Local Arts Agencies

Crisis and Opportunity

Published in: GIA Reader, Vol 15, No 2 (Summer 2004)

Anne Canzonetti and Caroline Myles, editors William Keens, contributor
Reviewed by Rachelle Axel, San Francisco Arts Commission

2003, 15 pages. Americans for the Arts, 1000 Vermont Avenue NW, 6th floor, Washington, DC 20005, 202-371-2830, info@artsusa.org, www.americansforthearts.org

Even in the best of times—that is, when the country is thriving economically, jobs are bountiful, philanthropic portfolios are generous, and the public is actively engaged in civic debate—the arts face the challenge of validating their place and value in the social sphere. In the past two years the stakes have been raised, as the nation, states, and localities grapple with an economic haze and its broad-reaching effects on public, private, and individual funding for the arts.

Local Arts Agencies: Crisis and Opportunity attempts to distill a story from dozens of local arts agencies (LAAs) and their constituents that tells of the impact of the times on their arts communities while offering strategies that may be adapted to help others weather the current climate.

Wolf, Keens & Co. interviewed twenty-eight LAAs nationwide to learn about their budget projections and about the creative strategies, planned or underway, for survival and growth. In addition, 325 people were asked follow-up questions to expand upon the initial information gathered. A total of twelve questions were posed; nine were quantitative, concerning projections of revenue and expenses from 2003 through 2005, and three were qualitative, concerning each agency's unique local economy and the impact the downturn was having on their viability, programs, and overall sustainability. Finally, plans for the future were examined, as were individual case studies that were already proving successful.

The primary shared experience that emerged was the steadfast commitment of LAAs to their missions and programs. They have not abandoned or changed the essence of their organizations, and, though staff and grant programs have been scaled back (in widely varying degrees), the agencies have not strayed far from their overall objectives.

Budget Projections
“Even as a slumping economy causes some erosion,” LAAs as a group present an aggregate picture of optimistic LAA executives and “relatively stable support,” especially from LAAs that operate as private-sector nonprofit organizations. This picture of stability, however, may be somewhat misleading. Individual cases range from stories of acute struggle (most notably San Jose, California and Tempe, Arizona) to stories of jump-starting revenue-generating initiatives and thriving as a result of risks taken (New Jersey, Hartford, Connecticut, and Hawai'i).

Projected spending by these twenty-eight organizations was $575 million between 2003 and 2005. The overall estimates indicated a slight drop in spending in 2004 and an increase in 2005. By 2005, nine of twenty-eight LAAs expect an increase in their budget and revenue, five expect their budgets to remain flat, and fourteen expect their budget to continue shrinking, with the biggest reduction being a 20 percent decrease in one agency's budget. Two or three of the twenty-eight are expecting to run a deficit in the next several years. The remainder anticipate breaking even or ending their fiscal years in the black. Part of the reason deficits were forecast is a combined $1.7 million decrease in budget size.

Earned income is expected to drop, but not as significantly as one might expect (from 23.3 percent to 22 percent). While this is a nominal percentage, the combined fall-off in both earned and public dollars amounts to a $6 million drop in unrestricted funds and will curtail spending.

As for public support (46 percent of the agencies' combined revenue), it is widely expected that this funding source will drop in 2004, but increase in 2005. The private sector by contrast was seen as most reliable, and agencies expected revenue to hold steady at its current 31-32 percent of total income. In those regions where tourism recovery was already underway (Miami-Dade County, for example) hotel taxes were factors in cumulative steady or increased income.

One common insight was the importance of cultivating smaller donors more extensively; increasing even small donations would not only increase and diversify revenue, but also develop a pool of advocates.

Local Strategies to Offset State Crises
Not surprisingly, the strength of a local economy is the key to a well-funded LAA. In regions that have seen boom industries shrivel (e.g., Seattle and San Jose), arts agencies are struggling along with other industries to hold their footing. Conversely, Columbus, Ohio, has boosted its role as a hub for transportation, biotech, and creative services, which has spilled over to create “a bright future” for the arts. State governments, however, may hold even greater sway over the fiscal soundness of LAAs. The poor fiscal health of states promises to be a drag on the recovery of all. And as the federal government places more responsibility on the states, states will have fewer tax revenues to direct to any one need, especially as state reserves are depleted.

Countermeasures to offset state crises were described. In Boston, New Jersey, and Cleveland innovative strategies to stabilize local and state arts agencies include placing a tax measure for the arts on the ballot and establishing task forces aimed at stopping the elimination of state arts agencies. Austin is building stronger inter-agency partnerships in city government and positioning the arts as a key to Austin's “bring-business-back strategy.” Miami-Dade's Department of Cultural Affairs spotlighted the value of creating powerful messages; it believes the best strategy is to indoctrinate the opinion leaders—the mayor, local council members—and let them be the messengers.

Lessons for the Field
A number of overarching recommendations emerged from this study. All twenty-eight LAA executives confirmed that good leadership, strong messages, and an organized, vocal citizenry are critical components of a supportive environment for the arts. Of course, fiscal responsibility and skill remain assets to an agency and community. Developing partnerships and alliances will help the arts reach out to other sectors of civic life and broaden the breadth of its support. Tax reform policy discussions must always have the arts at that table if systemic shifts are to occur and avoid the arts becoming the first and easiest target. Arts organizations must tie their programs to public policy and/or integrate them with community initiatives and show the benefits of an arts-rich region. A combination of efforts will enable local arts agencies to better weather similar storms in the future.

This report is a valuable addition to studies about the impact of a shifting economy on the arts. (It is worth noting that a follow-up report for 2004 will be published soon.) While its findings seem to skate on the surface of changes that deeply affect the daily lives of many arts workers, the report can serve to open up discussions at the local level and charge each of us to recommit ourselves to the future of the arts in our communities.