With the sources of philanthropic wealth under scrutiny, how will cultural institutions survive?

by Sean McManus and Melissa Cowley Wolf

Cultural institutions across the U.S. were already suffering from the fear that the rising generation of philanthropists is not that interested in the arts. Then, the long-unquestioned sources of philanthropic funding were thrust into the spotlight. Artists, activists and the wider art world are questioning not only the sources of the wealth that support cultural institutions but also scrutinizing the very foundations of modern philanthropy. Recent scandals have reached such a tenor that the future of cultural institutions, as well as the entire sphere of cultural philanthropy, is now uncertain. With three months until the launch of the Arts Funders Forum in Miami Beach, these extraordinary events require deep discussion and exploration.  

The recent public outcry over questionable cultural funding sources has spurred unprecedented actions, including the resignation of trustees and board chairs; the renaming of galleries, plazas and halls; and the creation of new institutional guidelines for the acceptance of monetary gifts, which, in some instances, have barred long-time donors altogether. While these stories have reverberated around the world, the storm of attention from media and the public has played out most acutely in the U.S., where private philanthropy has always played a central role in defining culture.

Combine this current crisis with the steady decrease in public support for the arts, the changing priorities among next-generation philanthropists and the role that technology plays in fundamentally altering how humans connect with art and cultural institutions are facing an existential crisis of relevance.

With support from the Knight Foundation, the Art Funders Forum has been examining the current state of arts funding across the U.S. by talking to leading cultural philanthropists as well as the rising generation of funders. The picture is clear: seventy-eight percent of this community is deeply concerned about the current state of cultural philanthropy.

Institutions have been seeking alternative means of funding, often by increasing admission prices and attempting to expand board support. Yet even at the largest institutions, admission fees comprise a very small percentage of overall operating budgets. After half a century, The Metropolitan Museum of Art announced last year that it was moving from a pay-what-you-wish admission policy to one that required visitors from outside New York state to pay the full price of admission at $25 per person. Admissions now make up 16 percent of the Met’s operating budget, while philanthropic funding constitutes more than 50 percent. With rising costs of exhibitions, artwork conservation and storage, insurance and administrative costs and attracting world-class talent, the need to develop sustainable fundraising systems is essential to keeping these vital public spaces alive.

AFF surveyed cultural leaders and conducted interviews with top philanthropists across U.S. who are deeply invested in these issues. One main theme that emerged was the need for institutions to better express their value to society. One prominent cultural leader noted, “We have not done a good job of advocating for ourselves. Culture is considered a ‘nice to have’ not a ‘must have’… we need to change that.” Others underscored the importance of positioning the arts as a tool for community development, civic engagement and education as well as the need to communicate this impact to the public and to donors. Institutions must also develop better systems for measuring the impact of donor activity and making the findings more transparent and accessible, according to our findings.

The behaviors of younger donors, many of whom are the recipients of the largest intergenerational wealth transfer in human history, raise new challenges for cultural institutions. Rather than continuing with the current “transaction-driven” method of philanthropy, the emerging class is more “process-driven” — focused on how their giving makes an impact. Young philanthropists want the arts to drive social change, but can institutions keep up? And should young donors be accountable for the sources of their families’ wealth?

The issues facing America’s cultural sector are varied and complex. To find creative solutions and drive collective action, the cultural community must come together to write new rules that will allow the arts to flourish. We do not propose to have all of the answers, but we know that through exploration and collaboration, many of these problems can be eventually solved. Arts Funders Forum is the only organization dedicated to addressing this industry-wide crisis. By gathering leaders from across the arts, we believe we can combine resources to scale positive impact. Join Arts Funders Forum to reimagine the future of cultural philanthropy.

Do you identify as a funder of the arts? Can you contribute to creating the new models of cultural philanthropy? We encourage you to share your questions and ideas with us. We hope you will be part of these important conversations and join our inaugural event during Art Basel in Miami Beach on December 3, 2019 by registering here.