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Full text of "Looking ahead : private sector giving to the arts and the humanities"

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Private Sector Giving 
to the Arts and the Humanities 



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PRESIDENT'S COMMITTEE ON THE ARTS AND THE HUMANITIES 

Looking Ahead 




Private Sector Giving to the Arts and the Humanities 



A Report by Nina Kressner Cobb 



Research in this report was funded by the Rockefeller Foundation. 

Publication was made possible by a grant 

from the Texaco Foundation. 



TABLE OF CONTENTS 

PAGE 
Introduction and Summary of Findings 4 

Note on Methodology and Sources 6 

Section One: Overview of the Private Sector 8 

A. Introduction 8 

B. Overview, 1994 8 

C. Longer-Term Trends 8 

D. Beneficiaries of Private Sector Giving 12 

Section Two: Funding of the Arts and the Humanities 12 

A. Introduction 12 

B. Individual Donors and the Arts 12 

C. Corporate Donors and the Arts 13 

D. Foundation Donors and the Arts and the Humanities 14 

Section Three: Relationship Between Private and Public Funding 16 

A. Historical Background 16 

B. NEA and the Arts 17 

C. NEH and the Humanities 21 

D. The Institute of Museum Services 30 

Section Four: The Role of Tax Policy 31 

Conclusion 33 

Appendices 34 

Bibliography 36 

Acknowledgements 38 



Introduction 

Looking Ahead: Private Sector Giving to the Arts 
and the Humanities was written by Nina 
Kressner Cobb, a consultant to the Rockefeller 
Foundation, and is being released to the public 
by the President's Committee on the Arts and 
the Humanities with permission of the author 
and the Rockefeller Foundation. 

This report brings together the findings of 
the most recent research on private sector 
philanthropy — from individuals, corporations 
and foundations — to analyze trends in giving 
to the arts and the humanities in the context of 
total charitable giving to all causes. In an 
attempt to paint one portrait of private giving, 
information was compiled from a number of 
independent sources which used differing 
methodologies. These sources include: The 
American Association of Fund-Raising 
Counsel, The Foundation Center, Indepen- 
dent Sector, The Conference Board, and the 
Business Committee for the Arts. Numbers 
and trends cited in the summary and the text 
come from their research. 

The report also discusses the relationship 
between private and public sector funding and 
assesses the impact of recent cuts in federal 
funding to the arts and the humanities on 
private sector donors to cultural life in the 
United States. These observations are derived 
from over 100 interviews and conversations, 
and from public testimony, recent studies and 
essays on these subjects. 

Private sector funding cannot be understood 
without looking at public policy and public 
sector funding. Since 1965 both funding and 
activity in the arts and the humanities across 
the U.S. have grown enormously, paralleling 
the creation and growth of the National 
Endowment for the Arts (NEA), the National 
Endowment for the Humanities (NEH) and 
the Institute of Museum Services (IMS). The 
funding patterns demonstrate a complex 
national cultural structure in which private and 
public donor sectors reinforce each other, 
funding different pieces and parts, exercising 
different priorities within the whole. As one 
funder phrases it, the public and private sectors 
"operate in synergistic combination." 

Just after this report was completed, the U.S. 
Congress' House-Senate conference commit- 
tee on the Interior Appropriations bill agreed 
to cut the National Endowment for the Arts 
(NEA) by 39%, the National Endowment for 
the Humanities (NEH) by 36% and the 
Institute of Museum Services (IMS) by 27%, 
thus cutting $133 million of federal support 
from the agencies for cultural organizations, 
scholars and artists. 

Headers should remember that cultural 
organizations obtain their revenues from many 



sources; private grants, contributions, 
memberships and government grants and 
payments are part of a complex funding 
structure that includes earned income. 
Ticket sales, admissions, program ads, and 
gift shops are just some of the ways that arts 
and humanities organizations earn a 
significant part of their annual budgets; 
these sources of revenue are not covered in 
this report. 

SUMMARY OF RESEARCH 



i 



In 1994, private giving to all nonprofits 
totalled an estimated 130 billion dollars, up 
3.7% from 1993. This increase kept pace 
with inflation, but it did not keep up with 
real economic growth. 

For the first time since 1986, total giving 
has fallen below 2% of Gross Domestic 
Product; p rivate cha ritable giving is not 
gro wing with a stro n ger U.S. econom y. 

While the past decade witnessed significant 
increases in private giving, in real dollars 
both overall giving and giving by individu- 
als have stagnated since 1989, and despite 
recent increases, have failed to match their 
1989 highs. From 1987 to 1994 overall 
corporate giving declined in real dollars by 
one-sixth (although it may be on the rise.) 
Only foundation funding grew consistently, 
increasing by 50% from 1984 to 1994. 

Over the 30 years between 1964 and 1994, 
giving patterns were stable, with an average 
45% of charitable giving going to religion, 
followed by education, health and human 
service sectors. 7.5 % of privat e support in 
1994 went to arts and culture, up from 3.2% 
in 1964, but still among the lowest benefi - 
ciar ies of the im j^r fat-pgnrip^, 

I ndividual donors are responsible for the 
great m ajorityof private giving. 87.7% of all 
private giving comes from individual gift s 
( including beq u ests), 7.6% from found a- 
tio ns, and 4.7% from corporations . Closer 
analysis reveals that the size of donation by 
household has declined, and recent data 
suggests that the size of contribution to the 
arts by donor households has fallen more 
rapidly than for other causes. 

_ An estimated $9.68 billion was contributed 




tothe arts , humanities and culture in 1994. / 

There are 37,000 foundations of all ty pes in 
the U.S. 1,020 of t he large st foundations, 
which together provided more than b0% of 
the~gfahT funds, allocated a lmost_1 5% of 
thelFd ollars ($834 inillion)lo~the~arts and 
the humanities in 1993. 



of the foundations surveyed for thi 
study, with one exception, reported that 




they will not be able to increase their 
fundrng-rbr the arts and the humanities.. 

Many foundations predict that there will 
be increased competition for funds by 
health and human services requests. 

Foundation officials observe that the size, 
scale and expertise needed for national 
planning and strategic funding for the arts 
and the humanities are now located at the 
two Endowments and the IMS. 

The arts and the humanities have very 
different funding structures. More funding 
is available to the arts from all public and 
private sources; the humanities rely more 
on higher education, federal funding and a 
few foundations. This study does not try 
to estimate the extent of the support 
provided by colleges and universities, 
which employ artists and scholars and 
present public programming. 

.The Arts: 

I ntergovernmental funding for the a rts, 
c ame to at least $1.1 billion in 1995. O f 
this_total, $162 million came from the 
NEA; $ 265.6 million came from sta te 
ap propriations through state arts ag encies, 
an d an estimated $650 million was fro m 
direct l ocal government allocati ons-to 
cultu ral organizations as well as to loca l arts 
councils. 

All foundation funding f orthe arts and^fch e 
cu lture in 1992. the most_ E£ceo t year for 
which there are complete figures, totalled 
$1.36 billion. 



Most foundation dollars are given locally, 
concentrating on the largest, most presti- 
gious institutions, often in response to 
capital campaigns. 

Small, innovative and community-based 
arts organizations will lose the most in the 
competition for private dollars and 
declining public funds. 

The totals for individual giving to the arts 
and culture mask a worrisome trendj_the__ 
ohation toThearts per 



average size o 
contributing household leTTdramatically 
berweenT987 and V993 . This dg ehneX 
accompanied bv a similar decre ase in 
volunteer involvement in the arts. 



Statistics on corporate donations are kept 
by several sources and are inconsistent. 
The 1995 Business Committee for-the Arts 
survey reports^ajharp-incfease-tH-eoippe^Eev 

To~the arts, from $518 million in 
1991 to an all-time high of $875 million in 
1994. However, the annual suryey_by^trre 
ConterenctTBoard finds thafgiving to the 



arts in 1994 among Fortune 1000 
companies increased only slightly. 

* Corporate giving to the arts is driven 
increasingly by marketing and human 
resources objectives. In general, corporate 
giving is determined by location and 
benefit to employees. 

* ThHMFiA has h^n th p larges.LHngl'' 
donor_t o the arts since 1976 ., jNT EA has a 
national scope that allows it to study and 
influence disc iplines, audiences an d 
d istn bution Tsy gtems . 

Foundations observe that NEA grants are 
an acknowledgement of merit which 
encourage local hinders to contribute to 
an organization or project. Other funders 
report that they depend upon the 
knowledge and judgment of the NEAs 
review process. 

The Humanities: 

Funding for the humanities is not as well 
documented as funding for the arts. It is 
impossible to identify how much funding 
for higher education supports the hu- 
manities, nor are there statistics on 
individual or corporate giving to the 
humanities. Data is limited to the 
foundation sector and even that is 
incomplete. 

* The humanities received only $182.2 
million from state and federal sources in 
1995 and even less from the private 
sector, not including grants to individuals. 

* 1993 foundation data show that the 
humanities — including funding for 
historic preservation and museums — 
received only 1.9% of all giving from the 
sample of 1,020 foundations, which 
provided more than 55% of all foundation 
giving. 

* Of the eighteen main private sector 
supporters of the humanities studied, only 
three foundations fund the humanities as a 
distinct category. Only the Andrew W. 
Mellon Foundation, at $30 million in 
support, provides extensive grant-making 
in the humanities. 

The National Endowment for the 
Humanities, at $172 million in 1995, is by 
far the largest supporter of the humanities 
compared to the private sector and to 
other units of government. 

Private funders observe that only the 
NEH has the mandate to operate on a 
national scale and with a systematic 
approach to encouraging research and 
public participation in the humanities. 



Note On Methodology 
And Sources 

Research for this report proceeded along 
three lines. The first, which forms the basis of 
Section One, was to assemble data to present a 
composite picture of private-giving patterns 
among the three donor communities — 
individual, corporate, and foundation. The 
second, presented in Section Two, was to 
determine trends in the patterns of giving to 
the arts and humanities by these donors. The 
third, the substance of Section Three, was to 
evaluate the extent to which funding for the 
arts and humanities depends on the interac- 
tions between private- and public-sector 
funding. 

Section One, "Total Giving by the Private 
Sector," is based on statistical studies and 
surveys that are published annually for each of 
these donor communities. The findings in 
these diverse publications have not been 
brought together in a single study until now, 
in part, because the different data bases, 
surveys, and statistical studies collect data from 
somewhat different universes, often define 
terms and base years differently, and use 
different methodologies. 1 Finally, Section 
One serves as a context for the analysis of 
funding trends in the arts and humanities, 
which is the focus on Section Two. 

Section Two, "Funding of the Arts and 
Humanities," based on a small subset of the 
statistical studies and surveys and scholarly 
articles, examines trends in giving to the arts 
and humanities from all three donor commu- 
nities. 

Section Three, "The Relationship between 
Private and Public Funding," is based prima- 
rily on interviews with private-sector funders 
of the arts and humanities. These interviews 
were used to determine the response of the 
private sector to possible cuts in federal 
funding of the arts and humanities. Funders 
were asked whether they thought their 
priorities would change as a result of decreases 
in federal funding; that is, would allocations to 
the arts or humanities at their foundations 
increase or decrease? The fundraising 
experiences of eight state humanities councils 
were examined to test the possibility of 
privatization. Funding for museums is 
included throughout this analysis, even 



though the Institute of Museum Services is 
not discussed in detail. Finally, funders were 
invited to assess the impact that cuts in federal 
funds would have on the arts and the humani- 
ties. 

Foundation officers interviewed by the 
author were chosen from Foundation Center 
lists of the top 25 arts funders and the top 25 
humanities funders. Program officers at 
community and corporate foundations were 
added in order to achieve greater diversity in 
type of foundation and/or location. In 
addition, interviews were conducted with 
scholars, directors and researchers at such 
service organizations as Dance/USA, scholarly 
associations, historical societies, umbrella 
organizations such as the Federation of State 
Humanities Councils and the American 
Council of Learned Societies, as well as with 
former and current program officers at the 
National Endowment for the Humanities and 
the National Endowment for the Arts. 

Section Four: "The Role of Tax Policy," 
provides a brief description of the principal 
elements of federal tax policy that affect 
charitable giving and then discusses the degree 
to which changes in federal tax law could 
have an impact on private giving to the arts 
and humanities. 

SOURCES 

Before proceeding, a word about the 
inherent difficulty in using published data on 
private-sector giving is appropriate. Directo- 
ries, surveys, and sources within each category 
of private giving are compiled differently. 
The Independent Sector has created a 
taxonomy to standardize beneficiary catego- 
ries, the National Taxonomy of Exempt 
Entities (NTEE). 2 The Independent Sector, 
the American Association of Fund-Raising 
Counsel and AAFRC Trust for Philanthropy, 
and the Foundation Center use these catego- 
ries in their data collection, surveys, and 
statistical analyses on individual and founda- 
tion giving. However, there is still a lack of 
standardization in methodology and the 
sources of underlying data. For example, 
some rely on surveys while others use IRS 
data. The discrepancies and incompatibilities 
are discussed below for each category of 
sources. The particular problems of finding 
data on funding for the humanities are 
elaborated on in Section Three of this report. 



See sources below for a more thorough discussion of this point. 

Independent Sector is a coalition of over 800 voluntary organizations, foundations, and corporate-giving programs with an interest 

in philanthropy. 



FOUNDATION SOURCES: The two 
major sources on foundation giving are Giving 
USA and Foundation Giving: Yearbook of Facts 
and Figures on Private, Corporate and Community 
Foundations.* These sources provide different 
totals for foundation giving for the same year, 
in part because Giving USA does not include 
corporate foundations in this category, while 
Foundation Giving does. Giving USA, for 
example, cites the figure $9.91 billion for 
foundation giving in 1993; while Foundation 
Giving cites $11.1 billion for the same year. 4 
In addition, Foundation Giving and Tfie Grants 
Index are based on IRS data and foundation 
reports; whereas Giving USA is an estimate, 
based on Foundation Center data, for the 
following year. 5 It should be noted that when 
Foundation Giving provides information about 
the grant distribution of the foundation world 
as a whole for 1993, it is based on projections 
from a sample of 1,020 foundations. That 
subset of foundations represents more than 
55% of all foundation giving, even though 
there were over 37,000 foundations that year. 

A further discrepancy appears in the two 
sources on foundation giving to the arts, 
Foundation Giving and Arts Funding: A Guide 
on Foundation and Corporate Grantmaking 
Trends. The reporting periods covered in 
these two documents differ so that aggregate 
figures on arts and culture are different in 
each document. Arts Funding compiles grants 
according to a true calendar year because it is 
a benchmark study; whereas Foundation Giving 
is based on a funding year. For example, 
Foundation Giving included grants for both late 
1992 and 1993 in its 1993 data. 



INDIVIDUAL GIVING: The two major 
sources on individual giving, Giving USA and 
Giving and Volunteering, provide different data 
because they use different methodologies to 
collect data and they survey different uni- 
verses. Giving USA tracks individuals. Giving 
and Volunteering is based on households. 
Thus, for 1993, Giving USA cites $99.18 
billion for individual giving; while the latest 
volume of Giving and Volunteering, based on a 
survey of about 1,500 representative families, 
cites $63 billion for 73 million households. 6 
The latter survey does not target the very 
wealthy who contribute one-third of the 
charitable giving. In addition, Giving USA 
and Giving and Volunteering use different 
methods to measure gifts by those who do 
not itemize contributions on their tax returns 
(non-itemizers) . 

CORPORATE GIVING: The two 
principal sources on corporate giving to the 
arts — the Conference Board and the Business 
Council on the Arts (BCA) — also use 
different means of acquiring their data. The 
Conference Board surveys its membership, 
which is limited to the Fortune 1000. Its 
totals are partly an artifact of the number of 
members who respond, a number that can 
vary considerably from year to year. BCA 
surveys a different group of corporations — 
most of which are too small to be members of 
the Conference Board — and projects the 
results of its survey onto the entire universe 
of companies with annual revenues of at least 
$1,000,000. Giving USA also provides data 
on corporate giving to the arts. Its figures are 
based on Conference Board surveys and data 
from several service organizations. 



3 Giving USA is an annual survey of philanthropy published by the American Association of Fund-Raising Counsel and the AAFRC Trust for 
Philanthropy. Foundation Giving, based on data in The Grants Index,, is an annual statistical study published by the Foundation Center. 

4 Giving USA 1995; Phone conversation with Loren Renz. 

5 Giving USA publishes its estimates a year before Foundation Giving, correcting them the following year. 

6 Giving and Volunteering in the United Slates: Findings from a National Survey 1994 Edition, Washington, DC, 1 994. 



Over the past decade, 

private-sector giving 

has shown a 

disturbing pattern: 

from 1984 until 1989, 

Giving USA's estimates 

of total giving grew 

from $108.8 billion to 

$132 billion dollars 

after adjustment for 

inflation. In 1989, 

however, this growth 

stopped and giving 

was only $129.9 

billion in 1994. 



SECTION ONE: 
Total Giving in the Private 
Sector 

A. INTRODUCTION 

The private sector is a universe of diverse 
donor communities — individual, foundation, 
and corporate — that provided an estimated 
$130 billion to a large variety of beneficiary 
groups and organizations in 1994. 7 Each 
donor community operates with a different 
set of incentives, goals, and methods and has 
an extraordinarily diverse membership. The 
foundation world encompasses over 37,000 
foundations, including among its ranks large 
national and small regional foundations, 
foundations run by the family of the donor 
and others run by a large professional staff. 
Individual givers — who numbered over 100 
million in 1994 — include the very wealthy 
philanthropist who can, through gifts and 
bequests, make hundreds of millions of dollars 
available to major cultural institutions, as well 
as the blue-collar worker who gives regularly 
to his or her church or synagogue, or choral 
group. 

The recipients of private-sector giving also 
are highly varied in size and in type; religious 
organizations account for the largest share, 
receiving 45% of total giving, almost exclu- 
sively from individuals; but health, social 
welfare, and educational organizations all 
receive a larger share than do arts, culture, 
and humanities organizations. Smaller 
beneficiary categories also include environ- 
mental, social benefit, and international affairs 
organizations. 

This rest of this section will present an 
overview of private-sector giving for 1994, 
noting shifts in funding from 1993, an analysis 
of longer-term trends within the three donor 
communities, and long-term shifts in patterns 
of giving to beneficiary groups by each sector. 

B. OVERVIEW: 1994 

According to Giving USA 1995, total 
private-sector giving in 1994 approached an 
estimated $130 billion, up 3.7% from the year 
before. As Table 1 above illustrates, most of 
this (almost 88%) came from individual 
donors. Foundation giving was a distant 
second, accounting for 7.6% of the total, and 



Table 1 : 

Overall Giving Patterns in 1 994 



Category of 
Donor 


1994 Gifts 

($billions) 


%of 
total 


Individuals 
(non-bequests) 


105.1 


80.9% 


Individual (bequests) 


8.8 


6.8% 


Foundations 


9.9 


7.6% 


Corporations 


6.1 


4.7% 


Total 


129.9 


100% 



Source: Giving USA 1995 



the remaining 4.7%, came from the corpo- 
rate community (including corporate 
foundations). s There was a relatively small 
increase in individual and foundation giving 
from the prior year and a slight decrease in 
corporate giving. The inclusion of religious 
organizations as recipients exaggerates the 
role of individual donors. When the 45% of 
total giving that goes to religious organiza- 
tions is excluded, the percentage of the 
remainder that comes from individuals is 
reduced to 77%, with foundations contribut- 
ing 14% and corporations 9%. 

The overall increase in total giving in 1994 
was just sufficient to keep pace with infla- 
tion, but did not keep pace with real growth 
in the economy. Viewed in the context of 
the national economy, total giving actually 
declined in 1994, dropping to less than 2% of 
Gross Domestic Product for the first time 
since 1985. As the longer-term trends 
discussed in the next section indicate, there is 
no easy correlation between economic 
growth and an increase in overall voluntary 
giving. The small increase in total giving 
from 1993 to 1994 — only .56% on an 
inflation-adjusted basis — took place against 
the background of a generally strong 
performance by the national economy. 

C. LONGER-TERM TRENDS WITHIN DONOR 

COMMUNITIES. 
/. Aggregate Trends. 

Over the past decade, private-sector giving 
has shown a disturbing pattern; from 1984 
until 1989, Giving USA's estimates of total 
giving grew from $108.8 billion to $132 
billion dollars after adjustment for inflation.'' 



' All data (or 1 994 comes from Giving USA 1 995. 

* Ibid. Individual giving comes primarily in the form of inter vivos giving (that is, gift: 
to be 80.9% out of the 87.7%. The remaining 6.8% was in the form of bequests. 

' Ibid., pp. 16-17. The inflation adjustment is accomplished by expressing all amounts in 1994 dollars 



de while the donor is alive) which, in 1 994, was estimated 



Table 2: 

Ten-Year Trends in billions of 1994 dollars 





1984 


1985 


1986 


1987 


1988 


1989 


1990 


1991 


1992 1993 


1994 


Individual 
(non-bequest) 


89.3 


88.1 


964 


98.6 


103.9 


108.2 


106.5 


107.0 


104.6 104.3 


105.1 


Individual 
(bequests) 


6.4 


7.2 


8.1 


9.0 


8.5 


8.6 


8.9 


8.7 


8.7 8.8 


8.8 


Corporate 


6.8 


7.2 


7.3 


7.5 


7.3 


7.1 


6.9 


6.7 


6.3 6.2 


6.1 


Foundation 


6.3 


7.4 


77 


8.0 


8.0 


8.1 


8.5 


8.6 


9.2 9.8 


9.9 


Total 


108.8 


109.9 


119.6 


123.1 


127.7 


132.0 


130.8 


130.9 


128.9 129.2 


129.9 


Annual 
Increase in 
Total Giving 


3.4% 


1.0% 


8.8% 


3.0% 


37% 


3.4% 


-0.9% 


0.1% 


-1.6% 0.2% 


0.6% 


Annual 
Increase in 
GDP 


6.2% 


3.2% 


2.9% 


3.1% 


3.9% 


2.5% 


1.2% 


-0.7% 


3.0% 3.3% 


4.1% 



Source: Giving USA 1995; Statistical Abstract of the United States. 



In 1989, however, this growth stopped and 
giving was only $129.9 billion in 1994. As 
Table 2 shows, total giving generally kept pace 
with the economy for the first part of the 
decade, but leveled off while the economy 
continued to grow, albeit somewhat sluggishly. 

Table 2 also shows that individual giving has 
followed the same pattern as total giving — 
significant annual increases through 1989 and a 
slow decline since. Individual non-bequest 
giving, as a percentage of the whole, has been 
consistently between 80% and 82% of the total 
throughout the decade. Bequests have added 
another 6.5% to 7.5% each year. 

The patterns for foundation and corporate 
giving have diverged. There has been a 
substantial and consistent increase in founda- 
tion giving, totaling more than 50%, from 
1984 to 1994. Corporate giving, on the other 
hand, which had almost doubled in the prior 
decade, declined steadily after 1985, going 
from 6.6% of total giving to 4.7% in 1994. 
Over this period, corporate giving decreased 
by about one-sixth in real dollars. 

2. Trends in Individual Giving. 

Notwithstanding the steadfastness of 
individual giving as a percentage of total 
giving, two recent studies raise significant 
concerns about its stability in the future. 
Estimates by Independent Sector, in Giving 
and Volunteering, 1994, show that among 



households surveyed, individual giving and 
volunteering have declined sharply since 1989, 
although they are up since 1987, the first year 
of the survey. In 1993, 73% of all Americans 
made some type of charitable contribution, but 
the size of the average donation among those 
households that contributed was $880, down 
1 1% in real dollars from $978 in 1989. The 
average income of those Americans who 
contributed was $41,350 and they gave 2.1% of 
their earnings. 

The average annual donation per U.S. 
household was $646, down from $734 in 1989. 
This decline in the willingness of the average 
household to support charitable causes finan- 
cially was matched by a similar decline in the 
willingness of households to engage in volun- 
teer activities on behalf of non-profit organiza- 
tions. The percentage of households that did 
any volunteer work — which correlates closely 
with giving — dropped from 54% to 48% over 
this period. 1 " [See Table 3.] 

According to this report, the drop in giving 
and volunteering was influenced by a sharp 
increase in the percentage of people worried 
about their economic futures — a rise from 57% 
in 1989 to 73% in 1993. Though contribution 
size dropped, the percentage of households 
making contributions remained stable. The 
study observed that when a substantial propor- 
tion of the population is affected by economic 
instability, the number of people who make 



and Volunteering in the United Slates: Findings from a National Survey 1 994 Edition, Washington, DC,: Independent Sector, 1 994. This 
lume study is based on a 1 994 survey of 1 509 households. 89.2 million adults donated 1 9.5 billion hours of volunteer work in 1 993, a 



10 Giving 

two-volume study 

decline of 5% over the last 2 yea 



...among households 
surveyed, individual 
giving and volunteering 
have declined sharply 
since 1989. In 1993, 
73% of all Americans 
made some type of 
charitable contribution, 
but the size of the 
average donation among 
those households that 
contributed was $880, 
down 1 1 % in real dollars 
from $978 in 1989. 



Foundation giving 

historically has been 

highly concentrated — 

with the largest 

foundations providing 

most of the funding. 

In 1 992, there were 

35,000 foundations, 

but the largest 1 ,000 

accounted for 

66 2/3% of all 

foundation giving, 

and the largest 50 for 

more than 25%. 



Table 3: 

Trends in giving and volunteering by household 



Year 


1987 


1989 


1991 


1993 


Percentage of households making charitable 
contributions 


71.1% 


75.1% 


72.2% 


73.4% 


Average household income (in 1993 $) 


37,113 


39,360 


41,222 


41,350 


Average household contribution for all 
US households (in 1993 $) 


562 


734 


649 


646 


Average household contribution by 
contributing households (in 1993 $) 


790 


978 


899 


880 


Percentage of households volunteering 


45.3% 


54.4% 


51.1% 


47.7% 



Source: Giving and Volunteering, 1994, vol. I, p. 16. 



charitable contributions is not likely to be 
affected, but the size of their contribution 
is." The most dramatic decline in contribu- 
tion size was among households with income 
between $40,000 and $50,000, where the 
percentage of households contributing 
increased slightly from 1991 to 1993, but the 
average contribution fell almost 45%, from 
$1,038 to $572. 12 

A separate study by a group of economists 
with the United States Department of the 
Treasury, based on income tax data, shows 
that there was also a sharp decline in chari- 
table giving by upper-income households 
from 1979 to 1990. Among taxpayers with 
incomes of more than $200,000, the average 
contribution declined from $11,104 in 1979 
to $8,389 in 1990. For those with income of 
more than $1,000,000, Table 4 shows a more 
than 50% decline in average giving — from 
more than $130,000 in 1979 to less than 
$65,000 in 1990. This decline in average 
giving is often hidden in statistics about 
aggregate giving by upper-income house- 
holds because the number of households 
earning over $1,000,000 increased dramati- 
cally during this period. 13 

3. Trends in Foundation Giving. 

Over the past two decades, foundation 
giving has increased steadily. From 1975 to 
1992, the value of foundation gifts in 
inflation-adjusted dollars has more than 



doubled, with one-third of that growth 
between 1984-1988 and another third from 
1988-1992. This rate of growth has been 
consistently greater than the growth of the 
economy as a whole. 

Foundation giving historically has been 
highly concentrated — with the largest 
foundations providing most of the funding. 
In 1992, there were 35,000 foundations, but 
the largest 1,000 accounted for 66 2/3% of all 
foundation giving, and the largest 50 for 
more than 25%. However, there has been a 
trend toward decentralization over the past 
two decades. For example, the top 50 
foundations accounted for 38% of total 
foundation giving in 1975, but only 30% of 
the total in 1984. There has been a geo- 
graphic decentralization as well. From 1975 
to 1992, the proportion of the nation's 
foundation assets held in the Northeast and 
Midwest declined from 70% to 58%, 
reflecting the growth in philanthropy in the 
West and Southeast. 14 There has also been 
great concentration among the recipients of 
foundation giving, with a relatively small 
number of institutions in a limited number of 
geographic areas receiving a disproportionate 
share of the funds. 

4. Trends in Corporate Giving 

Corporate giving to all causes, which was 
$6.1 billion in 1994, declined steadily since its 
high point of $7.5 billion in 1987. However, 
a forthcoming study by the Conference 



11 Ibid., Vol. I, p. 4. Because of the nalure of the survey, this data lends not to reflect the giving behavior of high income households, e.g., those with 
incomes above $200,000. 

12 Ibid., Vol. I, p. 39. 

" Income figures are based on 1991 dollars. This data comes from the Treasury Department's Statistics of Income data os described in Auten etal., 
"The Effects of Tax Reform on Charitable Contributions," National Tax Journal, [XLV] p. 275. The data for the median contribution in these 
income categories shows a similar decline. 

M Loren Renz, "Financing the Non-Profit Sector: Foundation Trends," paper given to Aspen Institute conference, December 5-7, 1994, pp. 2-3. 



Table 4: 

Deductible contributions by itemizing households with pretax income 
of more than $ 1 ,000,000. 15 



Year 


Number of 

Households 

(000) 


Average after-tax 
income ($000) 


Average 
contribution ($000) 


Average contribution as 
% of after-tax income 


1979 


18.7 


1,829 


134 


7.3% 


1980 


18.4 


1,649 


133 


8.0% 


1981 


20.0 


1,722 


164 


9.6% 


1982 


24.1 


1,968 


100 


5.1% 


1983 


31.0 


1,931 


125 


6.5% 


1984 


30.3 


2,137 


103 


4.8% 


1985 


35.9 


2,016 


105 


5.2% 


1986 


63.7 


2,522 


143 


5.7% 


1987 


47.9 


1,782 


90 


5.1% 


1988 


77.6 


2,065 


71 


3.4% 


1989 


66.7 


1,987 


82 


4.1% 


1990 


64.5 


1,701 


64 


3.8% 



Source: Auten et al. All dollar amounts are expressed in 1991 dollars. 



Board reports that corporate giving is up for 
1994 and will continue to increase by about 
3% this year and as much as 5% next year. 
The 383 companies that responded to the 
Conference Board survey gave a total of 
$1,986,130,000—33% of total contributions 
by U.S. corporations. 16 More significantly, 
212 companies that had responded to the 
survey both this year and last reported giving 



$1.6 billion in 1994, 5.8% more than in 
1993. Nonetheless, giving will not reach the 
same levels that it had in the 80s when 
corporate contributions had more than 
doubled on an inflation-adjusted basis. 
Corporate giving as a percentage of corporate 
pre-tax income decreased from 2.23% in 
1986 to 1.32% in 1993 and fell again to less 
than 1%.' 7 



Table 5: 

Breakdown of Total Giving by Beneficiary Type. 



Year 


1964 


1974 


1984 


1994 


Total 


$72.5 (100%) 


$92.1 (100%) 


$108.8 (100%) 


$129.9 (100%) 


Religion 


$32.7 (45.2%) 


$40.7 (44.1%) 


$56.3 (51.7%) 


$58.9 (45.3%) 


Education 


$10.0 (13.6%) 


$10.5 (11.4%) 


$11.5 (10.6%) 


$16.7 (12.9%) 


Health 


$8.3 (1 1 .4%) 


$11.6 (12.6%) 


$10.8 (9.9%) 


$11.5 (8.9%) 


Human Services 


$10.2 (14.1%) 


$10.4 (11.3%) 


$12.5 (11.5%) 


$11.7 (9.0%) 


Arts/Culture 


$2.3 (3.2%) 


$4.1 (4.5%) 


$7.1 (6.5%) 


$9.7 {7.5%) 


Public/Society Benefits 


$2.1 (2.9%) 


$2.3 (2.5%) 


$3.1 (2.8%) 


$6.1 (4.7%) 


Unclassified 


$7.0 (9.7%) 


$12.6 (13.7%) 


$7.6 (7.0%) 


$9.6 (11.8%) 



Source: Giving USA 1995, all amounts in billions of 1994 dollars. 



15 This sludy looked at households with pretax incomes above $1,000,000 (in 1991 dollars)- However, results were expressed in terms of 
after-tax income. 

16 "Advance Report, Corporate Contributions, 1994," Conference Board. In 1993, the Conference Board reported total giving at $ 1 ,975,41 7, 
with 3 1 8 companies answering the survey. Conference Board surveys are conducted among its membership which is limited to the Fortune 1 000. 
Total contributions derived from the survey are partly an artifact of the number of companies responding. Thus, the slightly higher total in 1 994 
with 383 companies responding is not particularly significant. 

17 Ibid.; Giving USA 1994, p. 76. 



There also has been 
great concentration 
among the recipients of 
foundation giving, with 
a relatively small 
number of institutions in 
a limited number of 
geographic areas 
receiving a 

disproportionate share 
of the funds. 



Corporate giving, 

which had almost 

doubled in the prior 

decade, declined 

steadily after 1985... 

Over this period 

[1984-1994] corporate 

giving decreased by 

about one sixth in 

real dollars. 



Table 6: 

Percentage of households contributing to particular categories of charity 



Year 


1987 


1989 


1991 


1993 


Religion 


52.5% 


53.2% 


51.3% 


49.2% 


Education 


15.1% 


19.1% 


21.1% 


17.5% 


Health 


23.9% 


32.4% 


32.9% 


25.7% 


Human Services 


23.9% 


23.0% 


27.5% 


26.7% 


Arts & Culture 


8.0% 


9.6% 


9.4% 


8.1% 


Public/Society Benefit 


6.5% 


11.2% 


11.2% 


11.2% 


Environment 


10.8% 


13.4% 


16.3% 


11.6% 


Youth Development 


18.5% 


21.6% 


22.1% 


17.9% 


Other 


9.6% 


17.9% 


15.9% 


16.1% 


Total 


71.1% 


75.1% 


72.2% 


73.4% 



Source: Giving and Volunteering 1994. 



D. BENEFICIARIES OF PRIVATE SECTOR 

GIVING. 

Giving USA identifies the principal 
recipients of charitable giving as Religion, 
Education, Health, Human Services, Arts 
and Culture, Public/Society Benefit and, 
since 1987, Environment/Wildlife and 
International Affairs. There has been great 
stability among beneficiary groups in their 
share of the total charitable pie over the last 
three decades. Throughout this period, 
religious organizations have claimed close to 
half of all giving dollars — almost all from 
individuals. The other major categories 
have also claimed a fairly consistent share. 
The principal exceptions have been a 
gradual, but steady increase in the share 
going to Arts and Culture, from 3.2% to 
7.5%; and a steady decline in Human 
Services, from 14.1% to 9.0%. 

Although the percentage of non-wealthy 
households making contributions has been 
fairly stable over the past several years, the 
percentage of households giving to each 
particular category has declined from 1991 
to 1993.' 8 This appears to be a trend toward 
more concentrated giving by individual 
households; in other words, fewer house- 
holds are making gifts to more than one 
category of beneficiaries. 



SECTION II: Funding of 
the Arts and the Humanities 

A. INTRODUCTION 

This section discusses private-sector giving 
to the arts and humanities. Giving by 
individual, corporate, and foundation donors 
are discussed for the arts; however, trends for 
giving to the humanities are limited to 
foundations, because such data has not been 
disaggregated for corporatate and individual 
donors. (Giving and Volunteering and Giving 
USA refer to the humanities, but as part of 
an arts, culture, humanities category.) 
Despite the fact that data for the arts is far 
more extensive than it is for the humanities, 
it is still thin about individual giving and 
inconclusive for corporate giving. Data on 
corporate giving to the arts covers more than 
thirty years, but is unsatisfactory because the 
two major sources do not agree; information 
on individual contributions to the arts only 
goes back to 1987. 

B. INDIVIDUAL DONORS 
According to Giving and Volunteering, 

average giving to the arts per contributing 
household fell 47% from $260 in 1987 to 
$139 in 1993. At the same time, giving to all 
causes by this same 8% subset of households 
that contribute to the arts increased by 53%. 
There was also a steep decline in volunteer 



Giving and Volunteering, Vol. II, p 4. 



Table 7: 

Contributions to the Arts by Households 



Year 


1987 


1989 


1991 


1993 


Percentage of households contributing 
to the arts 


8.0% 


9.6% 


9.4% 


8.1% 


Average contribution to the arts 


$260 


$193 


$194 


$139 


Average contribution to all charities 


$1,376 


$2,115 


$1,930 


$2,101 


Average income of households 
contributing to the arts 


$52,389 


$52,929 


$59,119 


$56,535 



Source: Giving and Volunteering, Vol. II, p. 18 (all figures are in 1993 inflation-adjusted dollars) 



involvement in the arts. 1 '' According to a 
1993 study, donors to the arts are between 
25-64, well-educated, employed full-time, 
have an average income of $56,535, and are 
more than twice as likely as other donors to 
plan to claim charitable deductions, and give 
to other causes. 2 " Table 7 above shows that 
between 1987 and 1993 the percentage of 
households contributing to the arts rose from 
about 8% to 9.6% and then fell back to about 
8%. The most important trend, however, is 
that the average size of these contributions 
declined during those years. 21 

There are no obvious explanations for this 
decline. Although giving patterns of this 
group may be quite sensitive to tax policy, 
there were no significant alterations in the tax 
law that could explain this change in behavior 
during this period. 22 The income group that 
gives to the arts also supports environmental 
causes and public/society benefits. Average 
contributions to these categories remained 
steady — albeit the average gift to both was 
much lower than it had been to the arts. 23 It 
may be that as these households concentrate 
their giving in fewer areas, other areas are 
taking precedence over the arts. 

C. CORPORATE DONORS AND THE ARTS: 

The seventies and eighties were decades of 
great growth for support of the arts by the 
business community. According to an 
influential 1963 survey by the Rockefeller 
Brothers Fund, fewer than half of American 



p. 18. 



corporations contributed to the arts. The 
study found that "only a small fraction — at 
most 3-4% or some $16 to $21 million" — of 
corporate giving went to the arts. 24 By 1977, 
corporate contributions to the arts had 
increased fivefold to $100 million, though the 
rate of corporate giving to the arts was only 
6.5% of corporate giving. In 1987, it had 
reached almost 10%. 25 

During the seventies, most companies 
investing in the arts throughout the United 
States were doing so for the first time. Arts 
organizations of all kinds were recipients of 
corporate philanthropy: traditional beneficia- 
ries such as the symphony, museums, theater, 
and opera, as well as less conventional 
recipients such as dance, craft centers, 
performing arts facilities, literary arts, and 
public radio and TV. 2 ' 3 The five-fold increase 
in corporate largesse in the eighties was 
primarily the result of the economic boom 
that increased the rate of corporate giving 
from 1% to 2% of pretax net income as well 
as the percentage of the total that went to the 
arts. 

Data for 1991 is quite contradictory; the 
Conference Board's annual survey of corpo- 
rate support to the arts showed corporate 
giving at an all-time high of 12%, while the 
Business Committee for the Arts noted a 
sharp decline among the companies it 
surveyed — both in absolute monetary terms 
and in the percentage of total corporate 
giving. 27 Although the BCA reported that the 



19 Giving and Volunteering 1994, Vol. 

20 Ibid., pp. 20-22. 

21 Ibid., Vol. II, Ch. 2, p. 19. 

22 During the period 1987 to 1993, the general pattern of tax law change was toward more liberal rules on charitable deductions and higher 
marginal rates. These factors should generally result in more charitable giving rather than less. 

23 Giving and Volunteering, Vol. II, p. 78. 

24 The Performing Arts: Problems and Prospects^ Rockefeller Panel Report on the future of theatre, dance, music in America. (New York: McGraw 
Hill) 1 965, p. 84. This report was a key document in the establishment of the NEA. 

25 Giving USA 1 994, p. 20. See Michael Useem, "Trends and Preferences in Corporate Support for the Arts," in Guide to Corporate Giving in the 
Arts 4 .edited by Robert Porter, ACA Books, 1 987, p. ix. 

26 Judith Jedlicka, Speech at International Mecenat Conference, May 22, 1 995. 

27 BCA Triennial Report, 1992. 



The five-fold increase 
in corporate largesse 
in the eighties was 
primarily the result of 
the economic boom 
that increased the rafe 
of corporate giving 
from l%to 2% of 
pretax net income as 
well as the percentage 
of the total that went 
to the arts. 



The last several years 

have witnessed a 

major shift in 

corporate giving to the 

arts. In the late 

eighties, responsibility 

for setting policy for 

giving to the arts 

began to move from 

corporate-giving 

departments to 

marketing, 

advertising, public 

relations, and human 

resources departments 

and became much 

more market-driven. 



percentage of businesses that supported the 
arts rose from 35% to 38% between 1988 
and 1991, the average portion of their 
philanthropic budgets for the arts went down 
drastically — from 17% to 11%. 2S As a result, 
giving to the arts dropped from $634 million 
to $518 million. 29 

The most recent BCA survey, TJie BCA 
Report: 1995 National Survey of Business 
Support to the Arts, and the forthcoming 
Conference Board report for 1994 diverge 
again. BCA found that businesses with 
annual revenues of $1,000,000 or more gave 
over $875,000,000, an all-time high, to the 
arts in 1994. Almost half of the 1,000 
companies that were surveyed supported the 
arts, allocating 19% of their philanthropic 
budgets to the area. This represents a 
substantial increase over 1991. Almost 75% 
of these contributions came from companies 
with annual revenues between $1,000,000 — 
$50,000,000. In addition, the median 
contribution doubled from $1,000 in 1991 
to $2,000 in 1994. The forthcoming 
Conference Board survey, on the other 
hand, finds corporate giving to the arts is up 
only slightly among the companies it 
surveys. Only civic and community-related 
causes showed a greater increase in 1994. 
Education continues to receive the largest 
share of contributions at 34.8%, but this 
represents an 11.9% decrease since 1993. 

The last several years have witnessed a 
major shift in corporate giving to the arts. 
In the late eighties, responsibility for setting 
policy for giving to the arts began to move 
from corporate-giving departments to 
marketing, advertising, public relations, and 
human resources departments and became 
much more market-driven. A study of 458 
major corporations that contributed to the 
arts found that corporate donors have 
become more concerned with tangible 
returns for their contributions. More than 
90% of the funders surveyed cited location 



within the corporation's areas of operation 
and potential benefit to its employees as the 
two most important criteria for funding an arts 
organization. Artistic merit was of concern to 
66% of the donors; publicity (a less tangible 
byproduct) was a consideration for 21%. 3 " 

Judith Jedlicka, President of the Business 
Committee for the Arts, confirmed that most 
of the major companies have radically 
changed their philanthropic giving programs. 
She observed that traditional philanthropic 
categories have been replaced by concerns 
that may or may not include the arts. Pro- 
grams to help children, which include 
reduction of violence and substance abuse, the 
expansion of multicultural experiences, and 
educational programs, are among the most 
heavily supported areas. Current vehicles for 
corporate support of the arts include more in- 
kind donations and incentives for employees 
to attend arts events or to volunteer in arts 
organizations. 31 The latest BCA Report 
shows a decrease for big national tours, public 
broadcasting and museum exhibits. Funding 
has shifted away from museums, theater, and 
symphony orchestras to arts education, united 
arts funds, performing arts facilities, opera, and 
dance. There is also increased pressure to 
fund other areas such as health and human 
services. 32 

D. FOUNDATION DONORS 

Foundation giving is only 7.6% of total 
private-sector giving, but since the arts are so 
heavily dependent on private contributions, 
the foundations' funding role is magnified. 33 
As a result, it is very significant that founda- 
tion giving in the arts is generally quite 
conservative, despite the diversity of the 
sector. According to Paul DiMaggio, the vast 
majority of foundation giving is local; 
furthermore, support is concentrated on the 
largest, most prestigious and artistically 
conventional institutions. Support for the arts 
is episodic, geographically uneven and often 



28 The BCA attempts, through less precise methods than the Conference Board, to estimate the behavior of a larger group of corporations, including 
many that are too small to be members of the Conference Board. BCA Report 1 992 included 750 corporations in its survey and then projected 
its results onto the universe of companies with annual revenues of at least $1 ,000,000. BCA figures are substantially higher than those put out 
by the Conference Board because the Conference Board survey is smaller than that done by BCA and BCA projects its results beyond the sample. 

''■'' Michael Useem argues that this decline is the result of leveraged buyouts which radically restructured corporate giving away from the arts and 
toward education because it is tied to the labor pool. "Leveraged Buyouts and Corporate Political Action," Socio/ Science Quarterly (Sept. 
1994], For every $1 ,000,000 growth in pretax net earnings, an arts organization could anticipate a $2,200 rise in a firm's cultural budget. 
Since 1 990, corporate giving has declined until it reached 1 .6% of pretax income. Phone interview with Michael Useem, June 26, 1 995. 

'"' Michael Useem, "Corporate Support for Culture and the Arts," in The Cost of Culture: Patterns and Prospects of Private Arts Patronage [ed. 
Margaret Jane Wyszomirski and Pat Clubb; New York: ACA Books, I 990] , pp. 45—62. 

11 Phone conversation with Judith Jedlicka, June 17, 1995. 

32 The BCA Report 1995: 1995 National Survey of Business Support to the Arts, p. 1, American Express, for many years one of the major 
corporate funders of museum exhibits, no longer supports travelling exhibits and now funds more theater and historic preservation, areas more 
directly tied to the company's business focus on tourism. Interview with Anne Wickham, January 1 8, 1 995. 

33 Loren Renz, "The Role of Foundations in Funding the Arts," The Journal of Arts Management, Law and Society (24:1) Spring 1994, p. 57. 
According to Hodgkinson and Weitzman, the arts are dependent on private sources for 35% of their financial support — a percentage far more 
substantial than the comparable figures for private education at 22% and for health at 3%, The Non-Prolil Almanac 1992-93: Dimensions of the 
Independent Sector [San Francisco: Jossey Bass, 1992), p. 37. 



Table 8: 

Foundation Giving to Arts, Culture, and Humanities (ACH) (in millions) 





1989 


1991 


1993 


Aggregate giving (Foundation Center sample) 


$3,245 


$5,000 


$6,400 


ACH giving (Foundation Center sample) 


$454 


$683 


$834 


ACH as % of total 


14% 


14.1% 


14.8% 


Humanities giving alone 


$35 


$44 


$50 


Humanities as % of total 


1.1% 


.9% 


.9% 



Sources: Foundation Giving; Grants Index (1994); (not adjusted for inflation). 



goes to large capital campaigns, with only a 
small share of the money going to experi- 
mental organizations. DiMaggio cited only 
three of the major foundations for their 
attention to planning, program develop- 
ment, and a willingness to support experi- 
mental or unconventional programs. 34 (See 
Appendix II for a listing of the 25 founda- 
tions with the largest programs in the arts.) 

Over the last decade, arts and culture 
(which includes the humanities) has main- 
tained a steady share of foundation funding, 
ranging from 1 3% to 1 5% of all grant 
dollars. 35 The period 1989 to 1992 witnessed 
increased support for the arts from founda- 
tions (up 1 3% in real dollars) , but shrinking 
support for the arts from NEA (down 9% in 
real dollars) and state arts agencies (down 
18% in real dollars). 

Between 1983 and 1989, foundation 
support for the arts was stable, accounting for 
1 in 7 grant dollars and 1 in 6 grants. 36 In 
the nineties, the arts' share of overall 
foundation funding declined from 14% to 
12.7% as funding of human services in- 
creased. 37 There were some significant 
changes in funding the different categories of 
arts and culture between 1983-1993 as well. 
Museum funding grew more than any other 
area of the arts. In 1989, museums received 
3.7% of total foundation giving, growing to 
5.1% in 1993. According to the 
Foundation's Center's data, in 1993 the two 
categories of museums and the performing 



arts accounted for almost 70% of all arts, 
culture, and humanities funding, with more 
than 50% going to museums. Among 
museums, art museums fared best, though 
there was a slight shift to history and 
science. 38 Within the performing arts, music 
and theater received the lion's share of 
funds — although theater declined. Dance, 
however, was on the rise after a long decline. 

Comparative figures for humanities 
funding are extremely limited. (See Section 
Three of this report for a discussion of this 
issue.) Table 8 above shows the Arts, 
Culture and Humanities (ACH) giving for a 
substantial subgroup of foundations over the 
past few years. 39 

Of the $834 million given by this group 
for ACH in 1993, only $50 million was 
allocated to the humanities. 40 This figure 
represents .9% of total giving by the founda- 
tions in the sample and about 6% of their 
ACH funding. However, this tabulation 
does not include history museums, historic 
preservation and centennials as part of the 
humanities. If they are so included, 
appropriations to the humanities more than 
double to slightly more than $100 million, 
or 1.9% of all giving by the sampled 
foundations. Note that since 1989, ACH 
funding by this group has gone down — 
from 1.1% to .9%. 

Some comparative data on the funding of 
humanities disciplines is available. From 
1991 to 1993, only two areas of the humani- 



34 Paul DiMaggio, "Support for the Arts from Independent Foundations," Nonprofit Enterprise in the Arts: Studies in Mission and Constraint 
(New York, 1986), p. 114, 134-36; see also Kenneth Goody, "The Funding of the Arts in the United States," Report to the Rockefeller 
Foundation, 1 983. 

35 Renz, Executive Summary of Arts Funding Revisited: An Update on Foundation Trends in the 1 990's, p. 1 

36 Renz, "The Role of Foundations ...," p. 59. 

37 Renz, Executive Summary of Arts Funding Revisited..., p. 1. Data for arts and culture before ) 992 comes from Nathan Webber and Loren Renz, 
Arts Funding: A Report on Foundation and Corporate Granlmaking Trends [New York: Foundation Center, 1 993], 

38 Loren Renz, Arts Funding Revisited: An Update on Foundation Trends in the 1990s [New York: Foundation Center, 1995]. 

39 The Foundation Center included 596 foundations in its 1989 sample; it included 832 foundations in 1991 and 1020 foundations in 1993. The 
1 99 1 and 1 993 samples represent over 50% of foundation giving and include the largest foundations. The number of foundations has been 
enlarged each year to make the sample more representative. (No grants of less than $10,000 were taken into account.) Figures come from 
Foundation Giving 1994. 

40 The humanities are defined as art history, history and archaeology, literature, classical languages, foreign languages, philosophy and ethics, and 
theology and religion. 



The vast majority of 
foundation giving is 
local; support is 
concentrated on the 
largest most 
prestigious and 
artistically 
conventional 
institutions. 



From the beginning, 

federal funding of the 

arts and humanities 

through the NEA and 

NEH was a 

partnership with 

private donors and 

foundations. 



ties, general humanities and literature, 
received an increase in funding. Allocations 
to general humanities rose from $15,548,567 
(74 grants) to $24,103,518 (100 grants); while 
funding for literature rose from $9,794,636 
(96 grants) to $14,760,779 (123 grants). 
There were severe dips in support for art 
history, classical languages, history /archaeol- 
ogy, philosophy/ethics, and theology/ 
comparative religion. For example, funding 
for classical languages dropped from $300,000 
to $60,000; for philosophy and ethics from 
$2,569,718 to $784,614. 41 



SECTION III: 

Relationship Between 
Private and Public Funding 
of the Arts and Humanities: 

A. HISTORICAL BACKGROUND 

Historically the private sector was respon- 
sible for the establishment of most of the 
enduring cultural institutions in the United 
States. In the nineteenth century, public- 
spirited individuals took the lead in founding 
opera houses, symphonies, museums and 
libraries. Foundations became their first 
institutional partners when the Carnegie 
Corporation, the Rockefeller Foundation, and 
a few other private foundations inaugurated 
programs to support the arts in the 1920s. In 
1957, the Ford Foundation embarked on an 
unprecedented funding effort to develop the 
arts by establishing not-for-profit theaters, 
orchestras, and dance and opera companies 
across the country. 

Widespread corporate sponsorship of the 
arts came later than foundation support, 
beginning in earnest with the establishment of 
the Business Committee for the Arts in 1967. 
Chevron's sponsorship of the arts goes back to 
1926. Other pioneers included AT&T, 
Hallmark Cards, Texaco, Chase Manhattan, 
Corning Glass, and Philip Morris. 42 

Instances of direct federal support to the arts 
and humanities do not abound before the 
formation of the NEA, the NEH and the 
Institute of Museum Services. However, 



significant emergency or one-time efforts 
include the building and decoration of the 
nation's capitol; the founding of the Library of 
Congress in 1800 and of the Smithsonian 
Institution in 1846; and the Depression-era 
WPA arts programs that provided employment 
to writers, playwrights, artists, and actors. 
Ongoing federal support to the arts and the 
humanities has come from indirect subsidies 
such as tax policy, postal rates, copyright law, 
and international cultural exchanges. Of these, 
tax policy has been most significant. (New 
policy alternatives are discussed in the final 
section of this report.) 

Direct federal support to the arts and 
humanities was institutionalized on an ongoing 
basis when the National Foundation on the 
Arts and Humanities Act, which established 
the NEA and the NEH, was passed in 1965. 
Together with the Institute of Museum 
Services (IMS), established in 1976, these 
agencies have provided funding on a competi- 
tive basis to the nation's artistic, cultural and 
humanities institutions and to individual 
scholars and artists. In 1995, NEA's allocation 
was $162 million, while NEH's was $172 
million: both less than they were 10 years ago 
when adjusted for inflation. The fiscal year 
1995 budget for the IMS was approximately 
$28.7 million. 43 For fiscal 1996, Congress cut 
NEA to $99.5 million, NEH to $110 million 
and IMS to $21 million. 

In addition, some 200 arts and humanities 
programs or activities scattered throughout 
various departments and agencies of the federal 
government received between $838 million to 
$1.1 billion in appropriations in FY 1995. In 
total, this represents between .05% and .07% of 
the fiscal year 1995 federal budget of $1,564 
trillion. This includes $362,700,000 to the 
Smithsonian Institution, by far the largest 
allocation, though much of this figure is not 
for the arts or humanities. Major funding, 
$56,900,000, was appropriated for the National 
Gallery. Other programs include those run by 
the Department of Education, the U.S. Park 
Service, the Library of Congress, the National 
Archives, the USIA, the GSA and the Interior 
Department's economic development program 
to help native American arts and crafts. The 
$334 million appropriation to the NEA and 
NEH for 1995 constituted less than one-third 



41 The data for 1991 appeared in an article by Jeffrey Thomas, "The Numbers Game: Philanthropic Foundations Give Record $9.2 Billion," Humani- 
ties, January/February 1 994, pp. 42-43, Data for 1 993 was developed by the Foundation Center for the Rockefeller Foundation, using the same 
criteria as Jeffrey Thomas has used. 

" Phone interview with Judith Jedlicka, July 1 7, 1 995. Speech by Judith Jedlicka at International Mecenal Conference '95, May 22, 1 995. In the 
introduction to the first ACA guide to corporate giving ( 1 978] , G. A. McClellan, president of the Business Committee for the Arts, asserted that such 
a guide could not have been written 10 years ago because so few corporations were supporting the arts. See Michael Useem, "Trends and 
Preferences ...," p. ix, 

" Memo from John Hammer, National Humanities Alliance, August 2, 1995. 



of total direct federal spending for the arts and 
humanities and less than the allocation to the 
Smithsonian Institution alone. 44 

From the beginning, federal funding of the 
arts and humanities through the NEA and 
NEH was a partnership with private donors 
and foundations. This is both by legislative 
design and an artifact of chronology. The 
federal government entered the funding arena 
late, and legislation was framed to maintain 
the primacy of private and local support, an 
objective that is clearly stated in the preamble 
to the law and supported by the funding 
structure. 43 Of the many billions in private 
giving to arts and humanities each year, there 
is good reason to believe that most of it goes 
to the arts. This certainly is true for the 
foundation sector; of the $834 million given 
to the arts, culture, and humanities in 1993, 
only $50 million is identified as going to the 
humanities. (This figure excludes funding of 
higher education that does not have the 
humanities as a primary objective.) A similar 
pattern prevails when we look at intergovern- 
mental funding of these two spheres. 

Since 1965, "an extensive intergovernmen- 
tal system of administering support for the arts 
and for distributing artistic benefits to the 
public has evolved" notes Margaret 
Wyszomirski, an arts policy analyst and 
former head of Policy and Planning at the 
NEA. 46 The intergovernmental system for 
the arts includes 50 state arts councils and 6 
special jurisdictions, 6 regional arts organiza- 
tions, and 3,800 local and community arts 
organizations. Altogether, intergovernmental 
funding for the arts is close to $1.1 billion for 
1995 — with state appropriations of $259.5 
million and local governments contributing 
$650 million. The state and local numbers 
include direct funding to cultural institutions 
as well as to state and local arts councils. 

The humanities have a much smaller 
federal-state partnership structure. There are 
50 state humanities councils and 6 humanities 
councils for special jurisdictions that receive 



almost all their funding from NEH. There is 
at least one local humanities commission, the 
Montgomery County(MD) Commission on 
the Humanities, with funding of $38,000 for 
the current fiscal year. 47 The state humanities 
councils are independent 501(c)(3) organiza- 
tions, not state agencies; whereas the state arts 
councils are state agencies with the level of 
state budgetary support discussed above. In 
1995, the state humanities councils received 
$26,952,000 outright from NEH. Another 
$4,530,000 was available for all 56 state 
humanities councils from NEH on a match- 
ing basis as state councils raised funds from 
private and other public sources. According 
to a report of the Federation of State Hu- 
manities Councils, funds from private, state 
and other sources amounted to 
$10,168,125 — more than doubling the 
required match — but bringing the total 
funding of the humanities through federal, 
state, and local humanities councils to only 
$182,206,125. 48 

B. NEA AND THE ARTS 

/. Background and History. 

The NEA has nurtured the growth of 
cultural institutions that serve both the nation 
and the needs of local communities. Since 
1966, the number of professional orchestras 
increased from 110 to 230, non-profit 
theaters proliferated from 56 to 425; dance 
companies grew from 37 to 450, opera 
companies multiplied from 27 to 120, and 
local arts councils grew from 500 to 3,800. 49 
Though the NEA was not directly respon- 
sible for the exponential growth in the 
number of these arts organizations, there can 
be little doubt that it was a catalyst. John 
Urice, a specialist on the state arts agencies, 
states that "all the literature on the formative 
stages of state arts agencies cites the essential 
role and stimulus of the federal govern- 
ment. " 50 In 1993, the most recent year for 
which comparable data is available, state arts 
agencies expended $29.8 million in NEA 



44 Susan Boren, "Arts and Humanities: Funding and Reauthorization in the 104th Congress," CRS Report for Congress, June 22, 1995, pp 2, 3, 
10. 

45 Wyszomirski and Mulcahy, "The Organization of Public Support for the Arts," in America's Commitment to Culture: Government and the Arts 
(Boulder, Co.: Westview Press, 1995) p. 137. 

46 Wyszomirski, op. eft, p. 132. 

47 Phone Interview with Minna Davidson, Legislative Analyst for the Montgomery County Council, August 1 0, 1 995. 

48 1995 Staff Salary and Council Income Report, Federation of State Humanities Councils, #7-95, p. 21. Once again, data on the amount of 
money raised by the state councils is not available in any one source. NEH keeps the information only insofar as a state council makes its match. 
The Federation of State Humanities Councils provides a profile of the average state humanities council which includes money above the amount 
of the NEH match. See p. 32 for the profile. 

49 Wyszomirski, og. cit., p. 137. 

"The Future of the State Arts Agency Movement in the 1990s: Decline and Effect," The journal of Arts Management, Law and Society (spring 
1 992) 22:1, p. 21. Five state arts councils predated NEA legislation — New York, Utah, Georgia, North Carolina, and Puerto Rico. The 1 2 
councils that were established in 1965 — Connecticut, Hawaii, Illinois, Michigan, Missouri, Nebraska, New Hampshire, New Mexico, Ohio, 
Oklahoma, Texas and Vermont — were certainly influenced by the proposal and drafting of the federal legislation. 



Interviews with a 
variety of foundation 
officers and 
governmental funders 
make clear that, 
notwithstanding the 
cliche that the 
foundation sector is the 
laboratory for 
innovation while 
government clones its 
successes, NEA has 
been an innovator in 
funding the arts. 



"The NEA changed the 

arts environment 

completely. It was the 

major catalyst in 

decentralizing the 

arts." 



regrants and $149.4 million in state funds, a 
total of $179.2 million. This combined 
investment of federal and state money helped 
to stimulate further giving in the form of 
matching funds, local government support, 
earned income, private contributions, and 
corporate sponsorships, thus contributing 
significantly to a final sum of over $4 billion. 51 

More important than numerical growth is 
the geographic dispersal in the arts that has 
taken place as a result of this support. Says 
Holly Sidford, of the Lila Wallace-Readers 
Digest Fund, the largest private donor to the 
arts and culture, which in 1994 paid out $43.5 
million in grants, "The NEA changed the arts 
environment completely. It was the major 
catalyst in decentralizing the arts." She views 
the NEA as very significant in ensuring broad 
access to the arts. 

Interviews with a variety of foundation 
officers and governmental hinders make clear 
that, notwithstanding the cliche that the 
foundation sector is the laboratory for 
innovation while government clones its 
successes, NEA has been an innovator in 
funding the arts. Paul DiMaggio notes that 
while NEA leadership has been responsive in 
allocating funds, it has also been creative in 
identifying and meeting the needs of a field. 32 
Says Robert Crane, vice president of the Joyce 
Mertz-Gilmore Foundation, "NEA took more 
risks. NEA money has been important money 
in putting institutions on the map. Many 
small to mid-size theater companies have cut 
their teeth on NEA money." 33 Gayle Mor- 
gan, at the Mary Flagler Cary Foundation, a 
hinder of contemporary music, agrees. 54 On 
the other hand, Nick Rabkin at the MacArthur 
Foundation believes that when NEA broke 
new ground, it was due to public pressure, 
principally from diverse artists in the field." 

National scope combined with concentrated 
resources are factors responsible for NEA's 
ability to influence the field and to support 
innovation. Though foundation funding for 
the arts reached an estimated $1.36 billion in 
1992, that funding is an aggregate that is 
divided among several thousand foundations. 36 
Of these foundations, few have sufficient staff, 



money, expertise, or access to information for 
long-range planning or innovation. In his 
testimony to the Independent Commission 
on the National Endowment to the Arts in 
1990, the late MacNeil Lowry, the architect 
of the Ford Foundation's arts policy in the 
1960s, noted, "The requisite size that allows 
for long-range planning is no longer located 
at foundations, but at the NEA which since 
1976 has become the single largest source of 
annual funding of the arts." Thus, NEA's 
significance far outweighs its $162 million 
budget for 1995. (Note: NEA's. fiscal 96 
budget was cut to $99.5 million by Congress, 
a 39% reduction.) 

The NEA has forged partnerships with 
foundations and state arts councils, among 
other organizations, to accomplish its goals. 
In 1992, the latest year for which there are 
comparable figures from the foundation 
sector, combined federal and state funding to 
the arts reached approximately $368 million. 57 
Though this represented only one-third of 
foundation giving to the arts and culture that 
year, funders and scholars agree that the staff 
at NEA constitutes a national knowledge 
bank on the condition of arts disciplines 
across the country and their myriad arts 
groups and organizations. 38 This unparalleled 
level of expertise equips them to perform 
more systematically and strategically. Says 
Richard Mittenthal, former Executive 
Director of the New York Community Trust 
and now a partner at the Conservation 
Company, "If I were limited to one call per 
grant investigation, I would probably try to 
contact the NEA." Once again Lowry: 
"Strategies for growth and change, once 
better done by the private sector, are now 
equally dependent on public funding." 
Cynthia Gehrig of the Jerome Foundation 
puts it most succinctly, "What we now have 
is a system that operates in synergistic 
combination. There are many instances of 
public cajoling, promoting, and encouraging 
private support for the arts — particularly in 
the form of start up funding for new organi- 
zations or artists that resulted in public 
support. Private funding has been strength- 



A memo from Kelly Barsdote, NASAA, May 30, 1 995. This ralio is derived by including all forms of income of the relevant organizations. 
Paul DiMaggio, "Decentralization of Arts Funding," in Stephen Benedict, Public Money and the Muse: Essays on Government Funding for the Arts 
[New York: Norton, 1991] pp. 249-250. 
Phone interview, June 1 3, 1995. 
Phone Interview, June 8, 1 995. 
Phone interview, June 6, 1 995. 

Renz, "The Arts Funding Update: A Preliminary Report," draft, pp. 1,2. 

Ibid, Of this $368 million, the states' share was approximately $2 1 3 million and the remainder was from NEA. 

Paul DiMaggio, "Support for the Arts from Independent Foundations," in Nonprofit Enterprise in the Arts: Studies in Mission and Constraint (New 
York, 1986]) , p. 1 34. See also testimony by Marian Godfrey of the Pew Charitable Trusts to the President's Committee, p. 2 (January 25, 
1995). Telephone interview with Suzanne Sato, June 8, 1995. 
1 All the quotes in this paragraph are from testimony before the Independent Commission in 1990. 



ened by public support." 59 

In recent years, public policy analysts have 
focused on the unintended consequences of 
government programs. An unexpected 
outcome of the NEA system that foundation 
officers in the arts frequently mentioned was 
the creation of a national dialogue about the 
arts. Holly Sidford observed that in bringing 
people from all over the country together to 
serve on peer review panels, knowledge 
about a field or discipline is effectively 
disseminated. For example, theater people in 
Whitesburg, Kentucky have the chance to 
talk to their counterparts from Los Angeles. 
As a result, they all learn about the best 
practices in the field. Ben Cameron of the 
Dayton-Hudson Foundation, which disburses 
about $2,800,000 to the arts, primarily in the 
Twin Cities, regards the site-report system 
and peer review as extremely important for 
learning about organizations and developing a 
national perspective. The shared awareness of 
common issues among professionals brings 
candor to discussions that is often missing 
when a grantee meets one-on-one with 
a funder. 

Most important, in addition to its ability to 
provide for the systematic and strategic 
growth and diffusion of the arts on a nation- 
wide scale, the NEA has the charge to do so. 
As a result, many NEA programs have 
influenced an entire field. Nowhere has this 
been more obvious than in the Dance 
Program. The Dance Touring program, 
according to Bonnie Brooks at Dance/USA, 
was the lifeblood of almost every dance 
company in the country. Because dance 
companies can perform for only a brief season 
in their home communities, they are depen- 
dent on touring for their livelihoods and for 
audience development. The Dance Touring 
program, which was solely funded by NEA, 
offered incentives to presenters in the form of 
reduced fees to put on performances. 
Another highly influential NEA initiative was 
the Awards for Visual Artists program, 
partnered with the Rockefeller Foundation 
and the Equitable Foundation, which opened 
museum doors to exhibits by living artists. 
This program was a progenitor for the 
Rockefeller Foundation's Understanding 
Cultures through Museums program that 
distributes $1,000,000 in grant money 



annually. Other examples of NEA programs 
that have shaped entire fields would include 
the linkage of opera and musical theater, 
assistance to ongoing theater ensembles, and 
the advancement of folk arts. 

2. Impact of NEA onfunders and communities. 

An important indicator of the catalytic role 
that NEA plays is the degree to which prior 
or contemporaneous NEA support of a 
program is taken into account by private 
funders in evaluating applications for funding. 
Most program officers at foundations with 
arts programs view the receipt of an NEA 
grant as a sign that an organization has 
attained a level of sound organizational 
structure and/or artistic excellence. Neal 
Cuthbert of the McKnight Foundation, 
which contributes $6,000,000 to arts organi- 
zations throughout Minnesota, said that the 
national recognition that an NEA grant 
confers is very important to a local founda- 
tion. It indicates that an organization has 
attained a national standard of excellence and 
reached an important developmental stage — 
one characterized by sophistication and 
self-consciousness."" 

Marian Godfrey of the Pew Charitable 
Trusts views NEA funding as a force that 
establishes national standards of artistic and 
programmatic excellence to inform and guide 
other support; she agrees that its national 
imprimatur leverages support from the private 
sector. 01 To Holly Sidford, at the Lila 
Wallace-Readers Digest Fund, NEA recogni- 
tion is also significant. At the very least, 
other funders say they look for an NEA grant 
as evidence that an organization has done its 
fund-raising thoroughly by approaching both 
private and public funders. 

In addition, program officers at local and 
national foundations talk about their reassur- 
ance when making decisions to fund appli- 
cants that have received an NEA grant. 
National funders like Suzanne Sato, until 
recently a program officer with responsibility 
for the arts at the Rockefeller Foundation and 
now at the AT & T Foundation, stated, 
"When it's an organization I don't know, I 
feel I have to take another look. NEA 
funding is reassuring. It doesn't influence my 
decision, but it makes it easier to make the 
grant."'' 2 Ben Cameron at Dayton-Hudson 



60 Phone interview, June 7, 1 995. His statement was echoed by Robert Crane of the Joyce Mertz-Gilmore Foundatic 
41 Testimony to the President's Committee on the Arts and the Humanities, January 25, 1995. 
62 Phone Interview, June 8, 1995. 



Phone interview, June 1995. 



Most program officers 
at foundations with 
arts programs view 
the receipt of an NEA 
grant as a sign that an 
organization has 
attained a level of 
sound organizational 
structure and/or 
artistic excellence. 



The arts are in trouble 

in New York City 

because funds are 

eroding at every level. 

For example, New York 

State Council on the 

Arts support has 

dropped more than 

50% in three years; 

from $59,000,000 in 

1991 to $29,000,000 in 

1994. 



confirms that he too takes another look at an 
applicant that has received NEA funding. 
John Orders of the Irvine Foundation, which 
dispenses $3,500,000 to arts organization in 
California, says that an NEA grant has been 
one more check that makes a funder feel 
reassured about an organization's future. 

All program officers interviewed for this 
report view NEA Challenge Grants as 
effective vehicles for leveraging money. 
Again John Orders: "Irvine is positively 
influenced by an NEA Challenge Grant. 
We can then help to complete the end of the 
process." Penelope McPhee, at the Knight 
Foundation with an arts budget of 
$7,000,000, also pays attention to NEA 
Challenge Grants. According to Jane Stern 
at the New York Community Trust: 
"Challenge Grants are a factor. We have 
limited resources. We're always making 
choices about how to make our money most 
useful. I always use it as part of my argument 
about why we should fund this program at 
this time." 63 Like other community founda- 
tions, the New York Community Trust, 
which is the largest of its kind, is donor- 
driven or donor-advised. As a result, 75% of 
the funding goes to the major institutions in 
New York City. Smaller, community-based 
organizations are eligible only for the 
remaining 25%, making the competition 
difficult. 

3. Effects of the decline of federal and state 
funding onfunders and their communities. 

Every funder interviewed, with the 
exception of the Ford Foundation, reported 
that their foundations are not in a position to 
increase their arts and culture portfolios. 
Ernest Gutierrez, of the Kresge Foundation 
in Michigan, argued that it is absurd to think 
that the philanthropic sector can fill the 
funding gap. Program officers at Lila 
Wallace Readers Digest, Pew, Rockefeller 
and Ford noted that each national foundation 
has a mission, set years in advance. 

Funders differed on whether their arts and 
culture portfolios would be able to maintain 
current levels of funding. Penelope McPhee 
expects arts funding to stay stable at Knight, 
but not to increase; but Deena Epstein, at 
Cleveland's Gund Foundation, which gave 
$2,200,000 to the arts in 1994, is worried. 



Says Epstein, "There's a commitment to 
continue arts contributions in the greater 
Cleveland area at this family foundation." 64 
But Cleveland receives significant NEA 
funding, she reported. Epstein spoke, for 
example, of an alternative gallery in Cleve- 
land with a bare bones budget of $230,000. 
The Gund Foundation contributes $24,000, 
as does NEA; but Gund will not be able to 
make up the difference if NEA funding is cut 
or eliminated. 

Kelly Ambrose at the conservative Bradley 
Foundation in Milwaukee sees the loss of 
NEA funding as an opportunity, but concedes 
that arts organizations in Milwaukee will be 
hit hard. The Bradley Foundation will not be 
able to increase its support; indeed it will 
have to cut back its funding to the arts 
because of internal exigencies. To make up 
for these losses, the Bradley Foundation plans 
to start an initiative to foster the notion of 
patronage in Milwaukee. Ben Cameron says 
Dayton-Hudson will stay the course, but it 
will not be able to fill the void left by NEA 
funding cuts because of its commitment to 
social action. 

Several program officers thought that 
federal cutbacks to social welfare would make 
it exceedingly hard even to hold the line on 
arts funding. Neal Cuthbert at the McKnight 
Foundation feared that cuts in federal support 
to human services would lead to choices 
between the arts and human services at his 
foundation. He observed that because NEA 
gave Minnesota organizations substantial 
support, the first wave of cuts at NEA had a 
destabilizing impact on Minnesota's economy 
and on its arts institutions in particular. 
Similarly, Marian Godfrey testified that the 
Pew Charitable Trust was experiencing 
increased pressure from applications in the 
area of health, human services, education, 
environment, and religion. Alison Bernstein, 
Director of the Education and Culture 
Program at the Ford Foundation, did not 
think that the Ford Foundation would trade 
off across these sectors. She noted that while 
the Ford Foundation does not generally 
modify its appropriations in response to 
external stimuli, Ford would probably go into 
special reserves rather than cut back on the 
arts should the trustees decide to take 
emergency measures to increase funding in 



" Phone Interviews, June 7, 1995. 
u Phone Interview, June 7, 1 995. 



the social sphere, an option that few other 
foundations could afford. 65 

The arts are likely to be hard hit at 
community foundations, a sector of the 
foundation universe that is most responsive to 
external stimuli. 6 ' 1 For example, Jane Stern 
reports that funding for the arts went down 
dramatically at New York Community Trust 
because certain special funds were no longer 
available. She also fears that the arts are in 
trouble in New York City because public 
funds are eroding at every level. For 
example, New York State Council on the 
Arts support has dropped more than 50% in 
three years; from $59,000,000 in 1991 to 
$29,000,000 in 1994. "There's too much 
pressure from other areas. It creates real 
tension to continue our funding in the arts 
under the current climate. You can do some 
creative programs on the cheap; but you 
can't run a youth service program that way. 
If you don't have enough people, you have 
to close down." She added that NEA 
provides capacity-building grants that would 
not be taken up by other funders. The 
president of the Santa Clara Community 
Foundation, Peter Hero, on the other hand, 
thinks that funding for the arts will remain 
stable at his foundation. 

Some funders predict a shift in strategy 
rather than a decline in funding. John 
Orders at the Irvine Foundation reports that 
his board had already decided to be more 
strategic by giving fewer, bigger, and longer- 
term grants. In addition, they now fund 
more service organizations because these 
organizations affect organizations throughout 
the region across the country at the same 
time. Orders and others expect NEA cuts to 
have a drastic effect on individual artists. 
Marian Godfrey, Bob Crane, and others fear 
for the small community-based arts organiza- 
tion. A loss to these groups of even 3% to 
5% means cutting programs and staff. 67 A 
recent study prepared for a consortium of arts 
funders confirms that this will be particularly 
true for minority arts organizations in New 
York City. 68 



C. NEH AND THE HUMANITIES 
1. Background. 

Direct support of the humanities is more 
likely to come from public rather than private 
funds. In 1993 NEH funding for the humani- 
ties was $172.4 million, compared to slightly 
more than $100 million from private founda- 
tions. Moreover, more than half of the latter 
funding was for historic preservation and 
history-related museum projects, leaving only 
$50 million for traditional humanities disci- 
plines. 

The lack of data on funding for the 
humanities presents great difficulties in any 
study of the issue. The largest arena for the 
humanities is higher education; yet there is 
little data about the humanities available for 
this sector. The major annual survey of 
voluntary support to higher education, 
Voluntary Support to Education — which collects 
data on 85% of the voluntary support received 
by colleges and universities in a given year — 
does not disaggregate the humanities. This 
represents a sizable gap since higher education 
received approximately $12.4 billion in 
charitable contributions from nongovernmen- 
tal sources in 1994. Of this total, individuals 
gave 50%; foundations, 21%; corporations, 
20%; and other organizations, 9%. w Indi- 
vidual gifts to higher education are generally 
unrestricted and their use cannot be disaggre- 
gated. In addition, there is no data about 
donations to historical societies, other than 
certain limited information provided by the 
Foundation Center. The American Associa- 
tion of State and Local Historical Societies 
intends to develop such a database about 
income sources, but it does not exist yet. 

Data on the humanities is limited to 
foundation giving because the Foundation 
Center has the only data base on funding of 
the humanities. Its data is reliable, though 
limited. Since the database is derived from a 
sample, it does not reflect absolute figures for 
any one year. 7 " Direct grants by foundations 
to individuals are not included in the aggre- 
gate data. 7 ' It cannot be used for long-term 
trends because its categories of analysis were 
limited to language/literature, history, and 



65 In addition, $1 ,000,000 has been added to the arts budget for the new biennium. The increase is for a new initiative and is unrelated to external 
events. Bernstein noted that these changes take time. 

66 Community foundations hold 4.9% of the assets held by foundations. 

67 Marian Godfrey, Testimony to the President's Committee on the Arts and the Humanities, p. 3. 

68 See Joan T Hocky, "Report on Private Funding to Organizations in New York City that Serve Artists of Color and Their Work " (New York June 
25, 1995). 

69 Nancy Horton, "Philanthropic Support for Higher Education," Research Briefs (vol. 6,3) 1 995, p. 1 . 

70 Memo from loren Renz, Vice President for Research, Foundation Center, August 4, 1995. Interview with Frederick Schoff, Vice-President for 
Publications, The Foundation Center, August 3, 1995. 

71 For example, the John Simon Guggenheim Foundation, which recently awarded about $1 ,700,000 in fellowships in the humanities does not 
appear among the top 25 funders of the humanities because grants to individuals are not included. Similarly, the Rockefeller Foundation's 
grantmaking in the humanities is greatly underestimated. 



Direct support of the 
humanities is more 
likely to come from 
public rather than 
private funds. In 
1993 NEH funding for 
the humanities was 
$172.4 million, 
compared to slightly 
more than $100 
million from private 
foundations. 



art/architecture grants until 1989 when the 
Foundation Center adopted the National 
Taxonomy for Exempt Entities (NTEE) for 
categorizing grants. 72 NTEE uses a broader 
definition of the humanities and includes 
grants to humanities organizations as well as 
awards in art history, history and archaeology, 
classical languages, foreign language schools/ 
services, language and linguistics; literary 
services/activities; philosophy/ethics; theol- 
ogy/comparative religion as humanities 
grants. 

Definitional problems still remain. Founda- 
tions classify grants according to their own 
programmatic goals. Foundation Giving and 
The Grants Index, both published by the 
Foundation Center, include in their humani- 
ties totals only those awards which they 
designate with a primary coding in the 
humanities. Thus, for example, their list of 
the top 25 foundations that fund the humani- 
ties, reproduced as Table 9, at right, is based 
solely on grants whose primary identification 
is as a humanities grant. 73 A grant with a 
humanities component, but with a different 
primary identification, is not taken into 
account. As a result, the figures in Table 9 
frequently understate the amount of humani- 
ties funding by these foundations. 74 

The Foundation Center's coding system is 
an attempt to get comparable data across 
foundations, but this attempt is limited by a 
foundation's self-definitions. For example, if a 
foundation with a higher education program, 
but no specified programmatic interest in the 
humanities, gives a grant to a college or 
university, the grant will automatically be 
categorized by the Foundation Center as a 
grant to higher education. If there is a clear 
indication that the grant involves humanities 
content, the grant will receive a secondary or 
perhaps tertiary classification in the humani- 
ties. Grants with secondary or tertiary 
designations are not included in the aggregate 
data published in Foundation Giving and The 
Grants Index, but can be retrieved through 
tailored requests for data from the Foundation 
Center. Humanities funding will still be 
undercounted since many grants are not 
clearly designated. (See Appendix I for 
humanities funding totals when higher 
education — with a secondary or tertiary 



designation in the humanities — is requested. 



2. Foundations that fund humanities programs. 

Humanities funding at foundations identi- 
fied as the top 25 humanities funders by the 
Foundation Center (see Table 9) falls into 
four separate categories: (a) Foundations 
with humanities programs that are distinct 
from their arts programs; (b) Foundations 
with undifferentiated arts and humanities 
programs; (c) Foundations without humani- 
ties programs per se, but that intentionally 
fund the humanities; (d) Foundations 
without a programmatic interest in the 
humanities that nevertheless may fund 
projects which involve the humanities. 

Of those funders interviewed, only three — 
The Andrew W. Mellon Foundation, the 
Rockefeller Foundation, and the Mrs. Giles 
Whiting Foundation — have humanities 
programs that are distinct from their arts 
programs. The Mellon Foundation funds the 
humanities through three distinct programs 
for research libraries, graduate fellowships, 
and the liberal arts. Two foundations — The 
Kresge Foundation and the Ahmanson 
Foundation — have undifferentiated arts and 
humanities programs. Five foundations — the 
Samuel Kress Foundation, the Henry Luce 
Foundation, the Getty Trust, the Lynde and 
Harry Bradley Foundation, and the Geraldine 
Dodge Foundation — have other program- 
matic goals, but intentionally fund in the 
humanities; while the rest fund the humani- 
ties somewhat inadvertently as they fulfill 
other programmatic goals. 75 

a. Foundations with humanities programs 
that are distinct from their arts programs. Of 

the three foundations with distinct programs 
in the humanities, only Mellon funds the 
humanities broadly and extensively. Robert 
Pennoyer, Director of the Mrs. Giles Whiting 
Foundation, which allocates $935,000 for 
graduate fellowships in the humanities, was 
dismayed to learn that this program would 
place his small foundation among the top 25 
funders, let alone in the top ten. 7 '' 

Mellon is by far the largest private hinder 
of the humanities. According to Richard 
Ekman, the Mellon Foundation's Secretary, 
the foundation expends $30,000,000 annually 



72 See p. 2 above. 

71 Additional information can be retrieved from the data base, however. See Appendix I, 

74 For example, the figures for humanities giving cited by program officers at the Mellon and Rockefeller Foundations are higher than those in Table 
9 because the former include funding for higher education or for other areas that were not defind as humanities grants by the Foundation Center. 

73 See Appendix I for a comparable listing when higher education grants with a secondary or tertiary designation in the humanities are included. 
Seven foundations in Table 9 did not participate in this study. 

"' Phone interview, June 1995. 



Table 9: 

Top 25 Humanities Funders in 1993 77 



Foundation 


$ to humanities 


# of grants 


1 The Andrew W. Mellon Foundation 


$14,854,000 


19 


2 Lila Wallace-Readers Digest Fund 


$6,043,805 


25 


3 Drue Heinz Foundation 


$5,060,000 


4 


4 F.W. Olin Foundation, Inc. 


$2,160,000 


1 


5 The Fletcher Jones Foundation 


$1,500,000 


1 


6 The Rockefeller Foundation 


$1,438,850 


19 


7 The Ford Foundation 


$1,189,408 


9 


8 The Kresge Foundation 


$1,000,000 


1 


9 Mrs. Giles Whiting Foundation 


$975,000 


5 


1 Charles R. Culpeper Foundation 


$930,947 


6 


11 J. Paul Getty Trust 


$743,600 


8 


1 2 The Lynde and Harry Bradley Foundation 


$693,951 


15 


1 3 Samuel Kress Foundation 


$621,000 


36 


1 4 Lilly Endowment 


$526,604 


1 


1 5 John D. and Catherine T. MacArthur Foundation 


$525,000 


2 


1 6 Lettie Pate Evans Foundation 


$500,000 


1 


1 7 W.W Keck Foundation 


$500,000 


2 


1 8 Central European University Foundation 


$456,264 


5 


1 9 Henry Luce Foundation 


$445,000 


3 


20 Florence Gould Foundation 


$411,839 


3 


2 1 Geraldine Dodge Foundation 


$376,559 


8 


22 Arthur Vining Davis 


$316,000 


3 


23 Soros Foundation 


$306,557 


1 


24 J.M. Kaplan Fund 


$305,000 


11 


25 The Ahmanson Foundation 


$273,000 


10 



Source: The Foundation Center. (Note: Figures in this table vary from some numbers cited in the text due, in part, to 
different definitions used by individual foundations and the Foundation Center in classifying grants.) 



to support research libraries, graduate educa- 
tion, liberal arts colleges, and research. 78 As 
Ekman observed, some of Mellon's programs 
complement those at NEH, but others 
provide support to aspects of the humanities 
that the NEH does not reach, such as graduate 
fellowships. Both Mellon and NEH support 
"long-term scholarly projects that organize the 
raw materials of research to produce editions, 
translations, dictionaries, library catalogues, 
and other reference materials that are used by 
students and faculty." While Mellon provides 
between $1 and $2 million a year for projects of 
this sort, NEH annually allocates more than 



$15 million. 79 Ekman testified that a 10% 
reduction in NEH funding for editions, transla- 
tions and research tools could be offset only by 
increasing the Foundation's expenditures in this 
area by 50-100% — "an adjustment. . .that. . 
.would distort the Foundation's other pro- 
grams — including those that address areas of the 
humanities that are not the focus of NEH's 
current activities." 80 

According to its own figures, the Rockefeller 
Foundation is the second largest humanities 
funder with annual expenditures approaching 
$7,000,000 a year. According to Tomas 
Ybarra-Frausto, Associate Director of the 



77 This listing ignores much significant humanities-related giving, e.g., grants to higher education, grants under $ 1 0,000, and grants to individual; 

78 Testimony, Public Meeting of the President's Committee on the Arts and the Humanities, Jan. 25, 1 995, p 3 . 

79 Ibid., p. 4. 

80 Ibid. 



"Private foundations, 

corporate and family 

foundations do their 

funding by guidelines 

and goals which are 

special to their 

interests and 

institutional purposes; 

they fund on a project 

basis to advance their 

corporate ideas...." 



Arts and Humanities, "Humanities program- 
ming at the Rockefeller Foundation is 
rooted in its original mission to serve the 
well-being of humankind," and is linked to 
the other programs and divisions of the 
foundation. 81 One result is that humanities 
programming at Rockefeller has been 
traditionally aimed at contemporary issues, 
and changes to reflect those issues. Says 
Lynn Szwaja, Senior Research Associate for 
the Arts and Humanities, "Our current 
guidelines have moved us into problem- 
based funding. We can no longer be as 
responsive to the needs of the humanities as 
a field." 82 In her 1995 testimony before the 
Subcommittee on Labor, Education, Arts 
and Humanities of the United States Senate, 
Alberta Arthurs, Director of the Arts and 
Humanities Program at the Rockefeller 
Foundation, pointed out, "Private founda- 
tions, corporate and family foundations do 
their funding by guidelines and goals which 
are special to their interests and institutional 
purposes; they fund on a project basis to 
advance their corporate ideas...." 83 Since the 
overall goals of the Rockefeller Foundation 
are to further equity and sustainable develop- 
ment, its humanities programming is 
consistent with that agenda. Other founda- 
tions have similarly appropriate guidelines. 

b. Foundations with undifferentiated arts 
and humanities programs. Humanities 
funding at the Kresge Foundation is re- 
stricted to funds for capital campaigns. 
Humanities awards have gone to historical 
societies, history museums, and colleges; in 
the arts, to theaters, concert halls, and art 
museums. Because these are general support 
rather than substantive humanities awards, 
criteria for arts and humanities are not 
differentiated. Kresge frequently partners in 
these projects with other federal agencies 
including the Challenge Grant Programs of 
NEH and NEA. 

Humanities funding at the Ahmanson 
Foundation is undifferentiated from arts and 
culture. With support limited to southern 
California, Ahmanson provides awards in 
three major areas: arts and humanities, 
education, and social welfare. Annual 
allocations at the Ahmanson Foundation 



have averaged $20,000,000. Of this, the arts 
and humanities have held a large share of the 
programming with 32% in 1989 and 29% in 
1993. Manya Schaff, a program officer at 
Ahmanson, does not expect arts, culture and 
humanities funding to decrease and notes 
that, although social welfare spending went 
up in 1994, funds to arts did not go down. 
By the same token, she does not expect any 
changes in response to cuts in federal funding 
at NEH because the foundation moves slowly 
in reaction to external stimuli. She says that 
the foundation is on an alert basis. 84 

c. Foundations without humanities programs 
per se, but that intentionally fund the 
humanities. Of the five foundations that 
have non-humanities programs that intersect 
with issues and concerns of humanities 
disciplines, two — the Getty Trust and the 
Samuel Kress Foundation — are limited to art 
history and conservation. The Getty Trust 
expends $6,500,000 annually — both nation- 
ally and internationally, for its programs in 
conservation and art history. The Samuel 
Kress Foundation disbursed $2,500,000 in 
1992. Charles Meyers, acting director of the 
Getty Grant Program, observed that Getty 
provides support to both national and 
international projects. The impact of budget 
reductions at NEA, NEH, and IMS is a great 
unknown, but he expects that the increased 
demand for domestic funding could distort 
the balance of Getty funding. 85 

The Henry Luce Foundation also provides 
substantial funding for art history, some 
$4,000,000 last year, with a focus limited to 
American art. In addition, it provides money 
to support research in Asian affairs, higher 
education, and religion. The amounts 
allocated to Asian affairs and higher education 
vary each year, depending on the size of the 
portfolio and the quality of grants received. 
Thus in 1992, the foundation disbursed 
$2,371,000 for its Asian Affairs program, 
which grew to $3,790,000 in 1993. In 
higher education, $270,000 was disbursed in 
1992, but $525,000 in 1993. 86 Ellen 
Holtzman notes that "although previous 
NEA or NEH funding is not a decisive factor 
in our grantmaking, [she does] regard it 
highly because it shows an acknowledgment 



el Phone interview, August 16, 1995. 

"'' Phone interview, August 16, 1995. 

95 March 2, 1995. 

u Phone interview, Manya Schaff, July 28, 1 995. It should be noted that art, culture and the humanities are used interchangeably by this foundation. 

" Phone interview, July 10, 1995. 

"' Phone interview, August 14, 1995. 



by the field of a level of excellence." 87 John 
Wesley Cook, the Foundation's president, 
states that they consult with NEH program 
officers about grants submitted to both 
organizations and they are strongly influenced 
by NEH approval. 88 He adds that the 
foundation is now on alert, listening to the 
needs of its applicants because of reduced 
funds available elsewhere. However, more 
openness to the needs of grantees does not 
mean that the foundation will be able to 
change its priorities. Holtzman says she has 
already seen a reduction in the number of 
applicants who list the NEA and NEH as co- 
funders. 

The Lynde and Harry Bradley Foundation 
does not have a humanities program, but is 
aware that it funds the humanities through 
the support it provides to higher education. 
Program officer Hillel Fradkin observed that 
since the Bradley Foundation is a mid-size 
foundation, it does not allocate specific 
amounts of money to its different program 
interests, but funds projects based on the 
quality of the proposals submitted. Of the 
$1,750,000 awarded last year for graduate 
fellowships, Fradkin estimated that half were 
in the humanities. One-third to one-half of 
the money allocated for book projects went 
to humanities projects; in addition, two 
special projects were also in the humanities. 89 
Fradkin expects funding at Bradley to 
continue at the same level, but not to expand 
because resources at the foundation are 
limited. He foresees a scarcity of resources 
for fellowships, particularly for younger 
scholars, as well as for media and editing 
projects. 

The Geraldine Dodge Foundation funds 
the humanities through its focus on education 
and school reform. Thus, it has collaborated 
with NEH and the New Jersey Committee 
on the Humanities to expand summer 
institutes for teachers. With annual giving at 
$11 million to be allocated among its five 
program areas, humanities funding fluctuates 



each 



year. 



d. Foundations without a programmatic 
interest in the humanities that may neverthe- 
less fund projects involving the humanities. 

Most of these foundations fund the humani- 



Phone interview, June 1, 1995. 

Phone interview, June 15, 1995. 

Phone interview, August 1, 1995. 

Phone Interview, Scott McVey, June 5, 1 995. 



ties as byproducts of other programmatic 
concerns. This is true for the Lila Wallace- 
Readers Digest Fund, the Ford Foundation, 
the Lilly Endowment, the John D. and 
Catherine T. MacArthur Foundation, and the 
Arthur Vining Davis Foundation. 

Lila Wallace-Readers Digest does not fund 
the humanities as a category, but its visual arts 
program provides support for interpretive 
material when it gives awards to museums to 
expand their audiences. It supports public 
humanities programs at independent research 
libraries — the Folger Shakespeare Library, the 
Newberry Library, the J. P. Morgan Library, 
and the American Antiquarian Society — to 
help attract a broader public. Similarly the 
Ford Foundation's Education and Culture 
Division does not explicitly seek humanities 
projects. Nonetheless, that division, as well as 
others at the Foundation, may fund humani- 
ties research in order to fulfill other program- 
matic goals in the urban poverty program or 
the international affairs division, for example. 91 

The Lilly Endowment provides significant 
support to the humanities through its program 
in religion which gives away $20,000,000 a 
year. Craig Dykstra estimates that half this 
funding goes to universities to research a 
variety of issues including African American 
religion, Protestantism, and American Catholi- 
cism, among others. He estimates that almost 
half of that $10,000,000 may be in the 
humanities. 92 The John D. and Catherine T 
MacArthur Foundation funds humanities 
projects or practitioners through its Peace and 
International Cooperation Program, the 
MacArthur Fellows Program, and the Media 
Program. Kennette Benedict says that some 
portion of the $18 million given through the 
Peace and International Cooperation Program 
funds the humanities through its support of 
ethnography, ethnic studies, the dynamics of 
conflict, and cooperation. Catharine Stimpson 
suspects that about 20% of the MacArthur 
Fellows Program, which has supported 458 
fellows since 1981, were historians, art 
historians, or critics. The Arthur Vining Davis 
Foundation supports private liberal arts 
colleges, but grants are given to an institution 
with no regard to the kind of program that the 
funds will support. The foundation has also 
funded some media projects. 



91 Alison Bernstein noted that the Education and Culture Division at the Ford Foundation is re-thinking its funding of area studies and will emphasize 
culture. 

92 Phone Interview, July, 1995. The education program which is also funded at $20 million has little connection to the humanities. 



The restricted size and 
nature of private- 
sector humanities 
funding bring into 
relief the importance 
of the NEH as the only 
funder specifically 
charged with 
operating on a 
national scale and 
with a systematic 
approach to fostering 
the growth of the 
humanities. 



A statewide program in 

California that provides 

administrative support 

to share exhibitions 

throughout the state, or 

a reading and 

discussion series in 

some of North 

Carolina's poorest and 

most isolated counties, 

bring humanities 

programs to 

underserved regions. 

Unfortunately this type 

of program does not 

attract private-sector 

donors. 



3. Prospects for replacing federal funds. 

The restricted size and nature of private- 
sector humanities funding bring into relief the 
importance of the NEH as the only funder 
specifically charged with operating on a 
national scale and with a systematic approach 
to fostering the growth of the humanities. For 
fiscal year 1996, Congress cut the NEH's 
budget by 36%, to $110 million. Support for 
the humanities at NEH that will be the most 
difficult to replace includes funding for 
humanities research, outreach activities and 
the building and support of infrastructure. 
NEH's partners in this endeavor are limited 
to the state humanities councils and the 
handful of foundations listed above who fund 
the humanities. 93 Each of these areas of 
concern is discussed at more length below. 

a. Research opportunities for individual 
scholars. NEH alone provides more research 
opportunities for individual scholars than the 
combined support from the four other 
national post-doctoral fellowship competi- 
tions. In 1994, NEH provided fellowships 
for 219 college and university faculty and 
independent scholars and summer stipends for 
another 202 scholars-researchers; while the 
American Council of Learned 
Societies(ACLS), the John Simon 
Guggenheim Foundation, the National 
Humanities Center, and the Rockefeller 
Foundation awarded only 197 humanities 
fellowships. 94 Guggenheim disbursed roughly 
$1,700,000 for fellowships in the humanities; 
Rockefeller, $2,700,000; and ACLS, 
$1,100,000. NEH's expenditure was 
$6,000,000. 

b. Outreach. Efforts to bring the fruits of 
humanities scholarship to the broadest 
possible public are the most visible part of the 
NEH's support for the humanities. It 
includes films, museum exhibits, or library 
discussion groups, and public lectures. 
Examples of NEH-funded museum projects 
are "Seeds of Change," an exhibit for the 
Columbian Quincentenary that was seen by 
over 2,000,000 people nationwide, and "The 
Age of Rubens," which had 226,000 visitors 
in Toledo, Ohio alone. Films include Ken 
Burns' "Civil War," an NEH success story, 
seen by 38 million viewers. 



The NEH summer institutes and seminars 
for 2,000 school teachers and 1,000 college 
teachers provide another form of outreach — 
in this case aimed at disseminating the latest 
scholarly approaches and methods to high 
school and college teachers. Each year, 
500,000 students benefit from these teachers' 
expanded knowledge base. These seminars 
maintain the interest and commitment of 
teachers in pre-collegiate systems. They also 
serve to keep college faculty in remote non- 
research institutions in touch with the most 
recent work in their field. 

These summer institutes are one of the 
few sources of funding for college-high 
school collaboratives and have helped to 
improve teaching in the basic humanities 
disciplines. Collaborations with the 
Geraldine Dodge Foundation and the 
Andrew Mellon Foundation have enabled 
these programs to expand. 95 

c. Infrastructure. Infrastructure is less visible; 
the term, in this case, refers to enlarging and 
preserving the tools of scholarship, the 
building blocks upon which scholarship and 
outreach depend. This includes the NEH- 
supported program to preserve brittle books 
and newspapers in libraries across the country 
by microfilming them before they disinte- 
grate, as well as the editing and publication of 
the papers of such important historical figures 
as George Washington, Thomas Jefferson, 
James Madison, and Martin Luther King, Jr. 
These are long, labor-intensive efforts. The 
editing and publication of Thomas Jefferson's 
papers has been in progress for 50 years. 
From the beginning, it has been a public- 
private partnership. The Papers of George 
Washington, also supported by NEH, consist 
of 130,000 annotated documents that will be 
issued for the first time in both print and 
electronic form. 

Editing or translating authoritative schol- 
arly editions also generally fall into the 
category of infrastructure. This includes 
reference works, critical editions, and some 
new editions of authors for the general 
public, such as the Library of America 
volumes. 

Formal collaborations with private hinders, 
such as those cited above, are necessarily less 
extensive than those in the arts. Some 



93 See below for a discussion o( ihe slate humanities councils and the federal-state partnership. 

'"■ NHC received NEH support for 1/3 of its 36 fellows. 

n Memo from Bruce Robinson, Assistant Director for Elementary and Secondary Education, NEH, June 6, 1995. 



funders, such as the Andrew W. Mellon 
Foundation, the largest humanities hinder 
among the private foundations, have pro- 
grams that parallel NEH programs and they 
often co-fund projects. Others — like the 
Whiting Foundation, with an annual budget 
of only $1,237,000 that places it among the 
10 largest humanities funders — fund only 
graduate fellowships in the humanities. 96 
Since foundations rarely like to fund long- 
term programs, projects frequently have been 
funded in seriatim. 97 Thus when Pew and 
Mellon money ended at The Jefferson Papers 
in 1992, the project was able to secure NEH 
funding. 98 

d. State Humanities Councils. Established in 
the mid-seventies, the 56 state and territorial 
humanities councils "sponsor programs that 
educate citizens about the history of their 
nation and community, engage them in 
reasoned discussion of public issues, encour- 
age participation in civic life. . ." through 
content-based professional development 
opportunities for humanities teachers and 
literacy training for new readers. The 
programs include a variety of formats, such as 
lectures, exhibits, multi-session reading and 
discussion series, week-long Chautauquas, 
intensive teacher institutes, conferences, films 
and others." 99 

State humanities councils are in the 
anomalous position of being both funders and 
fundraisers. For that reason, their experience 
provides a useful perspective on the possibil- 
ity of obtaining increased private support for 
the humanities. In FY 95, NEH allocated 
$26,952,000 outright and another $4,530,000 
on a matching basis to be divided among the 
56 state councils. 1 "" A profile of the sources 
of income of the average state humanities 
council reveals that in 1995, 59% of a total 
budget of $777,056 came from NEH 
outright, 13% from NEH matching funds, 
4% from other NEH funds, 7% from state 
funds, and 14% from private sources, the 
latter down from 17% in 1992."" As noted 
elsewhere in this report, just over 
$10,000,000 was raised by all of the councils 
in the aggregate from other sources as a result 
of the NEH matching program. 

Seven of the most successful fundraisers 



among the state humanities councils were 
interviewed for this report: California, 
Florida, Illinois, Indiana, Minnesota, Ne- 
braska, and Vermont. 1 " 2 North Carolina, 
which has been less successful in raising 
funds, was also interviewed. Several gener- 
alizations emerged from interviews with the 
executive directors of these councils when 
they were asked about their successes in 
reaching private funders. Their experiences 
confirm much of what is already known 
about private donors, but provide insights 
into the difficulty of raising private funds for 
the humanities, and for statewide humanities 
programs in particular. Thus, states with a 
strong philanthropic base and tradition, such 
as Minnesota and Indiana, are more success- 
ful seeking private support than states that 
have neither a number of local foundations 
nor a strong corporate base. Additionally, 
the experience of these state humanities 
councils is consistent with the findings about 
the low incidence of individual giving to arts, 
culture, and the humanities documented in 
Giving and Volunteering. 

Other conditions affecting fundraising 
include a state's geographic size, population 
distribution, and economic status — condi- 
tions that are either immutable or far from 
malleable. Large states with isolated rural 
populations, such as California, Nebraska, 
and North Carolina, must expend more 
time, money, and effort fulfilling their 
missions to provide statewide programming. 
In addition to diluting visibility, spreading 
programs throughout the state is expensive. 
Thus, California maintains two additional 
offices — one in Los Angeles and the other in 
San Diego — to coordinate activities in the 
southern part of the state. A statewide 
program in California that provides adminis- 
trative support to share exhibitions through- 
out the state, or a reading and discussion 
series in some of North Carolina's poorest 
and most isolated counties, bring humanities 
programs to underserved regions. Unfortu- 
nately this type of program does not attract 
private-sector donors. As Kristina Valaitis, 
Executive Director of the Illinois Humanities 
Council, observed about her state, "Most 
corporations and foundations are in Chicago. 
With few exceptions, they are not interested 



96 Of this total, $300,000 goes to creative writing, and these awards are categorized as arts funding. 

97 Testimony by Richard Ekman to the President's Committee on the Arts and the Humanities, January 25, 1995. 
08 Phone Interview with John Catanzariti, Editor of the Thomas Jefferson Papers, June 1 , 1 995. 

>9 Based on statement from the Federation of State Humanities Councils. 

100 These are the totals after a $5,000,000 rescission. 

101 Federation of State Humanities Councils, 1995 Staff Salary and Council Income Report. 

102 Carole Watson, Director of the Federal-State Partnership at NEH, and Jamil Zainaldin, Executive Director of the Federation of State Humanities 
Council, provided a list of the most successful fundraisers among the state councils. 



State humanities 
councils are in the 
anomalous position of 
being both funders 
and fundraisers. 



Indiana started fund 
raising in 1976, but 
even in a state as 
well-endowed as 
Indiana and a city as 
fortunate as 
Indianapolis in terms 
of its community- 
minded corporations 
and foundations, it 
took 1 years for the 
campaign to 
bear fruit. 



in going state-wide." 103 

A second generalization is that the federal 
system fosters creativity, adaptability, risk- 
taking and ingenuity. Says Valaitis, "There 
was a real pioneering spirit in the early days. 
We were set up to require a variety of 
funding sources. The state humanities 
councils represent a federal program that has 
worked imaginatively." This can be seen in 
the several different approaches to program- 
ming, institution-building, and fundraising 
that emerge from among the agencies 
analyzed in this report. Florida, with neither 
a strong corporate base nor an extensive 
philanthropic community, has been able to 
rely on the state for one third of its funding, 
far above the 7% average cited above. With a 
growing population, Florida is the fourth 
largest state in the country. Ann Henderson, 
Executive Director of the Florida Humanities 
Council, explains that her state legislature's 
largesse is due to its awareness that such a fast- 
growing state inevitably gets short shrift from 
the federal government because allocations are 
based on a census which is outdated before it 
is published. As a result, the Florida Humani- 
ties Council has received state funding for the 
last 15 years. In 1994, the Florida Center for 
Teachers, which started as a council-initiated 
project, became part of the state university 
system. 

The Indiana Humanities Council, on the 
other hand, has not gone to its state legislature 
for support. In 1994, of a $1.5 million total 
budget, Indiana received only $585,000 from 
NEH. Over $900,000 came from founda- 
tions, corporations, and individuals. 104 With a 
large base of foundations in Indianapolis, 
several of which are interested in the arts, 
education, and the humanities, the Indiana 
Humanities Council has been fortunate. The 
Indiana Council received money from the 
Lilly Endowment for the Indiana Interna- 
tional Forum, a state-wide program that 
focuses on Indiana's role in the global 
community. Wordstruck, a program that 
brings writers and scholars to 50 local 
communities throughout the state, received 
funding from corporations. Says Weaver 
Smith, the Indiana Council's Executive 
Director, "Indianapolis has a really significant 
philanthropic community. Many people in 
these organizations are founders and friends of 



the humanities council." 105 

Victor Swenson, Executive Director of the 
Vermont Humanities Council, reported that 
his council started its fundraising activities in 
1984 with a goal of raising $30,000. One of 
the first state councils to hire a private 
fundraiser, Vermont now raises 50%, 
$450,000 out of $900,000, from private 
sources, which include businesses, individuals, 
and small foundations. The Council's Board 
and Swenson himself have been very active in 
raising funds — ranging from $500 to $2,500 
— from individuals. In order to raise this 
amount of money, the council has had to 
alter and narrow its mission. It sees itself less 
as a grantmaking agency and more as an 
organization with a specific active agenda — to 
increase literacy throughout the state. This 
strategy is tied to the state of Vermont's 
announced goal of achieving literacy for all of 
its citizens by the year 2000. 

Council-initiated programs were the first 
strategy devised by state humanities councils 
to raise their visibility and, with such visibil- 
ity, increase private funding. These pro- 
grams — many of which are unique to a 
particular state because they draw on its local 
history and interests — give each state council 
its own particular flavor. The Chicago 
Humanities Festival, now in its sixth year, has 
been successful as a fundraising event, 
attracting 15,000 people in one weekend. 
Nineteen educational and cultural organiza- 
tions in Chicago put on as many as 40 
different programs on humanities themes. 
Institutions like the Chicago Historical 
Society and the University of Chicago are 
involved. Funding has come from the 
MacArthur Foundation which has a strong 
Chicago focus. Other programs, such as 
speakers' bureaus, teachers' institutes, and 
Motherread, a family reading institute, are 
replicated from one state to another.""' 

A third conclusion is that federal funds 
have been important in gaining state funding. 
The Minnesota Humanities Council received 
more than one-third of its funding from the 
state in 1994. Out of a $1,500,000 total 
budget, $600,000 came from the state 
legislature and $550,000 from NEH. The 
rest was raised from corporations and founda- 
tions. Florida and Minnesota, which have 
both been able to maintain a high level of 



"" Phone interview, June 5, 1995. 

104 The Indiana Humanities Council has been able to mount an annual campaign that brings in $ 1 50,000 

'"' Phone interview, June 2, 1995. 

"*' Nebraska's speakers bureau sent 690 speakers across the state in 1994. 



state funding, view federal funding as a 
necessary source of leverage for state funds. 
Cheryl Dickson, the Executive Director of 
the Minnesota Humanities Council, 
observed that when federal funding to the 
arts went down in Minnesota, the state 
legislature lowered its allocation too. 
Swenson adds that federal support has been 
crucial to the Vermont Council's ability to 
leverage private money as well. 

State funding is unpredictable, however. 
The long-standing support that the Florida 
Humanities Council has received from the 
legislature is not the rule. A new state 
legislature may change its priorities; a 
sympathetic governor may not be able to 
rally new support or needed funding when 
new demands appear from other sectors. 
Cheryl Dickson is concerned that 
Minnesota's 10,000 non-profits will be 
competing for public and private money 
throughout the state and expects the 
competition, which is already fierce, to 
become cut-throat. In these difficult times, 
even the strong support of the Governor of 
Illinois may not leverage more than 10% of 
the income that the Illinois Council already 
gets from the state. On the other hand, the 
North Carolina legislature very recently 
surprised the Humanities Council with a 
line-item appropriation, only the second in 
the Council's history. 

These executives all emphasize that 
fundraising is a long-term effort. Swenson 
of Vermont points out that the need to 
develop a successful programmatic strategy 
and to cultivate individuals is a slow process. 
Indiana started fundraising in 1976, but even 
in a state as well-endowed as Indiana and a 
city as fortunate as Indianapolis in terms of 
its community-minded corporations and 
foundations, it took 10 years for the cam- 
paign to bear fruit. Like North Carolina 
and California, Indiana is a very diverse 
state: the southeastern part of the state is 
rural; Indianapolis is a model city; and 
northwest Indiana is predominantly urban 
and suburban. Weaver Smith notes that 
"beyond our core of support in Indianapolis, 
we still have a great deal to do." 

The Nebraska Humanities Council has 
actively focused on private fundraising since 
1989 when it set up a 25 member board for 



this purpose. In 1990, the Council raised 
just under $50,000 in private funds; last 
year, it increased its intake to over $135,000 
from corporations, foundations, and indi- 
viduals. The state of Nebraska allocated 
about $104,000 to the Council as well. As a 
result, the Council's NEH appropriation of 
$460,000 was only 66% of its 1994 budget. 
The Nebraska Council takes its commitment 
to program across the state very seriously. In 
1994, the Council served 125 districts with 
programs in 190 communities. Of these, 10 
were in Omaha, 25 in Lincoln and the other 
125 were scattered across Nebraska's third 
congressional district which is larger in area 
than the six New England states combined. 
Despite this commitment, Hood believes 
that cuts to NEH will hit rural districts the 
hardest. To make up for the loss of federal 
funds, the Council recently hired a consult- 
ing firm to develop a plan to raise an 
endowment. The consultant's first recom- 
mendation was to drop the word "humani- 
ties" from the name of the organization. 1 " 7 

Most of the situations described so far are 
not unique to the humanities, but there are 
circumstances peculiar to humanities 
organizations and hybrid granter-grantee 
institutions such as these councils that should 
be confronted when thinking about 
privatization of support for the humanities. 
The first is simply that, as we have seen 
throughout this report, there is confusion 
about the very meaning of the term humani- 
ties. Second, there are few funders with a 
programmatic focus on the humanities. Says 
Cheryl Dickson, "Even in a state with as 
concentrated a group of funders as Minne- 
sota, it's hard to get money for the humani- 
ties. We often have to disguise ourselves as 
human services. We've had an easier time 
with an ethics in medicine program, 
Motherread, and a K-12 teachers' institute." 
In Vermont, the Humanities Council 
program has dealt with the issue by focusing 
on literacy. This strategy has been very 
successful in raising state and private support 
because it relates to the state's goal of 
achieving 100% literacy by the year 2000. 
Other funders do not want to contract the 
richness of their humanities programming to 
such a degree. Nevertheless, Weaver Smith 
thinks that Indiana may have to focus more 



107 Phone interview with Jane Hood, June 6, 1 995. 



"If there are more 
pressing social issues, 
education and the 
humanities will seem 
like luxuries. 
Whatever we have 
done thus far in 
raising external 
money has been in 
the context of 
knowing where our 
salaries, rent, and 
operating costs were 
coming from." 



The Institute of 

Museum Services, 

created by Congress in 

1 976, is the only 

agency dedicated 

exclusively to the 

improvement of 

museum operations. 



on single issues, such as the problems of 
adolescents, in order to raise funds successfully. 

Humanities councils have particular 
difficulty raising funds from individuals. This 
is in part because of public confusion over the 
meaning of the humanities and the scope of 
their subject matter. Council-initiated 
programs are frequently carried out with a 
local partner who may get most of the credit. 
Generally, organizations seeking to raise funds 
from individuals will try to take advantage of 
the relationships and personal contacts of their 
board members. It has often proven difficult 
for humanities councils to position a board for 
this purpose. Here too, a state's size can be a 
factor. In a state the size of California, for 
example, the board's contacts are negligible. 
North Carolina found that its board, which 
was largely academic and thus well-suited to 
directing the mission of the humanities 
council, was not properly positioned for or 
even sympathetic toward fundraising. 

Oddly enough, the humanities councils' 
role as grant-maker — especially with a mission 
for an entire state — can hamper them. As 
grantmaking agencies, they fund programs and 
events through grantees who then get credit 
and recognition. The re-granting program 
gives the state agency its broadest reach and 
allows for more grass-roots participation. All 
the directors interviewed talked of the 
impossibility of replacing this grant money. 

Weaver Smith of Indiana predicts that as 
federal funding gets leaner, the pressure on all 
non-federal funding will become severe. 
Funds are limited, making it a zero sum game. 
"In Indiana, Humanities gets its support from 
the education and continuing education 
pool," she continued. "If there are more 
pressing social issues, education and the 
humanities will seem like luxuries. Whatever 
we have done thus far in raising external 
money has been in the context of knowing 
where our salaries, rent, and operating costs 
were coming from. Then we can plan and 
raise money for programs ahead of time. It 
will be different if we don't know where 
November's payroll is coming from." Even 
Florida, which gets almost 50% of its money 
from non-federal sources, says it will not 
survive federal budget-cutting. 



D. THE INSTITUTE OF MUSEUM SERVICES 

While this report does not contain a 
detailed analysis of funding from the Institute 
of Museum Services (IMS) to the museum 
field, the role of IMS deserves mention. The 
responses of foundation executives to the cuts 
in direct federal support for culture are also 
relevant to the Institute of Museum Services 
and the museums it supports. Private funding 
figures for museums are included in the 
summary of private giving to the arts and the 
humanities earlier in this report. 

The Institute of Museum Services, created 
by Congress in 1976, is the only agency 
dedicated exclusively to the improvement of 
museum operations. IMS funds all types of 
museums including history, art and science 
museums, zoological parks and botanical 
gardens. IMS grants help museums maintain 
hours of operation, care for collections, 
support educational programs and provide 
professional training for staff. Over its almost 
20 year history, IMS has made 15,500 grants 
to museums in communities small and large all 
over the country as its budget grew from a 
modest $3 million to a high of $28 million in 
fiscal year 1995. Grants are competitive; only 
26% of applications are funded. Like the NEA 
and NEH, the IMS has matching require- 
ments for its grantees. (Note: IMS' budget for 
fiscal 1996 was cut to $21 million by Con- 
gress, a 27% reduction.) 

Cultural organizations and museums report, 
as they did in the Foundation Center's 1993 
benchmark study of private funding, that they 
need more grants for general operating 
support rather than specific project funding. 
This need was also reported by the Henry 
Luce Foundation in its 1993 study. 1 "" IMS is 
an important source for such general operating 
support, allocating about 80% of its funds for 
this purpose. 

Although museums are more successful 
than some cultural organizations at attracting 
private support, many are still highly depen- 
dent on government support from federal, 
state and local sources. In its Data Report from 
the 1989 National Museum Survey the Ameri- 
can Association of Museums reported the 
following distribution of museum income: 
25.2% from private donations; 1 1.5% from 
investments; 30.5% from earned income, and 
32.8% from government sources. According 



108 Evaluation of Arts Grants, The Henry Luce Foundation, Inc., August 1993. Also see Renz, Arts Funding 



to the American Association of Museums, of 
the $1.2 billion received from the public 
sector in 1988, 41% came from the federal 
government (including direct appropriations 
to the Smithsonian and other national 
museums), 34% from local governments, 20% 
from state governments, and 5% from other 
governmental sources. 109 While there is no 
museum infrastructure analogous to the state 
and local arts councils and the state humanities 
councils, there are an estimated 8,000 
museums of all types across the country, and 
museums have several national professional 
organizations to serve them. 

Other federal agencies which provide 
museum funding are the National Endow- 
ment for the Humanities, the National 
Endowment for the Arts, the Department of 
Education, the National Park Service and the 
National Science Foundation. Of course, the 
federal government gives direct funding to the 
Smithsonian Institution, the National Gallery 
of Art and to both the Library of Congress 
and the National Archives, which own 
millions of visual records and objects and 
which also mount exhibitions. 

SECTION IV: 

The Role of Tax Policy 

Although a detailed examination of 
proposed changes to the tax code is beyond 
the scope of this study, any discussion of 
public versus private funding of charitable or 
not-for-profit activity must take note of the 
central role played by tax policy. United 
States tax laws, on the state and local as well as 
federal level, favor organizations engaged in 
such activities in a variety of ways. 110 Thus, 
not-for-profit arts, culture, and humanities 
organizations are generally exempt from 
property and sales taxes at the state and local 
level as well as from income taxes at all 
levels. 111 The most prominent tax incentive 
for charitable giving, however, is the ability of 
donors to deduct charitable contributions in 
computing their tax liability under -the 
individual income and estate taxes and the 
corporate income tax. Further, if a charitable 



gift is in the form of appreciated property, the 
donor gets the additional benefit of excluding 
from income the amount of such appreciation. 
Because our income tax system has a progres- 
sive rate structure and a fairly substantial 
standard deduction, the benefit of the chari- 
table deduction is much greater for high- 
income payers than for others. Conversely, 
changes in the tax law that effect, directly or 
indirectly, the value of the charitable deduction 
are likely to have the strongest impact on the 
charitable behavior of high-income donors. 

A. THE EFFECT OF TAX LAW ON GIVING 

BEHAVIOR. 

Over the years, the charitable deduction has 
been viewed as a central element in our 
national policy toward charitable giving. In 
the words of the 1988 Report to the President 
of the President's Committee on the Arts and 
the Humanities: 

...while the Federal income tax system did 
not create American philanthropy, it has 
served as a powerful inducement to the 
charitable impulse that encourages con- 
tributions to nonprofit organizations. If 
the charitable impulse is the engine that 
drives the train of American philanthropy, 
the charitable deduction is the coal that 
stokes the engine. 

Although there has been substantial debate 
among economists as to the degree to which 
the tax treatment of charitable giving affects 
how much is given to whom, there is general 
agreement that there is a substantial effect." 2 
For example, one of the leading works on the 
subject, Federal Tax Policy and Charitable Giving, 
by Charles Clotfelter, concludes that "Federal 
tax policy has a substantial impact on the level 
and distribution of charitable giving in the 
United States."" 3 Clotfelter states that his 
"empirical analysis suggests that support for 
charitable organizations responds both to 
explicit tax incentives for charitable contribu- 
tions and to general changes in effective tax 
schedules."""* 

Most economists believe that curtailing the 
charitable deduction would have a chilling 
effect on charitable giving. For example, in 



l0 ' Museums Count. A Report by the American Association of Museums, Washington, DC, 1 994, pp. 42, 47. 

110 Note however that all the tax "breaks" discussed here are directed toward organizations rather than toward individuals or specific activities, 
which must always derive the benefit through a specific organization. 

1 " In the absence of this tax exemption, an ACH organization would potentially be subject to tax on a variety of cash flows — ticket sales, investment 
earnings, contributions, proceeds from the sale of goods and services related to the exempt purpose of the organization. 

" 2 See Clotfelter (1 985); Clotfelter testimony (1 995); Auten et al (1 992). But see Leslie Lenkowski, "To Increase Contributions, Decrease Taxes," The 
Chronicle of Philanthropy, June 15, 1995, who argues that it is the amount of after-tax income available for making gifts that should be the 
primary determinant of the level of giving. 

113 Clotfelter (1985), p. 288. Elsewhere in that study, the author reports that his analysis indicates that repeal of the charitable deduction would 
cause total charitable giving to fall by a quarter. (Page 141 ) 

" 6 Op.cil. 



At present the law 
provides a significant 
incentive for giving by 
high-income charitable 
donors. Many of the 
changes in the federal 
income tax law that 
are being publicly 
debated these days — 
such as various forms 
of "flat tax" or 
replacing the income 
tax system with a 
national sales or value 
added tax — are likely 
to decrease rather 
than increase that 
incentive. 



The last thirty years 

have witnessed the 

formation of a complex 

national funding 

structure for the arts 

and the humanities in 

which the private and 

public sectors reinforce 

and complement 

each other. 



1986, gifts of appreciated property were 
made subject to partial taxation under the 
alternative minimum tax rules. Over the 
next several years, there was an increasing 
perception in Congress and elsewhere that 
this "tightening" of the law had resulted in a 
dramatic decline in certain kinds of contribu- 
tions to major cultural institutions. As a 
result, the rule was suspended temporarily, 
then permanently repealed in 1993. 

Many economists also believe that, all 
other factors being equal, a decrease in the 
highest marginal tax rate will result in less 
charitable giving because (1) a disproportion- 
ate amount of such gifts are made by taxpay- 
ers in the highest brackets; (2) as the tax rate 
goes down the "price" of giving (i.e., the 
after tax cost to the taxpayer of each $1 
received by the charity) goes up and makes 
the act of giving less attractive; and (3) the 
fact that such a taxpayer will in fact have 
more disposable after-tax income out of 
which to make gifts will not be as significant 
a factor as the higher price of giving. 

Current tax law is quite favorable to 
charitable giving. There are no stringent 
limits on the deduction, no adverse mini- 
mum tax consequences, and marginal rates 
are higher than they have been since 1986. 
The only changes in tax law that could 
increase the tax incentive for charitable 
giving are to allow the deduction to those 
taxpayers who do not itemize deductions on 
their tax returns or to raise marginal rates 
higher than their current level. The former 
loses a significant amount of revenue and the 
latter seems highly unlikely in today's 
political climate. 



B. THE IMPLICATIONS OF TAX POLICY FOR 

ACH ORGANIZATIONS. 

As noted elsewhere, the average household 
income of individuals who give to cultural 
organizations is high (over $59,000 in 1991 
and over $56,500 in 1993). The giving 
behavior of this group is more likely to be 
influenced by changes in tax law than the 
population as a whole. At present the law 
provides a significant incentive for giving by 
high-income charitable donors. Many of the 
changes in the federal income tax law that are 
being publicly debated these days — such as 
various forms of "flat tax" or replacing the 
income tax system with a national sales or 
value added tax — are likely to decrease rather 
than increase that incentive: by lowering the 
tax rate; by broadening the income base, 
which could result in a direct limitation or 
elimination of the charitable deduction; or by 
creating a deduction for savings that would 
make charitable giving no more tax-favored 
than investing. There seems little prospect of 
any general change in the tax laws that would 
have the effect of increasing the incentive to 
make charitable contributions. 115 

In the absence of any change in the law, 
current tax policy encourages gifts by the 
high-net-worth taxpayer and will result in the 
indirect federal support of the particular 
institutions favored by those individuals. If, 
as appears to be the case, wealthy individuals 
tend to support large, well-established 
institutions in our largest urban centers, then 
less established or less urban organizations 
may receive less support than they would 
under a system of direct federal subsidy 
funded through the appropriations budget 
rather than the tax budget. 



Vj A number of more drastic tax reform proposals that are being seriously considered — such as forms of "flat tax" — would shift the underlying basis 
for our federal tax system away from using income as a base and more toward consumption. It is not entirely clear how charitable contributions 
would be treated in such a system, but at the very best, they would be treated no more favorably than investment activity. If a taxpayer can get 
the same tax benefit from making an investment as she can from making a charitable contribution, the tax incentive to make such charitable 
contribution is minimal at best. 



CONCLUSION 



Since the creation of the National Endow- 
ment for the Arts, the National Endowment 
for the Humanities and the Institute of 
Museum Services, both funding and activity 
in the arts and the humanities have under- 
gone enormous growth in the United States. 
The last thirty years have witnessed the 
formation of a complex national funding 
structure for the arts and the humanities in 
which the private and public sectors reinforce 
and complement each other. The private 
sector - individual giving, corporate support 
and foundation funding - contributed much 
to this growth in the arts and the humanities 
and the improvement of museums, and was 
paralleled by an increase in public investment 
by federal, state and local governments. 

Private sector donors provide funds 
according to guidelines and goals which are 
special to their interests and institutional 
purposes; they fund to advance their corpo- 
rate ideas. The private sector has the 
privilege to choose grantees by the special- 
ized criteria of its individual, corporate or 
foundation donors. The public sector, 
however, has a mandate to operate on a 
national, state or local scale; to fund a wide 
variety of purposes; and to develop its 
funding goals through a public process. 

In the private sector, each donor commu- 
nity operates with a different set of incen- 
tives, goals and methods. In general, private 
sector funders favor large, regionally impor- 
tant, well-established institutions, over the 
smaller, community-based, less visible 
organizations and individuals. 

What distinguishes public investment 
through the NEA, the NEH and the IMS, is 
the mandate to make cultural experiences 
accessible to all Americans. These federal 
agencies developed national strategies to 
encourage the growth of entire disciplines 
and distribution systems, rather than fund the 
growth or survival of a particular dance 
company, research project or museum alone. 
In addition, they have created a knowledge 
bank about disciplines and audiences which 



the rest of the funding community relies 
upon. With annual investment much 
smaller than total private sector giving, 
NEA, NEH and IMS have supported a more 
equitable distribution of cultural resources 
across the country. The partnership between 
federal and private funders has been success- 
ful in increasing our country's cultural capital 
and has established cultural products as an 
important export of the United States. 

As one hinder has said, 'America's unique 
cultural system rests upon a complex and 
delicately balanced funding framework. 
Each cultural organization must piece 
together a complex fabric of support out of 
grants from various federal, state and local 
agencies; corporate sponsors, foundation 
grants, individual donations as well as earned 
revenues." 116 

The loss of federal funding will upset this 
balance and have many unpredictable 
consequences. But it is clear that with 
increased demands on their limited re- 
sources, private foundations will not be able 
to replace federal funds. Nor do the trends 
among other donors indicate that these 
sources can or will increase their giving. 
Increased support from state budgets seems 
unlikely. Giving to the arts by major U.S. 
corporations is not increasing significantly, 
and the drop in the size of individual 
contributions is a worrisome trend not only 
for the arts and the humanities but for all 
philanthropy. Economic growth alone is not 
a guarantee of increased private sector 
giving. In the immediate future the small, 
innovative and community-based arts and 
humanities groups, the economically fragile 
companies, scholarly projects, and individual 
creators are most at risk of losing sources of 
support. 

The issue before all of us today is how to 
ensure, improve, and increase charitable 
giving and how to continue the public- 
private partnership that has so dramatically 
expanded cultural development and public 
access to the arts and the humanities. 



Marian Godfrey, Tesimony lo the President's Committee on the Arts and the Humanities, January 25, 1 995. 



But it is clear that with 
increased demands on 
their limited resources, 
private foundations 
will not be able to 
replace federal funds. 



APPENDIX I 

Top 25 Funders of Grants with a Primary, Secondary or 
Tertiary Designation in the Humanities, for 1993 





Foundation 


$ to humanities 


# of grants 


1 


The Andrew W. Mellon Foundation 


$16,481,520 


27 


2 


Lila Wallace-Readers Digest Fund 


$13,843,805 


28 


3 


Drue Heinz Foundation 


$5,075,750 


5 


4 


The Ford Foundation 


$4,107,968 


24 


5 


The Pew Charitable Trusts 


$4,016,000 


16 


6 


The Henry Luce Foundation 


$3,590,000 


16 


7 


The Rockefeller Foundation 


$3,405,150 


38 


8 


The Kresge Foundation 


$2,225,000 


4 


9 


F.W. Olin Foundation, Inc. 


$2,160,000 


1 


10 


Lilly Endowment, Inc. 


$1,830,895 


7 


11 


DeWitt Wallace-Readers Digest Fund 


$1,725,000 


1 


12 


The Fletcher Jones Foundation 


$1,500,000 


1 


13 


W.K. Kellogg Foundation 


$1,279,634 


6 


14 


J. Paul Getty Trust 


$1,236,000 


20 


15 


Charles R. Culpeper Foundation 


$1,155,947 


8 


16 


The Lynde and Harry Bradley Foundation 


$1,091,441 


25 


17 


The Dibner Fund, Inc. 


$1,034,730 


2 


18 


Max Kade Foundation, Inc. 


$991,000 


19 


19 


Mrs. Giles Whiting Foundation 


$975,000 


5 


20 


John M. Olin Foundation, Inc. 


$810,622 


15 


21 


John D. and Catherine T MacArthur Foundation 


$792,185 


6 


22 


Samuel Kress Foundation 


$682,000 


41 


23 


The Starr Foundation 


$600,000 


2 


24 


Stratford Foundation 


$590,117 


2 


25 


The Charlotte W Newcombe Foundation 


$587,950 


1 



Source: The Foundation Center. Based on grants of $10,000 or more awarded to organizations. Excludes fellov 
ships and other awards made directly to individuals and foundation-administered programs. 



APPENDIX II 

Top 25 Funders of the Arts and Culture, 1 992 





Foundation 


Amounts 


# of grants 


1. 


Lib Wallace-Readers Digest Fund 


$55,810,056 


108 


2. 


Andrew W. Mellon Foundation 


$29,423,800 


76 


3. 


Pew Charitable Trusts 


$18,784,000 


105 


4. 


John D. and Catherine T MacArthur Foundation 


$17,423,350 


74 


5. 


Drue Heinz Foundation 


$14,861,294 


28 


6. 


Kresge Foundation 


$12,550,000 


28 


7. 


Annenberg Foundation 


$12,163,315 


28 


8. 


George Gund Foundation 


$11,598,471 


40 


9. 


Ford Foundation 


$10,960,980 


94 


10. 


Howard Heinz Endowment 


$10,419,659 


21 


11. 


Rockefeller Foundation 


$10,403,575 


161 


12. 


John S. and James L. Knight Foundation 


$10,031,882 


105 


13. 


Brown Foundation 


$8,754,706 


62 


14. 


Communities Foundation of Texas 


$8,637,840 


32 


15. 


Freedom Forum International 


$8,367,731 


80 


16. 


Ahmanson Foundation 


$7,558,800 


59 


17. 


William Penn Foundation 


$7,345,332 


45 


18. 


Frederick P. & Sandra P. Rose Foundation 


$6,260,000 


5 


19. 


Robert R. McCormick Tribune Foundation 


$6,109,800 


20 


20. 


Lilly Endowment 


$5,904,963 


23 


21. 


Wortham Foundation 


$5,753,500 


24 


22. 


Burnett-Tandy Foundation 


$5,736,742 


15 


23. 


Robert W. Woodruff Foundation 


$5,396,280 


4 


24. 


Ann and Gordon Getty Foundation 


$5,332,959 


92 


25. 


Amon G. Carter Foundation 


$5,277,395 


13 



Source: The Foundation Center: Arts Funding Revisited. Based on grants of $10,000 or more awarded to organizations. 

Note: These numbers may differ from numbers cited in the text of this report due to differing definitions or reference 
to other fiscal years. 



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Author's Acknowledgments 



Assembling the complex and diverse 
material contained in this report in a timely 
fashion has been an enormously complicated 
undertaking. I was aided by dozens of 
scholars, researchers and, program officers 
who gave generously of their time and 
insights in interviews and in conversations. 
Special thanks go to Loren Renz, Virginia 
Hodgkinson, Margaret Wyszomirski and 
Jamil Zainaldin. Malcolm Richardson 
provided characteristically wry but sage 
advice. Stanley N. Katz, James Smith, Myrna 
Chase, and Ellen McCulloch-Lovell offered 
valuable suggestions about the manuscript 



itself. Barbara Kovacevic helped enormously 
in the preparation of the final report. Harold 
Nigel Ramdass served admirably as fact- 
checker. I am grateful to Alberta Arthurs for 
continuing to believe that humanists can do 
anything and that the impossible is possible. 
My most heartfelt thanks, however, go to my 
husband Peter v.Z. Cobb whose continuing 
patience, good cheer, incisive mind, and 
expertise in tax policy assure that Alberta is 
right. Finally, to my daughter Laura for 
showing the same optimism, good humor and 
uncommon common sense as her dad, while 
pulling together the bibliography. 



Tlie President's Committee wishes to thank the author, the Rockefeller Foundation and 
the Texaco Foundation for making this publication possible. 



President's Committee on the Arts and the Humanities 



The President's Committee on the Arts and 
the Humanities was created by Executive 
Order in 1982 to encourage private sector 
support and to increase public appreciation of 
the value of the arts and the humanities 
through its projects, publications and meetings. 

The Committee is composed of leading 
citizens, appointed by the President from the 
private sector, who have an interest in and 
commitment to the humanities and the arts. 



Its federal members represent thirteen federal 
agencies with cultural programs, including the 
National Endowments for the Arts and the 
Humanities, the Institute of Museum 
Services, the Department of Education, the 
Smithsonian Institution, the Library of 
Congress, the National Gallery of Art, and 
the John F. Kennedy Center for the Perform- 
ing Arts. 



Members of the President's Committee 
on the Arts and the Humanities 

Hillary Rodham Clinton, Honorary Chair 



Private members 

John Brademas, Chairman 
Peggy Cooper Cafritz, 

Vice Chair 
Cynthia Perrin Schneider, 

Vice Chair 
Terry Semel, Vice Chair 
Susan Barnes-Gelt 
Lerone Bennett, Jr 
Madeleine Harris Berman 
Curt Bradbury 
John H. Bryan 
Hilario Candela 



Federal Members 

Jane Alexander 
James H. Billington 
Joseph D. Duffey 
Diane B. Frankel 
Sheldon Hackney 



Executive Director 

Ellen McCulloch-Lovell 



Anne Cox Chambers 
Margaret Corbett Daley 
Everett Fly 
David P. Gardner 
Harvey Golub 
Richard S. Gurin 
Irene Y. Hirano 
David Henry Hwang 
William Ivey 
Quincy Jones 
Emily Malino 
Robert Menschel 



I. Michael Heyman 
Roger W. Johnson 
Roger Kennedy 
Earl A. Powell III 



Rita Moreno 
Jaroslav Pelikan 
Anthony Podesta 
Phyllis Rosen 
Marvin Sadik 
Ann Sheffer 
Raymond Smith 
Isaac Stern 
DaveWarren 
Shirley Wilhite 
Harold Williams 



Richard W. Riley 
Leslie Samuels 
Timothy E. Wirth 
Lawrence Wilker 



Notes