The Arts Face Their Own Fiscal Cliff

There has been an endless amount of discussion about the impending fiscal cliff faced by the United States government, especially here in Washington, D.C. It strikes me that the arts face their own fiscal cliff.

Too many of our great arts institutions have migrated from the typical challenge of balancing the annual budget to a far deeper evaluation of their very viability.

Earned income has failed to keep up with inflation and fundraising has plummeted for too many organizations. It is not uncommon to read about huge deficits and cancelled seasons. Not surprisingly, orchestras are suffering the most and the most visibly (although no art form is immune). Orchestras have the highest level of fixed costs and therefore are the least flexible during hard times; they simply cannot lower costs as much as dance or theater companies who can save money by doing smaller works or museums that can mount exhibitions from their own collections.

This has left many suggesting that we need new models for running arts organizations (although I have yet to hear any suggestions of new models that could save large organizations like orchestras, ballet companies and opera companies) and others looking for draconian cuts to the budgets of the institutions they love.

The main choice proposed by many boards and even some in management are large cuts to overhead costs; for orchestras this typically means reducing musicians' salaries, often radically, although other costs are mentioned as well. This 'remedy' is not dissimilar to the Conservative movement's solution for America's fiscal woes: severe cuts to entitlement and other programs to reduce the cost of government.

A second approach (might we call it the Democratic approach?) is to increase revenue so that programming would not be cut.

There is a big difference between governments and arts organizations, of course. While governments can legislate revenue increases, arts organizations must earn them. And this is as scary to most board members and managements as higher taxes are to those who have signed the Norquist pledge. How can we plan on higher revenues when there is increasing competition for entertainment dollars and the economy has made fundraising so much more difficult, they ask.

I have spent the better part of my life arguing that revenue increases are not only advisable, but necessary. It is inarguable that over time, those organizations that reduce salaries of artists and cut artistic initiatives are going to have a harder time raising funds and selling tickets -- they will simply not be able to compete for the best talent and for funders and audience members. For not every arts organization is going to be making big cuts--for every troubled organization I can point to one that is doing well at the moment.

Like many who are commenting on our national problem, I believe growth must be the long-term answer.

And a combination of judicious cost cutting matched with aggressive marketing and fundraising aimed at creating more revenue must be the short-term answer.

But unlike the unilateral way this problem will be solved by Congress, every arts organization must make this choice for itself.