On Establishing a National Cultural Bank

An open bank vault.
For a National Culture Bank

bank-vault-3d-hdIn its Taking Note post on Nov. 5, the National Endowment for the Arts (NEA) research staff analyzed some high-level economic data prepared by the Bureau of Economic Analysis (BEA). Looking at the nationwide investment in “long-lived artworks” — which the government defines as artworks “exploited” in physical media for more than one year — the data indicates that over the past 15 years, we have invested in some sectors much more than in others. For example, the investment in the creation of new work for TV is up significantly, whereas new investment in motion pictures is up only a little, investment in books is static, and the investment in music has been significantly diminished. Without other, corresponding data — such as whether more movies are being created, or that fewer movies with bigger budgets are being made — this high-level data cannot draw an accurate picture of whether investments in the cultural sector are ensuring a rich, flourishing sector, or how they impact individual artists. (For my more detailed look at the data, visit PeriodicArts.)

The nonprofit sector, especially the cultural sector, is well aware that it is perpetually undercapitalized. This is understandable since the sector’s financial structure does not provide mechanisms for capital investment like the for-profit sector does. Nonprofits must rely on earned revenue and tax-based incentives to philanthropic giving for its capital because the underlying reality is that nonprofit markets generally cannot and do not generate sufficient surpluses of earned revenue — which would be a source of needed capital for investment — to sustain itself over time.

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In addition to reinforcing these facts, the NEA analysis and BEA data support the mountain of anecdotal evidence that the economic underpinnings of our cultural industries are evolving. Predictions of the future vary wildly, of course: nobody can accurately predict what any given sector will look like or how people will make a living in their chosen art or discipline in five years. Indeed, there is just too much fundamental change occurring in all aspects of the creation, distribution, and exploitation of cultural product for us even to take a guess at a five-year trajectory. Some of the evidence — like the aforementioned BEA data about filmmaking, and the data about a marked decline in investment in music products at the same time that anecdotal evidence suggests that more music is being created—further underscores a real need to understand the complex ecology of forces in the cultural economy if we are going to have one that is rich and flourishing.

Data analysis should tell a story.
Data analysis should tell a story.

While we cannot know what the future will look like, this much we do know: the “traditional” institutional and industrial pathways for funding the creation and distribution of artistic product that existed during the latter half of the 20th century is largely gone. As I have written before, while artists are adjusting and finding new ways to express themselves, they are, at the same time, shouldering economic burdens formerly handled by others. This, too, makes it harder to build a thriving and predictable cultural environment. Data such as that analyzed by the NEA can help us understand the macro trends in our creative sectors, but it cannot really tell us where investments need to be made. This can only be ascertained by a thorough analysis of the entire ecology of how artists are creating, distributing and making sure there is an audience for their work. If we could have, or develop, such an analysis, we would understand where our nonprofit infrastructure truly needs support, and it might help alleviate the economic burdens now being shouldered by artists. But even if we did have, or did develop, such an analysis, we would still then need a mechanism to fund the capital necessary to deliver systemic support and relief.

One could take the point of view, as many advocate today, that the arts should be left to the vagaries of the market, not shielded from it; that any non-self-sustaining economic efforts in arts and culture must suffer the fate of market forces. Artists, according to this economic rationale, must simply continue to adapt to changing economic and social conditions in order to deliver sufficient value for people to compensate them, or else they will stop their artistic activity because it does not pay.

Adopting such an approach, however, rejects the decades-long, underlying foundation of our cultural sector: that a rich diversity of creative activity is a positive component of society and its nature is such that we can only achieve it with public and private subsidy. Acknowledging this valid distinction between for-profit and not-for-profit confirms the idea that the creation and distribution of creative product has value beyond the economic and, therefore, should be supported despite its inability to sustain itself in the market. If we still believe this, and I believe we should, then in the face of shifting economic and social forces, we must provide a vehicle for systemic investment support where it is needed, based on data and analysis. This would address the need for a significant bank of resources that can be allocated where investment is needed — that is, when it is clear that the current investment insufficiently builds or maintains a robust ecology in which culture can thrive.

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A National Cultural Bank, offering investment capital where a particular sector’s need can be demonstrated, would be such a vehicle.

When we talk about “systemic investment support where it is needed,” we are indeed talking about a national scale — a monumental effort that may seem impossible in an era of partisanship infecting all conversations, cultural or otherwise. But assuming we could one day have such a conversation, a National Cultural Bank could provide the necessary systemic support and investment.

Such a bank — which would more resemble an investment fund than a traditional nonprofit grant — would feature these key elements:

  • Funding of sufficient scale to make a systemic impact — perhaps by aggregating one year’s funding from all government arts funders (NEA, state agencies, local agencies) and institutional foundation funders. Based on 2012 data, this would yield a fund of approximately $3.175 billion;
  • an oversight body with expertise, fiduciary responsibility and legal authority to evaluate requests for funding, according to specific guidelines for use of the funds;
  • some form of required repayment modeled on investor return by users of the fund (say 10% of all earned income until 110% of the investment was repaid) in order to ensure sufficient future capital without needing to seek out additional funding, i.e., to make the Bank self-sustaining;
  • reduced risk of loss of funds through non-repayment, which could only happen if a borrowing institution or artists went out of business.

It would be interesting to model this idea to determine if it is realistic and could function as imagined. Whether or not we pursue this mechanism, what remains clear is that our creative sectors are evolving continuously and unpredictably, and without some effort to enable us to realign support where it is needed, we leave the future of our cultural sector to the whims of chance and the whims of the market. To do so will only undermine the value of culture to our society.

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Ken Tabachnick

Ken Tabachnick is an arts manager, educator, reformed intellectual property attorney and intermittently practicing artist. In his different roles, he has worked with: major institutions, such as New York City Ballet, Paris Opera, the Kirov and Bolshoi companies; individual artists, including Stephen Petronio, Bebe Miller, Robert Wilson and Trisha Brown; and educational institutions Purchase College and NYU’s Tisch School of the Arts. His current interests occupy the intersection between art, policy, business and organizational structure, and TaeKwonDo. He is active on non-profit boards including Dance/USA, Stephen Petronio Company and Westbeth Artists’ Housing. Select writings and speeches can be found at his blog, Periodic Arts.