Published on Tuesdays
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Mickey Butts
Executive Director, Editor, and Publisher
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By Mickey Butts
For classical music in the Bay Area, it's been the month of the megadonation. Jeannik Méquet Littlefield fired the opening salvo October 3: a $35 million, no-strings-attached gift to the San Francisco Opera, putting a decisive end to its string of perilous years in the red. Possibly the largest individual donation ever made to a U.S. opera company, it was a striking vote of confidence in new director David Gockley's plans.
Two-thirds of the donation will help shore up the $90 million endowment, with a goal of $250 million. One-third will go toward operating expenses over five years, certain to mount with Gockley's costly ambitions. They include outreach via closed-circuit video and broadcasting, an "American Ring" cycle, and a Philip Glass world premiere.
But Littlefield wasn't alone in her staggering generosity. Also in October, Helen and Peter Bing gave $50 million toward the construction of a new concert hall at Stanford University, and Richard N. Goldman announced a $10 million challenge grant to the San Francisco Symphony, in the hopes of inspiring $20 million from others.
Nationally, in fact, it's been quite a year for musical munificence, with Mercedes and Sid R. Bass giving $25 million to New York's Metropolitan Opera, and Eli and Edythe Broad giving $6 million to the Los Angeles Opera for yet another new Ring cycle.
San Francisco Opera inaugurated its War Memorial Opera House in 1932 with a performance of Tosca, after a 14-year, $6 million fundraising effort from leading citizens and a municipal bond issue. It was an investment that in today's dollars was worth almost three times Littlefield's recent gift.
At the time, Opera administrators most likely hoped the company would be self-sufficient from ticket sales alone in the new venue. But the Opera's $57.1 million budget in the fiscal year ending 2005 relied heavily on $40.3 million from individual donors, foundations, government agencies, and corporations for 62 percent of revenues. (All the figures in this article are taken from the organization's most recent 990 form filed with the IRS. Discrepancies can exist between these numbers and other published figures.)
Across the street at the San Francisco Symphony, the nearly $56.1 million 2005 budget depended on almost $19.8 million in donor support, equaling about 57 percent of revenues. The mix of revenue sources varies at every major institution in San Francisco, but in total, fundraising typically accounts for more than half of revenues, and sometimes the predominant portion of revenues. Patrons might be surprised to learn how little money comes from the actual business these institutions are in: filling seats.
If an arts organization were a for-profit business, it would be like a Starbucks that made most of its money from the tip jar. Arts organizations that specialize in classical music these days could best be described as donor-solicitation shops that happen to put on a good show, rather than artistic operations that somehow manage to cover the rent.
How do these organizations raise so much money? Mammoth fundraising staffs. At the Opera, for instance, the development, or fundraising, department has the largest number of employees on the administrative side of the organization (not including the large production and orchestra staffs), with 19 employees. Even with some positions currently vacant, that's more staff than the 15 positions in top management.
Officials at the Opera expect the development budget to increase in the current fiscal year "to reflect cost-of-living adjustments and increased fundraising expectations." The Opera spent $2.7 million on fundraising in 2005, over eight times the entire budget of the shoestring operation at Pocket Opera, the San Francisco-based presenter of minimally staged operas in English translation.
Over at the Symphony, development is the biggest administrative department (not counting the orchestra itself), with 20 employees. It spent $3.5 million to raise money from donors in 2005, almost four times the entire budget of the Berkeley Symphony, by way of comparison.
According to the Association of California Symphony Orchestras, concert revenue has been falling for years, and now makes up only 42 percent of the typical orchestra's overall income. The average orchestra in the state spends 17 percent of the money it receives in donations on raising the money that isn't coming from tickets. (To be fair, it's important to note that because of the much larger revenue base over which to spread costs, the share of the San Francisco Symphony's contributed revenues spent on fundraising is 10 percent, while the Opera's is 7 percent.)
The vast majority of classical music organizations in the Bay Area have nothing like these resources to devote to fundraising. And they have nothing like these large budgets as a result. More than half of the nonprofits in the Bay Area have expenditures under $200,000 a year.
To see how the other half lives, so to speak, let's compare the eye-popping numbers mentioned earlier with the much more modest budgets at a range of small and midsize organizations that are frequently reviewed in San Francisco Classical Voice. Figures listed are total annual expenses, with revenues from fundraising in parenthesis. All are taken from the most recent fiscal year 990 form filed with Guidestar, with the ending year noted. (For more on arts organizations' costs, see "The (High) Price of Music," by Lisa Hirsch, which ran in SFCV on Feb. 21, 2006.):
American Bach Soloists: $648,513 ($500,135) — 2005In every city in America, and especially in the Bay Area's hotbed of classical music, smaller groups of every flavor and variety stage scaled-down opera productions, present shortened symphony seasons, and host intimate chamber, early, choral, and new music concerts on a shoestring — in churches, old movie theaters, rented halls, wherever they can. Many are lucky to pay their musicians just slightly more than the bare minimum.
Berkeley Symphony: $977,263 ($744,719) — 2005
Cabrillo Festival: $525,667 ($479,904) — 2005
California Bach Society: $40,268 ($22,533) — 2005
Chanticleer: $2,587,515 ($1,011,483) — 2005
Composers Inc.: $67,035 ($50,122) — 2005
Del Sol String Quartet: $88,874 ($52,098) — 2005
Earplay: $110,181 ($91,890) — 2005
New Century Chamber Orchestra: $755,546 ($702,387) — 2005
Noontime Concerts: $163,943 ($162,129) — 2004
Magnificat: $160,866 ($90,551) — 2004
Opera San José: $3,689,093 ($2,166,641) — 2005
Other Minds: $591,462 ($381,425) — 2005
Philharmonia Baroque Orchestra: $2,528,460 ($1,542,639) — 2005
Pocket Opera: $323,909 ($189,274) — 2005
San Francisco Contemporary Music Players: $333,865 ($300,300) — 2005
San Francisco Early Music Society: $318,351 ($78,154) — 2005
San Francisco Lyric Opera: $207,102 ($166,121) — 2005
Volti: $172,199 ($87,778) — 2004
West Bay Opera: $465,021 ($244,721) — 2005
Or in the case of Clerestory, the Bay Area's newest professional chorus, the musicians actually lose money on the gig. Clerestory's last set of two concerts in October, with stellar singers drawn mostly from the ranks of Chanticleer alums, cost $1,500 to produce, most of that going to rent the venue and conduct limited advertising. Since they are brand-new, there were no donations. Ticket sales covered a little less than their costs. "Of course, this does not include any money 'paid' to the eight members," says Jesse Antin, founder of Clerestory. "Unfortunately they will have essentially worked for free, this time." (In case you missed the concert, it was reviewed in SFCV.)
Antin says his $1,500 budget is "chump change to a big arts operation with a development juggernaut." He continues, "The amount of overhead paid by the other big organizations is staggering, considering that Clerestory just put on some world-class concerts using mainly the computers and copy machines at the offices of our day jobs."
Like every new group, Clerestory essentially has to go it alone financially when it starts up, building what it can from scratch. Why do they do it? They're passionate about the music. "You really have to do it out of love when there isn't much other initial return," he says. Fortunately, the chorus is an affiliate of the San Francisco Early Music Society, which provides nonprofit status for 36 affiliate groups. But Clerestory is also working on forming a board of directors so that it can incorporate under its own nonprofit status soon.
Antin's dream is to find a single donor to underwrite the true costs of a concert or project. "It's nice for the donor to have his or her name under the program title, and to display a kind of pride of ownership over a particular product or event," he says. "Otherwise, you just write a check and the money disappears, and you're left wondering what it did."
"I do think these donors are out there — arts donors looking to make an investment in something new and cool. But it's not as high-profile to give to Clerestory as it is to give to the San Francisco Opera or the Symphony. I assume there's a kind of philanthropic pecking order, and that being invited onto the board of the Opera is the top of a desirable totem pole. Your average community chorus can't compete with that, and our government isn't helping them out either."
The summer Music@Menlo Festival in Menlo Park is a success story, however, reaching a high level of artistic excellence and relative financial stability in only four years, thanks to major foundation partners. And over at one-year-old Ave, an excellent professional chorus run by Jonathan Dimmock, the situation was similar to Clerestory's until June, when a generous donor stepped in to more properly fund its last Berkeley Early Music Festival concert.
But for every success story, there are many others of struggle. Fledgling groups like Ave and the Pacific Collegium chorus have seen their concert seasons disrupted by legislation Congress passed in August 2006 (H.R. 4) that severely limits the use of what's known as donor-advised funds, mini-foundations controlled by individual donors, as a form of umbrella under which small groups can gain their crucial tax-exempt status. "The law has definitely had an impact since we are not yet a 501(c)3 [nonprofit] and had just set up a foundation through [the National Heritage Foundation] before this came down," says Pacific Collegium artistic director Christopher Kula. "We are trying to hobble on as usual and explore alternate ways to continue our operations, but this has certainly interrupted our fundraising plan for this year." These two groups are focusing their attention now on achieving nonprofit status, a costly and labor-intensive status to establish and maintain.
At the five-year-old San Francisco-based City Concert Opera Orchestra, which is dedicated to high-quality performances of rarely heard operas (see SFCV's most recent review), director Thomas Busse says his budget is $25,000, of which he takes home a whopping $6,000. "This is roughly the budget for chorus shoes at the San Francisco Opera," he says. "I've been at this for five years, and the largest donation we've ever received is $1,200. We were rejected for 19 grants in 2006."
Part of the problem, as he sees it, is that the community foundations and government sources he targets won't consider him unless he's physically based in their part of the Bay Area, even though he would like to present in places like the South Bay as part of his concert series all over the region. This situation causes many groups to locate in San Francisco just to qualify for Grants for the Arts funding, for instance. He's also frustrated because many foundations only offer specific project funding, and not the general support he needs, and they rarely fund more than 10 percent of a nonprofit's budget or offer multiyear funding. There's also a chicken-and-egg problem: You need a funding record to attract foundation funding, so many groups rely on individual donors to establish that track record.
Like everyone these days, Busse is looking for a generous patron. But he knows how hard those are to find. "Donors to small organizations usually give because they like the art form," he says. "Donors to large organizations often give because it looks good for their social status. There are many fewer of the first type of donor."
The situation is similar in the nation's capital of classical music, New York. I recently had the opportunity to meet with the leaders of the major arts organizations in New York, under the auspices of the 11-day NEA Institute in Classical Music and Opera at Columbia Journalism School. It is a unique opportunity for classical music critics to attend a flurry of concerts, meet with top arts administrators, gather ideas and inspiration, and be briefed on the history, context, and challenges of covering classical music in America.
As I learned, not only are the acoustics excellent at Carnegie Hall, but its fundraising machine hums along nicely, as well. Carnegie Hall was built in 1891 for $2 million, 90 percent of which Andrew Carnegie paid for out of his pocket. He had hoped that his magnificent hall would be self-sufficient from ticket sales and rental income. Today, Carnegie Hall has a budget of $66 million, one-third of which is raised annually from fundraising.
Up the street from Carnegie at rival presenter Lincoln Center, the $80 million budget relies on almost $27 million in donor support. And Lincoln Center is far along in one of the largest fundraising campaigns in U.S. performing arts history: $650 million to finance the first phase of an ambitious overhaul of the sprawling arts campus.
The amounts raised through fundraising at other major organizations show the typical range: $13 million at Brooklyn Academy of Music (BAM), or more than a half of revenues, all the way up to $82 million at the Metropolitan Opera, or a third of revenues. At BAM, which has carved out an international reputation for its cutting-edge presentations, the funding mix includes significant amounts from the City of New York and small individual donations, two major sources of financial stability. Under fundraising guru Karen Brooks Hopkins, BAM has gotten increasingly creative at slicing and dicing its programs to appeal to every kind of donor imaginable, to match its hip and endless variety. In BAM's case, artistic planning is tightly aligned with financial planning.
This situation exists because, unlike in Europe and elsewhere, the government doesn't play a significant role in arts financing. "In Europe, they think it's the government's job," says Clive Gillinson, executive director of Carnegie Hall. "Here we won't get an extraordinary arts scene unless we all do it."
"I remember being on tour with Chanticleer in Sweden several years ago, and after a concert we had a dinner reception hosted by a local choral association," says Jesse Antin of Clerestory. "They seemed vaguely aware that American music groups are not mainly funded through taxpayer dollars, but it was such a foreign idea to them that they could hardly grasp it. Conversely, it required a major thought experiment on my part to imagine a world where funding for the arts was guaranteed, and, if not exactly generous, was woven into the social fabric."
The National Endowment for the Arts and state and city arts councils certainly make a dent, especially in places like New York and San Francisco that truly understand the connection between tourism and the arts. But there's much more to be done in areas where these local and state government sources have been cut, or are dependent on fluctuating tourism revenues, such as San Francisco's Grants for the Arts hotel tax, which funds a wide range of arts organizations based in San Francisco. It currently gives $13 million in grants to 220 mostly small and midsize San Francisco-based groups (those not based in San Francisco are left out).
But all this funding just isn't enough. Eighteen percent of arts groups in the Bay Area have a deficit, according to a 2005 study by the Center for Social Innovation at the Stanford Graduate School of Business. Median net assets for arts organizations were $60,000, as compared with $80,000 nationally and $95,000 regionally.
Most Bay Area arts organizations survive on sweat equity and discounted labor. According to the Stanford report: "The executive director of one small performing arts nonprofit in San Francisco reflected on the difficulty of raising enough funds to successfully carry his promised season of concerts: 'We will be able to complete the season that we have committed to, but then will have no money at the end of the season. Unless we get more money, we will have no reserves and will not be able to get the next concert started.'"
"Midsize organizations are particularly vulnerable as costs escalate, and even the largest organizations are challenged by the lingering economic malaise," wrote John R. Killacky, arts program officer of the San Francisco Foundation and a mayoral appointee to the San Francisco Arts Task Force, in a San Francisco Chronicle op-ed piece in 2005. "Many groups have not recovered from the suspension of funding from the California Arts Council several years ago and arts leaders of groups of all sizes are demoralized by the pressures and diminishment of support."
All this talk about money highlights an even more critical point. There's an ecosystem of organizations that exist along a spectrum from tiny one-off producers to gigantic establishment presenters. What's more, the biggest depend on the smallest. How would the "establishment" mean anything without the avant-garde to measure it against? There are over a dozen small opera companies operating in the Bay Area, many staging innovative works you would never see at the San Francisco Opera (see "A Baker's Dozen of Opera Companies" by Janos Gereben in the Feb. 28, 2006, issue of SFCV).
The biggest organizations also depend on the smaller groups to introduce audiences to diverse and less commercial new productions, identify up-and-coming talent, and develop innovative new programming ideas that can trickle up the chain. Where else will you find works like Anthony Davis' X: The Life and Times of Malcolm X (at the Oakland Opera), the seldom-heard Frank Martin opera Le vin herbé (at City Concert Opera Orchestra), and the West Coast premiere of Ned Rorem's Our Town (coming to Walnut Creek's Festival Opera in 2007)? Where would the major opera companies be without the talent incubated by serious outfits like Opera San José? Audiences are also often introduced to an art form, and their tastes further developed, in the smaller companies, from which they begin to move out to the bigger organizations.
But despite all these societal benefits, only a handful of groups make it to the top of the money pile. Wealth concentrates in the hands of the biggest organizations. The situation is similar to the world of private education, where the billion-dollar endowments of the Harvards of the world overflow with support, while the less fortunate make due with much less.
Individuals, foundations, and corporations give so disproportionately to the biggest organizations for many reasons. These organizations spend vast amounts of money to do their work, so they certainly need and deserve the funds. The Met estimates that it spends $1 million each and every time the curtain rises at a night's performance, of which only about half is covered by ticket sales. And the costs of innovation are adding up quickly under new general manager Peter Gelb — witness last week's intensely cinematic, and extremely expensive, puppetry vehicle Madama Butterfly by English Patient director Anthony Minghella.
Of course, there's kind-hearted generosity and noble civic-mindedness, not to be downplayed as important motivations. But there's also simple vanity: Individual arts patrons give as part of a complex ritual of status and influence. They donate to maintain their position on boards, to keep up with the Joneses, and to mingle with other powerful people.
Money attracts money. Nothing succeeds like success. And the rich really do get richer, through the magic of compounding returns on investments, a big part of many established organization's budgets. But for every dollar given to one of the largest organizations, that's a dollar not given to a smaller organization. There's no hard proof that any kind of "substitution effect," as the economists would say, exists in arts funding, but there is only so much money to go around, after all. Unless, that is, something changes.
There's another way for donors to give, and industrialist Andrew Carnegie showed the way. Carnegie had a singular goal later in life: Give away his millions before he died. With Carnegie Hall, he created a democracy of sorts in which even the smallest or most far-flung organizations and individuals could rent out the jewel-box recital hall, or the larger hall, to make their New York debut.
But people often don't remember that Carnegie also gave millions — billions in today's dollars — to build more than 3,000 libraries across the United States. In even the smallest towns, and in nearly every state, these magnificent buildings still stand, opening doors of learning to all of America.
It has been estimated that Carnegie and John D. Rockefeller, the richest men of their day, gave away more money in their lifetimes than the entire U.S. government budget in 1910. Warren Buffett and Bill Gates, the wealthiest men alive today, would have to give away 30 times their fortunes to equal the level of giving that Carnegie and Rockefeller achieved.
Ultimately, titans like Carnegie forged a new kind of philanthropy. Carnegie wrote: "[Spending] is held to be the duty of the man of wealth: To set an example of modest, unostentatious living, shunning display or extravagance ... and to consider all surplus revenues which come to him simply as trust funds, which he is called upon to administer ... to produce the most beneficial results for the community," according to Joseph Horowitz's 2005 book Classical Music in America. Carnegie wrote two books on the topic, and their titles say it all: Triumphant Democracy and Gospel of Wealth.
We need a similar gospel of wealth today. As people with the means to make a difference, major donors have a social obligation to open their wallets to the largest groups, who have important missions to advance. But donors also have a moral responsibility to give energetically and creatively to the smallest groups at the same time.
Imagine what a tiny fraction of the $35 million going to San Francisco Opera could do if it were spread across the Bay Area, Robin Hood-style, to the smallest organizations. We might see a further flowering of classical and other serious music forms, or at least a welcome stifling of all the doom-and-gloom predictions about the future of classical music.
Some far-sighted individual arts patrons do give this way, and many foundations make a big difference in many areas. But there's just not enough of them, as any struggling group will tell you. The West in particular lags behind the nation in foundation giving to arts and culture, donating only 7 percent of grants to the arts as compared with 19 percent in the Northeast, according to the Foundation Center.
Nationally, 75 percent of private giving comes from individuals, rather than foundations or corporations. Add to this a demographic wave that's already beginning to hit. Baby Boomers will give an estimated $1.7 trillion to charities between 1998 and 2017, as they inherit the wealth amassed by their parents. By 2017, that could amount to $571 billion a year.
Smaller organizations are where a new generation of donors can really get some bang for their buck. Because these group's overhead expenses are so low, donors can see their money directly at work artistically. Like the patrons of old, they can also rest knowing that important art has gotten made and that it has enriched the community. Sometimes, they can enjoy the gratification that they "saved the day."
It's up to all of us to pitch in. Regardless of net worth, individuals can give what they can afford, volunteer, or join the boards of the smallest groups and add their wealth, expertise, or connections to help these groups stabilize and grow. Those with greater resources can sponsor a concert, underwrite the commission of a new work, help build the staff infrastructure needed to grow, support local organizations that have incubated important groups throughout their history, or give to a local foundation that can help identify the best organizations for them.
Some excellent starting points for figuring out this new landscape include: a New Visions report titled "Philanthropy's Forgotten Donor"; a report from Global Business Network titled "Looking Out for the Future" at the Future of Philanthropy Web site; and the book Inspired Philanthropy: Your Step-by-Step Guide to Creating a Giving Plan by Tracy Gary and Melissa Kohner (Jossey-Bass, 2002).
And donors can certainly read SFCV to learn more about small and up-and-coming groups worth investigating. We are the voice for the little guys, in an era of declining arts coverage in the major media outlets for everyone. We are too often the only publication that reviews the smaller organizations mentioned in this article.
Ultimately this new approach is not a matter of substituting giving to the major symphony or opera company with giving to a small chamber symphony or opera company. It's a matter of giving generously to both.
It's also about developing a new way of thinking about financing a local arts scene, one that understands that our community is only as strong as the weakest link in the chain. Our cultural web depends on a full and rich spectrum of organizations, and their existence depends on growing the financial pie for everyone.
(Mickey Butts is executive director, editor, and publisher of San Francisco Classical Voice. His writing has appeared in Salon, The Nation, Food & Wine, The Financial Times, The Industry Standard, Wired, Business 2.0, and The San Francisco Chronicle. His ghostwriting and editing on business, economics, and nonprofit management have been published by Harvard Business Review, The McKinsey Quarterly, The Financial Times, Economist Intelligence Unit, Random House, Bridgespan Group, and Harvard Business School Publishing.)
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©2006 Mickey Butts, all rights reserved.
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From September 1, 1998, to Oct. 31, 2006, SFCV has published, in addition to our weekly features, Music News, and Listening Ahead columns, 2,551 reviews of Bay Area performances by: 53 symphony orchestras (530 reviews), dozens of recital presenters (444 reviews), 42 opera companies (356 reviews), 94 chamber groups (301 reviews), 39 new-music ensembles and programs (268 reviews), 53 early-music ensembles (199 reviews), 38 choral groups (162 reviews), 17 music festivals (119 reviews), 24 chamber orchestras (99 reviews), six musical theater groups (17 reviews), as well as numerous world music groups (15 reviews), youth music ensembles (14 reviews), and other organizations (14 reviews).
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