The SVOG Fiasco is Emblematic of Arts Funding in the US
I hate to admit that I wasn’t at all surprised by what happened yesterday with the Shuttered Venue Operators Grant (SVOG) system — which crashed after an enormous number of organizations tried to submit their funding applications all at once, to avoid losing out in this first-come-first-served Hunger-Games-style granting process (https://www.nytimes.com/2021/04/08/arts/music/svog-grant-application.html). Although those in the for-profit theater world might have had a rude awakening, it was just their first taste of what we go through every day in the non-profit cultural sector.
Let’s itemize three factors leading to this point: timing, amount, and process.
1. It’s been a whole year of waiting for this funding. Yes, for many of us we’ve been able to get other emergency grants and PPP loans, but it should go without saying that those weren’t enough and didn’t cover enough of the sector — because if they had been, nobody would have been so desperate for SVOG.
2. The funding amount is miniscule compared to the need. Although on first glance it might appear that the $16 Billion program is more than enough to cover the $15.2 Billion in losses that Americans for The Arts estimates the non-profit arts sector suffered over the last year (https://www.americansforthearts.org/by-topic/disaster-preparedness/the-economic-impact-of-coronavirus-on-the-arts-and-culture-sector), those figures don’t match up. Keep in mind the following:
* The $15.2 Billion doesn’t include the for-profit theatres who were intended to be helped by SVOG in addition to the non-profit sector. Broadway theatres in NYC alone, representing only one portion of the for-profit cultural industry in only one city, used to generate $1.8 Billion in ticket sales annually before the pandemic (https://www.cnbc.com/2020/09/29/coronavirus-broadway-nyc-shuttered-until-2021.html); I was unable to find an aggregate figure for the whole sector.
* It represents only one year of losses, and doesn’t account for the continuation of the crisis nor the long-term financial impacts.
* It doesn’t include costs for reopening.
* According to the National Assembly of State Arts Agencies (https://nasaa-arts.org/nasaa_research/facts-figures-on-the-creative-economy/) “The value of arts and cultural production in America in 2019 was $919.7 billion,” “Performing arts companies and independent artists, writers, and performers added a combined total of $60.9 billion to the U.S. economy in 2019,” “America’s nonprofit arts industry generates $166.3 billion in economic activity every year, resulting in $27.5 billion in federal, state and local tax revenues,” “There were 5.2 million arts and cultural sector jobs in America in 2017 — accounting for 3.3% of all U.S. jobs — which collectively paid workers a total of $446.7 billion.”
Long story short, we don’t have adequate data on the depth of need, but I’m confident in saying that it must be on the order of hundreds of billions of dollars, not $16 Billion. Even if we’re conservative and assume it’s only $32 Billion, that’s still double the funding amount available through SVOG, and enough to account for the desperation of organizations to apply as quickly as possible.
3. The grant application is literally insane. I watched over the last several months as the smartest people in New York City’s cultural sector tried to understand and explain how to apply and how the SBA would calculate grant amounts, and I can tell you quite frankly that not only do I not understand it, but many others do not, and many organizations decided not to apply based on that lack of understanding. Guidelines have been changing day-by-day and minute-by-minute. And the application process itself is enormously daunting, requiring hundreds of pages of paperwork, complex assessments of need, and dealing with an online portal that was clearly problematic.
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All three of these problems have been a daily reality for non-profit fundraisers for decades. If we look at it as only a “struggle” that we can/must overcome through hard work, then we’re failing to consider the financial impact of that structure, which is what I’d like to do here.
Seeking funding is work that takes time and money. Seems obvious, no? Time IS money, because grantwriters and fundraisers are paid salaries. Two grant applications takes twice as long as one grant application. Getting $100,000 from ten $10,000 grants takes 10 times as much work as one $100,000 grant. But in order to secure ten $10,000 grants, an organization must submit 50–60 applications, if not more. The same principle applies to fundraising from individual donors. You have to ask thousands of people in order to get hundreds of donations. And because donations and grants are most often one-time, you have to do this over and over again every single year.
This means that an enormous amount of the funding needed by the non-profit arts sector is THE FUNDING NEEDED TO SUPPORT THE SEARCH FOR FUNDING.
There’s no clear estimate of this amount, but here are some attempts: https://www.affinityresources.com/pgs/articles/fundraising_costs.html https://www.socialvelocity.net/financing-not-fundraising-calculating-the-cost-of-fundraising/ Those attempts are based on reported costs, and the problem with reported costs is that our industry as a matter of rule has to HIDE THE AMOUNT WE SPEND ON FUNDRAISING IN ORDER TO RAISE MONEY — in other words, we have to constantly justify most of our expenses as programmatic (think of the constant fundraising appeals that tell you that “95% of donations go to help the people in need”), so we find ways to shoehorn fundraising expenses as programmatic expenses in our reporting.
Nonprofit accountants consider an 80% or 75% programmatic spending percentage to be good, but based on what I’ve seen I’m going to go out on a limb and say that I estimate the true cost of fundraising as a portion of the overall expense of running a non-profit cultural organization is at least 30% on average and possibly as high as 50%. Again, there’s no good data on this, in part because the sector doesn’t want there to be. Keep in mind the fundraising professionals are the most highly-paid cultural workers in the entire sector, above administrators, curators, and artists. I don’t entirely begrudge them (us) for that — it’s terrible, thankless work — but my point here is not to make an ethical or value statement, its simply to observe that as a factual matter, fundraising itself eats up an enormous portion of the funding going to non-profits.
And, to put a fine point on it, that’s a direct result of the funding model that requires us to look to many, many different sources for funding, over and over again, a process that includes the high failure rate and the labor cost of that. Now if I were to point out that if an organization, whose true programmatic costs were $970,000, got $1,000,000 annually from one single source that was guaranteed indefinitely, it would be sufficient to run the organization and to deliver all their programs for free, because the fundraising cost would be 3% — you might call me a communist.
Speaking as a communist, it’s been known since at least 1991 that the ADMINISTRATIVE costs of healthcare in the US are exhorbitant, and are one of the most significant factors in why our overall healthcare costs are many times higher per capita than in any other developed country (https://www.nejm.org/doi/full/10.1056/NEJMsa022033#t=article). More recent studies continue to show that a universal healthcare system would be cheaper, more efficient, and more just than the current model. (https://pnhp.org/financing-a-single-payer-national-health-program/).
I urge you to think about the arts sector through this lens. In healthcare, the cost of administering multiple different insurance plans, the cost of denying coverage, the costs to doctors of having to accept different plans, etc., are analogous to the administrative costs of fundraising in the non-profit sector. (Plus hospitals are also non-profits and hence subject to some of the same fundraising costs as the non-profit sector overall). If we want to solve the problems of healthcare in our country, we need a bigger, UNIVERSAL vision. The same is true of the arts. And I’m only talking about the administrative cost side — the enormous amount of waste that results from the way we fund the arts. Both sectors would be CHEAPER to run if we were willing to admit that public funding is more fiscally prudent than the private model.
However, there is a deeper reason why we need more universal thinking in the arts, and that has to do with who is excluded in the current model. In healthcare, the waste and inefficiency has a catastrophic side effect: the millions who have no, or insufficient, coverage. Furthermore, this lack of coverage only amplifies existing social disparities along racial and economic lines.
In the arts there has been a lot of talk about Diversity, Equity, and Inclusion, but we’ve been unwilling to challenge the funding models that perpetuate injustice. As a result, things have gotten worse even as the rhetoric around DEI has amped up https://heliconcollab.net/our_work/not-just-money/. The COVID-19 Pandemic has made racial and economic disparities even worse overall, but rather than keeping it abstract I want to bring it back to SVOG.
What happens when you have an insanely cumbersome grant application process that is first-come-first served? Those with the capacity to apply get the money, simple as that. That means that organizations that already have well-paid fundraising staff and well-paid accountants, organizations that are well staffed enough to allow those accountants and fundraisers the (labor) time necessary to bang their heads against the SVOG wall until they bleed, organizations that have the resources to provide those staff members with the computers and internet connections they need to complete the applications, are the organizations who will be able to benefit from this program, ahead of the organizations that can’t afford to pay the salary of a development director or a full-time accountant.
And because there are severe racial disparities among organizations, with organizations serving and led by people of color being severely underfunded in comparison to their White-led and White-serving counterparts, this process will only serve to INCREASE the racial disparity in the arts, because it’s the BIPOC organizations that don’t have the capacity to apply for funding on the same level as White organizations.
It’s the competitive, scarcity-based funding model that leads to all these outcomes: Waste and Injustice.
If you’re not out there demanding not only a radical INCREASE in the amount of public funding we spend on arts and culture, but a radical change in the WAY we fund the arts, then your arts advocacy is going to continue to get us crumbs when we need the whole f***ing pie, and I’m not interested.
Wake up. Everything is changing in this new world we’re living in. If we want to save the arts sector and the artists who enrich our lives every day, we need to discard our advocacy for small increases and one-time fixes, and start thinking about reshaping the entire industry — starting with the broken model for funding it.
