Sunday, September 9, 2012

The Future of LAAs and the Subsidy Model of Arts Support

Good morning.
“And the beat goes on............................”

New feature:  What Are You Reading?:  Reading something you think is really interesting and would be of interest to others in our field?  Book, article, paper, study - whatever.  Share it with me so I can pass it on.  I recently came across a new Journal of Entrepreneurship in the Arts called ARTIVATE published by Arizona State University.  Check it out.

For decades the Local Arts Agency (LAA) has been the backbone of the national network of arts provision in America.  From just 40 agencies a half century ago, the number grew to over 5,000.  Most of these organizations are nonprofits (2/3), the remainder municipal agencies (1/3) of local government.  While their activities and programs differ from place to place, their missions to provide support and services to local communities for the most part, do not.  Most act as ‘hub’ clearinghouses and central points in those cities and towns, and provide connections, intersections and bridges within the sector and between the arts communities and stakeholders as far ranging as the PTA to local businesses.  Many, if not most, are granting or re-granting agencies that provide direct support to arts organizations and / or artists (According to Americans for the Arts, two-thirds of LAAs have grant programs.)  Most have programs that seek to support arts education in the schools, and a variety of ways to help arts organization managers and administrators - ranging from professional development and training, to internships, to convening, to communications.  Many are directly involved in heritage programs, some manage local facilities.  Many grew quite large, others remain rural, small and grassroots in approach.

What virtually all have in common (with much of the rest of our field)  is that their operational budgets are subsidized - either by local, state or the federal government, or some public revenue stream (a dedicated tax or a percentage of a local hotel tax as an example), or by private foundations and / or corporations.  Very little LAA income can be characterized as “earned” income, very little is in the form of individual donations.  The LAA is the penultimate embodiment of the subsidy model for the arts, but the arts as a whole are a subsidized industry.

The granting or re-granting programs at the core of the services provided by LAAs  range the gamut from operational and program support, to arts education, to underserved populations, to multicultural support, to marketing, to innovative and experimental incubator programs of various types, to professional development, to direct services benefiting artists.  Grants not only go to arts organizations, but schools, hospitals, community groups and more.  Indeed, more out of the box thinking originated in LAA grant programs than almost any other quarter of our sector.    These grant programs helped to make LAAs relevant and important locally, and that in turn helped them to leverage the power of the aggregate of local arts organizations to benefit the community.

In the latest issue of the New Yorker, in an article describing the maturing relationship between Bill Clinton and Barack Obama, Clinton is quoted as saying at one point that “it takes ten years to recover from a financial crisis that is rooted in a housing collapse."  Ten years -- and we are now in the fourth year of that decade.  Assuming arguendo there is truth to that assertion, and that the current lingering global crisis is even more acute than past downturns,  it isn’t unreasonable to assume that all the pressures that are on LAAs today - tight, penny pinching government budgets, increased demands of arguably higher priority spending (from health care, to infrastructure repairs, to education, to public safety), non-competitive advocacy and lobbying mechanisms where compared to other special interest groups, private philanthropic re-direction of funds and priorities, increased attacks by conservative groups - will all only get more intense.  Already, we see that kind of pressure resulting in the closure or significant downsizing of LAAs across the country - particularly in smaller, less affluent jurisdictions.  And even in larger, wealthier venues, staff, services and granting budgets have been frequently, measurably cut back .

The question must be asked:  How long will the ‘subsidy’ model of financial stability - at least for LAAs - remain viable?  And if someday in the not too distant future, because there simply isn’t the money available anymore from any level of government, or because other priorities have claimed greater private funding prioritization (even within arts funding), LAAs are no longer in the granting or re-granting business, what might they morph into so as to still have value, relevance to the local arts communities, and impact on those communities?  If the local government entity or a major foundation were to slash support, the LAA may not only be out of the grant making business, it may be out of business altogether.

How could LAAs remain supportive to local arts organizations and efforts in their local communities?  If not money, what could they provide that would keep them relevant and valuable?  What would a re-invented LAA look like, and do they already exist?

Having spent the majority of my nonprofit arts professional career closely involved in the sub-universe of LAAs, I think there are a number of critically important, and continuously relevant roles that LAAs can play in our future (and I am sure many already do some or all of the following):

 First, LAAs are “hubs” - and the role of a locally central point, out from which bridges to all parts of the community can fan, is of critical importance to all manner of needs - from professional networking, to brokering potential collaborations, to communications, to leveraging knowledge, to incubating new ideas, to being the liaison to stakeholders.  Without the LAA all of these kinds of things will need to be housed somewhere, or it will be axiomatically that much more difficult for any of these needs to be met at all.  Perhaps, the new LAA will focus more on its role as a hub and all that might imply.

 Second, LAAs have traditionally played at least a connective role in local advocacy efforts - from organization, to volunteer recruitment and management,  from training to communicating what is happening outside the sector that impacts us.  Even without a grants program, this is an area where a stepped up effort will, potentially, be enormously valuable in the survival of the whole local scene.  I can see the next generation LAA being much more active, and ultimately more powerful, in this arena.

 Third, While, not offering money directly, LAAs can continue to be helpful to local organizations in identifying where funds might be, in applying for those funds, in exploring new options (from technological innovations like Kickstarter to whatever else comes down the innovation pike), in training for fundraising and in exploring as yet untapped new sources.

Fourth,  I can see stepped up efforts by LAAs to be new centers in the effort to better train our administrators and provide professional development opportunities and options, as both coordinator and aggregator to organizing talent within the field to serve the field.

 Fifth, I can see LAAs increasing their role in making the case for local arts, including managing the media and selling the importance of the local industry to business and other communities of interest.

 Sixth, there is a role for the LAA to be more of a center of research - at least in the sense of identifying where current research is and connecting the local field to that research.  LAAs can take on the role of conducting local surveys, holding focus groups, and networking to local universities in more professional enterprises.

 Seventh, LAAs can continue to play a role in supporting emerging leaders, providing internship programs and giving voice to the next cohort of leadership.  Similarly they can continue to act as a lobby for diversity.

 Eight, LAAs are the logical entity to convene a wide variety of local gatherings that will help address local issues - both within the arts community and outside of it.

 Ninth, LAAs can expand their role in championing local artists and nurture local efforts to address artist's issues by giving a voice to that community.  From Open Studios programs to professional development there are countless specific programs LAAs can be a part of.

 Tenth, perhaps the real strength, and the greatest (as yet probably still unrealized) potential of the LAAs is in their acting in concert with each other.  They are themselves a network that can communicate with, unify, galvanize and marshall the entire arts field in ways no other element within our sector can.  The LAAs are one of the greatest "branch office" systems in America in any field.  Imagine, 5000 branch offices!  More than almost any company in America but for fast food and operations like Starbucks or 7-11.  Way more than any retail outlet, way more than Apple, probably more than Fed Ex, way more than most banks even.  We really ought to be tapping more into the potential of that asset than we have been doing in the past.  Back when Americans for the Arts was still NALAA, there was, I think, a greater sense of the locals as a community.

Of course, while this presupposes that LAAs might no longer be in the granting business, all of the above envision that there is still some income flowing into the LAAs and that the subsidy model (for LAAs) is not yet completely dead.  All the above can be done on far smaller budgets than the LAA universe has enjoyed in the past, but I sincerely doubt that it can all be done by volunteers; and it will cost something.  It is theoretically one model of re-invention for LAAs.

But we ought to also consider the possibility that the subsidy model for the arts in general may at some point no longer be viable.  If Romney, for example were elected, and made good on his public pronouncement* that he would zero out funding for the NEA, that might signal a wholesale attack on any (and every) kind of public arts funding, and while I doubt that would come to pass - dire economic straights would likely make it an attractive position to many - if for no other reason than as a symbol of a growing conservative viewpoint.  So it is also perhaps legitimate to ask what happens if the subsidy funding is no longer available at all? What happens if there is no more government subsidy - none? What happens (for LAAs anyway) if philanthropic support virtually dries up?   In which case, one critical question will be who will take on and provide all those services (and others) that LAAs already do, and might take on?  Nobody?  Then what?
*Note:  Here is Governor's Romney's position on the NEA as reported August 6 in Fortune magazine:
"So first there are programs I would eliminate. Obamacare being one of them but also various subsidy programs -- the Amtrak subsidy, the PBS subsidy, the subsidy for the National Endowment for the Arts, the National Endowment for the Humanities. 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 rather than receiving money borrowed from other countries, as our government does on their behalf."    
My fear here is that the Governor, in singling out, now on more than one occasion, the NEA for elimination (not cuts), is that he is backing himself into a corner and that it will be (if he is elected) more difficult for him to later come off this position, and that will make our job of lobbying effectively as to why such elimination is not in the best interests of the nation that much more problematic.  
I urge foundations across the sector to consider carefully the critical importance of the continued existence of LAAs to the communities they fund, and to the stated aims and objectives of their own arts programs.  Whatever areas your foundation is involved in, whatever aspirations you have for the arts in your community, whatever programs you seek to support and hope will succeed, the LAA is potentially your greatest partner.  And if your LAA disappears, I can almost guarantee that your programs will suffer.

The really bigger question is whether or not the subsidy model for the whole nonprofit arts in general might ever be so threatened that it collapses?  A time where there is no longer any government money in any meaningful amount at any level; no longer enough private sector foundation and / or corporation money to matter?  Is it possible that someday the arts will need to be funded almost entirely by individual philanthropic efforts coupled with earned income?   What would that look like if subsidy support largely disappeared?  Can we do anything to anticipate and prepare for that partial eventuality, no matter how remote?  Is it something we ought to look at?  In scenario planning, one considers ALL the possibilities, and this one seems less remote to me than some other possibilities  ---  NOT because of the political motivation behind it, but because of the economic reality.  There is ample evidence to suggest that America's share of the world global wealth pie will continue to decline on a per capita basis, as other nation's shares increase.  Even if the pie continues to get bigger, our percentage is unlikely to again support all that our once disproportionately larger share allowed.  Even harder choices loom on our horizon.  And the arts will increasingly be seen as one of those choices.  Eventually, it is possible the powers that be, or the public itself, forced between all the hard choices, will have no choice but to choose something other than us.  So we ought to be talking about the possibility of that kind of (partial) funding stream collapse, and more importantly how we can first prevent that, and absent that, then how we can adapt.

Have a good week.

Don’t Quit


  1. Thanks so much for this post! We have a tremendous Local Arts Network here in Illinois! The Illinois Local Arts Network (LAN) is a partnership program between the Illinois Arts Council and Arts Alliance Illinois to build capacity and excellence amongst Local Arts Agencies (LAAs) so they can better serve their communities and to provide opportunities for validation and support for their leaders.

    With guidance and leadership from the LAN Council, a team of LAA leaders who assist with planning and implementation, Arts Alliance Illinois and the Illinois Arts Council:

    *Provide professional development and resources to LAAs

    *Encourage statewide and regional communication amongst LAAs

    *Convene LAAs to exchange information and tools

    *Activate LAA networks to build public value of and public will for the arts

  2. Thanks for shining the spotlight on Local Arts Agencies, Barry. Like snowflakes, no two LAAs are exactly alike!

    Your posting about LAAs and the "subsidy model" got me thinking about my own observations over the years as I've watched many LAAs transform themselves into the 21st century agencies you envision.

    I wholeheartedly agree with you that a great deal of program innovation happens at the local level. The reason for this, I think, is because successful LAA leaders develop sophisticated navigational skills to adapt and reinvent LAAs amidst shifting priorities and constantly changing, unique environments. So in short, the answer to your question is yes, the re-invented LAA already exists.

    Grantmaking, as you note, is important, but I think most LAA's -- and certainly LAAs in the larger cities -- play a much more important role in defining and shaping cultural policy. Budget is de facto policy, and there are many different ways that an LAA can develop and deploy resources and partners in community cultural development. For example, local governments often make substantial investments in cultural facilities, whether as landlord, or as a contributing partner to new construction, or by encouraging the adaptive re-use of surplus municipal property.

    Public art programs, which integrate art into everyday life, are found in the portfolio of many LAAs. Most of these programs thrive because of local commitments -- typically, a dedicated percentage of capital construction budgets to include art and the work of artists in the built environment. For decades, public art has been actively creating a sense of place in communities nationwide -- the "original" creative placemaking, if you will.

    Many LAAs are powerfully aligned and intertwined with community priorities. Cultural tourism, for example, embraces and leverages a well established nexus between the economic drivers that are central to the arts and cultural sector and the hotel and hospitality industry. And LAAs are increasingly engaged in broader, overall community planning efforts, forging partnerships with other municipal agencies, including transportation, housing, public safety, planning and zoning, parks, and health and human services – and other partners across private and non-profit sectors.

    There are many great exaples of LAAs already engaged in some of the directions you outline -- and in lots of other areas not mentioned here. LAAs can be nimble because they typically understand how to articulate the value proposition of local arts and culture in a meaningful way that resonates with local government, the cultural sector, business, civic leaders, and most importantly, local residents.

    The power of these partnerships are what ultimately strengthens the field overall.

    Thanks again for focusing on LAAs.

  3. Barry - let me add my thanks for your thoughtful analysis of the possible future direction of the LAA in the current economic and political climate. Speaking from the perspective of the municipal agency LAA model, I do think that the work of messaging, convening and leadership are core responsibilities - perhaps more important than actual grantmaking. In Philadelphia the cultural agency disappeared during the previous Mayoral administration. Grant-making actually continued, yet it was clear there was a serious void with the absence of the leadership of an Office and it was re-established, in part as a result of a major advocacy effort that got a very pro-arts Mayor elected.

    Also increasingly important in the future, I believe, will be a model that looks at the larger eco-system of creative enterprise, including for-profit creative businesses, non-profit arts groups and individual artists and creative freelancers.

    I also object somewhat to defining this as the "subsidy" model because these agencies are largely dependent on contributed income. I think the definition needs to be different for a municipal cultural agency - where the goal is to say "this is part of the legitimate business of government to serve our citizens." Virtually all of City government is "subsidized" in this way - paid for by taxpayer dollars. I take the strong supporting position that what I do is just part of the appropriate business of government, along with public safety, picking up garbage and economic development. It (arts, culture and creative enterprise) is part of the solution, in fact, to how we effectively and creatively execute virtually all areas of government service.

    Thanks as always for keeping great conversations going Barry!

    1. Thanks Gary. I agree with your last point. It is important to take the position that the arts are really a normal and essential part of the services government does (and should) provide. I was, perhaps unclearly or confusingly, using "subsidy" to describe our dependence on public and private support and to distinguish the same from 'earned income'.

  4. Barry, as you know, Arts Orange County serves the sixth largest county by population in the US--over 3 million people. We have more than 600 arts organizations! In the 17 year history of this LAA, it has only received County funding once and only for one year--ten years ago. With 34 different municipalities, Orange County also lacks a "primary" city that we can go to for funding. So, ArtsOC has always had to finance its small operation with private philanthropy from individuals, foundations and corporations. I arrived in 2008 from a career in nonprofit theatre, where there is a much higher proportion of earned income. As the recession impacted our contributed income, we began examining ways to finance our mission with earned revenue. We discovered that ArtsOC has something that our constituents need and value enough that they are willing to pay for it: our knowledge. While we continue to provide free professional development programs to our arts community, some arts leaders realize that their organizations can benefit greatly from more intensive, customized consultation from us. Our growing client base now includes fledgling organizations, major universities and municipal government. Our ability to provide these services at a modest cost to them makes ArtsOC a very attractive alternative to other consultants--and we are quick to refer our clients to others when the scope of work exceeds our knowledge base or ventures into areas where there may be a conflict of interest.
    I'm not recommending this to all LAAs as a business model nor is this a panacea for us. But it is a means to diversify our funding base within our mission spectrum, enabling our organization to weather the variables of the present funding environment and to overcome the entire lack of funding from the County that designates us as its official arts agency.