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PUBUC-PRIVATE RELATIONS:THE ARTS AND HUMANITIES

C. Richard Swaim, University of Baltimore

Culture in the United States traditionally has been supported by avariety of private sources. It was the very rich who through theirmunificence supported grand opera houses and made it possible forsymphonies to perform and museums to be built. Today, however, theprivate patron is being replaced with a new structure of patronage, astructure which contains the upper middle-class consumer, the corporatesector and government—perhaps the most significant and portentous patronof all. Patronage of the arts and humanities in the United States has beenmarkedly different than that of Western Europe. Unlike governments inWestern Europe, government in the United States has not been directlyinvolved. The most notable and identifiable form of support came throughtax expenditure policy and discrete Congressional support for projects andbuildings within the capitol.

A significant commitment to support the arts and humanities came in1965 as a result of the National Foundation for the Arts and HumanitiesAct.^ The creation of the National Foundation for the Arts and Humanitiesrepresents the national government's direct support of culture and issignificant inasmuch as it demonstrates a break with past practice.Subsidies for culture indirectly through tax breaks for donors and taxexemptions for cultural organizations left the question of who gets what tosupport with the donor. Direct support now placed the sticky questions ofwho gets what with the federal agencies charged with support of the artsand humanities.

The results of the decision to directly subsidize culture are colored bythe proposition that government relates best to those who relate to itbest. The activities and organizations receiving subsidy do so as a result of"constituency based choice making," a process enhqriced by the developingintimacies among the public and private partners. The beneficiaries ofdirect government subsidy are those politically powerful constituenciesexerting influence through traditional avenues as well as through corridorsprovided by the intermingling of functions, boundary overlap, and explicitshared decision making. This makes the growth and development of culturevery much a political question and less so a cultural one.

Commentators on cultural policy often point out that in contrast toother countries the United States provides far less support for culture percapita. This is an unfair contrast for these advocates do not account forsupport generated (and to tm extent directed) by tax expenditure policy, thecatalytic effect of the direct support provided, and the effect of theimprimatur resulting from the agencies' awards. The amount of publicsupport is larger than normally perceived.^

...we can estimate that the $917 million in direct aid given infiscal year 1979 by all levels of government stimulated anindirect government contribution of 2.3 billion dollars.Combined with direct giving these figures suggest that inFiscal 1979 the arts received direct and indirect aid from all

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levels of government amounting to approximately $3.2 billion.

The most understandable and often mentioned assistance provided bythe Endowments is financial assistance in the form of grants. In addition tofinancial support, the Endowments exhibit a leadership function for the artsand humanities through technical assistance, information dissemination andadvocacy. Coupled with their monies, the National Endowment for theArts and the National Endowment for the Humanities are a formidablepresence in American cultural philanthrophy. Their presence andoperations should raise questions about the developing relationships amongthe public, private and non-profit sectors.

PUBLIC-PRIVATE INVOLVEMENT: FUNDINGThe 1965 legislation establishing the National Foundation for the Arts

and Humanities followed several national studies concerned with thehumanities and the arts." The general theme was the financial plight ofthe arts and humanities. The arts, especially the performing arts, werebeset with an economic character which led to increased costs and deficits,problems aggravated by rising inflation. Congressional hearings throughoutthe early sixties reiterated this point. The humanties were cast as a poorsister in relation to the monies being received by the sciences and both thearts and humanities clamored for federal assistance. The legislative teamof President Johnson combined the arts and humanities into a singlefoundation and produced the partnership we have today.

The enabling legislation for the arts and humanities agencies intendedthat federal support would be but one portion of the support available.Rogert Stevens, the first Chairman of the Arts Endowment, speaking indefense of the legislation said:

These funds should be partially used as seed money to enableprivate, city and state institutions to start or increaseservices to the public...I believe that foundations wouldincrease programs of aid if matching funds were available....

Roger Stevens was very nearly right though it was not the foundationswhich would demonstrate spectacular increases in cultural support. It wasthe business and corporate sector, in addition to the two Endowments,which would produce quantum leaps in cultural support dollars.

At the time of the establishment of the NFAH in Fiscal 1966business support was approximately $21 million annually. Thebusiness communities contribution has increased in tandemwith the Arts Endowment contribution. In Fiscal 1980, U.S.businesses contributed over $469 million to arts organizationsnationwide.

Testimony in support of the arts and humanities appropriations also revealthe broadening effect of the agencies' direct support of culture.

Policy Toward Public-Private Relations 467

...compelling evidence shows that in the past fifteen years,state and local government appropriations have risen frominconsequential levels...aggregate private giving has risenfrom 266 million dollars to 2.7 billion foundation giving hasrisen the 66 million dollars to 188 million dollars, andcorporate support has risen from twenty-two million dollarsto more than half a billion.

The impact is favorably received among congressional supporters and findsits way into language accompanying appropriations requests to the floor.This catalytic effect is due to both the advocacy effects of the agency asweU as the effects of the matching requirements of the agencies' grant.

The matching character of the Endowments' grants has beendeveloped into a major policy stance. The Endowments use the ChallengeGrant Program to stimulate and direct private monies in specific directionsof cultural support. In addition each agency has a Treasury Fund Programcontaining a match of increasing proportions. The resulting match forTreasury Fund is three to one, that is, for each federal dollar, three dollarsof private monies are required. This concept was developed into a similarprogram by the agencies, the Challenge Grant program.

The Challenge Grant Program was added during the agencies' re-authorization in 1976 and is similar to the Treasury Fund. ^" There is aresulting three to one match, however, the three doUar match must be newmoney. Thus, the cultural organizations are challenged to find new sourcesof contributions. In addition, there must be a demonstrable commitmentfor long range financial planning by the recipient. The awards may bemade on the basis of managerial performance which may, in some cases,eclipse the cultural factors in the judgment to provide support. NancyHanks, past Chairman of the Arts Endowment, defended the concept ashaving the explicit purpose of increasing support for the arts.^^ The grantsmade thus far have been successful in that arena. This potential wasparamount in the early deliberations concerning the program as was thepotential for partnership and cooperative funding with the corporatesector. 1^

The bait of private monies is a potent lure for public agencysponsorship of cultural institutions and activities and acts as a lever toextract public monies for support of culture. The common conception ofthe agencies' matching requirent«nt is that these funds entice additionalprivate support. While this is true the flow of influence is reciprocal. Withthe bait of private monies the Endowments can be drawn into projectsotherwise left unattended. Speaking of the growing role of corporatefunding, one person reported:

There has always been growing cooperation in funding effortsbetween corporations, foundations and government. Indeed,there has been for all three sources a much greater sharing ofinformation and each has taken its turn in providing thecatalytic money for one project or another.

While one can criticize support for specific projects, criticism should alsobe levied at choice made in the larger context among cultural activities

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and organizations. The broader patterns of funding by the Endowments arethe result of several factors, for example political pressures by constituentgroups, and in addition, the developing intimacies among the public andprivate sector partners.

PUBLIC-PRIVATE INVOLVEMENT: IMPRIMATURWhile there are a variety of patterns which public-private

involvement may follow, in the case of the arts and humanities private non-profit organizations provide culture in partnership with the support of theprivate sector and government.^'^ While the share of the cultural supportdollar provided by government is small, there is also a legitimacy, animprimatur, conferred by the award. And, to the extent that standards areestablished by the Endowments' peer review structure and then promulgat-ed by the cultural agencies through grant awards, this is a furthermanifestation of the public-private confluence in the development andshaping of culture. This extends influence beyond mere dollar amounts.Increasingly other patrons are looking to the cultural agencies for thestamp of approval. "We like working with the Endowment, says Ken Kansas,Exxon's manager of communication programs. Endowment panels provide akind of certification."!^ This is also the case with the *

...federal funding in the humanities provides a particularlyimportant service for other funding sources, both public andprivate. That service is the establishment of a generallyapproved method of determining the quality and abilities ofproposers and proposals which the personal, corporate andfoundation donor is usually unable to provide or secureelsewhere.

This "good housekeeping seal of approval" enables th£ recipient todraw on additional private support, corporate or foundation.

Overall the debate over the role of the NEA is marked by anunseemly dependence on the part of private funding sourcesfor what has been called the government good housekeepingseal of approval. This seal of approval is now being requiredby even the richest of constituencies of our society, both as ageneral blessing of the arts, and even more importantly, as avalidation of specific projects, programs and institutions.

This development is welcome by most. Corporate and foundation spokes-persons attest to this as the reason for the continuation of the agencies.Congressional people are pleased for this attests to the good job theagencies are doing and, by extension, speaks for the Congress without asubstantial commitment of additional direct government support.

PUBUC-PRIVATE INVOLVEMENT: DECISION MAKINGOther factors also point to the development of a "cultural-

bureaucracy complex" through shared advice and personnel and cominglingof decision making and expertise. Both Endowments work directly withprivate sector organizations in cooperative funding arrangements. One

Policy Toward Public-Private Relatirais 469

example is Visions, a public broadcasting series sponsored jointly with theFord Foundation. Additionally, there is a regular relationship with theMeUon Foundation and the Endowments' museum program and the Dance inAmerica series is a joint Exxon-Arts Endowment project. In recent budgethearings (1981), representatives of the private sector spoke glowingly ofthe advice and encouragement of the Chairman and staff of the culturalbureaucracies which "provided the means to more intelligently shape ourpolicies and more wisely allocate our funds." The implication seems clear,the obfuscation of boundaries between the public and private sectorsmuddles the distinction between public and private interests.

The exchange of information, shared decision making and coordina-tion among the cultural partners also stems from the memberships anddeliberations of the Endowments' advisory bodies—the National Councilsand the panels of experts. The National Council on the Arts and theNational Councils on the Humanities which respectively advise the twoagencies are composed of members from the private sector and advise theagencies on policy and programmatic directions. The agencies also havepanels of experts, established by programs, which make the actual decisionsconcerning the awarding of funds. Most of the criticism of these panelscenter on their revolving door character and the alleged existence of"backscratching" and an "old boy network."^" The notion of peer review iscentral to the Endowments and confers a sense of legitimacy to theagencies.

The panel system is essential to the Endowments' operation. Theagencies have always used representatives from the field to make thedifficult decisions concerning grants and, in the course of applicationreview, policy is also made. In fact, the Arts Endowment now distinguishesbetween policy panels and application panels. In either guise, these panels,as well as the advisory councils, represent an installation of privateinterests on the guiding bodies of the agencies, interests which areintimately involved in aUocative and policy decisions. This reinforces theallegation that the decisions in the broader policy context are the result ofprocesses that obfuscate the distinction between public and privateinterests.

IMPUCATIONSThe result of direct government subsidy of culture and the developing

relationships among the public and private sector partners is thepoliticization of culture. Government relates best to those which relate toit best and the cultural agencies give support where support is wisest togive politically. It foUows therefore that the Treasury Fund and theChallenge Grant Program, programs which appeal to the Endowments'powerful constituencies, developed into a major policy stance for theagencies. This demonstrates that the Endowments foUow, as do otheragencies, constituency based choice making.

This politicization is aided and abetted by the overlap among theprivate and public sector partners. The impact of developing relationshipsamong the private and public sectors in this instance has been to enhancetraditional interest group politics. The beneficiaries of direct governmentsubsidy of the arts and humanities are those who traditionally haveinfluenced policy; now they also shape policy through the intermingling of

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functions, boundary overlap and shared decision making. This reinforcesthe current distribution of resources among cultural activities andorganizations and favors status quo culture.

These developing relationships among the public and private sector dofavor some cultural activity over others. There may also be a problem ofaward criteria and the catalytic eff'ect of the agencies' awards may have aspurious effect on patrons choices.^^ These points are worth noting. Withdirect government subsidy of the arts and humanities and the furtherdevelopment of public-private relationships, the marketplace of tastes andideas has been abandoned as a decision forum for the growth anddevelopment of culture. It is now the political marketplace which isinstrumental. The kind of culture which will survive and prosper is thatwhich wiU make it in this particular environment and respond to as well asshape the forces of supply and demand therein.

NOTES

1. For an examination of patronage in Western Europe see FrederickDorian, Commitment to Culture (Pittsburg: University of PittsburgPress, 1964). For a general discussion of the history of American artssupport see Lawrence Mankin, "Government and the Arts: From theGreat Depression to 1973," (Unpublished Ph.D. dissertation. Universityof Illinois, 1976). A more recent economic analysis is by Dick Netzer,The Subsidized Muse (Cambridge: Cambridge University Press, 1978).A collection of readings in the area is Public Policy and the Arts,Richard Swaim and Kevin Mulcahy, (Eds.) (Boulder: Westview Press,1982).

2. PL 89-209.

3. An early critical analysis and one which is often overlooked is that ofBarry Schwartz, "Politics and Art: A Case of Cultural Confusion," pp.19-28, Art in Society, VoL 10, No. 3 (Fall-Winter 1973). The phrase"constituency based choice making" is David Stockman's quoted in "TheEducation of David Stockman," by William Greider, The AtlanticMonthly, (December 1981), p. 30.

4. Curiously even the mose ardent conservative critics of culturalsubsidies do not consider tax expenditures subsidy. See Ernest vandenHaag, "Should Government Subsidize the Arts?" Policy Review, X,(Fall, 1979), pp. 63-73.

5. George Gelles, "Public Art Support and the Federal Presence," Abackground paper prepared for the National Partnership Meeting, June1980, George Washington University. See Netzer, op. cit., for a lessgenerous estimate, p. 52. Michael Mooney, however, is less sure aboutany such amounts being calculable. See his The Ministry of Culture(New York: Wyndham Books, 1980).

Policy Toward Public-Private Relations 471

6. There have been a variety of reports, these are the major studiesBaumol, William J. and William G. Bowen, Performing Arts: TheEconomic Dilemma (New York: The Twentieth Century Fund, 1966).The Ford Foundation. The Finances of the Performing Arts, Volume Iand II (New York: 1974^! Rockefeller Panel Report. The PerforminiArts: Problems and Prospects (New York: McGraw Hill, 1965August Heckscher, The Arts and the National Government: Report ofthe President. (Washington, DC: USGPO, 1963).

7. Roger Stevens in testimony. U.S. Congress, House of Representativesand Senate, Committee on Education and Labor, Committee on Laborand Public Welfare, Hearings, before the subcommittee of theCommittee on Education and Labor or the House of Representativesand the special subcommittee on the arts and humanities of theCommittee on Labor and Public Welfare of the Senate on H.R. 2043,343, 3617 and similar biUs, 89th Cong., 1st sess.. Part I and 11,February and March 1965, p. 86.

8. Susan Boren, "Government Support of the Arts: Should It BeMaintained or Decreased?" (Washington, DC: Congressional ResearchService, The Library of Congress, May 1981), p. 13.

9. From the statement of Edward R. Block, President, The AmericanCouncil for the Arts, before the House Interior Appropriations Sub-committee, 97th Cong., 1st sess., March 25, 1981, p. 3.

10. Diane Gingold, The Challenge Grant Experience (Washington, DC:National Endowment for the Arts, 1980). This document is asummation of the initial round of challenge grants to the ArtsEndowment and is a how-to perspective on the process.

11. U.S. Congress, House of Representatives, Committee on Education andLabor, Chairman Hanks of the National Endowment for the Artsresponding to questions. 94th Cong., 1st sess., November 12,1976.

12. National Council on the Arts, Minutes, 43rd Meeting, May 1976, pp. 9-10, 16. Elizabeth Weil, Director, Challenge Grant program. NationalEndowment for the Arts commented that "...the Endowment'sinsistence on a high degree of managerial competence and fundraisingcapability has screened out many organizations of high artistic qualityfor which a challenge grant might be feasible and criticallyimportant." p. 3, Gingold, Op. Cit., It is for this reason that a programof advancement grants was developed. This development was inresponse to the management and financial quality of the organizationand not the artistic merits. The confluence of artistic criteria andmanagement criteria coupled with the developing relationships amongthe public and private sector is disturbing for with this blurring comesa concommitant loss of accountability.

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13. Statement of Kenneth Albrecht, Vice President, Equitable LifeAssurance Society, before the House Interior AppropriationsSubcommittee, March 25, 1981, p. 2.

14. B.L.R. Smith, The New Political Economy: The Public Use of thePrivate Sector. (New York: John Wiley, 1975). Dennis L. Thompson,"Private Implementation of Public Policies," (Paper presented to theAmerican Political Science Association Meeting, Washington, DC,1979). Smith and Thompson both cite specific ways and Smith notes,"Novel administrative arrangements have emerged which presentintricate new problems for the public and private sectors." p. 1.

15. Cultural Post, Volume 7, Number 4 (November/December 1981).

16. From the statement of Betsy McCreight, President, Federation ofPublic Programs in the Humanities, before the subcommittee forInterior and Related Agencies of the Committee on Appropriations,U.S. House of Representatives, 97th Cong., 1st sess., March 24, 1981.

17. Samuel Lipman, "Funding of the Arts: Is More Better?" ManhattanReport, Volume 1, No. 6 (September 1981). The effect of the stamp ofapproval has also been discussed at the National Council on the Artsmeetings, see Jerome Robbins' comments at the 52nd meeting,November, 1978.

18. See the report by the Surveys and Investigations staff of theCommittee on Appropriations, U.S. House of Representatives, thereport is reprinted in Hearings, Department of Interior and RelatedAgencies Appropriations for 1980, before a subcommittee of theCommittee on Appropriations, House of Representatives, 96th Cong.,1st sess., 1979.

19. See the testimony of MacNeil Lowry before a subcommittee of theCommittee on Appropriations, House of Representatives, 96th Cong.,1st sess.. Part 10, pp. 99-116. Mr. Lowry's statement, in part, reads,"This (leverage) goes far beyond matching grants and challengegrants. It creates new categories of philanthropy. It can redirect ingiven localities the claims upon individual or corporate patrons forparticular development campaigns. It directs the politics of trusteesin major institutions to more and more publicized programs. ...It helpsto account for the fact that millions in new funds for museumsexhibitions are wiUy niUy devoted only to a few very lau'ge shows thatcan be sold to government or corporation as a circus and as the motiffor tee shirts and other souvenirs in museum shops."