Joanne Scheff Arts Management The Private Sectors Support for the Arts: The U. S. Experience Joanne...

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Joanne Scheff Arts Management

The Private Sector’s Support for the Arts: The U. S.

Experience

Joanne Scheff

Seminario Internacional: “Inversion Cultural: Los Nuevos

Escenarios”

March 2001 Caracas

History of Support for the Arts in the U. S.

Non-profit enterprise developed after the Civil War through efforts of and investment by emerging upper classes.» Museums and symphonies were

administered by their founders and supported by wealthy individuals.

» Provided source of honor and prestige.» Protected art from government intervention

and from the whims of the masses.

1930s and 1940s: art became more popularized: » taught in universities» played on radios

1950s: Ford Foundation under W. MacNeil Lowry provided millions of dollars of capital financing to support infrastructure of arts organizations.

Other foundations followed Ford model. 1965: National Endowment for the Arts

created: cultural emphasis by the government given official life.

Followed by creation of state and local arts agencies.

Contributions from corporations and foundations:» 1955: $15 million 1990: $500 million

1960s - mid-1980s: promotion boom in the arts:» Increased accessibility of arts to greater

numbers of people » Expanding attendance levels » Growth of new and larger performing arts

organizations

Growth in the Arts

19651995

Orchestras 58 1,000

Opera 27 110

Dance 37 250

Theaters 12 400

Income Sources for Arts Organizations

50% earned (ticket sales, etc.) for performing arts; less for museums

50% contributed» Individuals: 70% - 75%» Foundations: 10% - 15%» Corporations: 10% - 15%» Government: 3% - 5%

(Federal, state, and local)

Philanthropy from Individuals

Major source of charitable contributions: 83% of giving overall

In 1996: totaled $150.7 billion overall from 75% of Americans

Another 14% said they would have given but were not asked!

$10.9 billion for arts, culture, and humanities

Philanthropy from Individuals, cont’d

On average, people give between 1 and 2 percent of their income to charities.

50% of arts contributors report annual incomes of $50,000 or more.

Cultural donors are older (50% over age 50) than donors to other charitable organizations (23% over age 50).

Cultural donors are more likely to be married and less likely to have children at home.

Motives for Giving

“Altruism” masks the complex motives that underlie giving behavior.

“What people want most is simply to be sought.”

“Every individual needs to feel that he is a worthwhile member of a worthwhile group.”

Harold Seymour

Motives for Giving, cont’d

Builds self-esteem and self-image Builds social status or prestige: public

recognition for good deeds Pride in association with an organization, its

programs and personnel Belief in value of the arts and in responsibility

to support them Some people give because they are asked by

someone they like and respect.

Motives for Giving, cont’d

Required to give at work -- pressured by superiors

Family tradition of being philanthropic Financial planning considerations: tax

deductions Primary inducement for giving: belief in

an organization’s goals and offerings.

Major Gifts vs. Small Gifts

80% of gifts come from 20% of givers. Problematic to rely on a few major donors: loss can be destabilizing. Necessary to expend effort to obtain many small gifts.

Small gifts ($1 to $1,000) tend to be made regularly -- usually annually.

Major gifts are often a one-time stretch gift (for endowment drive or capital campaign).

Moderate gifts given annually by major givers.

Major Gifts vs. Small Gifts

Small gift givers are customers of the organization.

Small gifts focus on the organization’s annual and shorter-term needs.

Major gift givers are stakeholders in the organization.

Major gifts focus on donor’s agenda.

Types of Gifts

Annual Fund Capital Fund Endowment Drive Special Events Planned Giving

Corporate Support for the Arts

1965 - 1985: grew to $698 million per year. Driven by benevolent self-interest; derived from philanthropy budgets.

Late 1980s - early 1990s: dropped to $518 million. (Recession, reduced tax benefits under Reagan).

By 1994: up to $875 million.(Economic upturn, tax benefits reinstated, growth of sponsorship from marketing budgets).

Corporate Support for the Arts

47% of U.S. companies support the arts. 73% of contributions come from small

and mid-sized companies ($1 million to $50 million in revenues).

Median contribution of $2,000 93% of gifts allocated to arts projects at

local level

Types of Corporate Support for the Arts

Corporate Philanthropy Sponsorships Collaborations

Why Corporations Give

74%: to demonstrate good corporate citizenship

66%: to enhance the quality of life in their community

46%: to enhance their image and reputation

22%: to strengthen employee relations

Why Corporations Give

21%: to increase business networking opportunities

19%: to increase sales 18%: to reach important constituencies 17%: to promote products and services 13%: to enhance employee creativity 9%: to increase media coverage

Corporate Philanthropy

Most corporate philanthropy is given for health and human services, education, civic and community affairs.

Corporations donate 0.8% of pre-tax profits. Tax deduction of up to 10% of adjusted net

income allowed by U.S. government. Corporate foundations can donate up to 5%

of gross income without tax liability.

Nature of Corporate Support of the Arts

Philanthropy for the arts is declining:» 12% in 1992» 9.5% in 1995

Primarily program and project support as opposed to general operating support.

Avoid supporting controversial or unpopular programs that do not provide desired type of visibility.

Require extensive public relations benefits.

Approaching Businesses for Donations

Accountability is key. Donors do not reward good intentions; they reward good results.

Want to support programs of value; not help an organization limp along to survive.

82% of decisions about philanthropy made by the chairman or owner.

Decisions increasingly made by employee committees.

Understand funders’ guidelines and interests.

Types of Support

Cash Goods Expertise Services Space

Corporate Sponsorships

Cash or in-kind fee paid to a property in return for access to the exploitable commercial potential associated with that property.

Undertaken with expectation of commercial return.

Goal is promotion; altruism is implied.

Advantages of Sponsorship

Heightens visibility and enhances profile by linking up with arts organization’s image, appeal, and customer base.

Provides lifestyle association. Responds to consumer demands that

companies give back to their communities. Helps companies communicate or enhance

their commitment to a particular market segment.

Provides benefits other media do not:» Live audiences» Loyal members » Client entertainment opportunities» Category exclusivity» More visibility than TV ads» Matches lifestyle, rather than intruding » Access to databases and volunteers

Merchandising opportunities and sales incentives.

Call attention to, shape, or reinforce public’s perception of a product’s benefits.

Add human element to corporate image» Helps attract and retain quality personnel» Promotes goodwill among customers,

clients, and employees

Growth of Sponsorship: 1994 - 1997

Museum sponsorships increased 41% (to $65 million in 1997).

Sports sponsorships increased 35%. Corporate media spending increased

Sponsorship/Media Growth

Sponsorship has outpaced the growth of advertising and sales promotion every year since 1985.

In 1996, growth of expenditures for:» Advertising: 7.6%» Sales promotion: 4.6%» Sponsorships: 15%

Collaborations

Strategic in nature as opposed to sponsorships which are tactical.

More durable commitment - not event oriented.

Common mission. Authority determined by new

collaborative structure. Resources and reputation pooled.

Collaborations

Comprehensive planning Well-defined communication channels Risk greater than in more informal and

short-term relationship.

Uses for Collaborations

Expand customer base (both the businesses and the arts organizations)

Improve internal functioning by developing new and better management skills.

Cut costs.

Examples of Collaborations

Share expertise:EDS and Detroit Symphony

Combine office expenses and management: American Symphony Orchestra and Concordia Orchestra

Tie-in Promotions: San Jose Arts Card

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Joanne Scheff Arts Management The Private Sectors Support for the Arts: The U. S. Experience Joanne...

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