Funding for the arts:
The urge to create, or the urge to plunder?
In a recent Broad Street Review article, Armen Pandola suggested re-branding Philadelphia as Premiere City by (among other things) holding a nationwide “new play contest,” from which each participating local theater company would pick and stage a new work. To fund such a scheme, he suggested “charging an extra dollar for every hotel room rented in the city.”
However, under existing antitrust law (which, FYI, also applies to non-profits), hotel owners could not voluntarily band together and collectively raise the price of each hotel room, even for a socially desirable/charitable cause like Premiere City. Instead, promoters like Pandola would need to lobby City Council to impose the cost increase and the subsequent transfer of funds.
So Pandola’s well-meaning proposal to stimulate theater is actually an exercise in coercion. “A dollar a hotel room is a small price to pay for theater,” Pandola argues. I wish that Pandola, and everyone who supports similar schemes, would stop treating local industries, business owners and consumers as one more resource to plunder in support of the arts.
Obama vs. Clinton
Though more general in scope, a similar battle now rages among artists over which Democratic presidential candidate would better serve artists and the arts, where “better” means “will give us more money and benefits.” Among other schemes, both Barack Obama and Hillary Clinton (view their respective policies here) propose increasing funding for the National Endowment for the Arts. Imagine how the policies and plans of these candidates and Pandola might sound to someone who, for whatever reason, simply doesn’t want to support the arts?
Hilary supporter: “My candidate will force you to give us money.”
Obama supporter: “My candidate will force you to give us more!”
While I object to the arts community’s insistence on direct funding on moral grounds, I don’t understand why arts organizations continue to pursue these avenues when they’re all so much better at raising money indirectly from individuals and groups that genuinely want to support their work.
An economist shows artists the way
The economist Tyler Cowen makes the case for indirect arts funding in his book, Good and Plenty: The Creative Successes of American Arts Funding.
Anyone who’s ever attended a play in Philadelphia has heard the ubiquitous plea that only 40% (or so) of a theater’s revenue comes from ticket sales. As for the rest? Cowen writes: “Looking at nonprofit arts institutions more generally, individual, corporate, and foundation donors make up about 45% of the budget. Twelve percent of income comes from foundation grants.” (He refers to all of these sources as “indirect,” as opposed to direct government dispensations— such as the NEA and state arts— which on a nationwide average only provide a paltry 4% of arts revenues.
The usual response to this argument is: Think how much more art we could create if we supported the arts in America with the same government-sponsored commitment you see in France and Germany. But it’s just not true.
How we really compare to Europe
Direct arts funding in America pales in comparison to levels in Germany—the typical American taxpayer kicks in 50 cents yearly for the arts, compared to the $80 taxed out of the incomes of our German counterparts. On the other hand, Cowen notes, Americans donated more than $29.4 billion to arts and culture in 2003 (his most recent year). And the time-donations of volunteers—equal in scope to 390,000 full-time workers—amounts to another $20 to $25 billion on top of that. (By comparison, NEA funding peaked at $175 million in 1992.) So in America, total arts funding per capita is far higher, and the consequent output of art far greater, than in most European nations.
The lesson seems clear: Americans want to support the arts with their wallets and their time. So when arts advocates—whether Pandola or the Theatre Alliance or the Orchestra—think about ways to increase their funding to produce more art, they should think less about “taxing” the incomes of tourists and citizens, and more about ways to convince people to give voluntarily.
France follows our example
If theaters really want to boost their funding, they should advocate on behalf of their funders— donors— by advocating for changes to the current tax system, which Cowen points out provides “the most significant arts subsidy in the United States.” Currently, a dollar donated to a nonprofit institution reduces the donor’s taxes between 28 and 40 cents, depending on the donor’s tax bracket. Imagine how much philanthropic donations would increase if those deductions doubled?
Currently, France limits tax deductions to 1% of taxable income for individuals and .1 percent for corporations. But France (and Germany too) are starting to learn from the successes of the American system and looking at ways to change their tax codes to encourage greater levels of philanthropy. Maybe it’s time that American arts advocates for the arts reflect on their own achievements in this regard as well.
To read responses, click here.
To read a response by Dan Rottenberg, click here.