The following is a reprint of an article that appeared in The Podium, the e-newsletter of Symphony Services International on 5 December 2011. I was living in the South at the time.
I asked one Chair why he donates. Charles Metcalf is chair of Opera New Jersey, which is based in the beautiful university town of Princeton (once home to Thomas Mann and Albert Einstein), nestled between the larger cities of New York and Philadelphia.
You have only to walk a few blocks in many places in the US to get a sense of the scale of philanthropy here. Just pick a city. In Charleston, for example, within a five-minute walk, you can pass the Karpeles Manuscript Museum, Charles P. Darby Children’s Research Center, and Stiles and Virginia Harper Student Services Center...In Savannah, you can stand inside the Richard and Judy Eckburg Atrium, the impressive entranceway to the Jepson Center, one of the Telfair Museums of Art. Philanthropy is pervasive. Sponsorship also is part of life. Is everything sponsored? The ‘please turn off your cellphone’ message before the curtain at San Diego Opera is sponsored by the Sycuan Casino, that is: a business run by a Native American tribe, the Sycuan Band of the Kumeyaay Nation.
|The Karpeles Manuscript Museum, Charleston|
But I’m going to focus here on private giving, which is on the rise and about to take over from corporations as the biggest source of donation. In 2010, according to Giving USA’s Annual Report, 81% of US giving came from individuals, 14% from foundations. In Australia also, as Brook Turner reported in The Australian Financial Review (20 June 2011): ‘Individuals and foundations are poised to overtake companies as the biggest supporters of major arts companies...’
With businessman Harold Mitchell commissioned by Australia’s Federal Government to review private sector support for the arts in April 2011, it may be interesting to consider how philanthropy works in the United States. They’ve been doing it a lot longer and on a much larger scale than Australia. Are there any lessons for Australians in their experience?
In many respects, Australia and the US have similar ideas about charity. Our ideas of charitable behaviour stem from similar notions of social improvement. In both countries, funnily enough, our definitions of charitable activities can be referred back to a 1601 parliamentary statute brought in to redress ‘the Misemployment of Landes Goodes and Stockes of Money heretofore given to Charitable Uses.’ Back then those charitable uses included ‘Releife of aged impotent and poore people, ...Schooles of Learninge...’, even ‘Mariages of poore Maides’. And both Australia and the US believe you should get a tax deduction for a charitable gift. Over the years both countries have refined what is a charity for tax-deductible purposes, what in the US is termed a 501(c)(3) company after the subsection of the US tax code that defines recognised recipients.
It’s always been easy to include organisations that deal in health and welfare in such lists. It has often been harder to include the arts. But the US list is more generous. It includes such organisations as: mutual ditch or irrigation companies ‘if 85 percent or more of the income consists of amounts collected from members for the sole purpose of meeting losses and expenses’ or ‘cemetery companies...’ - and it has long specified literary pursuits for example. The other big differences are that in the US you can also earn income from your gift - and recognition is okay.
Perhaps Americans have a broader list of tax-deductible charities because they want to encourage individuals rather than the federal government to support social endeavour. Australia, of course, is different. One of the most intriguing conversations I’ve had in the US was with a Tea Party supporter who said he would move to Australia ‘if this dang country keeps going the way it’s going.’ I had to tell him that while he enjoyed his time in Sydney and the Barrier Reef, most Australians tolerate, welcome, even seek a higher level of government assistance.
Or, well, did once. Private support is on the rise, and is bound to be a greater source of funding in the future. Is it safe to rely on yet? According to Valerie Wilder, in The Australian Ballet’s public submission to the Mitchell Report: ‘If the recent flurry of press articles on philanthropy in Australia is to be believed, high net worth individuals in this country are not yet contributing at anywhere near capacity’.
Perhaps it is time to offer some of the benefits that US companies are allowed to offer - and advertise. Check out the Met’s website. With an organisation like the Metropolitan Opera you can be acknowledged, earn income and receive a tax deduction at the same time. It’s all explained to you there, on a webpage. Perhaps a Charitable Lead Trust is what you want. As the Met’s site says:
Assets are placed into a charitable lead trust and the trust makes annual payments to the Metropolitan Opera for a specified term of years, often 10 to 15. After that, the assets are returned either to you or to your individual beneficiaries. These trusts are an excellent way to transfer appreciating property (preferably income-producing) to beneficiaries while supporting the Metropolitan Opera. They are a particularly effective means of reducing, or possibly eliminating, the estate and/or gift tax on the eventual transfer of these assets to your beneficiaries...
Or, is a Charitable Remainder Trust more your caper? You can click on the Gift Calculator. If you want simply to give, the Met’s site will tell you exactly what you get for your nominated amount, including assistance with ticket exchanges and seating improvements, donor recognition, and attendance at exclusive receptions, general rehearsals, closed rehearsals and even private coaching sessions with singers. As well, the Met’s website will tell you what portion of your gift, given these benefits, is not available for a Tax deduction.
In 2010, the Metropolitan Opera broke fundraising records. They made $182 million in contributions, a 50% increase on the previous year. It could be credited to the broadening of their donor base through their live broadcasts into cinemas around the country, or individuals ‘stepping up to the plate’. I wonder if it also has something to do with the clarity of their website.
It does seem that philanthropic giving in the US is not as altruistic as in Australia (although there are donors who eschew benefits), but with their ability to attract more people US organisations have more potential to create a community around their artform. If you give in the US you also have a chance to make your mark as a stakeholder. At a certain level of giving, you gain entry to the board. One organisation quoted me $5000 as the price of board membership. I immediately thought, ‘I could become a player here.’
Of course it’s all hard work. Fundraising is more than half of what a US CEO does. The million dollar donors want to talk to him or her. And then there are the huge Development departments, the engine rooms of the organisation, ‘where the energy comes from,’ says Anne Midgette, music critic for The Washington Post, ‘where the income of these organisations is pursued with a lot of muscle.’
Some orchestras in the US, such as the Boston Symphony Orchestra, are wholly reliant on themselves to raise their funds. How does the pressure fall on the individual employee? Barbara Hanson is Major Gifts Officer at the Boston Symphony Orchestra, with specific responsibility for Tanglewood, the BSO’s summer home in western Massachusetts.
|Seiji Ozawa Hall, at Tanglewood|
A big part of looking after donors is making them feel welcome. Says Hanson, ‘All of our overseers and our trustees have a staff person who is their contact. I have my own list. Basically “I’m your girl”. If these donors have ticketing or other requests, for example, ‘I don’t handle their requests myself. I can’t get in and print out a ticket, but I will go into the box office and sit with the box office manager because they will leave their requests with me and that sort of thing. And I get to know people very well. It’s so unbelievably stimulating and exhausting - and exciting.’
Part of looking after donors for Hanson involves travel. A great many Tanglewood supporters come from New York or northern New Jersey (about two hours’ drive away). ‘In fact, I go to New York for a short period of time every month. I go to Florida in March usually for about a week and see supporters who are wintering down there. I mean lunches and dinners with people, or coffee, or just catch up. We work around an event or two. The Pops goes down every other year and we go with them and see folks and just maintain contact. They might ask, “How’s the season going in Boston? Is anything new coming up for Tanglewood?’ I fill them in if they ask about specific things. And then the same goes for New York. It’s having a presence because certainly they don’t forget about Tanglewood in the winter time but it’s very different once they go back to those lives because also a lot of our supporters are Metropolitan Opera supporters.’
So it’s getting to know your own list of donors and trustees. But how do you, tactfully, work out their giving potential?
‘Well we have a research person on staff, so we try and find out someone’s capacities because, you know, it’s funny. I’ve never asked anyone for a million dollars but there are people who if you asked them for a million they might just keel over and land on the floor. And there are others who, even if they didn’t have that capacity, would be very flattered you would think that they did. So that’s where the relationships come in, getting to know people, finding out how much an institution means to them. You want to know how to approach someone when you’re going to ask them for a big gift because you don’t want to leave money on the table and you don’t want to insult someone. As I’ve been told from the very beginning, when you’re talking to someone about a gift it should never come as a surprise.’
And, says Mi Ryung Roman, Director of Development at New York-based Orpheus Chamber Orchestra, ‘Every board member has an expectation that they’re either going to give or find people - “give or get”. Your most important relationship is with the board and knowing who they are and what they do.’
But why do people give? Deborah R. Card, Executive Director of the Seattle Symphony, once said, ‘People almost never give just because they have the spare cash and they need a place to stash it’. There is a range of reasons for philanthropic giving. For some, it’s the benefits. ‘At Tanglewood,’ says Hanson, ‘we give the benefit of parking and ticketing.’ But, she concedes, there are some who decline benefits. They don’t come to Donor Dinners, for example. Orpheus Chamber Orchestra offers ‘side by sides’. ‘We can offer our top donors the chance to sit onstage next to a musician during a rehearsal, so they can be in it and feel what it’s like,’ says Mi Ryung Roman. ‘Orpheus has the advantage of offering unique opportunities, being a chamber orchestra.’
A lot of the motivation can be summarised as ‘the experience of feeling involved’. So, do donors need the tax breaks? Yes, says music critic, Anne Midgette, pointing out that ‘tax breaks are the state subsidy in America’.
‘I think without a tax break people would be less ready to give $10 million. It’s hard to say because I can’t speak for the super-rich. But I also think motivations are never one-sided. There’s always a complex network of: because your name goes on the building, because it feels good to be a patron to your community, because you get a tax break. You know - win-win. The tax break is not the major reason. It is a reason. It is part of the constellation of perks that make people happy to do it.’
|Production shot from Opera New Jersey's 2010 production of Carmen. Photograph: Jeff Reader|
‘I basically give some kind of donation to any arts organisation where I’m a regular subscriber,’ he says. His General Director, Richard Russell, interjects: ‘One board member at an organisation I used to work for said to me they came to the board because they were interested intellectually about learning how an arts company runs. That was something they wanted to do in their retirement. There’s a social caché of being on the board of Metropolitan Opera that we can’t duplicate here, but luckily we have board members who are committed to seeing opera in this area’.
People with enough money to give and the wherewithal to make it work for them - I could imagine a great generative potential for an organisation embracing knowledgeable people who know where to place their money. But what about the dominant personality?
Charles Metcalf: ‘There’s a sense in which you don’t want to be a one-dominant donor place. It can get a bit despotic. But sometimes it’s a dominant donor, sometimes it’s someone who’s been the director for 35 years.’ He and Richard chuckle. Richard explains, ‘There’s a great interest in Gilbert and Sullivan in the Princeton area and Chuck doesn’t have a great love for that work.’ And this time Metcalf interjects: ‘But I support it.’
What about the people who just have ‘spare cash’? Anne Midgette offers a cautionary tale about a donor she spoke to some years ago. ‘I asked her, “What conductors do you like?” And she said, “Oh honestly, you know to me it’s all just beautiful music.” And I thought, “It’s so much like a function of a social place.” I mean, that’s what orchestras have to worry about. The next generation coming up does care about what kind of music they’re hearing.’
Which must mean it’s going to become harder to extract money. I imagine it already is. I talked to a woman from Minneapolis who was going to New York precisely to raise funds for an organisation she’d started. We both talked about the ‘ask’ and how difficult that might be. At what moment do you say, ‘So, the reason I’m here is...?’
But this doesn’t seem to faze the Development people I’ve spoken to. Says Barbara Hanson: ‘I mean I’m a development person. People know what that means. If I’m spending a lot of time with them or having pointed conversations with them about their philanthropy, eventually it’s going to come to “Will you give us this, or can we talk about a long-term gift or that sort of thing?” And I’ve had people say, “We both know what this conversation is about. Why don’t you come to the point?” To me that’s wonderful. It’s called “thank you!”’
Says Richard Russell: ‘there is a continuum from single ticket buyers to subscribers who then become donors. So the idea is to capitalise upon their interest to begin with. You’re not trying cultivate people who are not already attached to the organisation, or at least have no interest.’
Mi Ryung Roman: ‘I think the most fun part of my job is it feels like matchmaking. It often makes the “ask” not a scary thing to do. It takes a lot of research and conversation and learning about someone beyond their obvious association. Let’s say you’re a subscriber: do you love music enough to have your kids learn it? Was your own upbringing around music? Do you support other performing arts organisations? I personally have a musical background, but it’s the art of relationships management that counts. The artform speaks for itself.’
Or does it? Does this mean donors and board members who will push the orchestra beyond its standard and arguably petrifying repertoire and make it a living institution in the 21st century, an attractive proposition for the next generation of donors? I spoke to Jesse Rosen, President and CEO of the League of American Orchestras, the advocacy and research organisation for orchestras in the United States: ‘I think in some sense having a large proportion of private support has an energising effect. Your donors and patrons are not just people who give money, but people with perspective and points of view and varying strains of thought and belief. So they have some sway and some influence over direction. They’re voices in the orchestral organisation and arguably through that process orchestras have an accountability to them that keeps orchestras connected to current, contemporary thinking. The other side of this though, which will be contradictory but I think that both things are true, is that the absence of government subsidy means that orchestras operate with an extremely narrow margin for risk, and every program has to meet very stringent revenue targets. Room for experimentation is really quite limited.’
So how diverse are their ‘strains of thought’? There is Midgette’s ‘to me it’s all just beautiful music’ type of donor. But Rosen and I spoke at length about the Cleveland Orchestra’s expansion to Miami, where the orchestra has its own Miami board and donors. ‘The driver for Cleveland going to Miami was the erosion of the population base and wealth in Cleveland itself; its capacity to support an orchestra at the level to which it’s been supported, and they went into a market with no professional orchestra’.
But it seems the Miami venture has had an effect on repertoire and outreach. Says Rosen: ‘What Cleveland realised is that if they were going to be successful in Miami, that they had to build relationships there, not just funding relationships but really make themselves part of the community. So their residencies in Miami are quite extensive in terms of teaching masterclasses, public symposia, partnerships with schools and other organisations. They’ve appointed a conductor with a specialty or special knowledge and experience with Latin American repertoire [Costa Rican Giancarlo Guerrero, who conducted the West Australian Symphony Orchestra in May 2011]. So they have in fact planted themselves there as though they want to stick around and it’s led the musicians and management both to really increase their connection to the Cleveland community.’
This sets up an inspirational image of an imaginative orchestra operating with a flexible and knowledgeable board and set of donors to respond skilfully to a unique set of circumstances. What if, like Hollywood, the boards and donors (think of them as ‘producers’) were knowledgeable peddlers of the product, drawing on deeper and deeper knowledge of the greater society they were beginning to incorporate? But there have been and continue to be risks with philanthropy.
You have to be sensitive, observes Mi Ryung Roman, aware of the demands on New York’s much-requested donors. ‘There are high-profile individuals who are hit up by every organisation in town.’ And there are many calls on their interests. ‘Someone says, “I give the bulk of my charitable giving to Dana-Farber [the Cancer Institute]”,’ says Barbara Hanson. ‘I’m going to argue with that?!’ Charles Metcalf chooses his words carefully: ‘What would be a risk for me in giving to the arts is a substantial weakening of the social and health protection network of the less well-to-do; the pressure will be on me to divert.’
Perhaps the biggest risk is the decline amongst the current giving age-group. ‘It’s not presumed,’ says Jesse Rosen, ‘that as wealth transfers from one generation to the next that the coming generations will be placing the same priority on giving to the orchestra and the ballet, the opera, etc...’
You still get instances like the anonymous donor who matched every dollar individually donated to Orpheus Chamber Orchestra’s Project 440 composer commissioning project. ‘But,’ says Anne Midgette, ‘it’s many organisations’ goal to break away from “heroic giving”,’ which she defines as the sort of donor who will pull out the cheque book when an organisation is a million dollars short and say, ‘Alright, one more time’.
I mention to her a May 7th San Francisco Chronicle article in which David Gockley, General Director of the San Francisco Opera, worried about relying so heavily on 11 top donors, and said, ‘What we need to do is for each wealthy donor, to find 10 people who are interested in opera and get them to give one-tenth of what their parents gave.’
Midgette: ‘But I think you’re going to have to find a hundred people who’ll give $100,000. I say over and over there’s so much emphasis on education and getting young people into the orchestras. What they need to be doing is cultivating people between 40 and 50. That’s the generation that they’re going to lose and that’s the generation that’s poised to be donors.’
And they’ve got to make those people feel that they belong because ‘Orchestras have not done a lot to make their audiences feel like they belong in other ways. You know, there’s that whole format of the orchestra concert. You must behave in a certain way if you don’t want to look stupid. You must sit silently. You’ll often have music played at you that you don’t really like or want to hear. It’s a very oddly antagonistic relationship to the audience and so gaining entrée into a club that feels exclusive and a little bit scary is probably well worth the price. I think the biggest threat is that the billionaires of tomorrow are not going to have the same incentive to donate as the billionaires of today. And yet classical music is relatively cheap. I remember talking to a philanthropist in California, a young woman who got into commissioning music, saying “It’s so cheap. I can’t buy art like this but I can make all of these symphonies...”’
Giving, of course, is meant to be America’s redistribution of wealth. Even so unsentimental a businessman as Cornelius Vanderbilt, one of the fathers of American capitalism, donated his flagship to the Union in 1862 and then, after the Civil War was over, endowed a university in the South as part of his own personal contribution to Reconstruction. In a sense, you are obliged to donate. ‘From those to whom much is given, much is expected,’ Rose Kennedy is supposed to have drummed into her children. Anti-governmentalism is an oft-observed feature of American life, but it doesn’t necessarily translate into anti-society, and most Americans acknowledge that there is something they should be doing for their country. But is there anything my interviewees would want government to be doing?
Some envy Australia’s level of government support. When I ask Richard Russell if he thinks there would be any disadvantages to 37% support, he thinks hard for a minute. ‘I’m struggling to find a “con”.’ Finally, he says, ‘I think you’re obviously subject to political patronage if that’s the case.’ Australians would probably advise that this is no more problematic than the influence of big donors or longstanding music directors. Opera New Jersey does say however that the 5% they get from the state legitimises them to a helpful degree. Says Charles Metcalf; ‘If you get government funding, that is a good housekeeping seal of approval that channels donors to you, or has the potential to do that.’
Jesse Rosen sees some practical benefits in holding onto the sort of data collection and analysis and advocacy that the National Endowment for the Arts is capable of. Anne Midgette is a little more caustic about calls for more government support. ‘Well everyone in America likes to pontificate about how the government should support us. It’s never going to happen. What would I like to see? I’d like to see more dynamic art. I’d like to see less timidity. Nobody’s going to want to go to classical music if it’s “white bread”.’
What most would probably not want is for President Obama to cap the Charitable Gift Deduction, a prospect that was raised again this year when the White House jobs plan was presented to a joint session of congress. Senate Democrats proposed acceptable alternative ways to fund the package, but some Not-for-Profits (or, rather, 501(c)(3)s to give them their US name) are still nervous about a measure the president has mentioned several times.
You get a sense from studying US philanthropy that when the system works, it works well. But even though Australia’s Productivity Commission said in January 2010: ‘[the reason] governments provide subsidies to the private sector rather than simply increasing state provision is that it can result in better targeting of resources’, I do see holes. A system based on individuals’ predilections is not necessarily a wholistic approach. What happens if you have a disease that doesn’t pique the interest of someone who can pay for the research? I think of the ‘Adopt a Highway’ movement. Around America you see signs acknowledging the people who have subsidised a tract of road – the Central Coast Republican Party, Employees of Hearst’s Castle, North Malibu Hair Salon... But you probably should ask if the interstate highway system could have been built this way. Who provides the overview?
Philanthropy probably won’t replace government involvement in Australia (at least for a long while to come), but it certainly provides a high level of vibrancy in the United States. And hey, on just about every block in America, it’s part of the daily streetscape.
Gordon Kalton Williams
Metropolitan Opera’s donor page
Acknowledgements: I’d like to thank Robert Clarke for his advice on this article. This article first appeared in The Podium, the e-newsletter of Symphony Services International, 5 Dec 2011.