Bilgesu Sisman | The Nonprofit Arts Industry and Its Discontents
Let’s start with some grounding premises:
Economic justice in the arts cannot be theorized or practiced in separation from thorough analyses and interventions into the systems, structures, and ideological scaffoldings of contemporary capitalism, such as the gig-ification of labor, financialization of the economy, neoliberal ideologies of work, eradication of social safety nets, the ever-widening wealth gap, commodification of the cultural landscape, as well as from the interconnected racial, sexual, and environmental injustices that sustain them.
The struggles of artists and cultural workers for fair compensation and financial stability/sustainability cannot and should not exist independent of struggles for housing, healthcare, education, and protections led by people from all walks of life.
The demolition of wage labor is the condition for creativity to be wrangled away from processes of extraction, exploitation, and alienation, making time and resources for creative expression available not only for the rich and lucky few, but all who want to exercise it on a consistent basis.
Our time is one of defense, which means that strategies for combating economic injustice should be multiple, intersecting, and mutually supportive, instead of waiting for one grand alternative or wholesale revolutionary change to happen, which decreases the likelihood of enacting justice and sustainability in the present and near future. While long-term revolutionary strategy should not be abandoned, alternative economic practices such as solidarity economies, cooperatives, mutual aid associations, community time banks, open-source, and communal use of land and tools can be embarked upon by participants, making it possible to divest from capitalistic markets and practices in the short term and imagine, build, and strengthen forms of organizing that can disseminate and challenge it systematically on other levels and at other domains as well.
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There is a good amount of literature and documentation of practices that deal with these issues that approach the question of economic justice in the arts from an encompassing viewpoint. In comparison to these discussions, bringing up the topic of the role of arts nonprofits in relation to the same question might seem minor or secondary. However, the fact that nonprofits are one of the major - if not the greatest - infrastructural components of the arts and culture economy warrants the following, especially within the framework of the nonprofit sector’s subsidiary function of navigating the internal contradictions of late-stage capitalism.
As someone who’s spent the majority of her professional life working in nonprofit educational and arts institutions, I had the chance to observe firsthand the political and economical problems surrounding the arts “nonprofit-industrial-complex”, and how, in the long run and despite the best intentions of those who work in the field, nonprofits contribute to, instead of successfully address, economic injustice in the arts.
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Nonprofits are meant to operate in a third domain besides the public and private sectors, both in between and in relative independence from the realms of for-profit/proprietary and government activity. In the US, the ascendance of the model of contemporary nonprofits is tied to the 1969 Tax Reform act, which would make 501C-3 organizations able to accept government funding and have tax exempt status. While modeled after corporate structures of hierarchical governance and oversight, and generally incorporating bureaucratic forms of management and administration, nonprofits nevertheless profess to work for the mission of contributing to the public good. In the arts, this can take the form of developing or promoting the work of artists through varied activities such as arts education, public exhibition and performance, artist and project grants, residencies, prizes, help services, relief funds, professional development etc.
According to pre-COVID19 estimates, nonprofit arts organizations make up for only 60% of their revenue for sustaining their operations from earned income (ticket sales, membership sales, merch sales, sponsorships, fundraising, as well as investment and endowment income), while having to make up for the remaining 40% through private sector contributions (30%) and government funding (10%). The pandemic causing the slashing down of revenues due to decreased attendance from audiences, thus necessitating an increase in revenue from the latter two sources is a crucial topic for discussion in its own right. However, even on a stable ground of earned income, nonprofits cannot exist without private and government funding. This entanglement lies at the root of arts nonprofit organizations’ strong alignment - despite their endorsed change-driven rhetoric - with the economic, social, political, and ideological status quo, as neither foundation support and individual donations nor government funding can be done without.
It has been noted over and over again that in the face of growing deficits (made worse with the fact that grants that fund general operations in significant amounts are close to non-existent), decision makers can be quick to re-interpret the mission so that the financial survival of the organization starts taking precedence over what the organization was set out to do, constituting a weird logic of “arts-organization-for-arts-organization’s-sake,” cutting off programs to be able to open up space for non-arts related revenue-generating activities such as rentals or business partnerships. The focus on getting and maintaining funding can skew priorities, as it replaces efforts of delivering meaningful, mission-led and well-planned programs, with staff time and resources being channeled to the former.
It is not unheard of that some nonprofits justify their operational models by hinting at how artists and the community the organization is missioned to serve do not understand or appreciate the work that the organization does for them, and that these constituents should actually serve the organization by contributing their labor, finances, and promotions to keep the organization alive.
In the worst cases, programs that create impact but don’t bring in revenue are placed on the cutting board. Everything, from space use to community partnerships, become monetized. Self-perpetuation, which should either be a measure or side-product of success, becomes the guiding goal, and the organization is more prone to succumb to external priorities than its original ones. All of these have detrimental results, not only for the people the organization is tasked to serve, but also for its raison-d’etre of being a public benefits provider.
And yet, it would be wrong to put all the blame on nonprofit organizations themselves. In the US, the percentage of public funding marked for arts is miniscule: The federal budget for the arts constitutes a small percentage of the government’s overall budget, totaling 0.003%, and appropriations to state arts agencies constitute just 0.04% of state general funds expenditures, despite the total amount of federal, state, and local funding having gone up with relief funding after 2021. The lack of adequate public support for independent art creates another competitive market, and frequently, the corporate structure of nonprofits hinder the ideation and execution of alternative models such as resource pooling. Increasing operational expenses that are not publicly funded but need to be compensated through earned income and private funding (both of which are in decline) thus become the justifying ground for staff cuts and layoffs, more often than not leaving the remaining employees to do more and more work without additional compensation.
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The economic reality of working for the arts and nonprofits in general can be summed up in the “passion tax” that artists and cultural workers in nonprofits pay a significant amount of. The social expectation that people who do work they are passionate about should accept fewer benefits, lower pay, and poorer working conditions is unfortunately one that contributes to the ideological underpinnings of the nonprofit industry. When it comes to artist support - a major tenet of the mission of arts nonprofits - we see the material effects of it in cases of artists’ access to employment, funds, and opportunities, especially since nonprofits act as the major distributor of public and private funds.
In the realm of government funds, grants that go directly to artists are rare (and these are usually concentrated on the state level.) The main model of fund distribution has nonprofits as intermediaries. Their tax-exempt status as 501C-3s enables them to serve as fiscal sponsorships for artists who would otherwise need to pay income taxes on granted or donated sums, making affiliation with nonprofits a requirement.
In the majority of cases, these public funds - except for relief funds and limited term UBI experiments - are project-based. Research on economic stability of artists is clear that project-based grants, due to their sporadic nature, do not address the financial needs of artists on a holistic, consistent basis. This is one of the reasons for these same artists to work on contractual basis for nonprofits. As mentioned before, artists as independent contractors create a cheap labor force for the nonprofit industry - a surplus supply of precarious workers without job security, healthcare, unemployment, or retirement benefits. Unfortunately, on top of these challenges, artists also have to deal with not getting paid or being underpaid for their work, as the myths of passion-work and exposure-over-compensation persist.
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Nonprofit sector’s reliance on the private sector for what it cannot cover with earned revenue or public funds exposes these organizations to being susceptible to complicity with capitalism’s extractive and exploitative pursuits. Let’s start with private foundations. Constituting a legal way of pooling of wealth away from taxation, private foundations constitute the second largest contributor in private funding for the arts (%33) after individual donations.
As they withhold in private accounts what would have been revenue for the public services (74% of every dollar is tax subsidized in donor advised funds), foundations are required to donate only %5 of their annual assets. Many foundations don’t go above the required percentage, and the rest of the endowments are directed to stock investments, thus capital accumulation.
It requires no hard math to see that this system directly contributes to the widening of the wealth gap, as income that would be taxed for public services is hoarded away.
With regards to their ideological functions, private foundations serve the role of corporate PR. Here, art plays a legitimating factor for the exploitatively accumulated wealth. Toxic Philanthropy and Artwashing refer to the ways in which the contemporary artworld is upheld with profit that’s been made through practices that are deemed unethical even within the logic of capitalism. In “All the Beauty and the Bloodshed,” filmmaker Laura Poitras documents Nan Goldin’s decades long fight against the Sackler family, the owners of Purdue Pharma which is the maker of Oxycontin, for being responsible for the opioid epidemic, as their names “graced” numerous galleries, museum wings, institutes, art centers, libraries, scholarships, and buildings due to their status as high donors. Goldin and P.A.I.N.’s (Prescription Addiction Intervention Now, that Goldin is a founding member of) activism and advocacy work succeeded in getting the Sackler name removed from dozens of prestigious institutions. While Goldin’s courage and persistence to fight a mega-wealthy family and prestigious arts institutions connected with them, at the very risk of damaging her artistic career, is beyond inspiring and should be a guiding light for struggles to sever ties between arts and economic injustice, the repeatability of the experiment is doubtful, especially for anyone who doesn’t have the kind of artistic reputation and social capital that Goldin possess.
This was made apparent recently in Hannah Gadsby’s less than satisfying response to their Brooklyn Museum show’s ties to the Sacklers (leaving aside the other controversy about her co-curating the exhibit), where a certain form of pessimism about changing the structures of the art world and its ties to money comes to excuse working within these structures. The ethical quandary is certainly greater for artists who are less influential and less financially secure - one either rejects the opportunity to work in institutions funded by dirty money, or bear the burden of their art being funded by it.
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There are two other major components feeding into the structural inequity of the nonprofit philanthropic model that need to be mentioned. I’ll pose them as questions for further elaboration by the reader, with the hope of addressing them in future work:
Most nonprofits’ boards are recruited from people who have the time to volunteer their time to serve on the board and the social capital to raise funds for the organization. When looked at in aggregate, this group is almost exclusively made up of people with wealth and privilege, keeping them at arm’s length from the constituency the organization is missioned to serve. How can artists benefit from a structure where top-level budgetary decision-making and control doesn’t include them?
Even in nonprofits with participatory governance models, how can passionate and mission-driven individuals ideate and effectuate change in the way that these organization do work, when almost all of their time and energy is necessitated just to keep the organization functioning (i.e. looking for funding, preparing for audits, compiling grant reports, putting together fundraising events etc.) It is thus hard to see an evolution within the current nonprofit model without broad reaching tax reform.
As the assumption about the nonprofit system being the best one to serve the arts becomes untenable in the face of its continuous and structural problems, artists and activists re-evaluate the efficacy of this model for their goals and experiment with informal, collaborative, technology-supported, and community-based alternatives, the discussion of which goes beyond the scope of this essay. On the other hand, one thing that could support these experiments in a vital way is the expansion and restructuring of grant and funding opportunities for artists that directly and continuously support artistic practice without further intermediaries. In addition, building cooperative networks between artistic and non-artistic practices and sharing resources are musts for establishing the economic basis for decreasing our investments in systems of inequity.
In summary, nonprofits are not going to be much help to us if our main goal is to sever the tie between wealth and art and establish economic justice in the arts, as their modus operandi is set to uphold the status quo, thus standing in the way of real systemic change. And after all, not only is the revolution not going to be funded, but there will not be any nonprofits after it.
Bilgesu Sisman is a writer, film programmer, and educator, who has worked in arts nonprofits and academia and has been part of multiple grassroots organizations around anti-capitalism, cooperative economies, and participatory democracies. She currently works as the Director of Cinematheque at Cleveland Institute of Art.