How Our Arts Funding System is Shaping Culture in the U.S.

Late summer for the arts community is quiet and arts organizations are busy planning bold, glamorous and what will soon, they hope, be their best seasons yet. Normally, one might not give much attention to a production of Peter Ilyich Tchaikovsky’s well-known opera standard, Eugene Onegin. Yet, this September, the Metropolitan Opera’s star-studded season opener occurred on the heels of Russia’s outlawing of purported gay propaganda and its embrace of anti-gay rhetoric. The timing of the production of this particular opera – composed by a gay, composer from that nation (Tchaikovsky) and starring a famed Russian-born soprano – ignited much-needed debate and discussion about the marriage or separation of politics and art. Activists opposing Russia’s new law as profoundly discriminatory urged leaders of the Met to support gay artists publicly (Cooper, 2013). The Met published a statement doing so, but refrained from taking a political position:

The Met is proud of its history as a creative base for LGBT singers, conductors, directors, designers, and choreographers. We also stand behind all of our artists, regardless of whether or not they wish to publicly express their personal political opinions. As an institution, the Met deplores the suppression of equal rights here or abroad. But since our mission is artistic, it is not appropriate for our performances to be used by us for political purposes, no matter how noble or right the cause. (Ng, 2013)

            Douglas McLennan, founder of ArtsJournal, recently considered this controversy and posed the question, “are arts leaders cultural leaders?” At first glance, this may appear to be a question with an obvious answer. In the U.S., where there is no established or officially sanctioned culture, arts and cultural organizations are often imagined by the citizenry to be the agents that create, support, and disseminate our culture. Nonprofits and private philanthropists fund 38.2% of these entities, while government accounts for only 6.7% of their total revenues (NEA, 2012). In short, ours is a distinctively privately supported arts culture in which artists and arts organizations, rather than designated government agencies, are our cultural leaders. However, this support structure yields unintended consequences that shape both the content and character of our cultural products and social identity. I argue in this essay that the often divisive politics surrounding public and private financing of arts in the United States is contributing to a loss of identity among the nation’s arts institutions. Specifically, I discuss trends in private, foundation, and public funding of the arts that are contributing to this phenomenon. I then examine these issues briefly as they relate to my dissertation work on state arts policy in Virginia.

According to the National Endowment for the Arts (2012), nonprofit performing arts groups and museums earn 45% of their total revenue from contributed income provided by individuals, corporations, foundations, and governments. Other revenue comes from earned, interest, and endowment income. To understand the wellsprings of the 45% of income that is donated, one must consider the complex reasons why individuals and organizations give to the arts. The simple answer is that people give to these institutions because they support them socially and ideationally (Wyszomirski, 2002) and because they can take advantage of, and leverage, tax incentives as they do so (NEA, 2012). However, such donors may contribute to mission drift or dilution (Minkoff & Powell, 2006) if they provide support for activities that push these entities in directions not in accord with their original or core missions. Put differently, because they are the most significant source of income to arts and cultural organizations, private donors can have huge impacts on what those institutions do, how they do it, and what they say about what they do.

Foundations account for 9.5% of arts organizations’ total revenue (NEA, 2012), a small but significant source of income. Recently, foundations have been making waves in the nonprofit sector with calls for evidence-based grant making and increasing program outcome evaluation demands. The ethicist Peter Singer has called for “effective altruism” – doing as much good with each dollar and each hour as possible – while at the same time, suggesting that this standard cannot be met at an art museum, for example (Singer, 2012). Formalized donor benchmarks concerning what constitutes program or activity impact can create serious challenges for arts and cultural organizations. Anxiety about this turn among donors led to a 2013 convening of foundations working in the arts and social change realm to discuss what it is that should be evaluated when considering arts and culture related efforts. Leaders in the field sought at the gathering to catalyze a national conversation on how organizations should measure impacts, while assessing the relevance and utility of the evaluation processes that have been employed to gauge the value of the arts and arts organizations in the past.

Although the public sector accounts for a much smaller percentage of arts and culture organization revenue than do other sources, public funding is important to these entities not only as support, but also, and more importantly, because it confers prestige and standing, which can be used to garner additional assistance. Even though this claim has been criticized (Brooks, 1999), public arts funders often argue that government assistance leverages additional funds:

Furthermore, government funding helps to attract other investments. State arts agency grants typically come with a minimum 1-to-1 matching requirement, but matches often exceed that minimum. Dollars from a state arts agency provide a widely recognized “seal of approval” that helps grantees raise additional funds from individuals, corporations and foundations and to attract partners in entrepreneurial and earned income ventures. For every $1 of total grant funds awarded by state arts agencies nationwide, about $40 in matching funds is secured from earned or contributed funds (NASAA, 2010, p. 8-9).

            Guided by this sentiment, arts and cultural organizations compete vigorously for the little public money available to support them at the national, state, and local levels. Recent trends in the public arts arena, including economic development initiatives and collaboration with non-arts agencies, such as transportation, housing, and social services, have changed the work and programs being pursued by the arts organizations engaged in them. In short, while our public arts agencies are designed to fund organizations at arms-length, they undoubtedly affect our nation’s cultural direction anyway as a result of their out-sized influence.

Persistently uncertain funding acts as a continuing source of apprehension for arts leaders who rely on contributions for nearly half of their total revenue. It is no wonder then, that the Metropolitan Opera was unwilling to take an explicitly political position against Russia’s anti-gay law. The opera company’s complex funding streams might have been jeopardized regardless of how it addressed this difficult controversy. A consequence of our nation’s arts funding arrangement is that organizations are often unable fully to embrace their role as cultural leaders.

The question remains, however, which institutions are responsible for creating and preserving our arts, humanities, and culture? I have pondered this concern in light of the funding system I have briefly described and have explored the role of higher education institutions in creating and disseminating the arts in Virginia. To be sure, colleges and universities struggle with complex revenue streams and competing funding and resource demands, just as their arts organization cousins do. Yet, education institutions are buffered to a somewhat greater extent from the market-based based demands than are most cultural organizations. Arts centers at colleges and universities have different capacities, built-in audiences, and revenue-generating models built with an educational mission first and ticket-sales second. This discretionary decision space may allow for a greater degree of artistic experimentation with work that pushes existing boundaries, makes one feel uncomfortable, and perhaps may be difficult to understand. Just this type of effort can address systemic social issues and raise questions about our society and our culture that can cause audiences to think afresh about their norms, values, and assumptions.

The arts funding system in the U.S. is problematic in that its uncertainty and funder-driven demands shape the cultural products available to our population. Of course, this is ironic, considering that our system has long been justified with arguments that suggest it has completely opposite impacts. We need collectively to discern new ways to ensure that our severely funder dependent arts organizations enjoy at least as much latitude in their programming and artistic choices as our colleges and universities do so that collectively they can serve as leaders in both preserving and challenging our culture.


Animating Democracy. (2013, May). Cases and points: Funder exchange on evaluating arts and social impact summary. Retrieved from  

Brooks, A. 1999. Do public subsidies leverage private philanthropy for the arts? Empirical evidence on symphony orchestras. Nonprofit and Voluntary Sector Quarterly, 28(1). 32-45.

Cooper, M. (2013, August 19). Petition wants met gala dedicated to gay rights. The New York Times. Retrieved from

McLennan, D. (2013, August 10). Are arts leaders cultural leaders [Web log post}? Retrieved from

Minkoff, D.C., & Powell, W.W. (2006). Nonprofit mission: Constancy, responsiveness, or deflection? In W. W. Powell & R. Steinberg (Eds.), The nonprofit sector: A research handbook, 2nd ed. (591-611). New Haven, CT: Yale University Press.

Ng, D. (2013, August 8). Metropolitan Opera responds to petition blasting Vladimir Putin. Los Angeles Times, Culture Monster. Retrieved from,0,2906036.story

Singer, P. (2013, August 10). Good charity, bad charity. The New York Times. Retrieved from

National Assembly of State Arts Agencies. (2010). Why should government support the arts? Retrieved from

National Endowment for the Arts. (2012). How the United States funds the arts. Retrieved from


Kate Preston is a doctoral candidate with the Center for Public Administration and Policy and a graduate assistant in the Office of the Senior Fellow for Resource Development at Virginia Tech. Her research interests bridge arts management and public affairs scholarship, and her dissertation work focuses on state-level arts policy in Virginia. Kate holds a master’s degree in Arts Management from American University and was the summer 2012 graduate assistant for Animating Democracy, a program of American’s for the Arts. Before pursuing doctoral work, Kate worked for the National Symphony Orchestra at the Kennedy Center in Washington, DC.

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