Supporting the Arts Through HUD

I wrote earlier on the blog about finding more  non-NEA ways to support the arts and I saw that the recent Americans for the Arts proposals for Obama included using CDBGs to support the arts.  I wrote a memo a while ago about using HUD and CDBGs (Community Development Block Grants) to support the arts. It's been submitted to a few places and I thought you guys might be interested in it. So here it is.  I hope you enjoy it.  BTW, to learn a little more about what CDBGs are and how they are currently used w/r/t to the arts, go here.

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 Date:                December 5 2008

 

To:                   XXXXXXXX

 From:              Isaac Butler[1]

 

Re:                   Community Development Block Grants and the Arts

 

This memo provides recommendations for how Community Development Block Grants (CDBGs) could be better used to fund the arts as a component of the forthcoming economic stimulus package. 

 

This memo is divided up into four sections

 

I.               The economic impact of the non-profit arts in America

II.             The funding crisis in the non-profit arts

III.           Existing ways CDBGs fund the arts

IV.           Recommendations for increasing and improving arts-related CDBGs

 

I.               The Economic Impact of the Arts in America

 

Non-profit arts organizations have a wide-ranging impact on the economy in both direct and indirect ways.  The arts directly impact the economy by creating jobs, generating both income and tax revenue  and helping ancillary businesses via event-related spending.  The most comprehensive and up-to-date study on the direct economic impact of the arts[2] found that the non-profit arts sector was responsible for creating the following:

-       5.7 million jobs

-       $104.2 billion in household income

-       $7.9 billion in local tax revenues

-       $9.1 billion in state tax revenues

-       $12.6 in federal tax revenues

In addition, the study found that attendees at cultural events had a significant impact on local businesses:

-       The average spending of an attendee at an event was roughly $27.79 above and beyond the cost of admission

-        Arts and culture audiences spent roughly $103.1 billion in 2005

-       This helped create over 3 million jobs in business such as restaurants, parking garages, hotels and retail stores and $46.9 billion in household revenue

 

The arts also have an indirect positive economic benefit by helping to create the kinds of communities that creative people want to live and do business in. These creatives then help encourage further business and economic development through their talent and ingenuity.  Cultural vibrancy is what attracts that talent. As Richard Florida puts forth in his landmark The Rise of the Creative Class, “creative people … [are] key to economic growth,” and that “Creative people are not moving to… places for traditional reasons.  The physical attractions that most cities focus on building…. Are irrelevant, insufficient or actually unattractive. “ His research shows that diversity, vibrant culture and nightlife scenes and the arts are key factors for attracting creatives,  “even by those who infrequently partake”[3]. The important consideration moving forward is how to encourage arts-based economic development of communities while minimizing the negative impacts of gentrification[4].

 

II.             The Funding Crisis in the Arts

 

All of the above economic impact has been created despite the relatively low levels of arts funding in the United States. The National Endowment for the Arts, the largest current government source of arts funding[5], spends roughly a 19^th per capita of what the British spend via Arts Council UK. 

 

At no point in human history have the arts thrived without some form of State arts sponsorship. Even the ancient Greeks subsidized ticket prices for those who could not afford to see the plays in the yearly feast of Dionysus. The arts are a remarkable economic engine, but the initial burst of fuel that engine requires is government arts funding. As the economic crisis worsens, corporate, foundation and individual giving to the arts is decreasing[6].

 

Non-profit arts organizations are particularly vulnerable to real estate problems.  All it takes is one poorly timed rent hike to put a valuable community resource out of business. This directly dovetails with the CDBG’s mandate of funding “brick and mortar” projects to help develop urban communities, and thus the CDBG is more ideally suited to address this problem then the National Endowment for the Arts.

 

III.           Existing Ways CDBGs Fund The Arts

 

 CDBGs are already used to fund the arts.  In 2006, many communities used CDBG money to fund programs ranging from arts programs for seniors and the homeless to commissioning of public art in low-income neighborhoods.  These programs[7] are a good start, but given the enormity of the arts’ impact on our economy and the crises facing the arts, they do not go nearly far enough. 

 

The amounts of money requested by the city and state arts councils and provided by CDBGs are not adequate even to accomplishing the stated goals of the programs being funded.  $130,000 is not enough money to create “an arts district and public art” in Aurora, Colorado, neither is $9,800 enough money to fund two separate arts-related after school programs serving over 110 youths in Somerville, MA. Considering that over four billion dollars has been set aside for CDBG grants, there is room to increase arts funding that falls within the CDBG mandate. 

 

IV.          Recommendations for Increasing and Improving Arts-Related CDBGs

 

The following recommendations are ways to help increase funding to the arts as a way of stimulating the economy sustainably and responsibly.

 

-       Explicitly state in CDBG outlines that the arts is a sector considered for funding by CDBGs

-       Set aside $500 million in dedicated funds for arts-related programs and encourage City and State arts agencies and councils to apply for them. These funds can either be used directly or regranted to arts organizations (as New York City does biannually through the Community Arts Development Program)

-        Encourage City and State agencies and councils to design programs which will use funds for one of the following specific purposes:

                                                     i.     Construction of subsidized Arts Real Estate.  Arts Real Estate is here defined as both subsidized housing and subsidized studio, rehearsal, performance and display space such as art galleries etc.

                                                      ii.     A program for aiding non-profit arts organizations in the midst of capital campaigns that are being negatively impacted by the economic downturn.  A failed building campaign at a time when sources of funding are being cut back could be fatal to some of our most vital arts organizations

                                                        iii.     Programs that will help small local arts organizations to buy spaces in the communities they serve.  This is an important way to mitigate the negative effects of gentrification.  As neighborhoods improve and rents rise, arts organizations will be forced out of the very areas they helped create[8], enabling small arts organization to put down permanent roots in a community helps to ensure stability.  At the same time, small arts organizations tend to be run by underpaid staff and artists wearing several hats out of love for their community and their art form.  Partnering arts organizations with business development consultants as part of this program will be instrumental to ensuring its success[9].

 

City and State arts councils may very well recognize other local needs beyond these programs and thus HUD should not limit the purview of arts-related CDBG grants to the above. 

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[1] Isaac Butler is a theatre director, freelance writer and was a member of Barack Obama’s National Arts Policy Committee.

[2] The following information comes from the Americans For The Arts study, Arts and Economic Properity III from 2007. It can be found at http://www.AmericansForTheArts.org/pdf/information_services/research/services/economic_impact/aepiii/national_report.pdf

[3] Florida, Richard. The Rise of the Creative Class. Massachusetts: Basic Books, 2002. 218-223.

[4] For more information on the role of the arts in gentrification and ways cities like Minneapolis are using the arts to help mitigate the negative impacts of gentrification, see Kleiman, Neil Scott et al. “The Creative Engine.” Center For An Urban Future (http://www.nycfuture.org/images_pdfs/pdfs/CUFArtsReport1118.pdf)  Nov. 2002. 5-9

[5] The current FY2009 appropriations request for the NEA is $128.412 million according to the NEA’s website (http://www.nea.gov/about/Budget/NEABugetRequestFY2009.pdf)

[6] For a glimpse at one of many creative communities affected by the economic downturn see Greg Cook’s Culture Crunch, a recent article in the Providence Phoenix (http://thephoenix.com/Providence/News/73153-Culture-crunch/)

[7] A summary of these and more can be found at the Arts Action Fund’s Community Development Block Grants available as a PDF document at http://www.artsactionfund.org/pdf/congress/cdbg_brief.pdf

[8] This has happened time and again in New York City. Few art galleries remain in Soho from the heyday of the Soho scene beyond those that could afford to buy their spaces decades ago.  A recent study by the New York Innovative Theatre Foundation found that thirty six Off-Off Broadway spaces had closed in the last five years alone, many due to rising rents (the study can be found at http://www.nyitawards.com/survey/OOBSpaceReport2.pdf)

[9] A pilot program for doing this already exists in New York City, it is called the “Building Sustainability Program” and it is administered by CDAP.

Comments

[Nitpicker]

Apropos of I:

"Don't trust economic impact studies.
These studies usually give economics a bad name.

'We should be skeptical of “economic impact” studies that show the importance of the arts to a community. A study of this kind might show that an arts festival or new arts arena brings millions of dollars in economic value. But these studies typically treat arts expenditures as creating value out of nothing. Implicitly it is assumed that if the money had not been spent on the arts, no other economic or social values would have been produced. Again, the relevant comparison is whether an arts arena leads to more value than some alternative. When we look at economic impact studies for one industry at a time, they all appear to show high benefits. But this means that the net benefits of any single project are low, zero, or perhaps even negative on average. By investing in one good idea we are always forsaking another good idea. In essence those studies list gross benefits rather than net benefits. Furthermore, once an economic impact study is being done, the resources are likely no longer undervalued.'

That is from my Good and Plenty: The Creative Successes of American Arts Funding."

Posted by Tyler Cowen [George Mason University economist] at www.marginalrevolution.com, on April 29, 2006 at 01:51 AM, quoting from one of his books.

The same sorts of arguments are made to justify subsidizing sports stadiums, and are equally unconvincing. See, for example: http://www.sabernomics.com/sabernomics/index.php/2008/05/sports-stadiums-and-economic-development-a-summary-of-the-economics-literature/

Moreover, why make this argument anyway? It assumes that public money (tax dollars) should only be spent on things that can be shown to produce economic growth, which is not a very progressive argument.

[Tommer]

OK, Isaac - When all is said and done, are you an artist because of the economic impact of your work on Brooklyn? Or does something else drive you? OK, no need to answer, I am just rattling your cage.

I am a big fan of Americans for the Arts, and the work they do is important and necessary, but the economic impact argument, useful in some increasingly limited circumstances, is a slippery slope. The arts are essential for their own sake, and we all need to get comfortable with owning and defending that argument, and not depend on secondary benefits to justify what we know to be valuable.

[Parabasis]

Tommer, Nitpicker,

This memo was written specifically for the purpose of talking about how arts subsidies could fit into HUDs expanded role under the *economic stimulus package*. Because of this, it is necessary to make the economic impact argument. If I were writing a memo for the Dept. of Education, it would be about how the arts enrich education. I believe the intrinsic benefit argument but it has yet to prove itself a viable argument for getting the government to support the arts. It is at best one of several arguments that must be made simultaneously.

[Tommer]

Good point. I am just personally sick of hearing about the economic impact of the arts.

That said, one of the more interesting pieces i've read on the topic is Creativity and Neighborhood Development, by banker Jereny Nowak, which doesn't so much make the case for the economic value of arts and cultural activities and institutions, but assumes it and lays out the details for city planners and developers on how to integrate the arts into their plans as a means to succeed economically.

See: http://www.trfund.com/resource/downloads/creativity/creativity_neighborhood_dev.pdf

(Wait! Aren't we supposed to be talking about theater?)

[Asher]

CDBGs would only provide a benefit to non-profits with theater spaces, though. Or is that not the case? I'm assuming that the hundreds of nomadic non-profits in NYC would not be eligible for this type of funding.

[isaac]

Hey Asher,

First off, I love P73 and what you guys are about, so I'm flattered you're reading this blog and commenting, thanks!

Second, to answer your question.... while most current CDBG $$$ goes to arts organizations that have their own spaces, that is by no means a prerequiste either under the existing framework for eligibility nor under the guidelines I call for in the memo. Obviously the clause for helping nonprofits in the midst of brick-and-mortar capital campaigns will only affect those who have their own spaces. The other ideas (which are just examples of how the money could be used, it's not meant to limit how it will be spent) would benefit companies without their own spaces.

[Nitpicker]

Isaac writes: "This memo was written specifically for the purpose of talking about how arts subsidies could fit into HUDs expanded role under the *economic stimulus package*. Because of this, it is necessary to make the economic impact argument."

Understood.

But--what if it isn't true? What if the arts don't stimulate the economy? Is it then OK to say so anyway, to shove them into the stimulus package & get one's hands on some (much-needed, I agree) cash?

[Parabasis]

Nitpicker,

I would argue personally that the evidence points to that it does. I'm not claiming it does to get the money, I'm making an argument based on a particular facet of a larger argument about how the arts are positioned in our country that I sincerely believe. (Just to be clear: I knew you weren't accusing me of anything, I just want to make it clear to everyone that I do sincerely believe what I've written in the memo,it's just not the sum total of my thoughts on the issue).

There are good economic impact studies and bad. I looked at a lot of them while researching the memo. I left off the frequently mentioned but never-backed-up-by-citation claim that every dollar of arts funding produces $7.00 of economic activity. Similarly, I threw out some pretty obviously weak economic impact data. The Americans for the Arts study (And I read some critiques of it as well-- due dilligence!) seems on further investigation sound.

Tyler Cowen- an economist and writer whom I respect- is a self-identified libertarian and free market evangelist. I personally feel that his arguments against economic impact studies w/r/t the arts are more the result of his own biases economically, politically and culturally (he did write a book about how commercial culture is the best culture after all) than anything else.

To answer your question... If I didn't think the argument was true, I wouldn't think it's appropriate to make it. There are many reasons to support the arts, and other channels within government (State and Edu being two obvious ones beyond the NEA) to do it.

I also want to say that people's frustrations that the inherent benefit argument doesn't work (frustrations expressed here in comments by tommer and personally with me in many conversations with my peers) are understandable and that I share them. But we live in the society we live in, and as Alinsky would say, it's important to make arguments in a way that allows to be heard.

[RLewis]

"What if the arts don't stimulate the economy?" Oh please. How many generations to we have to keep going back to and re-proving this. Sure, others things may have a bigger bang, faster bang, but to imply that it might not help at all is the worst straw-theory.

Clearly, DC thinks it has some bang....
http://www.wnyc.org/shows/soundcheck/episodes/2009/01/26/segments/121930