Critical Issues Facing the Arts in California

by Alexis Frasz & Holly Sidford

AEA Consulting recently completed the first phase of a Scoping Study for The James Irvine Foundation to identify the most critical issues that the cultural sector in California must address to ensure a sustainable and healthy cultural ecology for the future. The first result of this is a working paper, "Critical Issues Facing the Arts in California," summarized below and found in full at www.irvine.org. Although this paper focuses on California, many of the issues are relevant to cultural organizations around the world. The Irvine Foundation and AEA hope the broad distribution of the paper, together with related planning activities sponsored by the Foundation, will spark a conversation about the most important issues facing the sector and help generate innovative solutions for the future. You can share your views on the project blog, (californiaculture. blogspot.com).

If we use a broad definition of cultural participation, people's engagement with the arts is healthy nationwide. Some estimates which include the "unincorporated arts," defined as community, a vocational, or folk arts, suggest that as many as 95% of American adults participate in some kind of cultural activity on a regular basis.¹ Despite remarkable levels of personal engagement in many different kinds of arts activity, audiences at nonprofit arts organizations are generally flat or shrinking. The nonprofit arts are competing for consumer attention not only with other nonprofits, but with the full range of commercial and nonprofit leisure options available. The commercial arts sector, once thought to be inferior to the nonprofit arts sector, now serves large parts of the nonprofit sector's former market.

Shielded from the immediate effects of supply and demand, much of the nonprofit arts sector has been sheltered from broader trends shaping the creation of and demand for culture. Individual organizations and the sector as a whole have increased fixed costs consistently over the past 40 years by building new facilities and adding programs, even while attendance and earned and contributed revenues remain stagnant or fall.² There is now a serious imbalance: the current level of public participation and financial support is not sufficient for what the nonprofit arts sector needs to survive.

Even as they see the pulling away of audiences and funders, many cultural nonprofit groups behave as though the current challenges are a result of a cyclical economic downturn, but the evidence suggests that we are experiencing a permanent structural change. The environment for arts and culture in California and the rest of the U.S. has irreversibly changed, and the nonprofit arts sector has reached a breaking point where it must adapt to changing technologies and consumer demand or become increasingly irrelevant. Inaction or "business as usual" is not an option. Major factors influencing the sector include:

• Changing demographics, which have implications for the way that culture is created and consumed, as well as what types of creative work are considered art;
• Increasing reluctance of government to spend money on public goods and services, including culture, that are viewed as nonessential;
• Increasing influence of the market in all spheres of life and the breakdown of the clear distinction between for- and nonprofit sectors;
• New technologies, which are transforming the way people work, get information, connect with others, share resources, and create and participate in culture; and
• A shift in the way the public values culture, both in style and in substance.

AEA has identified five broad categories to serve as the starting point for further discussion.

1. Access

As a result of the Internet and other communications technologies, there is wider and more democratic distribution of artistic offerings and a proliferation of ways to participate in culture. Affordable personal and home media delivery mechanisms have spurred a corresponding growth in specialized products and cultural micro-markets. The institutionalized nonprofit cultural sector and traditional corporate cultural providers are struggling to maintain their edge in this context, yet artistic creation is flourishing. An increasing number of artists are successfully self-producing and self-marketing, building networks of audiences and supporters through inventive uses of communications technology. The vast amount of cultural content currently available intensifies competition for consumer attention, and increasingly audiences expect artistic creators and distributors to be technologically literate, responsive to their personal interests, and constantly generating fresh content. As there is greater interest in participatory art and the pursuit of personal creativity grows, there appears to be a decline in public appetite for traditional forms of nonprofit arts presentation and interpretation.

2. Cultural Policy

California, like most states in the U.S., lacks a unified cultural policy to guide the strategic development of the field and maximize public and private investments at both state and local levels. Unlike their work in many other sectors, such as the environment, health, education and social services, very few California funders have invested in arts and culture policy. Cultural policy should be based on a broad assessment of the value of the arts for the public and the supports needed to build a healthy sector and provide public access. This requires informed research and reliable data, which is severely lacking in the arts sector. Instead, driven by decentralized actors with a diverse range of priorities, the sector has grown exponentially over the past two decades, and is fragmented, undercapitalized and disconnected from an understanding of its public value. In California, the arts lack the essential policy instruments available to many other sectors including: broad-based consensus over public value, understanding of the legitimacy of public support because of market failures, a solid causal model of the effects of investments, and standardized evaluative measures for success of investments. An effective cultural policy would not simply focus on increasing financial appropriations to nonprofit cultural organizations, but on creating a shared understanding and compelling argument about the public value of culture. It would invest in building the broad array of institutional and non-institutional supports needed to provide wider access to culture and build universal appreciation of the value of the arts and culture among the public.

3. Arts Education

Multiple studies have shown that exposure to the arts at the elementary and high school levels is a primary determinant in adults' subsequent valuation of and participation in the arts. Arts education correlates with overall academic success because involvement in the arts has a positive impact on children's self-esteem, curiosity, creativity, and ability to collaborate and work in teams. Yet, two generations after Proposition 13, most California school districts are strapped financially and have sparse, if any, resources to support solid, sequential arts education. Even where such resources are available, school teachers and administrators are not well-equipped to integrate the arts into school curricula because they were not exposed to the arts during their own elementary, high school, and professional educations. While polls show that a vast majority of California adults (as many as 90% in the San Jose area, for example, and close to 99% in San Diego) would like to see their children receive 3-4 hours of arts instruction per week, there has been no consistent, statewide effort to restore this vital element in the arts ecology. Governor Schwarzenegger's proposal to allocate $100 million to arts education in the FY 07 state budget is a positive step, but only a beginning in what needs to be a long-term, comprehensive, inventive and energetic re-investment strategy. Because of its broad-based public support, arts education has great potential as a galvanizing issue.

4. Nonprofit Business Model

For the past four decades the nonprofit cultural sector has been encouraged to create new organizations and expand facilities, without a concomitant emphasis on building appetite and audiences for the products and services of these institutions. As a result, many believe the sector is over-built and unsustainable at current levels of attendance and investment. The basic revenue model for nonprofit arts organizations is changing quickly. Whereas 10 years ago, arts groups could rely on a combination of public funding, philanthropic resources and audience fees, now public funding at federal, state and local levels is declining (in some cases, such as California, very precipitously). Overall, philanthropic and corporate funding for the arts is not growing (and in many places is being reduced), and earned income from audiences is not likely to make up the difference, as attendance, overall, is static or declining. Yet few arts organizations are strategizing new business models in response to these trends. Many, in fact, are still increasing fixed costs (often with the support of private and public funders) at a time when operating income is becoming increasingly difficult to generate. The vast majority of cultural organizations have so far invested little in research to determine the motivations of either their traditional audiences or potential new markets.

5. Preparing the Next Generation of Artists and Arts Managers

The changes in the environment for culture necessitate that artists and arts managers develop new skill sets to be successful, but so far the sector has not made this a priority. The blurring of the boundaries between the commercial and nonprofit arts means that artistic legitimacy is no longer the sole province of the nonprofit world. Many young artists and cultural workers are abandoning the 501c3 nonprofit sector for more nimble, flexible organizational models, and increasing numbers of talented young people are eschewing employment in the nonprofit arts (with their poor salaries and few employment benefits) to take jobs in the more lucrative commercial sector. Young artists are not being prepared for the realities of the workplace into which they are moving; young arts managers and administrators, too, are not being adequately trained to understand the new context for nonprofit arts development and presentation. Additionally, boards are not being adequately prepared for requirements of leadership and service in the era of Sarbanes-Oxley.

While there are significant challenges that the sector must face, this should not be misconstrued to suggest that the future of the cultural community in California is bleak. On the contrary, California is a wellspring of artistic and cultural innovation and creativity, and is on the forefront of many of the developments in the sector. In addition to its cultural assets, California possesses a highly diverse population encompassing cultures from around the world, and an economy larger than all but five nations. The underlying causes of the California arts sector's current conditions are complex and many decades in the making, but the challenges can be dealt with if the people who care about the sector are given the tools and resources to do so. Innovative solutions can lever California's rich cultural and artistic assets. If investments and policies are shaped strategically and informed by solid information about key trends, there is every reason to believe that California, and other states that respond proactively, will be dynamic and generative environments for culture in the decades ahead.

1  According to researchers Moni Peters and Joni Cherbo. Referenced in Maria-Rosario Jackson, et. al. Art and Culture in Communities: Unpacking Participation. (The Urban Institute, November 2003). Also, Maria Alvarez, There is Nothing Informal About it. (Cultural Initiatives Silicon Valley, 2005).

2  Kevin McCarthy, et al. Performing Arts in a New Era. (RAND Corporation, 2001)