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In all of the tiresome, and very public discussions on “income inequality” we have been thru in America in the last year or so, how is it that NONE of them have focused on income inequality in the arts?

Fact is, income inequality among artists is tolerated at levels that would give nosebleeds to a Sherpa. Income levels at the very top of the arts are as astronomical as in any other profession – possibly, though not definitely, excepting hedge fund managers and majority stakeholders in anything even remotely internet and social media related.

And I have to say that as a dedicated Capitalist, high incomes are fine with me… although it can be amusing to see very-well-compensated “artists” mixing it up with the “Occupy Whatever” people.

But what about inequality among institutions?

The recent spate of conversations sparked by the Eric Gibson article in the Wall St Journal (“Fat Unions May Kill the Fat Lady”) points up, again, the incredible gap between those institutions at the pinnacle of the American Non-Profit world, the Metropolitan Operas, The LACMAs, the Gettys… and most of the rest of the residents of planet 501c3, who can only dream about the looming threat of “Fat Unions”. Try to imagine anyone referring to Actor’s Equity Association that way. Yes Virginia, there is such a thing as “Big Art”.

The problem, of course, is that in some regards “Big Art” doesn’t look very much like “Big Business” or “Big” anything else. It doesn’t have rich, one-percenter owners that we can all safely loathe (although it does have one-percenter donors – much harder to hate), it doesn’t make something that everybody needs (or at least, that everybody wants), and most importantly, it doesn’t throw off dollars the way Godzilla spews fire, or the Transformers hurl vehicles. It sucks up your dollars, and other peoples’ dollars, and burns them at an incredible rate, in often extravagant ways, in the name of someone else’s idea of culture. And of course, per the article, at the end of any given year, it often loses money.

Maybe it’s not so different from the rest of us after all.

I’d suggest that the Fat Lady that we really hear singing in the non-profit world, that we’ve heard singing for the last 10 plus years, that we’ve heard singing for NYC Opera, for the Minneapolis Symphony, for countless dance companies and smaller regional theaters around the country, and that Mr. Gibson suggests might be singing for the MET, isn’t singing for them at all. Or not just for them, and not even just for every arts institution flirting once again with insolvency. She’s singing for way we have done business in the non-profit world since the dawn of non-profit time, or at least the dawn of prosperous, post-WWII America.

Consider this bit from Peggy Noonan’s recent Op-Ed on a very different subject, political (dis)unity in the US, “Out Of Many, Two”:

“The waste, the long-term deficits, the pumped-up Fed, the fear of impending bankruptcy—all gave rise to a feeling of alarm among many in the country. But not among many in Washington. Why?

I came to think that policy disagreement aside, it was that most people in politics grew up in and were surrounded by, in the first 30 or 50 years of their lives, an incredibly, historically affluent America, one whose financial strength was so mighty it could absorb any blow. This fact of their lives became their reigning assumption: You can do any amount of damage to America and it will be fine.

The country they grew up in is the country that lived in their heads.”

The non-profit performing arts world grew up in that same “historically affluent America”. We are not living in it now.

Whether or not you believe that America will return is one issue – but it seems clear that many at the Metropolitan Opera are suffering from same delusion that Noonan’s Washingtonians suffer. No matter who you are in this economy, in this America, no matter how big your Art is, simply raising more money is not the answer. Big Art, little art, and all art in between need to re-consider their relationship to their donors, their dollars, and their community and their product. The country we grew up in, the country that is still living in our heads, is not showing up in our balance sheets. We need to find a new way.

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Please, please, if you care about non-profit performing arts, read When Your Board Walks Out En Masse…  on The Clyde Fitch Report.  Here’s a teaser:

“Individuals join boards for many reasons, most of which are good intentioned: an altruistic sense of giving back, to positively influence their local community, or to join in the excitement of friends, colleagues and family members for a cause. Board service is a serious (and legally binding) personal, professional and fiduciary responsibility. When 20 professionals walk out on an organization they are required by law to govern, one can safely suspect something had to have gone very, very wrong.”

Almost by definition, these organizations are going to be founded by motivated, pro-active people with a passion for their art form. These folks assume leadership roles and frequently attain out-sized importance in the new organization, and that power structure becomes hardened as time goes on. Those individuals become inseparable from the institution in the eyes of the public, and often, their own.

But non-profit institutions, by the nature of their tax-exempt status and the organizational structure that goes with it, are meant to be an end in themselves, to promote some public good. There is a natural tension between the importance of any one individual and the long-term viability of the whole organization.

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Here’s another interesting chapter in the For-Profit / Non-Profit contest discussion courtesy of Diane Ragsdale. I really don’t see the need to “keep some sort of constraint” on the money making impulses of non-profits: non-profit status requires a level of charitable intent. Can we not leave it up to the IRS? Not trying to be flip here. By gut-level definition, non-profits are going to struggle for revenue in any marketplace, and are always going to be reaching for more. Also, the tendency of any organization is to want to grow- the recent article in the LA Times (see previous post) re The Getty undertaking fundraising efforts to augment its nine billion dollar endowment surely drives that home pretty effectively. Are we really going to try and artificially constrain that basic human impulse?

I sometimes feel that there is a generationally based, reflexive distrust of “Broadway”, or “the marketplace”. The feeling is that they represent something that is, inherently, wrong. Not to be trusted. Corrupting in some irreversible way.  They are, in this view, comparable to Big Business, or Greed, or Capitalism. Can they be corrupting? Of course.  Must they be? Let’s allow the individual organizations to decide how they are going to do that reaching for revenue. Then their supporters, their constituency, can decide if they support that.

The pain that Polly Carl shares in her response, and shares with many others, over salary iniquities, and the constant funding of buildings and administrations before artists also hits home. High relative salaries for artistic and / or administrative leaders are usually defended as market-based; these people are charged, directly or indirectly, with bringing in the dollars that keep the structure going – you have to pay up to get the best people, and bring in the most dollars possible. So you have the closed circle that perpetuates the organization for the arts, and only rarely, and seemingly as an afterthought, trickles a few lonely shekels down to the creators of art…

As long as performing arts institutions remain shackled to this vicious, closed circle, that is, the constant need to re-raise your entire budget every single year, while simultaneously harboring the natural ambition to grow (and thus make your task even more difficult next year), this won’t change. Waiting for government to pick up the slack is waiting for Godot – it will never happen. Completely aside from the miserable current condition of government budgets, both Federal and State, it is politically impossible. Neither the money nor the political will are there. There may be a few (rare) exceptions with regard to political will at the state level, but in Washington both obstacles are insurmountable.

The answer, I believe, is to follow the lead of the most successful non-profits in the country, the private universities, and focus on endowments. This will, eventually, create a revenue stream independent of the annual budget-raising merry-go-round.  It creates a pile of dollars – that belongs to the institution – that artists can legitimately point to in their long-term quest for reasonable compensation. It’s money that the leadership isn’t required to raise every year, and so undercuts need to constantly pay top-dollar to asset collectors. And it helps to insulate the institution from the ups and downs of the economy (and if we can’t appreciate that in today’s economy, we never will).  Further, it’s one of the few tools that our government offers non-profit status right from the get go, and we don’t use it.

Is it a silver bullet? No. Will it be quick? No. Is there something better we haven’t tried?

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“Markets make us less moral”.

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That was the conclusion of a German study referenced here (http://blogs.discovermagazine.com/d-brief/2013/05/15/markets-make-us-less-moral/) ) at Discover Magazine online. By all means read the article – it’s short – but here’s the gist: participants were offered the chance to “sell” the life of a mouse for a fixed price (10 Euros), or refuse the money and save the mouse. Close to half said they would sell. Then another group was offered the chance to sell the mouse to a second party (who would then dispatch the mouse).  A larger number offered to sell the life of the mouse under these circumstances.  In a third group, multiple buyers and sellers interacted, with the same potential results for the mice, and with essentially the same (larger) number of respondents willing to ultimately off the rodent. The conclusion? “…a marketplace degrades a person’s morals…” This same study was referenced by Diane Ragsdale in a blog referenced below.

How do you even begin… market-India

In the first place, let’s examine the idea that something as essential to our “who-we-are-ness” as morality or ethics is really degradable by a simple 20 second transaction. Most of us think of our moral persona as something that is developed over the course of a lifetime, some of it bequeathed to us painfully (and joyfully) over years of our childhood and adolescent development by parents, teachers, mentors and even (God help us) siblings and friends.  This moral and ethical core being is additionally shaped by the most consequential, life-changing and emotional experiences from 70 or 80 odd years on this planet. If we can burn through even a modest fraction of what used to be called our “moral fiber”, in such a modest transaction, what the hell is it worth? Why did it take us so long to put the damn thing together if it was so easily disintegrated? And to stretch the point just a little further, if such a timid indulgence in markets was able to accomplish such notable moral deterioration, imagine what might be done by daily participation in such a market, trading mouse-lives by the tens, or hundreds, or  mouse-life futures, or mouse-life options (in case you were in need of   a hedge)? We would long since be a nation, and indeed a world, of name-your-favorite-mass-murderer-here(s). Doesn’t it seem just barely possible that this potential transaction didn’t change the participants in this study at all – it simply revealed the character they (and we) had already spent a lifetime building?

This whole thing is reflective of a persistent way of thinking in the non-profit world that distorts our economic vision and drives me nuts.

The evil market.

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This postulation of “The Market” (sometimes Broadway!!), a bloated and dissolute Jabba-The- Hut over here, and the little sisters of the poor non-profits over there, is an utterly false dichotomy and we need to do away with it once and for all. Markets are just a lot of people making decisions with their money. We can argue all we like about the ethics, or the quality of those individual decisions, and whether or not we approve of them, or we can argue about which piece of that spectrum we should be pitching to, or if we want to, whether we are more or less “moral” for that pitch, but the markets are Teflon – our judgments do not stick to them, they don’t stain them or move them or alter them in any way. The markets simply render back to us results, and they do not care what we think.

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Click here for an interesting discussion on the tension betwixt For- and Non-Profit theater worlds….

Click Here for a terrific blog by Scott Walters, called “Business Model: The Next Frontier” on The Clyde Fitch Report.

Here is a wonderful and (mostly) serious piece on increasing your capacity for creativity, from John Cleese.

Check out this great article on the Peabody Essex Museum in Salem, Mass. Goal – raise $650 M and dedicate $350 M to the endowment. Title of this article in The Wall Street Journal online is “A New Way Forward”.

Their goal for 2017: Earned Income, 24% of the budget; Contributed Income, 18% of the budget; Endowment Income 57% of the budget.

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Please read “Art and State” on Rocco Landesman,  the National Endowment for the Arts, and state support for the arts, in this case, in France.

The headline is the French level of state support to the tune of $9 billion. The hidden, complicating facts include French lust for (and success in capturing) private American dollars, and Landesman pointing out the volatility of funding from the private sector.

Hmmm.  According to economist Tyler Cowen in his book on this endless debate on funding the arts, “Good And Plenty”, some estimates suggest that Americans privately donated close to $30 billion to the arts in 2003 (while obviously, at the same time donating to Versailles and thousands of other causes worldwide).

What is the answer to income volatility in private life?

It seems clear that endlessly bemoaning the volume of government $$ for the Arts in America isn’t improving our fiscal situation. We live in a raucous democracy with an incredible panoply of opinion and taste. Getting all those voices to line up behind arts funding, without regard for opinions about the art produced by those subsidies seems like the impossible dream.

We live in the most prosperous country in the world, in an economy based on private wealth. Other nations seem to be doing  a pretty good job of accessing that. We are actually doing a pretty good job of that, per Mr. Cowen. Maybe we need to think about what we do with the money we are raising right now. And how we will eventually handle good economic times, when they finally come around again…

A few words on Conservatives and the arts.

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