Do the Arts Need a National Bailout?

Posted on April 1, 2009



Do the Arts Need a National Bailout?

Times are tough for the Arts in America. Even the 50 million dollars in stimulus money won’t help much as endowment funds nationwide are trashed. Robert Lynch, points out the 50 million in new money will do little to cover losses art organizations have suffered this year. Lynch uses San Francisco as an example, where art organizations have lost an estimated 40 million in state funding alone. The current loss of revenue in the arts nationwide will surely amount to billions of dollars.

Conversation with Robert Lynch, NewsHour post by Jeffery Brown

Floyd Norris asks the question “What are art organization suppose to do”? He points out that many small organizations are devastated today and they have little financial power to offset their losses. He points out colleges are in the same boat. I would point out that the Big Art organizations are too.

In fact, I would suggest our largest art organizations may be in more trouble than our small ones. The big guys have big budgets and have suffered big losses. Big organizations also have the need and expense of large staffs. A small organization can in many instances reduce paid staff and maintain functional viability with a volunteer work force until the economy improves. Big organizations simply cannot or could not function without their professional staffs. Two very different worlds exist today where reality and needs are dramatically different as are fundamental funding realities. Many large museums spend more money on one exhibit or performance production than small organizations spend in their yearly operational budget expenditures. It may turn out that the weak market survives this crisis and in the end comes out much stronger.

The Money is Gone Now What by Floyd Norris NYT

“There was outrage earlier this year when Brandeis University announced plans to close its art museum and sell the paintings. The university’s endowment was devastated by bad investments.

What do people opposed to the sale of paintings think suddenly poor institutions should do? Close? Seek government bailouts? Should Brandeis close down a few academic departments, or cut back on scholarships, to keep its art?

Brandeis is hardly the only college whose endowment has contracted sharply. I suspect that when the final numbers are in — and colleges are not exactly rushing to disclose the sad details — it will turn out that colleges as a group did far worse than the stock market while the market was doing horribly”. Floyd Norris NYT

The question remains “Do you sell off your assets to meet your budgetary needs”?

As Ford W. Bell says in his letter to the editor, to do so would violate the public trust.

Letter to the Editor from:

Ford W. Bell
American Association of Museums
Washington, March 23, 2009

“Allowing a museum to peddle its collection to cover operating debts would be like allowing a financial fiduciary, such as a bank, to raid assets held in trust to cover a hole in its own balance sheet”. Ford W. Bell

The fact is the Banks essentially did exactly what Mr. Ford says museums should not do, they raided assets held in trust for their customers through a series of bad investments. Just ask your elderly parents who’s retirement accounts are now only worth a fraction of what they were a year ago. Just look at your IRA or just about any other secure investment account you have, even trust funds. The reality of the facts, the reality of the depth of this economic crisis is reflected in the figures. It is no different for the Arts.

This past Sunday I was trying to help my youngest daughter with her college economics homework, she is an art student taking an economics course. I would compare my help to a monkey trying to perform brain surgery with a stick. I was going compare the monkey with a paintbrush in hand creating a master work of art to myself as an artist. I quickly realized that the monkey may in fact be far more skilled than I; in the creation of masterpieces and probably would quickly develop a profitable market for his art. I am looking for a monkey all I have is two old dogs who sleep most of the day and won’t work.

We were looking at the Elasticity of markets, Supply and Demand.

The example we were using was the farm market. In the example variables increased production while demand remained the same. When demand is lower than production increases in supply drive down profits, so even if you produce more at less expense you still make the same profit or less. Only when demand is higher than available production do profits rise, but even then given the variables over all income can remain flat. For example if a natural disaster creates a loss of production the increased demand raises prices but the loss of production balances the profits.

So it seems to me that if for example museums start to sell off assets, works of art the fire sale will drive value and profit down and in the long run everyone will lose. Just look at the Auto Companies or the housing market. Great deals will emerge from the flood of art into a depressed market but the flood will devastate value and profit. Perhaps Art Organizations can learn from the lessons of farming. Farmers often store their grain until markets become favorable.

Perhaps as bad as it will sound Museums and other Art Organization should temporarily close or reduce schedules until the viability of the market returns. They then would still have their assets. Many large organizations could use their collections or their talent in better or more efficient ways to reduce operating costs and maintain profits. Maybe they could find other ways to generate income from their collections and at the same time help smaller organizations present exhibits and performances that are more dynamic.

As an example, a big organization could loan artwork to a small organization. The two could share revenue generated by the exhibit as partners. Done creatively smaller organizations could increase the quality of their exhibits and stimulate increased attendance/audience. The big organization could create income from under utilized parts of their collection and increase audience and income. After all most big museums only exhibit small portions of their collections at any given time. Activity creates income for everybody.

I am sure Brandeis University could find another organization that would love to show artwork from their collection. They could also earn income from the loans of artwork even if the Rose Museum temporarily closed. They could possibly find more value in keeping their collection intact than they will earn by selling it off as a depreciated asset. Of course, they would have to figure out how to make a program work in a distressed market, but they are a university. Surely, someone on the university staff can figure out a smart (Creative) way to proceed forward and create a profitable program.

Maybe they could ask the folks over at the Museum Loan Network for advice; they have been working with large organizations for years, helping those organizations use their collections more effectively.

Museum Loan Network

As an example: One organization reduces operational activities. They collaborate with an organization that is in better shape. They charge a reasonable fee to package and ship the exhibit. Then both organizations share revenue generated by exhibit. Movie companies have operated this way successfully for years. Your local movie theaters make profit from supportive activities, like popcorn and soft drink sales. Surely, the brainpower in the Arts can figure out supportive revenue programs combined with admission fees and memberships sales. Even the last two areas will produce profit when program quality and interest increase.


Small potatoes, well small potatoes can add up to big profits. Just look at what Matt Jones in Seattle has accomplished with his Mashed Potatoes program at Gasworks Gallery in Seattle. The Cooperative Gallery charges an admission fee paid for in potatoes or food for the food bank. They have raised millions of pounds of potatoes and other food supplies for the local food bank one potato at a time.

Gasworks Gallery:

Matt Jones Delivers 50,000 pounds of potatoes You Tube

My advice to the Art Organizations of America is get creative and find sustainable solutions to your problems before you sell the cow for some magic beans.