The state of the nonprofit arts sector in the United States is a topic that has ignited passionate debate in recent years, given the decline in audiences, earned revenue, and philanthropic support in part as a result of the Great Recession. PND asked Michael I. Sovern, board president of the Shubert Foundation, which recently awarded grants totaling $24 million to nearly five hundred arts nonprofits, about the role of philanthropy — and, specifically, general operating support — for performing arts organizations. Sovern is Chancellor Kent Professor of Law at Columbia Law School and former president of Columbia University (1980-93), and has served on the boards of numerous nonprofits, including the NAACP Legal Defense Fund, WNET/13, and the American Academy in Rome.
Philanthropy News Digest: The Shubert Foundation describes itself as “the nation’s largest private foundation dedicated to unrestricted funding of not-for-profit theaters, dance companies, professional theater training programs, and related service agencies.” When did the foundation adopt a policy of providing unrestricted funding to performing arts groups? And why do you believe it’s important for the foundation to give its grantees maximum flexibility with respect to the way they use their grant income?
Michael I. Sovern: Our policy of providing unrestricted funding was already in place when I joined the foundation’s board over thirty years ago. Although the foundation was established in 1947, its formal funding priorities and guidelines were created in the 1970s, which is when the focus on unrestricted funding for professional theater companies — with a secondary focus on professional dance companies — began.
We have reviewed the policy from time to time but always have come up with the same answer. Each of the many performing arts organizations we support is wrestling with issues specific to its own location and circumstances while also facing challenges that are common across the industry. We believe that the administrators, artists, and boards of our grantees know best where the funds we provide should be directed. Our confidence is buttressed by our multi-faceted approach to the evaluation of each company — one that considers the artistic, fiscal, and administrative aspects of the organization. This careful annual review helps us to feel comfortable with awarding unrestricted grants.
PND: Why do you think so many arts funders are reluctant to provide general operating support?
MS: Some donors want to see the specific impact of their contributions immediately. Some enjoy exercising control. Fresh initiatives are more exciting than paying the electric bills. But the quest for earmarked support can draw an organization’s attention away from its central mission. Time and energy that could be spent strengthening the company may be diverted, possibly to the detriment of the overall health of the organization. A search for replacement funds to continue the projects or programs can drain resources while often yielding minimal results. The impact on the bottom line of the organization and the toll on the company itself may well prove that the pursuit of these funds was a mistake.
PND: In his new book, Curtains? The Future of the Arts in America, Michael Kaiser, the former president of the Kennedy Center for the Performing Arts, suggests that a growing number of arts funders are shifting their support to endowments and working capital reserves. Is that a sensible approach in the current funding environment for the arts?
MS: For at least two years now, we have been hearing from our grantees about the shift to working capital reserves — a move away from restricted endowments, in fact — that allows for more flexibility and access to funds when and where they are most needed. As the restrictions on working capital funds are often less stringent than endowment rules, these funds are closer to the general operating support in which we fervently believe. Gifts to endowments, unless they are very large, have a much smaller impact on current needs since, typically, only a small portion of them can be spent each year. They are essentially addressing tomorrow’s needs at a time when the building of large fortunes suggests that ample resources may well be available in the future.
PND: In his book, Kaiser paints a rather grim picture of the state of the performing arts, pointing with alarm to declining attendance rates, soaring pension costs, the “graying” of audiences, and a lack of interest among younger audiences faced with a growing number of digital alternatives. Do you share Kaiser’s pessimism?
MS: Although we do not share his pessimism as much as we share his concern, we understand and applaud his effort to cite and address these issues as an expert in the field about which we care so deeply. With the continued waning of the subscription model for performing arts organizations, the competition for entertainment dollars, and the shifting landscape of marketing and communications, among other challenges, the list of issues facing each and every performing arts group is lengthy and, sadly, growing.
Still, we have been continually inspired by many of the organizations that we support, particularly those that continue to make risk-taking artistic choices while also maintaining fiscal stability. There is extraordinary art being created and shared with audiences who know that there is no substitute for the communal experience of live performance.
PND: What are the two or three things performing arts groups should be doing to survive and thrive in this brave new world we find ourselves in?
MS: They are on the firing line and I am not, so I feel presumptuous in answering this question, but a consensus does seem to support one recommendation. Performing arts groups should serve audiences in ways that reflect the many voices of their respective communities to maintain the relevancy and immediacy that live theater and dance offer. An even tougher challenge is to educate audiences to take risks on unknown titles and support artists creating thought-provoking and intelligent new work. We will continue to do our part to help organizations that are trying to meet this challenge.
-- Kyoko Uchida