Part 3 -- The Post-Ford Era (1990 to Present) - Leverage Lost

Just as abundant cheap labor and institutional funding were the defining elements of the Ford era, reversals in these two resources are now defining the Post-Ford Era. Despite the Ford era's remarkable successes in preserving and advancing American high art under the nonprofit banner, it was not an era that could be sustained.

The most obvious, though rarely acknowledged, reason that it could not last indefinitely was that the institutional money supply could not continue to grow. An early assumption of many arts funders, including Ford, was that high leverage funding would stimulate other sources of contributed income for the arts, most notably from government, that would provide a steady and expanding flow of revenues: the so-called "pump priming" or "seed funding" strategy. Meanwhile, government was using the same logic to justify its arts funding. Each year, the National Endowment for the Arts would partially argue the case for its appropriation bill in Congress by pointing out that each dollar of Federal funding of the arts would stimulate a many fold return in arts support from private sector funders. Similarly, state arts agencies would employ this same rationale in their annual appropriation processes. Over the years, many public funding agencies would commission economic impact studies that would attempt to demonstrate not only the leverage of governmental dollars on private sector contributions, but also the effects of public arts spending on commercial sector revenues and on the generation of sales and income tax revenues.

Today, the funding leverage concept continues to be advanced by many governmental arts agencies as a primary rationale for public support of the arts, even though much private sector and governmental arts funding has been on a downward trajectory for several years. Some private funders, as well, continue to operate matching grant and challenge grant programs that assume the potential for high leverage.

Any student of biological, physical or economic systems would immediately recognize the flaw in the logic of funding leverage, as it has been practiced not only in the arts, but also throughout the nonprofit sector. One of the fundamental tenets of systems studies is the "free lunch" principle: no system can depend on the unlimited growth of resources. The leveraged funding strategy of the Ford era can be likened to a chain letter, a Ponzi scheme, or any other pyramidal growth system. The initiators of chain letters and Ponzi schemes often claim that, for a small effort or investment, a virtually limitless return will be realized, and though initially this prophecy may appear to be feasible, inevitably all such arrangements must fail because resources are finite. In other words, there is no perpetual free lunch. Ultimately, funding leverage will become unsustainable.

Although reduced or stagnant funding from governmental and private sources is now a pervasive topic in the nonprofit arts world, the emergence of this trend has been fairly gradual, and it is commonly believed that the reductions are a temporary aberration of the economy. The state of the economy certainly does influence the resources available to many funders, as well as the buying power of arts consumers. Nevertheless, to singularly blame the economy for the substantial pressures now bearing on the nonprofit arts sector ignores the hard reality that for three decades the arts were able to rely on exponential growth in financial and labor resources, and now the chain reaction started in part by the Ford Foundation, with the best intentions and spectacular results, has arrived at a point of systemic purgatory.

While the loss of funding leverage may appear to be an overwhelming problem for nonprofit arts organizations, an even bigger, though less acknowledged, issue is the loss of labor leverage. The most elemental force in the massive growth of arts organizations in the early Ford years was the arrival of a large new generation of artists and other arts workers who were willing to support their work through discounted wages. The continuation of Ford Era nonprofit organizations is, therefore, fundamentally tied to the ongoing availability of this core resource. For two reasons, the outlook is not good for the sustainability of discounted labor: a significant portion of the veteran generation that founded the Ford era organizations is departing, and it is not being adequately replaced by a new generation of discounted labor.

The departure of the veterans is principally due to a simple axiom of aging: as one becomes older, the expectation of earning more increases. During the early Ford years in particular, tens of thousands of young people entered the arts with little thought of it being a career that would bring adequate compensation. The 1960's economy was so robust, the cost of living was so low, and job opportunities so abundant, that a young person with a college degree could easily become a writer, curator, dancer or lighting technician, often by holding a supplementary non-arts job, and still have the option of entering another profession if the arts proved to be unsatisfactory. As this generation of arts workers has aged, however, the expectation of making money has increased. In part, this higher expectation can be viewed as a natural characteristic of becoming older and desiring increased material comfort. In the case of the highly educated baby boom generation, however, this natural expectation may have been accentuated for arts workers by the exceptional financial success that has been achieved by many of their non-arts peers who have used their college educations to obtain high incomes.

As expectations of making money have been escalating for veteran arts workers, their actual wages have been increasing as well. The problem is that the expectations have increased at a faster rate than the actual levels of compensation. One of the common stories among young performing artists of the 1960s was their pilgrimage to a large city, usually New York, where they worked for almost no wages for a theater or dance company. In those years, an entry level job for a college graduate might be $5-8,000 for a position in teaching, accounting or management. For these young performing artists, however, survival was a matter of living in shared housing, earning money in a menial part time job, and maybe receiving assistance from parents. In New York City, many nonprofit performing arts organizations with annual production seasons learned how to supplement their workers' wages through periodic layoffs that made them eligible for state unemployment insurance. So, while these young performers were usually aware that their worth on the open job market was $5-8,000, they might accept little or no compensation with few regrets. In effect, they were donating all or most of the value of their labor to the dance or theater company in which they worked.

Today, these same arts workers are in their forties and fifties. At this point in their careers, they may be earning annual wages of $25-40,000, no longer living in shared housing, intolerant of periodic layoffs, and almost certainly receiving no help from their parents. Moreover, the open job market has far fewer opportunities for their skills, and the time for developing the qualifications to enter an alternative career is past or becoming short. For many of these veterans, the realities of acquiring equity in a house, saving for retirement, obtaining medical insurance, or helping their children through college have become grim. Given their levels of education, advanced skills and seniority, these veterans feel entitled to incomes more in the range of $50-75,000, and yet only a small fraction of them, especially in small and medium size arts organizations, are able to reach this expectation. The net effect, then, is that the veterans are giving up more income to work in the arts today than they were in the early years of the Ford era, and the pressure of their need for increased income is a major cause of their exodus from the field.

In the bygone days of the early Ford era, labor exerted its own form of leverage. Artists would start new organizations, which became magnets for yet other arts workers, even without strong economic incentives. As long as labor was inexpensive, new nonprofit organizations provided a platform for artistic labor to pursue its need to produce work. In the post-Ford era, however, it appears that this leverage has been lost, or at least diminished, with respect to a younger generation of arts workers. Fewer in this generation are majoring in the liberal arts, and for those who do, there is less often the desire to take a chance on a low paying career with minimal long term security. A more typical strategy among undergraduates is to prepare for highly paid occupations, and to work hard at getting an entry level position with good prospects for advancement. A corollary of this change in career perspective is that within the relatively small pool of young college graduates who are willing to work in the nonprofit arts sector, there is often a demand for higher starting wages. Ironically, it is not unusual to find cases in which veteran arts workers are leaving the field, and being replaced by younger, less experienced workers, who start at wages comparable to those of the departing veterans.

A problem that compounds the dual trends of reduced discounted labor and reductions in grant funding is the apparent slippage in public demand for the services of many nonprofit arts organizations. In recent years, much of the performing arts industry (operas, symphonies, theaters and dance companies) has reported lower audience results. Here is an instance in which the recession of the early 1990s may have had a significant impact; but it is also likely that several other trends, all of them likely to last well beyond the recession, are significant. In essence, these longer lasting trends are reversals in the very factors that gave rise to the Ford era:

Societal Values: The 1980s are widely viewed as a time when personal gain triumphed over the public good, and there is little doubt that the one-time credibility, if not prestige, of a career in public service was set back by the political scandals and anti-government invective of the last two decades. While the ethic of volunteerism remains a strong element in American life, it is now more often practiced as an adjunct to an otherwise successful career, rather than as a way of life that diminishes one's earnings.

The nonprofit arts sector has also received a public relations body blow from the spectacle of Congressional muckraking over the various controversial grants awarded by the National Endowment for the Arts. At a time when "family values" are in ascendancy, it has become increasingly difficult to justify public spending on art that challenges the societal mainstream. In some ways, the arts have become discredited in the way that they were in Horace Lewis' day: not a place for virtuous people.

Prosperity: The erosion of favorable sentiments toward art and public service may also be related to long lasting changes in prosperity. In the post-Ford era, the average American no longer enjoys the premier standard of living in the world economy. Not only has total real income declined for Americans, but also disposable income: the money available for spending beyond the necessities of food, shelter and taxes. Less disposable income has obvious and direct implications for consumer demand for all forms of arts and entertainment.

Education: The pressures of a less bountiful economy and the retrenchment in attitudes toward the arts are compounded by changes in American public education. According to many authorities, overall literacy and educational attainment have slipped, and many arts education programs have been reduced or eliminated. Various campaigns have been mounted over the past 20 years, including those by the National Endowment for the Arts and the Rockefeller and Getty Foundations, to improve arts education curricula and convince school districts of the fundamental place of the arts in a balanced education. These efforts have often been pitted, however, against the realities of less money for public education and greater emphasis on so-called "basic" subjects that are viewed as essential preparation for employment. The newly promulgated "Contract with America" proposes even greater emphasis within public education on employment skills.

These trends in general education and arts education are particularly worrisome for the arts because of their exceedingly long term impact. Whereas societal values and economic prosperity may shift over spans of several years, changes in the educational system tend to be more glacial, and the impact on individuals can be lifelong. Thus, if a child establishes no arts literacy, especially during the early primary school years, the likelihood of that child becoming an artist or an active participant in the arts may be significantly diminished.

Given that much of the baby boom generation graduated from the educational system at or near its pinnacle, one might suppose that this relatively affluent group would be a prime source of new and stable audience support for the arts in the 1990s, even if the participation of subsequent generations is being dampened by a weakened educational system. The book Megatrends 2000 predicts a strong upward trend in arts audiences in the 1990s resulting from the well-educated baby boom generation's arrival at its prime income earning years. Unfortunately, there is little evidence that this trend is materializing, and it is quite possible that the baby boom generation will be less engaged in the arts than their parents' generation.

Leisure Time: The problem of low arts demand within the baby boom generation, and subsequent generations as well, may be due, in part, to the decline in leisure time that began to appear in the early 1970s, but became more evident toward the end of the 1980s. Overall, leisure time in the U.S. has declined by about one-third for working individuals since 1971, with both men and women spending more time engaged in work. According to Juliet Schor, the U.S. and Japan are the only industrialized nations in which a decline in leisure has occurred over this period. Not only does this decline have implications for arts audiences, but also for the volunteer activity that artists and non-artists invest in arts organizations.

Judith Huggins Balfe examines this issue one step further in an article about the baby boom generation's audience patterns. She suggests that this generation is approaching its limited leisure time in a manner different from its parents' generation. Given the pressure of work, Ms. Balfe sees a reluctance within the baby boom generation to commit itself in advance to a schedule of leisure time activities. Thus, this generation is less likely to buy season tickets because it wants to retain freedom of choice and the opportunity to attend activities spontaneously. This generation also may be reluctant to purchase even a single ticket to a high art event that requires arrival at a set time, and constrains the audience to a silent, passive posture until the performance ends. Rather, the increasing preference may be shifting to forms of performance, such as comedy, literary salons and jazz, that are more interactive, flexible with regard to arrival and departure times, and less constraining on one's behavior during the course of the event.

Demographic Change: Whereas the sheer size of the baby boom generation had an influence on the number of artists and audience members available to support the nonprofit arts build-up of the Ford era, population dynamics of a different sort are shaping the post-Ford era. Post-Ford is a more racially diverse time, and many nonprofit organizations based on the high art perspectives of an educated elite are finding it difficult to adapt to a more multi-hued audience. Moreover, governmental funding sources, which are necessarily sensitive to the broad racial and gender landscape of the electorate, are also exerting pressure for greater diversity among nonprofit arts organizations.

Technology: Throughout the pre-Ford and Ford eras, new technologies exerted a constant pressure on the high arts, capturing through electronic media any art form and audience that might be commercially successful. This pattern has continued in the post-Ford era as the new wave of CD recordings, home video, and specialized cable broadcasting has competed with the old guard of performing, visual and literary high art.

Implications of the Post-Ford Era

From our present vantage point in the mid-1990s, it can now be seen that the Ford era was the result of a coincidence of several disparate factors: the idealism of the Kennedy-Johnson administrations, increased leisure, high prosperity, the genius of McNeil Lowry (combined with the plentiful resources of the Ford Foundation), trends on college campuses, and several other influences. In the past three decades, each of these trends has followed its own course. Is it any wonder, then, that the nonprofit arts sector, which boomed during the brief intersection of these trends, cannot comfortably assume that the status quo will prevail? There are numerous examples of far larger sectors of the American economy that ignored major systemic trends to their lasting detriment. Most forms of manufacturing, health care organizations and railroads are a few among the many cases. While it is likely that the various trends affecting the nonprofit arts sector will oscillate, for better and for worse, in the future, they may never again coincide in the fashion that launched the Ford Era.

The main point of this paper has been to examine the nonprofit arts sector as a complex organic system that has been shaped by at least a half dozen major trends over the past century. While in retrospect it may be possible to trace the confluent forces that led to the bounty of the Ford era, it is another matter entirely to predict how the ecosystem will evolve into the future. Any system affected by large-scale external influences must necessarily adjust its behavior or become extinct. Systems tend to be so complex, however, that prediction of their behavior is impossible. In recognition of the chaotic behavior of social, economic and environmental systems, an emerging view among planning authorities is to prepare for alternative futures, rather than betting everything on any single projection of the future.

There is, perhaps, one reasonably safe assertion that can be made about the near term direction of the nonprofit arts ecosystem: that for the present, the arts will have no choice but to adapt to the circumstances of less discounted labor and contributed income, and in some instances, flat or declining consumer demand as well. The most likely result will be an overall decline in the number of nonprofit arts organizations, along with a reduction in the production of program services: exhibitions, performances, and so forth. This near term prediction does not imply that every nonprofit arts organization will follow a declining course, but rather that the nonprofit arts system as a whole will have to come into equilibrium with reductions in these resources. Other nonprofit fields, including environmental, social service and educational organizations, which expanded rapidly in response to the growth of discounted labor and institutional funding in the 1960-1990 era, are experiencing similar declines

Surely, the most vulnerable organizations are the small and medium size arts groups that have had the highest reliance on inexpensive labor and grants. In the San Francisco Bay Area, for example, more than 95% of the nonprofit arts groups fall into the small or medium size range using, as a rough standard, organizations with annual operating budgets of less than $1.5 million. Many, though by no means all, larger institutions have buffered themselves from some of the exigencies of the post-Ford environment through enhanced capitalization (buildings, cash reserves, equipment and endowments), reasonably adequate employee compensation, and multiple streams of contributed income from individual donors and institutional grants, complemented by dependable flows of earned revenues based on loyal audiences. For many of the major arts institutions, especially in the performing arts, audiences have tailed off in recent years, but given their diverse resource bases, large institutions can often manage their way through this hardship. Cuts are made in various cost categories, emphasis is devoted to increased earned and contributed income, endowments are bolstered, and the ship stays afloat.

For many small and medium size arts organizations, fine tuning of costs and income sources may not be enough. The departure of the founding generation of artists and administrators, and the subsequent inability of organizations to recruit employees of comparable skill and commitment, may be fatal. The loss of one or two key funding sources, usually in the form of previously reliable governmental or foundation grants, may have the same effect.

In a few instances, small, weakly capitalized arts organizations eventually declare legal bankruptcy, though the more common pattern is to retreat from a position of operating as a year-around organization, and instead operate from project to project as resources permit. Another tactic is to abandon operation as an independent nonprofit organization, and to function thereafter under the aegis of a nonprofit fiscal sponsor. Some attempts at merger are also in evidence, but examples of success are few in number.

All of these tactics for reducing fixed costs have in common one feature: a continued need for a supply of discounted labor, without which existence in any organizational structure is not possible. With the possible exceptions of the top echelon of orchestral musicians and a handful of superstars scattered throughout the performing, visual and literary arts, the compensation and status of the American artist are not substantially different from the pre-Ford days of the Lewis Dramatic Party of Professional Artists.

For those who came of age in the Ford era and became acclimatized to its nonprofit mode of operation, the realities of the post-Ford era may seem harsh or even hostile. For artists, administrators and board members, the operation of nonprofit arts organizations has become a thoroughly learned culture with deeply ingrained assumptions about values, ways of conducting business and sources of support. As with any established culture, it will not be an easy task to adapt to new circumstances. From an historical perspective, it can be seen that the American nonprofit model was always built upon the foundation of the earlier proprietary system, which required of arts workers a combination of personal economic sacrifice and the ability to attract paying customers. If the post-Ford era comes to resemble an earlier time when entrepreneurial skills were essential to survival, it is likely that many organizations founded in the Ford era will experience trouble making the necessary adjustments, or even discontinue operations rather than accept any compromise of refined high art standards that cannot be supported, at least partially, in the marketplace.

In the long worldwide history of the arts, artists have always found ways to pursue their work and audiences have found ways to see, hear and read it. The issue today is whether and how the model of the nonprofit arts organization, which has flourished for only a brief moment in the history of the arts, will continue to be a viable, versatile and publicly useful instrument for artistic production.

In considering this issue, those workers involved with the day-to-day operations of nonprofit arts organizations will increasingly have to ask a personally difficult, but fundamental, question, "How long will we be willing to carry on our work in the nonprofit arts in full knowledge of the ongoing necessity of sacrificing personal income?" In effect, an audit of the human resources of an arts organization, which revealed the likely career trajectories of current staffs and volunteers, along with an appraisal of the likely flow of new recruits, would provide a clearer understanding of sustainability than a financial audit.

Arts funders who have an abiding interest in the advancement of nonprofit arts organizations should be equally interested in the arts labor supply. In most instances, grant funding will not be sufficient to offset the value lost to arts organizations through labor attrition. Given the fragility of many nonprofit arts organizations, funders who pursue their usual role of using grants to influence production quality, audience size and composition, fundraising capacity, and financial stability may find that their interventions exert little positive influence. Worse yet, interventions made in the absence of a thorough understanding of the new systemic realities of nonprofit arts organizations, including the key issue waning of labor resources, may result in what systems experts call, "unintended consequences." Trying to boost audiences, for example, may push an already stressed organization, that should be focused on reducing fixed costs, over the brink.

Although funders are sometimes potent enough to award grants that make a material difference in an organization's long term advancement, it is an open question whether any foundation, corporation or governmental agency, even a coalition of funders working together, could succeed with an intervention that would change the course of the entire arts ecosystem, in a fashion comparable to the Ford Foundation in the 1960s. The post-Ford environment has no single funding institution that could muster the singular impact of the Ford Foundation's ventures into national dispersal of the arts and building up entire sectors of the arts, such as regional theater and ballet companies. The post-Ford landscape of funders is so decentralized and pluralistic that any plausible cooperative effort would seem to have little chance of achieving broad systemic change.

Even in European countries in which governments have long been endowed with financial resources, public support, and statutory authority that have enabled them to engineer the dynamics of their arts ecosystem, this unilateral position of control is now eroding in the face of new trends in technology, population diversity, societal values and the global economy. For decades, many American arts leaders advocated quantum increases in governmental appropriations to follow the European example of heavy per capita subsidization. More often today, the Europeans are looking to the U.S. for clues about supporting the arts in a more pluralistic milieu of cultures and funding sources. A new wave of nongovernmental foundations, some of which are funding the arts, are presently growing in several western European countries.

Assuming that governmental and private arts funders could marshal resources comparable to those of the Ford Foundation in its heyday, there is no obvious leverage point in the post-Ford environment. Some funders are fond of the idea that massive improvements in arts education would help to reverse declines in audiences; but would enhanced education by itself be enough to offset negative public attitudes toward public service and artistic expression, declining leisure time, slippage in middle class prosperity, and the constant pressure of new entertainment technologies? Each of these trends is driven by massive forces in the American economy, society and political order that surround and dwarf the nonprofit arts. So, for those with the ambition of rivaling the legacy of McNeil Lowry, there may be no choice but to await a more favorable alignment of the planets, when a leverage point, once again, becomes manifest.

Although the moment may not be ripe for grand strategies, there is no cause to abandon all that arose during the Ford era. In comparison to the last years of the pre-Ford era (the decade following World War II), the high arts sector of the post-Ford era appears to be much larger and more robust. Enough nutrient remains in the nonprofit arts system to support the conviction that many Ford era organizations will make the necessary adjustments to the new conditions, and thereafter prosper and mature. Even in cases wherein nonprofit organizations cease operation, their resident artists may well continue to find other organizational structures to support their work, whether it is under the auspices of alternative non-profit or the other voluntary and proprietary organizational models that will continue to be available.

And who knows? A new planetary alignment could arise at any moment and define an era beyond post-Ford. While it is highly unlikely that the next age will be shaped by the same coincidence of forces that unleashed the boom of the Ford era, there is no reason to expect that the presently prevailing trends in resources, societal values, population dynamics, technology, education and leisure will become frozen in a permanent orbit. Paraphrasing John Milton in Paradise Lost, there is no need to be forever fallen if we awake and arise to the ever-evolving realities of the cultural ecosystem.