Seed funding?

Michael Wilkerson, on the ArtsJournal blog, made an interesting proposal to fund the nonprofit arts sector: tax for-profit cultural products and funnel those restricted funds to the nonprofit sector.  A day later, he backpedaled from the proposal, on the advice of his son who pointed out that such a scheme would not help artists/creators/producers operating outside the traditional nonprofit organizational model.  On the same day, Scott Walters posted the first of a two part series that “compared the income and wealth disparities in the American economy to that of the philanthropic support of the nonprofit arts economy.”

Reading these two threads as a dialogue with one another (although neither acknowledges the other) highlights a problem endemic to the arts ecosystem: a focus on arts organizations rather than on artists.   Walters sees the concentration of arts funding in the hands of large organizations to be a social justice issue.  As long as those large organizations are dominated by one majority demographic, it is that. Wilkerson’s son sees the arts funding problem as one of economic equity, and it is that too.  So, here’s a radical idea: remove the middleman (or middlewoman) that is the arts organization. Get funding directly into the hands of the artists and makers.  To be clear, I’m not advocating the dissolution of arts institutions, but rather a revisioning of the way artists are funded.

What if individual  (that is, institutionally unaffiliated) artists and producing arts collectives – playwrights, painters, choreographers, composers — could apply to a large fund – perhaps funded through Wilkerson’s tax on for-profit cultural products – and then have funding distributed quite literally as seed money without curation or reporting.  Funding would not be decided based on past performance (I’ve written before about the problems caused by the three-year rule) but on a lottery system.  Any artist meeting some sort of minimum qualifications would have equal chance at securing funding as any other artist.  No reporting necessary – unless that artist wants to go on to second round funding beyond the seed level, in which case some evidence of having produced something would be required.

This idea grows out of the work I do with Phoenix Fringe Festival.  I support the fringe because the opportunity for independent artists to present their work is the lacuna of the arts ecosystem.  These independent artists may be, as Wilkerson describes them “outside our comfort zone,” but they are the artists of the future.  Large 501c3 organizations, and the 501c3 structure in general, are designed to reduce risk. But, without risk there will be no innovation.  By taking the 501c3 out of the equation, by funding artists directly, who knows what artistic innovation may result?

REMINDER/REJOINDER/DISCLAIMER: This blog is a place for me to throw wild ideas into the wind and does not necessarily reflect the rigorous scholarship I insist on in my day job.

About lindaessig

Linda Essig is director of Enterprise and Entrepreneurship Programs at the Herberger Institute for Design and the Arts at Arizona State University, including its award-winning arts entrepreneurship program, Pave: http://pave.asu.edu The opinions expressed on creativeinfrastructure are her own and not those of ASU. You can follow her on twitter @LindaInPhoenix and "like" the Pave Program in Arts Entrepreneurship at http://www.facebook.com/pages/pave-program-in-arts-entrepreneurship/386328970101 Find Pave's journal, Artivate, at http://artivate.org
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7 Responses to Seed funding?

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  4. Mike, the tax you describe is not unlike the tourism taxes that are common in state-level arts funding. Though the tourism market sometimes shifts from national to regional in hard times, it doesn’t fluctuate hugely and the volume is such that most arts communities can weather those storms. The focus shifts from planes to car trips, but folks still move around.

    Since you both are quoting national numbers, it makes me wonder what the current taxes are on inbound international tourism or our own cultural exports–both under federal regulation. I like the closed loop you draw between the profits made by commercial cultural products and the broader creative community that fosters and produces them, but worry about taxes on products here at home. If it’s more of a tourism, it makes sense that the money goes back to arts education in a big way and perhaps cultural exchange fits in there as a priority as well. Those activities fuel both the product and the interest in cultural endeavors.

    I also agree that getting the money to the artist quickly always makes for better results. I’m not sure that system is particularly broken, though. Could it be that the decentralized system of arts service organizations connected to the NEA is a perfectly fine network to get that money out? In terms of vetting and democratic distribution, I have a lot of respect for the protocols they have in place, especially those that cultivate diversity and prioritize rural producers. Most states can still give directly to artists and there are interesting models for entrepreneurial micro-loans. With a bigger pot, that scarcity model isn’t as scary.

    Remember too that arts-service people coach and support the arts community at the same time they mete out grants. The occasional public art controversy will crop up. Those are good for public dialogue (and a delight to manage too). In fact, I might vote for plumping up the professional support and development for the homegrown creative sector. If we’re suppose to fuel an economy, might be nice to grow our talent and tools.

    If you take away the paintballs that national politicians use to play gotcha each election cycle, then we do get a stable source of funding for the cultural community. It’s market-based so Hollywood and New York can pay their fare share and there’s a decent system to administer the funds. What’s not to like? You just have to get record labels and movie companies to agree, and then decide what’s ‘cultural.’

    Thanks for this thread… love that these thoughts are circulating!
    -Anne

  5. Linda,
    I love your idea in theory (and thanks for the tip of the hat toward my two blog posts, by the way). It’s certainly true that artists create the art that’s the center of the artistic universe, and that funding mechanisms are somewhat backwards in giving the $ to the organizations and almost never to the artists directly. But there are more than 2 million “registered” (with the IRS) artists in the U.S. Even the most crazed tax-raiser can’t possibly fund even a decent portion of those on a lottery system, right? But, as you say, once you start vetting, you create hierarchies and bureaucracies that are likely to exclude the very artists we are both trying to support in our blogs.

    If we can get a good conversation going, problems like the ones I raise can be surmounted, and a much better and more exciting artistic system can be built in this country. Forward!

    Michael Wilkerson

    • lindaessig says:

      Michael: Thank you for your comment. The 2.1 million artists figure used by the NEA includes actors and sculptors, but also floral designers and radio announcers. If a narrower definition is used that eliminates commercial designers and architects, that number gets cut in half. A narrower definition yet yields closer to 400,000. None of which is really relevant, however, because many artists — disciplined artists who spend a significant portion of their time making art — are not paid for that work and so are not counted by the IRS or BLS . There would need to be some application to the lottery itself. What is your estimate of the revenue that could be generated from a one cent tax on for-profit cultural products? Could it generate $10M? That would be 1000 grants of $10,000 each, directly to artists. And, such a tax would likely generate much more than $10M — and the lottery might make your son’s friends happy too.

      • The amounts of money that could be raised are staggering. According to the National Arts Index, Americans spend $157.7 billion a year on arts and entertainment. A 1% tax on, let’s say, the $100 billion that would be easily captured (large enough organizations to use computerized ticketing systems, less a generous amount for avoidance/loopholes), would yield a billion dollars a year. That amount would not only vastly exceed the current NEA grant budget ($66 million) but would be nearly twice the entire public funding from the arts from all states as well.

        So both organizations and artists could be helped considerably, in my view. The other reason for my proposal (which is detailed in a long paper I’ve submitted to a journal) is to end public funding for the arts as an annual culture-wars target by establishing a more automatic, permanent funding mechanism.

        I like thinking differently…

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