With a few exceptions, 2009 has been a year of salary freezes, layoffs and declining revenue for many Minnesota arts organizations. With all the reported sightings of the ‘green shoots of a recovery’ and an emerging belief that the worst of the recession is behind us, is the worst over for arts groups?
Bush Foundation President Peter Hutchinson says no. In fact, Hutchinson says 2010 is likely to be worse than 2009.
Hutchinson said arts groups depend primarily on four sources of revenue — ticket sales, individual donations, public funding, and philanthropic giving. He expects ticket sales and individual donations will continue to be detrimentally affected by the high unemployment rate, which is predicted to linger well into 2010.
The arts may be buffered a little by new money from the stimulus package and the Legacy Amendment passed by voters last year, but Hutchinson doesn’t think the level of public funding will actually rise over previous years.
Which brings us to philanthropic contributions. Hutchinson said the level of giving is dropping because of the hit foundation portfolios have taken on Wall Street.
“Foundation giving is likely to be down because most foundations figure their giving using a three year rolling average,” he said. “As we went into 2009 we had a couple of really good years behind us. But as we go into 2010, we’ve got this really bad year that we have to incorporate into that formula, and I think that’s actually going to lead to lower giving for many foundations when it comes to the arts. So, if I were predicting, I would say that arts and cultural organizations, oh and by the way, most other non-profit organizations, are going to face a really tough 2010.”
Hutchinson said because of that three-year formula, foundation giving tends to be higher than you’d expect going into a recession. But he said it also lags coming out, meaning the economy generally recovers more quickly than foundation giving. He said foundation giving probably won’t return to pre-recession levels until 2012.
“But that assumes that the market recovers,” added Hutchinson, which he said isn’t certain.
In his view, the recession may have a significant diminishing effect on the Minnesota arts landscape, depending on how arts groups respond in their programming. Hutchinson said they may be tempted to play it safe, and bring out the old “warhorse” productions that put butts in seats. He thinks that might not be wise.
“I actually think that’s probably a risky strategy in the long run, because in my view this is a time when we’re under stress,” he said. “Communities are under stress, individuals, families, people are suffering, and I think arts organizations have a chance to kind of call us to our higher selves. Arts, more than any other institution, have this way and means of appealing to peoples’ emotions, to reaching into our souls. And if all they do is put on fluff, I don’t think that’s rising to their highest opportunity at a time when we probably need them in ways that we’ve not before.”
Hutchinson believes the art groups that are more relevant to their audiences in these tough times are more likely to remain relevant when the happy times are here again.