Advantages And Disadvantages Of Private Andor Public Support

In debating the merits of the European as compared with the U.S. system of arts support, we are not suggesting that the nations in either camp should entirely abandon their own approach in favor of the other. Each system (and its local variations) is the expression of a long-standing cultural and political tradition that has to be understood in its own terms.20 Nevertheless, it is instructive to examine the claims made for each.

20. See Milton C. Cummings, Jr., and Richard S. Katz, eds., The Patron State: Government and the Arts in Europe, North America, and Japan (New York: Oxford University Press, 1987).

Table 12.5 Income structure in the performing arts: International comparisons (% of total income)

Year

Earned income

Private contributions

Public support, total

Central government

Provincial and local

Canada: all companies"

1991-92

47.8

16.2

36.0

1994-95

47.4

17.7

34.8

Finland: Finn. Nat. Opera4,

1994

22

<0.5%

78

69

9

France: Lyric theaters'

1993

16

84

8

76

National theaters'

1993

21

6

73

73

Germany: Theaters'

1994

14

85

1

84

Italy: Turin Opera®

1995

13.8

7.1

79.1

64.1

15.0

Netherlands: All subsidized companies''

1995

15

5

78

60

18

Sweden: Regional theaters'

1990-91

11

4

85

60

25

United Kingdom: 6 opera companies®

1993-94

38

13

49

47

2

8 orchestras®

1993-94

55

10

34

24

10

6 dance companies®

1993-94

36

11

53

49

4

United States: 62 opera companiesf

1995-96

49.9

45.7

4.4

1.1

3.4

68 theater companiesf

1995-96

60.9

33.1

6.0

1.6

4.4

" Statistics Canada, Canada's Culture, Heritage and Identity: A Statistical Perspective (Ottawa, 1997), table 4.4b. ' Arts Council of England, International Data on Public Spending on the Arts in Eleven Countries (March 1998), table 13.3. ® Ibid., table 8.4. d Ibid., table 9.4. ® Ibid., table 11.10. f See table 12.3, above.

Philosophically, those who favor the European system in which arts institutions are supported primarily by government subsidies start from the premise that art and culture are a national heritage and therefore logically deserve to be supported by the nation acting collectively. At the practical level, an alleged advantage is that the government can provide whatever funds are needed and in so doing relieve the institutions of unremitting and distracting pressure to raise money from private sources. Government funding, it is also argued, would be relatively stable, providing a more reliable basis for long-run planning than does private support. Perhaps more fundamental, support from the public budget is seen as a way of insulating the arts from the potential threat to their artistic freedom associated with dependence on the marketplace. As Schuster puts it, "The Swedish National Council for Cultural Affairs is struck by the paradox of encouraging greater corporate funding when one of the important goals of their national cultural policy is to 'combat the negative effects of commercialism in the cultural sector.'"21

Those who defend the "U.S. system" do not, of course, disparage government support. Rather, they argue that a combination of public and private funding, with heavy reliance on the latter, has some advantages over an almost exclusive reliance on the public budget. First, it diversifies the sources of income, which could make for greater stability than the European system under which arts budgets can be squeezed very hard during a period of public austerity. Second, diversity in funding sources also reduces the concentration of power over arts policy, which, in the European system, rests with government agencies. A secure base in private support gives institutions a freedom of action they lack when largely dependent on the government. Third, U.S. arts institutions, because of their reliance on the individual donor, cultivate the donor's attention, understanding, and goodwill. In the long run, that probably helps to broaden the constituency for the arts, which should, in turn, ultimately provide benefits in the political realm.

There is plenty of ammunition with which to criticize the arguments on both sides. As to the alleged sufficiency of government funding, Simon Jenkins in the Economist argued that government support during the austere Thatcher years, while "secure," did not

21. Schuster, Supporting the Arts, p. 56.

give Britain's arts institutions an adequate rate of growth. They have been falling behind those in other Western nations because "they have not won the spectacular government resources which their European colleagues have gained," while also failing to press for policy changes "that might have unlocked private resources."22

The question of stability

The alleged stability of government support must also be questioned in light of recent experience in the United States: at the federal level, the erosion of NEA funding by inflation in the 1980s, followed by a sharp cut in appropriations in the mid-1990s; at the state level, the wild gyration of appropriations from the late 1980s to the early 1990s. (See discussion in Chapter 13.)

As for the stability of private giving, while individual donations appear to be a secure form of support in the United States, it is doubtful whether corporate giving will prove as reliable. It is sensitive to changes in the level of profits, which can be volatile over the course of a typical business cycle, and also to changes in corporate structure resulting from mergers and takeovers.23

Mergers can affect corporate giving in two ways. First, at the budget-making level, the combined companies may decide to donate less to the arts than the sum of what the two had given individually. However, we have no systematic evidence on this point. Second, a substantial portion of corporate donations goes to arts organizations in cities or states where the corporations have either their national or regional headquarters or major plants. But, in an attempt to realize the economies that are usually announced as a prime objective, the merged companies are likely to close some of those operations. What happens to arts donations in the cities that lose a corporate presence? They are very likely to be reduced. However, there may be offsetting gains in other cities where operations of the combined companies increase. To pick an example not related to a merger, after Exxon moved its corporate headquarters from New York City to Irving, Texas, in 1990, an Exxon executive in Texas said, "We were big supporters of the arts in New York City until we moved here in 1990. In

22. Jenkins, "Paying for the Arts," p. 16.

23. See Useem, "Trends and Preferences", pp. ix-x.

1990 we began a measured program to reduce our support of the community organizations there Over the years we have drawn back almost all of our giving in New York." In 1997 Exxon reported giving $2.6 million to arts organizations, of which more than half went to arts groups in Texas.24

The record up to now is that corporate giving is somewhat more variable year to year than are individual donations. We studied the variability in the major categories of inflation-adjusted private giving from 1967 through 1996 by calculating the coefficient of variation (V) for the year-to-year growth rates in each category.25 Individual giving displayed by far the most stable growth rate (V = 1.52) and bequests the least stable (V = 6.0), while corporate (V = 2.32) and foundation (V = 3.49) giving fell between the extremes.Total donations (V = 1.43) were, of course, more stable than any of the components, clearly supporting the advantage of diversified sources of support.

Interference with artistic freedom

Whether government agencies or powerful private donors are more likely to interfere with that artistic independence of arts institutions is an open question. Perhaps the word "interfere" is too dramatic (although we cite such a case). More often the donor's influence on artistic policy makes itself felt without direct interference: The recipient institution bends its policy to conform with the agency's or the donor's known preferences. Such effects are subtle and not easily demonstrated. However, no less an institution than the Metropolitan Opera offers a well-documented example. In 1983 as part of its centennial celebration, the Met commissioned new operas from two U.S. composers. One of these, The Ghosts of Versailles, by John Corigliano and William Hoffman, was produced with considerable popular success in 1991-92. (It was the first new opera to have its premiere at the Met in twenty-five years.) However, it was reported in 1987 that the Met had canceled the other commission from Jacob Druck-man and also indefinitely postponed plans to produce Arnold Schoenberg's twentieth-century masterpiece Moses und Aron. The

24. Irvin Molotsky, New York Times, January 5,1999.

25. The coefficient of variation is defined as the standard deviation of a series divided by its mean. Data are from Giving USA, 1997 (AAFRC Trust for Philanthropy: New York, 1997), p. 199.

Opera's general manager explained to the New York Times that it was impractical to try to fill the 3,800-seat auditorium by putting on contemporary works, and that influential members of the board of trustees are also opposed to new operas. As he put it, "The people who make contributions to opera are not too excited about contemporary work."26 Thus do the tastes of private donors influence the artistic policies of their beneficiaries.

What about the influence of government donors? In Great Britain, Canada, Australia, New Zealand, and the United States, government grants for the arts are filtered through a semi independent arts council (the Arts Council of Great Britain, founded in 1945, was the first and became the model) under arrangements that are intended to insulate arts policy from the tastes (or whims) of the politicians who vote the funds. Harry Hillman-Chartrand and Claire McCaughey explain the system as follows:

The government determines how much aggregate support to provide, but not which organizations or artists should receive support. The council is composed of a board of trustees appointed by the government. Trustees are expected to fulfill their grant-giving duties independent of the day-to-day interests of the party in power. Granting decisions are generally made by the council on the advice of professional artists working through a system of evaluation. The policy dynamic tends to be evolutionary, responding to changing forms and styles of art as expressed by the community.27

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