberg has committed half a billion dollars to the Silicon Valley Community Foundation. This is interesting in that community foundations have been increasingly seen as a relic of past generations of donors, with new millionaires and billionaires choosing to distribute their philanthropy with the help of private wealth advisors instead. This gift, coming as it does from one of the scions of the technology world, could change that in a big way. Dan Lyons reluctantly gives Zuck the slow clap.
  
• Brooklyn’s new Barclays Center may be plenty controversial, tearing up as it did significant chunks of the neighborhood, but one thing that’s pretty great about it is that none of the concessions stands are operated by national chains. Instead, “you can get barbecue from Williamsburg’s Fatty ’Cue; Cuban sandwiches from Fort Greene’s Habana Outpost; pizza from Gravesend’s Spumoni Gardens; and, in an inspired old-school-new-school mashup, a confection called a concrete that combines Junior’s black-and-white cookies with ice cream from Blue Marble.” Here’s hoping other developers take the hint and start buying local.

IN THE FIELD

• After a period of impressive growth, Ovation, the only cable channel exclusively devoted to the arts (as traditionally defined), is being dropped by Time Warner Cable. The story is well worth a read, as it is an object lesson on what happens in the commercial marketplace for culture when profit maximization is the goal. Despite costing Time Warner a mere seven cents per subscriber, it (along with other low-rated networks) is being shed to help pay for major increases in the network’s most expensive channels, mostly sports-related. If you’re a Time Warner customer and would like to voice your concern, Ovation has set up a website for the purpose.
• Greg Sandow has been offering an interesting series on “mavericks”/bright spots in classical music, including this profile of the River Oaks Chamber Orchestra in Houston.
• More on the mysterious Woodruff Arts Center embezzlement fiasco.
• Crowdfunding French style means helping the Louvre acquire $3 million ivory statuettes.

BIG IDEAS

• Some end-of-year looking back and prognostication: Nonprofit Law Blog recounts the big nonprofit moments of 2012; Thomas Cott crowdsources arts predictions for 2013, and Barry Hessenius says nothin’ much will change this year. (I think Barry’s got it right.) Meanwhile, Tim Mikulski possibly reveals too much in recounting the top posts on AFTA’s ARTSblog in 2012.
  
• Smithsonian Magazine has a fascinating interview with Jaron Lanier, an internet pioneer and futurist who has now turned against many of the hacker-derived “information should be free” principles he once embraced. In explaining his change of heart, he cites the music industry as exhibit A of what went wrong.
  

  “I’d had a career as a professional musician and what I started to see is that once we made information free, it wasn’t that we consigned all the big stars to the bread lines.” (They still had mega-concert tour profits.) “Instead, it was the middle-class people who were consigned to the bread lines. And that was a very large body of people. And all of a sudden there was this weekly ritual, sometimes even daily: ‘Oh, we need to organize a benefit because so and so who’d been a manager of this big studio that closed its doors has cancer and doesn’t have insurance. We need to raise money so he can have his operation.’ “And I realized this was a hopeless, stupid design of society and that it was our fault. It really hit on a personal level—this isn’t working. And I think you can draw an analogy to what happened with communism, where at some point you just have to say there’s too much wrong with these experiments.”

  And then there’s this:

  “To my mind an overleveraged unsecured mortgage is exactly the same thing as a pirated music file. It’s somebody’s value that’s been copied many times to give benefit to some distant party. In the case of the music files, it’s to the benefit of an advertising spy like Google [which monetizes your search history], and in the case of the mortgage, it’s to the benefit of a fund manager somewhere. But in both cases all the risk and the cost is radiated out toward ordinary people and the middle classes—and even worse, the overall economy has shrunk in order to make a few people more.”

  Read the whole thing.

RESEARCH CORNER

• A new website called AidGrade might give Createquity fave GiveWell a run for its money. It takes a quantitative approach to aggregating and analyzing randomized controlled trials of various international aid program types (like microfinance, deworming, and bednets), and offers some pretty cool features.
• “It’s all driven by seventh-grade arithmetic and a whole bunch of data.” Rick Lester breaks down patron segmentation and analysis in this podcast from Technology in the Arts.
• Is creativity linked to dishonesty? Keith Sawyer analyzes a new study and finds that the answer may be yes.
• Fascinating interview with Jennifer C. Lena, a sociologist studying cultural economics and the spread of musical taste.
• This was just cool: 2012’s year in maps, from the Atlantic Cities.

ETC.

• Here’s some advice from a pro on live-tweeting events and conferences in an official capacity.
• “My five-year-old could have painted this” is so over. Now it’s, “my pet snake could have painted this!”

• The National Endowment for the Arts has spearheaded the formation of a new coalition of private funders to support its creative placemaking agenda. Called ArtPlace, the collaboration features Carol Coletta as its fearless leader, and has the backing of such significant national funders as the Ford, Knight, Kresge, Rockefeller, and Mellon Foundations. Grants and a $12 million loan fund are administered through the Nonprofit Finance Fund, a nonprofit lender and financial consulting organization. ArtPlace has already made a set of 34 grants in “record time” totaling $11.5 million to a range of projects in the Our Town vein (including one to Coletta’s former employer, CEOs for Cities, in an cool-looking collaboration with GOOD Design.). Thankfully, after a closed-door process for this first round, ArtPlace is opening up next year’s grants through a letter of inquiry which is due November 15. Coletta has more at the Art Works blog.

PHILANTHROPY

• A couple of weeks ago, Sean Stannard-Stockton asked a seemingly innocent question: who should be the Hewlett Foundation’s next president? I was surprised to see Sean wrote a follow-up in which he shares that “emails I’ve gotten from very senior members of the philanthropic community – people whose opinions I respect very much – suggest that my hosting this discussion is far more controversial than I might have guessed.” Apparently, according to these Very Senior People (none of whom, Sean notes, are Hewlett employees), speculating about who might ultimately be the driving force behind the distribution of hundreds of millions of tax-exempt philanthropic dollars a year should be off-limits to plebes who are not on the Hewlett Foundation Board. Thankfully, Sean elected not to listen to this silliness and has gone ahead and published the suggestions that have come in, which include some very interesting names.
• Speaking of Hewlett, Emiko Ono will be the new Program Officer for the Foundation’s Performing Arts Program, replacing Marc Vogl. Ono was Director of Grants and Professional Development for the Los Angeles County Arts Commission.
• Duke’s Fuqua School of Business has announced a first-of-its-kind “Initiative on Impact Investing.” Officials at the school’s Center for the Advancement of Social Entrepreneurship (CASE) will be developing a new course, case materials, and working with practitioners to explore impact investing in more depth in an academic setting.
• Ouch: the Center for Effective Philanthropy reports that community foundation leaders are far less strategic in their work than their rhetoric would suggest. In particular, “CEOs who are strategic in their donor work focus explicitly on how donor contributions will benefit the community. In comparison, nonstrategic CEOs focus on how donor contributions will continue to flow to the foundation.”

IN THE FIELD

• After a decade of planning and building, Kansas City’s $326 million Kauffman Center for the Performing Arts has opened – one of the last products of the performing arts building boom of the 1990s-2000s.
• Doug Borwick, the Association of Arts Administration Educators president who has a new blog on ArtsJournal called Engaging Matters, writes a love letter to the much-missed Community Arts Network.
• And here’s an inside look at Yerba Buena’s personalized membership program, YBCA: YOU, with more from Borwick.
• Words I’d never thought I’d write department: congratulations to Philly’s Mural Arts Program, which landed a cover story…in AAA New York Car & Travel magazine!
• Composer Nico Muhly offers an insider’s perspective on the byzantine restrictions faced by orchestral composers seeking access to recordings of their own work.
• Sally Gaskill, who runs the Strategic National Arts Alumni Project at Indiana University, interviews Angela Myles Beeching, director of the Center for Music Entrepreneurship at Manhattan School of Music, about preparing musicians for careers outside the academy.
• And speaking of professional training degrees for artists, excuse Poets & Writers magazine for trying to give people some sense of how to choose a creative writing MFA program. According to an angry group of writing faculty, the fact that the rankings take financial aid too heavily into account is enough to break out the pitchforks.

THOUGHT BUBBLES

• A very interesting interview with John Kreidler about his cultural policy simulation game, Medici’s Lever.
• Cool true-life story of the birth of an internet meme, conceived by the arts blogosphere’s own Chris Ashworth.
• Clay Lord offers a rare look at the neuroscience of audience response to theater.
• Arlene Goldbard offers her vision of how the arts could play a role in a new stimulus.
• Plagiarism appears to be on the rise in the internet age, even among doctoral students: a study of 120 dissertations in psychology turned up instances of plagiarism (defined as using 10 or more words from another source verbatim without attribution) in a shocking 80% of them. If even the future teachers are plagiarizing, what does that mean for the long term trend?
• Surprise, surprise: when you raise prices 60%, you might lose some customers.
• Two months ago, shoemaker Converse opened up a free recording studio in the ultra-hip neighborhood of Williamsburg, Brooklyn. The New York Times spends a day there talking to the artists taking advantage of the service. A competitive process is used to identify musicians, and as with Kickstarter’s “Projects We Love” (see below), artists are chosen “less for their talent than for their viral energies — their presence on MySpace or Facebook, their hustle in pursuing their careers.”
• I found this live improvised playwriting experiment between Neil Labute and Theresa Rebeck kind of cool, despite the hokey setup.
• I’ve never understood why anyone would want a tattoo, but it seems buyer’s remorse is at an all-time high. Unfortunately, tattoo-removal-seekers are finding that it’s not so easy to turn back time.

RESEARCH CORNER

• In connection with the Artist Revenue Streams project, Future of Music Coalition and the Field are co-hosting (along with a boatload of other organizations including Fractured Atlas) a workshop for musicians on “accounting for creatives” in NYC on Monday, September 19. Check the link for info.
• Nice to see an organization that just released a research report (the Center for Effective Philanthropy, in this case) openly discussing how response bias might have affected the results. We need to see more of this kind of transparency in reporting research results.
• I was intrigued to hear of the formation of a new music research and composition e-journal series on the Social Science Research Network database, led (mostly) by Boston University faculty.
• Andrew Taylor points us to a new book by the Curb Center’s Steven Tepper on protest and the arts.
• Two economists estimate the “psychic value” of a work of art (as distinct from its investment value) at 28% of its overall price.

LOOKING BACK

(the following are some “retro” links from the past 12 months that for one reason or another didn’t make it into the around the horn wrap-ups the first time around.)

• Joshua Phillips lays out a very serious and detailed proposal (and justification) for a public policy game show.
• It’s not too often that I see a coherent conservative case against arts funding, but here’s an example for those who might be curious. Main arguments: the evidence of the arts’ economic impact is flimsy, and government funding makes for worse art.
• It was hard to suppress a wry smile upon learning that Leona Helmsley’s precious dog Trouble, to which she left $12 million in her will (disowning two of her grandchildren in the process), has passed away. The funds held in Trouble’s trust have reverted to Helmsley’s charitable foundation, which is one of the largest in the world.
• Wondering where our nation’s sudden income inequality came from? Since 1992, super-wealthy Americans’ effective tax burden has plummeted by more than a third. Over the same time period, the effective tax rate for all taxpayers has dropped only 6%.
• Is subway pop-up theater the new flashmob-chorus/dance/opera-in-a-mall?
• I found this quote worth mulling over, from the NYTimes Magazine’s writeup of Kickstarter last month:
  

  I sat in on a meeting where the [“Projects We Love”] newsletter picks were made. During the half-hour or so Strickler and the team discussed the choices, I was struck by how often they talked not about the projects but about the pitches. “His video is so boring.” “What are the rewards?” “Why is this cool?” They were focused on the project ideas through the filter of “the Kickstarter project” as a form. “We have values,” Chen told me, and they boil down to prizing creators who respect its proc­ess. They favor creators who think through the rewards for backers, get the word out and engage an audience. In other words, the process doesn’t shape the aesthetic. It is the aesthetic.

Here’s your roundup for the week:

• As a reminder for the teabaggers out there, top marginal tax rates were over 90% from 1944 to 1963, including the entire Eisenhower administration. It took the administration of noted small-government advocate Lyndon Johnson to cut them below that level. (For comparison, under Obama’s plan, the top tax rate will rise to 39.6%. Taxes in the aggregate would still be lower than they were under Reagan.)
• The L3C is gaining momentum, having been passed now in Michigan, Wyoming, Utah, North Dakota, and the Indian Crow Nation.
• Uh oh: IMG Artists Chairman Barrett Wissman is guilty of securities fraud.
• Sean Stannard-Stockton marries my two favorite topics in talking about how philanthropy is like music.
• Here’s a sort of funny video from Network for Good about fundraising.
  

  “Let’s just keep it simple,” responds the donor/girlfriend. “I’m breaking up with you.”

  “I give and I give and I give, and I don’t hear anything from you,” she complains.

  “I sent you a plain-text e-mail receipt. It had your name on it, for God’s sake!” he counters.

  Yup.

• Via Americans for the Arts, the new Serve America Act includes new (paid) service opportunities for artists. Not sure if it’s related, but the Music National Service Initiative, a new social enterprise, is hiring MuiscianCorps Fellows.
• Speaking of AftA, they’ve just released their 2009-11 Strategic Plan and the results of an environmental scan conducted by AMS Planning & Research. (h/t @lisa_hoang)
• Good news? There are expected to be 24,000 management-level nonprofit job openings in 2009, according to a new report from Bridgespan. The bad news? That’s down from 77,000 in 2008.
• Steve Reich finally wins his Pulitzer.
• Two contrasting takes on blogs and profitability from two formerly employed journalists. In one corner, ex-Backstage editor and Createquity reader Leonard Jacobs is profiled in Crain’s New York, sharing his plans to turn the Clyde Fitch Report into a revenue-generating machine. And over there, we have ex-Boston Globe critic Thomas Garvey calling into question whether anything on the internet can be revenue-generating over the long run. The latter essay is a really powerful, challenging critique of much of our received wisdom about the wonderfulness of the information age.
  

  In fact, people are finally beginning to come to terms with the way in which the Internet actually destroys value rather than creates it. Indeed, the web may be the most efficient wealth-destruction machine ever devised. This was always the flip side of its immense efficiencies; the Internet made economic processes far less expensive, true, and cut out middlemen hither, thither and yon; but it also undercut the physical framework that made “value” possible. Indeed, the value of just about anything that wasn’t actually nailed down, like real estate, was quickly affected by the web. Locale, connections, knowledge – much of what made wealth possible at the individual level was attacked or simply replaced by the ever-rising tide of digital connectivity….

  So I ask myself, in this environment, how could the content of my blog have economic value? How could it be sold? It’s true a handful of bloggers, like Perez Hilton or DailyKos, have rocketed to some level of economic success. But they have done so by generating national audiences, and, perhaps more importantly, by intertwining themselves with existing real-world power structures or publicity machines.

  While not disagreeing with Garvey’s excellent points at all, Jacobs is probably in a better position than most to make it happen. Nevertheless, I am inclined to see blogs more as advertising vehicles for other services than as revenue generators in themselves. For more on this, via Seth Godin, here’s a great little pamphlet from blogger Chris Guillebeau on how he achieved overnight success in 279 days.