National Arts Stabilization Journal

Summer 1999

Volume 2, Issue No. 3

A Conversation with Stanley N. Katz

Woodrow Wilson School

Center for Arts and Cultural Policy Studies

Princeton University

The following conversation is a follow-up to "Criticism of Foundations," an article by Stanley N. Katz that appeared in Grantmakers in the Arts, Volume 9, Number 2, Fall 1998.

The relationships in arts funding don’t exist in a vacuum. How did we get to the present funding environment?

The nonprofit arts world has changed enormously. I think the starting point is thirty years ago. You have on one hand the federal government, and on the other hand, the Ford Foundation. Ford spent something like $80 million on the arts in those early days under the leadership of Mac Lowry. They learned a great deal; it was a wise expenditure of money, and it launched subsidiary organizations like National Arts Stabilization. But these funding initiatives also stimulated the growth of infrastructure in the arts. You needed infrastructure in order to achieve the aims of the funders and the aims that they wanted to be the aims of the organizations.

Then came the origin of the two national endowments. Not only the sudden availability (although it was very small at first) of central federal funding for the arts, but at the same time, there was what amounted to encouragement to set up or expand national service organizations in the arts. Most of these didn’t exist or exist fully at the time. The endowments and the service organizations began to develop a national system for recipient organizations that became important for a kind of pooling effect. The pooling occurred according to arbitrary lines, according to disciplines. One of the effects was to segment arts fields.

The service organizations and their memberships along discipline lines had a tremendous impact as they began to focus on Washington. It enhanced a turn toward politics. By politics, I mean the politics of the arts in a way that was quite destructive in the long run. And I think it was in part a response to the new federal funding.

At the same time, there was an equal and opposite effect in the emergence of corporate funding. It existed prior to that time, but not on a large scale. The emergence in the 1960s and 1970s of corporations as major players in the funding world, especially in the arts, for a small but important number of them, was enormously important. On the one hand, there was more money in the system. On the other hand, those kinds of funders had agendas and had strong preferences about the possible uses of their funds. Some of them pushed in the direction of large-scale events or shows because public relations was their goal. The best way to achieve that end was to attach your name to something that lots of people came to or observed. That wasn’t all that was going on in corporate funding, but it was one of the most dramatic factors that conduces toward production of the blockbuster show and other comparable events.

The third major element is the emergence of television as a major factor in everything and certainly in the arts. That in itself created both funding needs and artistic opportunities that were to shape what was produced.

In an altogether crude way I point out these three factors as creating what I think of as arts funding Act I. I would start there and say that what happened next, Act II, continues up to the present. That is, it turned out that this new system was not as stable as many of us had thought.

The current dynamic between arts organizations and grantmakers can be traced to the enormous expansion of funding that started in the 1960s. The common thread among the expansion of arts funding, the political organization of the arts, and the impact of television is the optimism, creativity, and the energy that led to the enactment of the legislation for NEA and NEH. This spirit made itself felt in a different way in places like the Ford Foundation. These are expressions of what I would call Johnsonian cultural exuberance. I consider 1965 to be the one year in American history, up to this point, when the Endowments could have been passed. It was just luck that there was a convergence of political and cultural instincts at that moment. A year later we had the Vietnam War and Johnson was in deep trouble. A year earlier we were focused on civil rights. So, 1965 turned out to be the unique moment. To a considerable extent, creation of these agencies was a product of the cultural ethos of the 1960s, but that was always in conjunction with what I would call the social planning instincts of the sixties which reached their high point in the Johnson administration. On the private side, it was in the Ford Foundation of McGeorge Bundy. Those are two sides of the same coin.

Ford invested enormous sums of money and not in a random way. It wasn’t just that the leadership had a set of ideas, but the whole policy side of the Ford Foundation had a set of ideas about how cultural and social development were linked. It is one of the great examples of private social planning in American history, and we’re still living with the consequences of it. What most people haven’t recognized is that on the whole, the private sector has always been more important than the public sector. That’s obvious now, but one could only tell that about the 1960s and the 1970s by looking back. It didn’t feel that way at the time.

It was never true that policy and funding were coming primarily from centralized public sources if you looked at the numbers. It took a long time to get NEA up to a significant number, and when it happened, it didn’t stay at that level for very long. NEA was having an apparent impact in substantial disproportion to the amount of dollars it had to give away. That led people to ignore what was going on in the private sector and at the state and local level. In my judgment those have always been more important. Now we’re forced to confront that fact.

What assumptions about arts funding must we now abandon?

By the mid 1970s one would have thought that the public sector was going to grow and the private sector was probably going to decline or not increase very much because there would be disincentives to private investment if the federal government continued to grow at a rapid rate. We didn’t anticipate that there were going to be peaks or cyclical behaviors of the federal government and of corporations with respect to the arts. We would have been optimistic in the 1970s that corporate spending was going to continue to go up and was going to continue to be an opportunity. But, we know that didn’t happen, it declined. It’s coming back a little bit now, but we know the federal government is just the opposite. There has been a dramatic decline. It’s quite possible that we’ll see some increase now, but I don’t think it’s going to be a large increase. I wouldn’t look to recover where we were in 1993 in the foreseeable future.

Everyone has concluded that we have to look elsewhere now. When we look elsewhere we find tremendous expansion in two places. One is on the public side at the state and local level, and the other is in private philanthropy. I think instead of trying to get a new program at NEA to fund local chamber orchestras, for example, arts organizations try to find funds either all in the local community or at the state level, whether or not this comes through an arts council or a local arts agency. Sometimes it’s line items in state budgets. It’s part of what I would call normal politics, and perhaps that’s where it ought to be. I think the action is now at the state and local level, at the level of private philanthropic foundations particularly larger ones, and also with individual donors. The major fact of the 1980s and into the 1990s is the unbelievable creation of individual wealth, and foundations of pools of wealth in this country. We’ve never seen so much, and that creates all kinds of possibilities for funding. But, the source of funding always has a dramatic impact on what arts organizations of any kind do, because certain kinds of activities appeal more to certain donors than others. What is happening now is that organizations are trying to figure out in this new environment, no longer relying on central funding, how they can best support what they’re doing and really plan what they are going to do.

How would you define the fundamental challenge to the arts in this changed environment?

What’s fascinating to me is that in an attempt to save the institutions we’re selling out not to the wrong people but to the wrong ideas. I think that marketing NEA as an economic development agency is not a good long-term strategy. I seem to be more or less alone in thinking that. But the challenge is clear. Organizations have to decide what their true mission really is. If the mission is not only to stay alive but to keep growing, then they’ll do whatever they must, and other considerations won’t be so important. If their mission is to provide a certain kind of art or to serve a certain kind of audience, then they’re going to have a much harder time. The interesting thing to observe right now is whether we get the kind of leadership, both arts managers and boards, that are tough enough and thoughtful enough and explicit enough to identify their missions and to stick to them and to do the hard work of developing funding – not going where it’s easiest to get the money; but raising a banner and seeing if they can’t get funders to respond to that. That’s much harder to do. Some organization won’t be able to do it. But, it seems to me that that’s the fundamental challenge in the current funding atmosphere. At certain levels of funders, for instance, some of the large foundations, there is so much money that they don’t know what to do with it, and they can’t give it away very efficiently. They’re making larger and larger grants because they’ve got to move money out the door. On one level that’s great. But this too isn’t going to go on forever. What we don’t know is what happens after the longest economic boom in American history. What goes up comes down. It’s not going to go on forever, although the end certainly isn’t in sight yet. What are organizations gong to do to adjust? They’ll adjust when the change comes. Are they planning to adjust? Not many, I think.

I believe that organization that have good finance committees, people who are genuinely knowledgeable about what’s going on, not just with money but with economic conditions generally, ought to be able to make intelligent decisions. After all, arts organizations are businesses too, cultural businesses, not-for-profit businesses. And, while it takes a lot of fun out of it, that’s the era we’ve moved in to, and many funders are insistent upon businesslike behavior. Again, NAS is an example of the phenomenon. The Ford Foundation wanted organizations run efficiently and on business lines. They rewarded that and punished other kinds of behavior.

What is the place for strategy in giving plans?

I distinguish philanthropy from charity, and this analysis goes back to the early twentieth century. What people like Carnegie and Rockefeller were doing when they invented what we call "philanthropy" was trying not just to give away money to people who needed money, but to change the world to make it better. If your goal is to change the world to make it better in the way they wanted to, that meant you needed action strategies. The philanthropists were mainly interested in problems of health and poverty. They thought that the way you address those problems was not by giving money to people who were starving or by building hospitals for people who were sick, but by doing research to find out what the causes of disease were, or to find out how the economy worked. Then, they developed strategies and created means to try to effectuate what they had learned. That’s what modern philanthropy is all about. The Ford Foundation just modernized this conception under McGeorge Bundy and now all the large-scale philanthropists are following along in one way or another. I think the distinction between good foundations and bad foundations is that the good ones have really thoughtful programs and carry them out in a systematic way. Almost all the big foundations do, though not at all, and there are certainly better and worse examples.

Should philanthropists concentrate on direct support for artists?

I agree with the notion that grantmakers need to learn how to trust the artists, but I think it’s a misplaced point of view. Let me start with the proposition that nobody owes an artist a living.

If artists want to take money outside the market for their art, they’re certainly entitled to do that, but they shouldn’t complain that people who give them the money want them to do something. There are good and sufficient reasons why funders have been giving them the money in the first place. One example would be the academy. If artists take jobs in universities, they shouldn’t bitch about the limitations of being academics. It’s too bad; it’s probably bad for their art; maybe they’ll produce a different kind of art if they do it, but they didn’t have to make that choice. It’s the same with other kinds of funders. I very often don’t like particular funder agendas, but I feel the same way about Pew or Rockefeller or Lila Wallace that I feel about Phillip Morris. In our system, funders are entitled to their own funding strategies.

In this sense, large foundations are no different from corporate funders like Philip Morris. It’s their money and they’ve got a right to spend it the way they want to spend it. If you don’t like that, you shouldn’t take it. You shouldn’t apply for it. If you make yourself beholden to someone else, then you shouldn’t complain about the constraints that person places upon you.

What changes in wealth might have a significant impact on arts funding?

Rather than concern ourselves with the much-discussed "intergenerational transfer of wealth," we should be studying the phenomenon of what I personally consider the obscene creation of individual wealth in this country over the last twenty years. There is an incredible amount of newly created wealth washing around this country, and we have set up a tax system that encourages giving it away. Nobody has made big fortunes these days in the old fashioned way. It’s come very fast and in huge quantities. It comes out of the commodities futures business in Chicago. That’s a place where some kid 22 years of age becomes a multi-millionaire on the Chicago Mercantile Exchange every day.

The question is, how long is it going to take to develop in these nouveaux riches the sense of stewardship of wealth that those who painfully built businesses (like Rockefeller and Carnegie) acquired over a long period of time, over generations? The issue may not be the transfer so much as the rapidity of the creation of wealth and the lack of training in how to be a wealthy person. We need to create a culture of philanthropy among the newly wealthy.

What could the relationships of the new donors and the arts be like?

You’re not going to change the Mellon Foundation or the Pew Charitable Trusts, but if you find old Alice Jones or Jimmie Smith who just made a big bundle and can get to her and convince him that supporting artists directly is the thing to do, I think that’s quite feasible. I think that will happen. Patronage is different now because there aren’t perquisites in the kind of patronage that we’re talking about now. It’s one thing if Michaelangelo is your house painter, but if you set up a foundation to make grants to individual artists you will probably not have the same sort of relationship with "your" artists as did Lorenzo de Medici.

We require a different kind of donor these days, someone who gets the idea that making art is in itself a sufficient and wonderful activity. We need donors to support individual and organizational creativity directly, not more purchasers of the Gates Codex.