Not Just Money: Who is Making the Decisions?

This is the second of three posts sharing findings from Not Just Money: Equity Issues in Cultural Philanthropy, a research study conducted by Helicon Collaborative with funding from the Surdna Foundation. This post looks at the lack of diversity among decision-makers (arts foundation staff and boards, individual donors and cultural institution leadership) and distinct challenges faced by organizations of color and those serving low-income communities in both urban and rural communities.

(The first post “Equity Issues in Cultural Philanthropy” explored inequities in funding distribution at national and local levels. A third post suggests how we might begin to move toward a new era of more equitable and inclusive cultural philanthropy. Click here for the full report, downloadable graphics, city profiles, email sign up, and more.)

We welcome you to share your ideas for how to move forward here and on Twitter using #notjustmoney.

Who is Making the Decisions?

Finding #5: There is a significant lack of diversity among cultural philanthropy leaders, and that influences funding policies and distributions.

In the business sector, academia, science and other realms, there is growing evidence about the value and importance of diverse perspectives in decision-making. (See, for example, Harvard Business Review.) In the arts and cultural realm, variety in the socio-economic, educational and professional backgrounds in foundation personnel can increase the likelihood that diverse artists, artforms and cultural traditions will be equitably valued, and assessed in ways that are appropriate for their cultural and social context.

Foundation giving and individual donations comprise nearly half of the nonprofit cultural sector’s annual revenue. The backgrounds and life experiences of the people making decisions about these allocations influence how funds are allocated. Currently there is a pronounced lack of diversity among both arts foundation staff and board members, which contributes to the imbalance in funding distributions.

Foundations

The leadership of philanthropic institutions does not reflect the demographics of the communities they serve. The Foundation Center’s 2015 Foundation Giving Forecast Survey showed that among foundations that give more than 10 percent of their funding to the arts:

• More than 92 percent of presidents are white
• 87 percent of board members are white
• 85 percent of executive positions are held by white people
• 68 percent of program staff are white, and
• The number of people of color working in these foundations increased only 1 percent between 2011 and 2015.

Of course, “white” is not a mono-culture, and many people affiliated with arts foundations value and advocate for funding diverse forms of cultural expression, regardless of their own background. But at a minimum, the overwhelming absence of people of color on boards and in senior leadership at arts foundations suggests significant blind spots in hiring practices, and these likely carry over into other realms of decision-making. In 2015, for example, just 10 percent of arts and culture foundations reported that they had established goals or guidelines for grantmaking that serves people of color, and only 30 percent could estimate how much of their funding was intended to serve people of color — on both points, less than other types of funders. (FC)

Individual Donors

Giving to the arts by individuals is an increasingly important part of the nonprofit cultural economy. Over the past decade, individual giving to the arts has increased, while inflation-adjusted giving by arts foundations has declined. (FC) Individual giving now represents about one-third of the cultural sector’s total revenue, and is nearly three times the amount contributed by foundations.

Detailed demographic data on individual arts donors is not available. But we do know that the recent growth in individual giving in the arts is due entirely to wealthy individuals — that is, contributions from households with annual income over $100,000. (Lilly School) And because people with incomes over $100,000 are more than twice as likely to be white and urban than Black or Latino or rural, we can surmise that most of the high-end arts donors are white and living in cities. (U.S. Census)

We also know that individual giving in the arts heavily favors larger institutions. In the ten cities Helicon studied, individual donations to larger cultural organizations — on average — were six times greater than contributions to organizations of color and those serving lower-income communities. (DataArts)

Some wealthy individuals do give to smaller cultural organizations, as well as to cultural groups serving communities outside their own sphere. But as individual giving grows as a proportion of overall contributed income for the cultural sector, inspiring more wealthy people to see the larger cultural ecology and allocate contributions to a diverse range of cultural forms and communities will be essential to achieving cultural equity.

Cultural Institution Leadership

The lack of diversity in the leadership of large cultural institutions also plays a role in shaping patterns of cultural philanthropy. Through their organizational and programming decisions, the leaders of larger cultural institutions determine which artists, cultural forms, and creative ideas will receive validation, resources and attention. These organizations have longstanding relationships with both individual donors and foundations (and sometimes overlapping board memberships), which help them attract and sustain generous funding for their work, but also influence donors’ views of what the cultural sector is and what warrants support. For these reasons, diversity in the leadership of larger cultural institutions is centrally important to achieving greater equity in cultural funding.

The country’s changing demographics and its increasing cultural diversity are not adequately reflected in the personnel of larger cultural institutions or the artists they present.

A few highlights from recent research document the imbalance:

• A 2015 survey of U.S. art museums commissioned by the Andrew W. Mellon Foundation revealed that only 16 percent of senior art museum leaders are people of color, and just 5 percent of museum directors are.
• A 2016 national report on racial and gender diversity in symphonies by the League of American Orchestras found that 14 percent of symphony musicians and 21 percent of music conductors were people of color.
• A 2009 study of California nonprofits showed that 79 percent of arts organization board members were white. (The Urban Institute)
• The Sphinx Organization reported in 2015 that only 1 percent of all works played by symphonies were composed by artists of color.
• A 2015 survey by the Dramatists Guild of America reported that just 12 percent of works produced by regional theaters between 2011 and 2014 were authored by playwrights of color.
• Actors’ Equity, the national labor union representing professional actors and stage managers, reports that between 2013 and 2015, less than 8 percent of principal contracts went to African American members and 2 percent went to Asian American members.

Recent research also shows that diversity in cultural organization staff members is often inversely related to organizational size. The 2015 survey of 900 cultural institutions in New York City, for example, reported that the most diverse staffs are found in smaller institutions — in community arts organizations, multi-disciplinary groups and local arts councils. Even among organizations focused primarily on Western European high art forms, smaller organizations tend to have more diverse personnel than their larger counterparts. The League of American Orchestra’s national study of symphonies, for instance, reported that smaller orchestras have twice the number of African American players as the largest ones, and nearly three times the number of Latinx musicians.

Finding #6: Cultural groups whose primary mission is to serve people of color and/or lower-income communities face distinct financial and organizational challenges.

Cultural groups dedicated primarily to serving communities of color, lower-income communities, disabled populations and LGBTQ communities often face distinctive financial and management conditions. Many, though certainly not all, cultural groups dedicated primarily to serving people of color or lower-income populations operate in communities compromised by long-term disinvestment by the public and private sectors, which has had rippling negative effects on the health, income, education, safety and other life circumstances of local residents. This is true in both urban locations and rural places.

This reality makes the work of cultural groups serving these communities especially important to the health and well-being of their residents, as research by the Social Impact of the Arts Project (SIAP), Maria Rosario Jackson and others shows. It also means that these groups must do more, in more complex situations, with fewer resources. In addition to providing their communities with access to cultural programs and nurturing artists, many are called upon to offer social services, safe community spaces and development programs for youth, and to take the lead in promoting civic engagement on a range of issues.

The conditions in which these organizations work influence their financial and organizational capacity. Information drawn from a 2016 DataArts sample of 701 such groups in ten cities illuminates some of the important hurdles these organizations face:

• They have less capacity to generate contributed income. Giving by individuals to organizations of color and those with missions to serve lower-income communities ranged from 0 to 9 percent of all individual giving to the arts.
• They have less capacity to generate earned income. On average, these groups generate less than one quarter of the earned income of larger-budget institutions.
• They have less access to grants of substantial size. Approximately 50 percent of all arts foundation funding is awarded through grants of $500,000 or more. (FC) Because the size of most arts grants is tied to the size of the organization’s budget, large grants are out of reach to smaller organizations.
• They have less capacity to develop reserves and generate investment income. As a result of the budget constraints noted above, these groups generate just 4 percent of their total revenue from investments, on average, compared to 18 percent for larger groups. (These figures exclude New York City.) This can mean a differential of hundreds of thousands of dollars in revenue each year.
• They have lower percentages of full-time staff. Less than half the work conducted at these organizations is performed by full-time employees, which further constrains their organizational capacity.

All of these factors mean that these groups have limited working capital, change capital and other forms of accumulated financial assets, which severely curtails their ability to take risks, survive set-backs or invest in their own development. It also means that they are more reliant on foundation grants and public sector funding — and that they feel shifts in funding from these sources disproportionately. This is particularly true of groups in rural communities, who have the least access to funding of any kind. (Public funding is not the focus of this research but broadly speaking and with some notable exceptions, allocation of arts funding by federal, state and local agencies is more equitably distributed than funds from private sources.)

We have a self-perpetuating cycle — most cultural groups serving communities of color or lower-income and rural communities are small, therefore they can’t qualify for substantial long-term philanthropic investments. But without meaningful investments over sustained periods, they can’t grow their capacity and their financial reserves, which means they don’t qualify for long-term investments, so they remain relatively small.

In the next post we explore the possibility of a new era of cultural philanthropy — one that works affirmatively and systemically to overcome the legacy of inequity in cultural funding, and more fully support the country’s diverse cultures and communities.