A Conversation between Private Grantmakers and the NEA

FACILITATOR: Our objective is to discuss the influence of the recession on changing philanthropic patterns. And to better understand how these patterns affect the dynamic relationships between public and private funding for the arts. The questions for today are intentionally broad, allowing for various entry points informed by the diverse perspectives in the room. Sometimes it feels that meetings such as this are more valuable if specific conclusions are reached; yet today we are asking you to actually steer away from conclusions and to place your focus on offering your informed perspective to the collective learning of the group. So let’s get started with the first question: How is the current economic environment shaping your thinking about funding?

PRIVATE GRANTMAKER: During this period, we have seen that midsized organizations, with budgets between five-hundred thousand and one million dollars, are doing better than other organizations. The whole problem for many has been compounded by real estate and trying to pay for buildings. It’s strangling them.

PG: In my state, the same size organizations are struggling, and we are putting more emphasis on small and service organizations and are putting them in the center
of our programs.

PG: We had to rethink making three-year grants when they would go until 2010–2011.

PG: We have to start taking a curatorial role in saying that I believe this organization should stay—we need to take a more public leadership role.

PG: The opportunity to have this conversation helps me be a little more sober about reviewing my next applications. I really appreciate the candor here. Now we must say, “Is it this organization or it is the one down the block?”

NEA: If we are going to get Darwinian about it, then we need to think about the ecology of the field. In folk arts, 72% of organizations have a budget of $150,000 dollars or less. They are resilient but still fragile. It’s not just thinking about a level playing field—it was never a level playing field.

NEA: We’ve heard that this moment (of Darwinism) has arrived. What does this mean? Well, there is a natural culling that needs to happen. Darwinian means not the survival of the fittest but the survival of the most adaptable.

NEA: If we are assuming that a capitalistic system works and continues to work—we need to look at the models we have been using. We are relying on a system where people chose what to buy, but is this a helpful system for us? We should have a sense of who is shutting their doors and why. We have a concept of how capitalism works, but that concept has been shattered, and we need to rethink what we are assuming about the arts. If we go with the capitalistic system, we are telling the American public it’s OK for these organizations to die.

PG: We are also looking at opportunities for these organizations to merge—a larger organization to merge with a smaller one that was not making it.

PG: Are you finding in the merger strategy that organizations come to you and ask to merge, or you go out to them and suggest it?

PG: We are finding both.

PG: Sometimes the things that survive are not always the most necessary, they may not be as viable to the constituency that they are serving—thus, we need to be curatorial and advisory.

FACILITATOR: How critical is data to this moment—whether it’s more qualitative or quantitative?

PG: I’ve been most taken by case studies where they drill down and look at funders in local communities, and that data can be extrapolated in many cases to reflect national trends. When you have data, you bring in other voices.

NEA: The falling away of audiences and the notion that we can get into the habit of thinking it’s a zero sum game. Even the fact that a dollar will be spent on the arts is a hard thing to ingrain into public thinking. The idea that people develop an appetite and a desire to engage in the arts has to be fostered.

PG: The notion of our curatorial responsibility—there are a growing number of fields and professions that are growing fragile. In some cases, we go to the candidate and in others they come to us. But we can’t do everything. We are responsive to services to the field, but we can’t do the entire job effectively. We can only do what’s in front of us. Do we save this organization again? Or do we decide to say no this time or yes again? Sometimes I have to ask my colleagues. If we are dealing with a DOA issue and the community is not stepping forward after the tenth time, we have to make some harsh decisions.

NEA: Historically, there has always been a relationship between public and private funding. The NEA needs to be more aware of the community and local influences before the grant applications come in and we evaluate them—to learn about the influence before, so we won’t be blindsided by issues. So, it’s not things have happened and we respond, but instead, we know about them as they are happening.

PG: It’s hard to find data addressing the crisis of the moment. However, over time, data gives us great insight to what the structural problems are that those organizations encounter in more stable conditions (not at a time like this). It’s a structural problem but not a crisis problem.

PG: What are the ethical issues surrounding these questions? As funders, are we prescriptive or responsive? I believe we need to be more responsive to needs of artists, organizations, and communities. So, let’s start the dialogue about what our role is. Those decisions are made based on what is best for a community. When we talk about “excellence” what does that mean for a specific community? Is some art that may not be defined as “excellent” by professional standards better than no art?

NEA: I think it’s fascinating that the industry has emerged in different stages. We don’t need to have just one investment strategy. When you go down the list, look to see if the grant is just keeping them alive or feeding their portfolio. Thirty years ago we were just investing in growing the arts; now portfolios are much more complex. We are not just developing the institutions like we were thirty years ago.

PG: The Advancement program was wonderful but not perfect—today this program could have many more facets—how does one become smaller, more adaptive rather than bigger. When you move away from only programming—rather than merge or don’t merge, a merger can be a single part of an overall plan.

PG: The multiple investment strategy seems to most effectively create a counter to the current moment we’ve identified and discussed.

FACILITATOR: Even if the economy continues to rebound over the next 18-24 months, what are some of the longer-term (5-10 years) changes you foresee? Among your grantees (structure, vitality, capacity for risk, etc.); within the field in general (trends, shifting priorities, etc.)?

PG: Strategic alliances—there are a lot of organizations who want to survive, but they don’t know about the changes in the game, so perhaps funders could provide space for these conversations to take place.

NEA: I love the idea of questioning the grants system itself, and using this time to look at year-by-year funding, mergers, and strategic alliances. I want to know how these thoughts and ideas come out of the funding discussions. I feel new in the field of philanthropy and giving of resources. I’m feeling hesitancy about our impact in the field—but we have it. I know that many projects that were not successful didn’t come forward with a strong message about where we want to go and who we are. I feel that we need to take a more active role in identifying organizations that we feel need more support or others that we feel have gone through their normal life cycle.

NEA: The way information has come into the endowment in the past has not been like it is now—we used to have day-long policy discussions. These discussions came with a whole array of artists, organizations, and panelists involved. I like having the opportunity for the exchange of these ideas—this kind of process is part of what our democratic system is about. Information, so better decisions get made.

NEA: We need to be aware of the real differences in the disciplines. Most dance companies have been bankrupt forever. What is unique about dance is that it’s a youth- driven art form—you dance when you’re young.

FACILITATOR: There were 2,424 American Recovery and Reinvestment Act (ARRA) grants applications to the NEA for jobs. The NEA funded 1 of 4 of them. What did you learn from these applications and the process of awarding the grants? (All responses were NEA personnel.)

• In our field, we have organizations that have maybe one or two employees—we were ultimately making a decision about what organizations to save/fund, not just what jobs to save.
• We saw individuals ready to act. Panelists and readers were so supportive of the work we were doing. The fields are ready to act, whatever you offer them.
• As funders, (we) can be more responsive than we ever imagined.
• Many members of Congress don’t understand that these are real jobs.
• There was a pretty big pushback about the advocacy capacity of the field—there was surprising, organized response.
• We saw the same thing in the states—they turned it around on a dime because they already had strategic plans in place—they were ready to respond.
• We saw that some applications hinged on one another—jobs based on previous request for funding. ARRA hinged on a project grant or a fellowship.
• All these groups can benefit from modern forms of communications, collective dialogues to create these strategies—an environment where the entire field can make these decisions. Bottom up rather than top down. Not just … you write a grant and send it in and six months later hear whether or not you receive it.

FACILITATOR: What are you doing strategically in relation to what you see? Secondly, what is it you would like to know, or continue to find out, from the private sector and vice versa?

PG: The capacity of leaders to adapt. Thinking differently about what leadership means. The moment we find ourselves in is a good and shocking thing. The foundation is doing very little in capital grants. We are shifting from looking at new building to repairs and maintenance and taking care of what we already have. Also interested in artist service organizations and more specifically artist workspace. Interested in space “capitalization.” We are trying to figure out how we can engage earlier in the process for organizations before they get to a point where they can’t maintain what they have. Making strategic investments.

PG: Our foundation has been all things to all organizations, including thirty-eight $25,000 fellowships across all disciplines. With the economy tanking and the foundation’s commitment in another sector, our arts budget is smaller. Working with a consultant, we are about to launch a program that puts the artist in the center. Working with organizations to re-grant and help the public realize that for artists, art is their job.

PG: We typically help an artist for three to five years. We are now going to offer an exit year, making sure that they have used all of our resources and also get feedback. It’s a big leap for us. We are not a national service operation. One emphasis is career development and this has helped us reach a lot more artists. We are interested in expanding and using more affordable practices and technology.

PG: We want to prioritize requests for mergers and acquisitions. Also, repurposing grants and trying to figure out how to do that better. We were encouraging balanced budgets, but not creating reserves. We want to clearly figure out how to provide a grant that succeeds at helping organizations to have a working budget and reserves for stabilization. After the economic downturn, we set up meetings to discuss where they (our grantees) were and tried to come up with solutions.

FACILITATOR: What are these grants being repurposed to?

PG: For example, a company was short operating revenue. We moved their fiscal 2010 into their 2009, their 2011 into their 2010. They were an excellent staff and board and reinvented their model.

PG: We recently did a study on how organizations are capitalized, which showed that funders are not making capital investments of the kind that actually stabilize organizations. We haven’t figured out how to change the way we invest in capitalization projects in response to the study. We have a technical assistance program that we are redesigning to address this need. There’s already a high degree of financial literacy in our culture sector and that helps.

We invested in research that redefines “cultural engagement” to include people’s own creative practices as well as their participation in professional arts experiences, both live and through the media. One finding is that there is no correlation between education level and personal creative practice, unlike with other forms of arts participation where a greater level of educational attainment correlates with a higher level of cultural attendance. (Alan Brown, year-old study).

PG: At a recent workshop in Atlanta, a common theme was that you don’t plan Plan B when it’s time to implement Plan B. There is a new interest in using tools: like scenario planning. We are incorporating so many tools from other areas. One thing we’ve learned: we need to identify partners that can take on things that we don’t/can’t.

NEA: We are in transition and we are prohibited to start new initiatives. However, we are working to increase funding for existing programs. The tone in which we can articulate data is important. Folk arts awards, jazz masters, opera, national medal of arts are examples of how we have grown to extend to events. There is a strong sense of priorities, but funding is available to the new chairman. It’s a difficult place for current staff to be in. So, every week, we have a meeting about what are the priorities. Transparency is important on how we perform and document.

NEA: What we heard was it’s important for our constituents to convene, so travel expenses were taken in consideration.

NEA: There will be a reset. Are there any themes that the agency needs to rethink?

PG: Bring Advancement back. I think it was a sad day when most of the fellowships left the agency. I think the NEA still holds influence, but if it lost it, I believe that is why.

PG: I’ve done a lot of research into cultural exchange. There are barriers between folks at the state department and the arts organization. It’s an area that needs more money and closer integration with cultural agencies and the NEA.

FACILITATOR: What is it that you as private funders and NEA staff would like to continue to learn from each other, and how might that happen?

• National overview is invaluable, and being able to come together is priceless.
• Momentum about cultural exchange is happening, and I would want to know what the interest is in the private and public sectors.
• Hear and know more about capitalization and stabilization.
• I’d like to see more common definitions when we talk about culture, and I’d love to see more hard data on the NEA’s impact on giving to other foundations.
• Discourse and planning on the bigger issues, like creating more philanthropists for the arts, connecting the commercial and nonprofit arts communities, improving the general perception of the arts to all Americans, and bringing back corporate support at a higher level. For the NEA, we’d like to see leadership in protecting those artforms that are vulnerable.
• I’d like to continue this dialogue around strategies for thoughtful processes allowing organizations to close. How does an organization go out of business thoughtfully and in a celebratory mood?
• I want to thank GIA for encouraging collaboration between its members and arts education organizations. I think it’s great to have artists reworking public education strategies and entering into that conversation.
• Learn how we can work to continue to use our collective support around a broad intelligent design—through strategic alignment of all our funding.