by Lucas Kavner | Source: The Huffington Post
In a recent interview written up by Politico, Romney said that cutting all federal funding for the National Endowment for the Arts, PBS, and NPR would be a “focus” of his administration. “Some of these things, like those endowment efforts and PBS I very much appreciate and like what they do in many cases, but I just think they have to stand on their own,” he said in the interview.
Romney is far from the only member of his party to hold this view. Chopping into already meagre arts funding has been a Republican priority for a few years now. In 2011, a group of 150 Republicans, led by Rep. Jim Jordan (R-Ohio,) proposed cutting all government funding for arts organizations. Like Romney, they wanted the NEA and PBS and NPR to make do with no public contributions whatsoever.
It’s a position that remains popular among conservatives, despite ample proof that cutting funding to these organizations would yield no significant increase in government savings. As Ezra Klein and Suzy Khimm wrote in the Washington Post, “getting rid of all these subsidies would have saved the government about US$2 billion this year - chump change relative to the scale of cuts that Romney wants.”
The annual budget of the National Endowment for the Arts stands today at just over US$146 million and is still pretty miniscule by government-spending standards. Remember that money has to stretch across every one of the agency’s grants and programs, covering all artistic disciplines, across the country. Whereas a single piece of defense spending was still funded by taxpayers, and does virtually nothing.
Ironically, Mitt Romney himself is reportedly worth about US$200 million, meaning he could fund the entire budget of the National Endowment for the Arts out of his own pockets if he were so inclined, with US$50 million still left to spare on horses or houses or anything else he feels moved to purchase.
But the larger point is that the arts keep getting picked on because they’re such an easy target, not because they’re useless. Can’t think of a program you want to cut? Just say “the arts!” It’s easy enough, and doesn’t make you any immediate enemies. As Jillian Steinhauer said in Hyperallergic, “Romney is simply following in a long line of Republicans who have used claims of cutting arts funding as a diversionary tactic, a way to appeal to conservative voters without having to talk about what a smaller government would actually look like.”
Also worth noting is that many of the organizations supported by government programs like the NEA are found in red states. Major arts providers in cities like New York or Los Angeles enjoy far higher levels of private donations than do institutions in most rural areas, where NEA grants can spell the difference between a program’s life and death. The NEA supports organizations in low-income regions, and helps states deal out money to those who need it most.
But if it’s a price tag that is required, then here’s one: the most recent “Arts & Economic Prosperity” report, compiled by the Americans for the Arts organization, found that the non-profit arts and culture industry actually generated US$135.2 billion in economic activity and supported nearly 4 million full-time jobs in 2010. It also generated $22.3 billion in local, state and federal revenue.
This is a figure that Tom Cochran, CEO of the United States Conference of Mayors, likes to cite when he defends the arts on a federal level. He said it’s not limited to “rich people coming to look at a museum” - the threat to American culture runs much deeper than that. As someone who has seen the effect that the arts can have economically over the years, Cochran says he will continue to make the case for supporting them. ”It’s not just people on the stage. It’s backstage, the drivers and the caterers, the entire service industry that related to the arts. Even with the recession we were in, the arts and non-profit arts were still an economic driver,” Cochran said. “The arts means money to us. We know about the spirit, the soul, and all of that, but if you take tourism and arts out of these cities, you lose money.”
The fact is: arts organizations continue to support economies, local governments and everyday citizens in ways that are often impossible to identify. That’s what the arts have always done, and why people tend to like art in the first place; because you can’t quantify or put a real price tag on their effects. You’re not supposed to.
But if the arts could appear in front of those 150 Republicans who wanted to shut down the NEA last year, they might trot out the inner-city kid whose life was changed by picking up an instrument, or the designers who revitalized a ravaged New Orleans, or the art lining the walls of hospital wards, or the proven educational benefits of arts in schools, or any number of intangible benefits that an NEA-sponsored program provides for American towns and cities.
The arts will have gotten a word in, hopefully, at the Republican National Convention this week. Robert Lynch, the president of Americans for the Arts, was traveling to Tampa to sit on a panel, moderated by Mike Huckabee, aiming to discuss this very issue.
Lynch said not all Republicans agree with these spending cuts, and he certainly would not advise cutting the NEA altogether. ”These views are not, I think, based in a logical understanding of how the arts system works,” said Lynch. The fraction of money that arts organizations receive from the government each year is a “leverage” for all the other money they raise on a yearly basis. You cut out the government support in certain cases, he said, and you lose your private investors.
“The economic impact of a program and the jobs it [provides] is right at the top of what public officials think everything should be about right now, and the arts help with that,” Lynch said. “Why would someone interested in improving the economy, why take that little piece away when you don’t understand how the whole thing works?”
Let’s play a game: if an alien landed in Rome today, it could come across places, documents and discussions on culture, to eventually find out that the Italian cultural system centre is called MiBAC; not an agency of adventurous exercises and full of values, but the ritual and mouldy temple in which nostalgic and scared custodians meet every day under the excuse of protecting the culture. It is as if a farmer kept the seeds in a sealed jar and never laid them in the ground: he would ultimately die of boredom and hunger.
It would certainly be an interesting scenario to see how a country is able to entrust the management of its wealth to an inefficient and clumsy structure, designed for the enhancement and promotion of heritage entrusted to it, but which in reality interprets these activities in merely lending money (randomly, with uncontrolled privileges to the powerful or the “veterans”, and little attention to the impotent and new) or imposing constraints – often to growth.
Our alien friend would then ponder on how could someone think of enhancing and promoting without a sustainable plan and suitable policies. The alien would not help to notice the bigger attention given to the appointment of toffs than to investment strategies and the development of professional skills to revive the fortunes of an industry that everyone loves to see falling to pieces.
Back to planet Earth, the map of the world is changing, and this map is no longer discernable with fixed boundaries, changing and evolving in an unceasing speed, as it is determined by the connections established by the global market. The Italian Ministry of Heritage and Culture, a heavy and complex control and constraint factory, proves to be inadequate to interact with this market.
In the past decade, nothing has been done but talk about the drastic cuts to cultural funds. And in fact, since 2003, the Italian State budget has almost halved the share of MiBAC (from over 2 million euro in 2003, to a million and a half in 2012).
The fact is pretty obvious if you think that the government has no more fuel to support a structure that is now considered a burden. To think critically and independently, it is therefore necessary to abstract the typical Italian approach that culture must be assisted, cared for, guided.
In the present situation, the topic of how many cuts should be made to the cultural funds is frequently discussed. But what if the Ministry itself was ‘cut’ instead? What if, given the challenges of the new millennium, competences and functions were granted to a more suitable management, such as the Ministry of Economic Development – which could easily include one for culture amongst its various departments –, thus implicating a broader strategic plan, in an exchange logic, relating consequently with the apparatus’ other economic sectors?
by Adam Davidson | Source: The New York Times
When Edvard Munch’s iconic painting The Scream went for about US$120 million and became the most expensive artwork ever sold at auction, it seemed like we had reached the climax of a fine-art bubble. After all, from 2003 to 2007, the fine-art market grew even faster than subprime housing. And then it kept on growing, pausing only momentarily during the crisis before hurtling even further upward. Eleven of the 20 highest prices ever paid at auction have occurred since 2008, when the global economy all but collapsed.
Many economists say that art can’t be in a bubble because, frankly, it’s not much of an investment in the first place. Unlike stocks, an artwork’s price reflects numerous nonfinancial intangibles, like the pleasure of owning a painting or, perhaps more important, its ability to signal the owner’s vast wealth and erudition. While stocks can provide an ongoing payment stream and are traded in public markets, art collectors must pay to protect their investments. It’s also much harder for collectors to resell expensive art. Not only is the market opaque, but few artists have real long-term value. Sergey Skaterschikov, who publishes an influential art-investment report, says that no painting bought for US$30 million or more has ever been resold at a profit.
Artwork itself may be a lousy investment, but selling it can be pretty profitable. Because each piece of fine art is unique and can’t be owned by anybody else, it does a more powerful and subtle job of signaling wealth than virtually any other luxury good. High prices are, quite literally, central to the signal. You’re spending US$120 million, in part, to show that you can blow US$120 million on something that can’t possibly be worth that much in any marketplace.
Art is often valuable precisely because it isn’t a sensible way to make money. And perhaps as a result, it has become even more valuable of late. Benjamin Mandel, an economist at the Federal Reserve Bank of New York, has been studying the art market because, he says, “it’s a great way to study asset price valuations.” Mandel read reports suggesting that the market was growing at an unsustainable clip. For one thing, prices have gone up far faster than global GDP.
But then Mandel realised that we had been looking at the market incorrectly. Fine art, he said, is not really part of the overall global economy. Instead, it’s part of the economy of a small subset of the super-superrich, whom some economists call Ultra High Net Worth Individuals. And their economy, unlike ours, is booming. In that alternate world, fine art as a percentage of the economy has stayed stable over the last decade, in part because a flood of new UHNWI’s in China, India and other developing nations has entered the art-buying market with great enthusiasm. In 2003, the sales at Christie’s Hong Kong totaled US$98 million. Last year, they were US$836 million.
The art market is a proxy for the fate of the superrich themselves. Investors who believe that incomes and wealth will return to a more equitable state should ignore art and put their money into investments that grow alongside the overall economy, like telecoms and steel. For those who believe that the very, very rich will continue to grow at a pace that outstrips the rest of us, it seems like there’s no better investment than art.
So how can a thirsty outsider get in on this market’s profits, short of opening a gallery or becoming an expert adviser? That’s the supposed role of art investment funds, like the Fine Art Fund. Fund managers remove the pleasures and ego-stroking that distort the investment principles of art ownership by collecting money — the minimum investment at the Fine Art Fund is US$500,000 — from individuals, much like a hedge fund or asset management firm does. These assets then serve to create something of a virtual art gallery. Managers use art expertise and close industry connections to try to buy art cheaply, sell it high and return the profit to their investors.
In this sense, the current art market seems a lot like the Gold Rush. In the late 1840s, there were tons of people who wanted to find gold, but it was mainly the middlemen, who sold the pickaxes and gold pans, who made money. And right now, the world is going to need a lot more pickaxe salesmen — advisers, consultants, gallerists, buyers. One confident art-fund manager told me that his pitch is simple: there are only around 3,000 top-quality items sold each year and more than 3,000 people want them. The number of buyers is growing faster than the amount of art.
The pitch is great, except that many art funds have collapsed. That’s because art isn’t gold, or any other commodity in which units can be evaluated objectively. The value of any artist’s work is determined by an insider world of cultural arbiters who coordinate with one another. They know long before the rest of us which new artist is going to have a big show, who is going to be trashed in a review or whose piece was just sold privately for a small fortune.
Because the art market isn’t regulated like financial securities, insider dealing is generally not illegal. In fact, being a truly influential insider is so rewarding that the slots are zealously guarded. Larry Gagosian, perhaps the world’s most influential gallery owner, needs a nearly impossible combination of skills — deep art knowledge, master salesmanship, charm, ruthlessness, financial savvy and the respect of the artists themselves — to maintain his edge and root out competition. When you start a consulting service or invest in an art fund, you are an outsider seeking to make money in a shadowy market filled with brilliant insiders just like him. No wonder it rarely works.
Terrance Shanahan felt as if he were “running to the sound of gunfire” when he joined dozens of concerned supporters of the Corcoran Gallery of Art and College of Art and Design at a hastily arranged public forum at the gallery last month. Gallery leaders realised that, for the third time in 23 years, they faced a community relations crisis on top of a financial emergency. Shanahan wanted to help.
Corcoran Director Fred Bollerer offered reasons for the board of trustees’ controversial decision to consider selling the historic building near the White House and possibly moving to the suburbs. Basically, Bollerer said, the gallery was verging on broke. The Corcoran was about to post its second US$7 million deficit in a row, and it would cost at least US$130 million to renovate the building. Where could so much money come from?
Shanahan had become a member of the Corcoran earlier in the year. When he heard news of the possible move, he said, he bumped up his membership from “supporting” ($160) to “contributing” ($500), to help the Corcoran stay put — though he was never solicited by the Corcoran. On the day of the forum, Shanahan did receive a fundraising appeal — from the Metropolitan Museum of Art in New York, where he had also been a member. “Why am I not getting the same e-mail from the Corcoran?” Shanahan asked himself. “Why don’t they ask every member to upgrade their membership one level?”
The Corcoran’s woes are deep, complicated and decades old, but Shanahan’s experience distils the essence of the problem: at critical moments, the gallery has repeatedly failed to make its own best case to even its best friends.
Unable to present a consistently clear pitch for itself, the Corcoran has made it too easy for major donors to drift to more predictable — and prestigious — art charities, such as the Smithsonian and the National Gallery.
Now, with the Corcoran’s annual fundraising, membership and attendance at their lowest ebb in decades, it’s not just the $500 givers who have felt curiously ignored. “I haven’t gotten a phone call from anyone at the Corcoran in five years,” said Tony Podesta, a lobbyist who, with his wife, Heather, is a leading art collector. He estimates that the couple has donated 150 works to the Corcoran over the years. “We still occasionally give them works of art, although it’s a little bit nerve-racking not to know what the future holds.”
“Years ago, we went to the Corcoran Ball,” the gallery’s key annual fundraiser, said Wayne Reynolds, former chairman of Ford’s Theatre and husband of millionaire philanthropist Catherine Reynolds. “I’ve never been asked back that I know of. I haven’t really been approached. It’s not really on my radar screen.”
One arts patron with millions to dispose of said, “I haven’t been asked to give.” And, when the patron’s organisation has rented the Corcoran for elegant gatherings, unlike at other venues that take the opportunity to market themselves, “I’ve never met anybody from the Corcoran. Nobody is there to tell me how great they are. I don’t think they’re really in fundraising mode.”
The reason has to do with erratic leadership, poor timing and bad luck over the years. More fundamental has been the lack of a clear sense of identity and mission.
Washington’s oldest private art museum, founded in 1869, has been trying to figure out its niche in the capital’s cultural eco-system ever since its primacy was upended in 1937, when Andrew Mellon and Congress launched the National Gallery of Art as a well-endowed, taxpayer-subsidised model. The Corcoran has never enjoyed a huge cash endowment. Financier William Wilson Corcoran’s principal gifts to the museum were its original building — now the Smithsonian Renwick Gallery — and the founding collection of American Art. By the time he died in 1888, Corcoran had also given $1.6 million, according to press accounts then. The Corcoran used some of its money to purchase land and commission the 1897 construction of its current home, the beaux-arts landmark on 17th Street NW. A benefactor underwrote an expansion in the 1920s, and, in 1925, the endowment stood at US$1 million (US$13 million in current dollars). The gallery established itself as an important national venue. Its biennial survey of Contemporary American Art was a vital happening on the national art scene for much of the 20th century.
From the earliest days, to help with operating expenses, the Corcoran charged admission. In 1910, it was 25 cents. That common practice loomed as a handicap as Washington filled with free museums. For several years starting in 1979, oil tycoon Armand Hammer, a trustee, underwrote free admission. But entry fees returned and now are US$8 to US$10. By 1959, money woes at the Corcoran were a regular topic of cultural conversation in Washington. “Right now, the gallery is just holding its own,” The Washington Post reported in November of that year. “It doesn’t have a money cushion to acquire new works and expand its program.” The endowment was melting under the strain of covering half the operating budget of US$241,000 (US$1.9 million in current dollars).
Red ink flowed year after year in the early 1970s, as directors came and went. There was speculation that the Corcoran might not survive independently. And the Hirshhorn opened as yet another publicly funded competitor. Yet after cost-cutting and fundraising, the Corcoran was back in the black by the mid-1970s. During an ensuing period of relative stability, the institution wrestled with unresolved questions of how the gallery fit into the growing menu of cultural options; the proper relationship between the gallery and the college; the balance between national and local identities; how to expand physically; and how to pay the bills for maintaining a lovely, historic space.
Marshalling itself to tackle all those questions, in the mid- to late 1980s, the gallery launched its most ambitious capital campaign: US$10 million for the endowment, US$2.5 million for renovations. It resolved to enhance community education and pursue “ground-breaking” exhibits. And it planned an office building on an adjacent lot to expand the college and provide rental income.
In June 1989, one of those ground-breaking exhibits turned out to be a show of Robert Mapplethorpe’s homoerotic photos. In a vain attempt to side-step a national political battle over federal funding of supposedly offensive art, the Corcoran cancelled the show before it opened. The gallery had received no federal money for the exhibit but had enjoyed nearly US$300,000 in federal support the year before. This epic cave-in prompted street protests and artist boycotts. The gallery’s late-1980s aspiration for a financial and artistic leap forward was sabotaged by a setback from which it would be hard to recover.
Membership renewals dropped by 50% for several months, at a time when membership stood at 6,000. “We had been recruiting these people by saying, ‘We’re an independent museum, not subject to any government pressure’… We violated the very spirit we used to recruit people,” said Brigitte Savage, who ran the membership department. Painter Lowell Nesbitt withdrew a planned bequest of more than US$1 million. The uproar squashed the latter part of the capital campaign, which still managed to raise at least US$6.7 million. But the real estate recession of the time killed the expansion plan and hoped-for rent stream.
Yet within several years, the Corcoran was back with grand designs to reinvent and right itself. The shelved office project morphed into a stunning proposed Frank Gehry-designed expansion. Instead of providing rental space, it would be devoted to allowing the college to grow. The architectural showpiece would lure tourists, and the fundraising campaign would cover renovation of the historic gallery.
By 2005, the dream was doomed when initial cost estimates of US$60 million shot to US$200 million. Meanwhile, the dot-com bubble had burst, erasing millions the Corcoran had been counting on from a new local wealthy class. The campaign raised a fraction of the money and the project was killed. Director David Levy resigned, board members quit, donors withdrew pledges. When the dust settled, the Corcoran could keep only about US$28 million. More than half went to pay Gehry for unused drawings. The rest evaporated into operations that were once again in the red.
John T. “Til” Hazel Jr., the board chairman at the time, said he was dismayed to discover how little financial support the Corcoran could muster. “It wasn’t as if we didn’t try,” Hazel said. “I talked to a number of people who had the potential, and they just were not interested in the Corcoran.” Hazel also engaged a museum development expert to study the donor market. The consultant reported back, Hazel recalled: “You have almost zero potential for raising money.”
The reason was the pool of major donors was smaller in Washington than in, say, in New York, and those funders could choose from “a lot more glamorous things to give to,” Hazel said. “You’re talking about the Smithsonian, the National Gallery, the Kennedy Centre.” In the shadow of those institutions, the mid-sized Corcoran must fund expenses that are more than double those at a more focused, smaller private museum such as the Phillips Collection, and five times those at the private National Museum of Women in the Arts.
A former trustee, now associated with another arts institution, said the Corcoran’s persistent inability to fund its wavering ambitions is because “we never had the fundraising machine that I have experienced with other arts institutions, and I think we haven’t had the fundraising base. Large donors have migrated to parts of the Smithsonian that reflect more directly their individual interests,” said the former trustee. “And there is also within those institutions a national platform and a national reach. The Corcoran has been hampered by its lack of focus.”
Much of the leadership is new. Thirteen of the 15 trustees joined the board after the Gehry flop. Bollerer is the second gallery director since Levy left, and, at 70, he plans to retire this year.
The new crowd is contemplating the most dramatic — sceptics say self-destructive — solution of all to the riddle of rethinking the Corcoran. “The destiny of the Corcoran should not turn on the building it sits in, but on what it does,” said Harry Hopper, chairman of the trustees.
To Hopper, a venture capitalist and contemporary art collector who joined the board in 2005, the Corcoran’s identity crisis dates to 1937 and the founding of the National Gallery, while its credibility crisis has been compounded by the misadventures of 1989 and 2005. “I would say the Corcoran’s life changed when Paul Mellon agreed to fund and drive the National Gallery to a different level and the Corcoran didn’t really respond to or understand that for decades,” Hopper said. “It hasn’t presented a crisp and clear position in the cultural marketplace. We’re working hard to change that.”
The board voted simply to consider selling the building and relocating, but Hopper says preliminary estimates suggest it would be significantly cheaper to go rather than stay. However, he would not disclose the estimated profit on selling the building nor the potential cost of developing new space elsewhere. The Corcoran has received multiple offers, according to gallery officials who would not identify the buyers. The gallery is hiring brokers to sift the offers and scout relocation options. “And at the same time, we’re open to other alternatives,” Hopper said. “For example, we have had partnership and joint venture discussions, and we remain open to those.” He declined to say what other institutions participated in those discussions. He added: “If a funding alternative reveals itself that takes us on a path to stay in the building, we would love that.”
Weighing relocation is just one piece of the puzzle. The board’s contemplated solution to the Corcoran’s identity crisis is to focus the mission more emphatically on education. What this means in practice remains to be seen, but Hopper said it could be accomplished more easily in a larger, more flexible space. Tuition payments to the art college now account for nearly 80% of the Corcoran’s annual revenue of US$24 million — a dramatic increase from about 30% in the late 1990s. It shows that the college already is central to the gallery’s balance sheet. Hopper has said the financial strain would be eased if the student population, now capped at about 600 because of space constraints, could rise to more than 800.
Despite the refocus on education, the sale of the Corcoran’s 16,000 artworks is not under consideration, Hopper said. The gallery has a leading collection of 19th century and early 20th century American painting, and a major photography collection, among other highlights. “The Corcoran can’t be the National Gallery, and the Corcoran can’t be a little boutique gallery located in a part of town that’s more convenient to the Northwest community like the Phillips,” Hopper said. “Our differentiator is that we’ve got a collection that has unique strengths, and we’re uniquely differentiated by having a degree-granting art college.”
Bold plans are one thing, but whether the Corcoran stays or goes, it still must figure out how to raise money. The recent record is dismal. The total fundraising for the last two fiscal years available (US$3.2 million in the year ending June 2011; US$4.4 million, June 2010) is the lowest since before 1995, the earliest year for which the gallery’s tax filings are readily accessible. The Corcoran has had budget deficits in 7 of the last 10 years. The endowment has dwindled from US$28 four years ago to US$19 million because of investment losses during the recession, deficit spending and recalculating some lost pledges tied to the Gehry campaign. Membership is down to 3,800, after topping 9,000 late in the Gehry campaign. The number of visitors to the gallery has sunk below 100,000 for the first time in memory, dropping to 69,442 for the year ending June 30.
Hopper said this “quiet period” when fundraising and public engagement have faltered — and supporters such as Shanahan haven’t been solicited — “has been an unfortunate consequence of taking the time to put together a credible plan.” The hit to the Corcoran’s credibility after the Gehry failure was paralysing, he said. It was hard to start asking for money again. Internal operations had to be rebuilt.
Hopper said he hasn’t solicited major donations during this period, though he and his wife, Maria, have given US$250,000 to US$499,999, according to the Corcoran’s fundraising honour roll. “If you’re going to go to serious people and serious foundations for serious amounts of money, 7-digit figures, you have to make your case for the cultural position of the institution, but you also have to show how in the bigger picture the viability question is answered,” Hopper said.
“That feels like a cop-out,” said Podesta, who said the Corcoran could have used the time better to reach out to the public for support and ideas.
To help make ends meet, the Corcoran recently sold the adjacent parcel — the one that was first to have been a rental property, then the Gehry expansion — for US$20.5 million to an office developer.
Boards of trustees are critical fundraising engines for arts organisations. Most of the Corcoran’s trustees are relatively obscure to members of Washington’s more established social and philanthropic circles. “I don’t know them,” said more than one patron around town. Trustees Carolyn Alper, Sarah Chapoton, Anne Edwards and Eleanor Hedden are recognised as arts advocates and long-time Corcoran supporters. Franco Nuschese is known as the owner of Cafe Milano. The rest include business and non-profit types with a range professional and cultural connections that will enable them to raise and donate money, Hopper said. “The board will step up as we go out to get sponsorship for this plan,” Hopper said. “We’re getting close to being able to distil out our strengths and communicate them more clearly.”
The wisdom of selling the building is hotly disputed around town on aesthetic, historic, sentimental and patrimonial grounds. The financial case for and against won’t be clear until a buyer’s money is publicly on the table and the price of relocating is known. The Save the Corcoran group of artists and advocates for staying has collected more than 2,900 signatures on a petition “to halt this misguided effort to sell the Corcoran.”
Stay or go, the future will depend on the generosity of donors such as artist George Andreas, who with his family and foundation, has given more than US$1 million to the Corcoran over the years. “The present location, if they can do it, is best,” Andreas said. Still, he added, “I am very pleased with this new regime. They are practical; they want to be realistic.” And it will depend on art patrons like Podesta, who noted: “The Whitney has moved. The Guggenheim moved. The Barnes has moved. Museums move all the time. I think the real question is: is there a sustainable model going forward that could take advantage of the collection and the role that the museum plays in the community?”
A good question — one that has been asked and not answered for too long.