Critical Issues Facing the Arts in California A Working Paper from The James Irvine Foundation SEPTEMBER 2006 CRITICAL ISSUES FACING THE ARTS IN CALIFORNIA: A WORKING PAPER Contents Foreword ............................................................................................ 1 Overview ............................................................................................ 2 Key Issue — Access ...............................................................................8 Key Issue — Cultural Policy ....................................................................11 Key Issue — Arts Education ................................................................... 14 Key Issue — The Nonprofit Business Model .................................................17 Key Issue — The Next Generation of Artists and Arts Managers .........................21 Conclusion ........................................................................................ 24 Appendix A: Advisory Committee ............................................................. 25 Appendix B: Bibliography .......................................................................26 Appendix C: Interviews ......................................................................... 31 Contributors ...................................................................................... 32 THE JAMES IRVINE FOUNDATION CRITICAL ISSUES FACING THE ARTS IN CALIFORNIA: A WORKING PAPER Foreword Since its inception in 1937,The James Irvine Foundation has been a consistent funderof the arts in California. Ourfoundation’s sustained commitment to arts and culture organizations across the state,combined with the manychanges we have observed recentlyin California’s artistic and cultural communities,led us to embarkon a project earlierthis yearto examine the forces,trends,and challenges facing California’s arts sectortoday. The Irvine Foundation retained AEAConsulting to complete the first phase of this project,intended to elevate the keyissues critical to the future of California’s arts sector. The working paperthat follows describes the initial findings from this first phase,based on a set of interviews with arts leaders across the state as well as a reviewof the relevant literature. California is a wellspring of artistic and cultural innovation and creativityand is on the forefront of manyof the developments in this sector. This is cause forpride and celebration. However,the sectoralso faces real challenges to its future viability. This working paper describes five keythemes which,if not addressed,maythreaten the health and well-being of the sectorgoing forward. As a result,the working paperdeserves close consideration. Our approach to these issues here in California maywell inform howthose outside of the state manage similarchallenges. To identifypotential approaches to address these challenges,we are nowcirculating this working paperto a broad set of constituents. We have also commenced the second phase of this project,which intends to gauge whetherthese themes resonate in the arts community,to outline possible implications,to identifyadditional quantitative research that is needed,and to surface recommendations forthe field. In this next phase,we will actively engage otherarts funders,artists,arts administrators,and cultural and policyleaders throughout the state. As one of ourapproaches to gatherfeedback,we invite readers of this document to offertheircomments through a Web site designated to encourage dialogue about the working paper. The Web site address is www.californiaculture.blogspot.com, and comments will be accepted until October31,2006. As one of ourmanyobligations as a public service institution,The James Irvine Foundation seeks to drawattention to issues critical to California’s future and to contribute to identifying solutions to the challenges facing ourstate. The continued health and vitalityof California’s arts and culture sectoris one such critical issue,and we hope that this working paper— and the activities it engenders —will lead manyof us to tackle head-on the challenges and opportunities facing the arts communitytoday. California’s arts sector deserves no less. James E. Canales President & CEO The James Irvine Foundation PAGE 1 | THE JAMES IRVINE FOUNDATION CRITICAL ISSUES FACING THE ARTS IN CALIFORNIA: A WORKING PAPER Overview In January2006,The James Irvine Foundation hired AEAConsulting to identifythe critical issues facing the cultural sectorin the state of California and illuminate the implications of these issues forthe sector’s long-term health and vibrancy. The Foundation initiated this work in orderto inform its efforts to strategicallyaddress the challenges facing California’s artistic and cultural community. This project was designed as a two-phase process. The first phase,conducted between Januaryand June 2006,was a qualitative exercise consisting of consultations with a small advisorycommittee (listed in AppendixA),an extensive literature search (bibliographyin AppendixB),interviews with a cross-section of cultural leaders (listed in AppendixC),and preparation of a written report on the initial findings and recommendations forfurther action. Structured as a “working paper,”this document is the conclusion to the first phase of work. It outlines the most serious challenges facing California’s cultural sector,issues that must be addressed to ensure a sustainable and healthycultural ecologyforthe future. AEAConsulting has focused the bulkof its analysis on nonprofit cultural organizations because,forthe last 40years,theyhave been understood byfoundations and government leaders as the primarydeliverymechanism forthe cultural experience. The conclusions of ourpreliminaryresearch caution against assuming that this is still true,orthat it will be true in the future. In fact,the research suggests that nonprofit arts organizations are onlyone of manyelements in California’s complexsystem of arts and culture today,and are likelyto become increasinglyperipheral as the modes of creating,delivering and consuming artistic content and experience are affected bylarge-scale changes in the broaderenvironment. The nonprofit arts and cultural sectoris facing major,permanent,structural changes brought on bytechnological advances,globalization and shifting consumerbehavior. The process of helping the sectoradjust to these changes and develop a more sustainable cultural ecosystem must be built on a common understanding of the largerenvironmental context and the evolving dynamics of cultural provision and consumption. Before discussing the five keyissues which have emerged as priorities forthe future health and vitalityof the cultural sectorof California,this section gives a brief overviewof the context in which this paperwas commissioned. The cultural sectordoes not exist in a vacuum. Currently,it is being challenged by majordemographic,economic,technological and social factors outside its immediate control. While the commercial arts and individual artists are also struggling to adapt to these changes,fora varietyof reasons the nonprofit arts sectorhas been particularlyslowin reacting effectively. Apreliminarylookat some majortrends suggests that the future of the arts is likelyto be neitherconclusivelynegative norpositive,but certainlydifferent than it has been in the past. It is critical that future decisions byindividual artists,organizations,funders and otherpolicymakers be made in context of global and local realities. PAGE 2 | THE JAMES IRVINE FOUNDATION CRITICAL ISSUES FACING THE ARTS IN CALIFORNIA: A WORKING PAPER BROADER CONTEXT FOR CULTURE The changing demographics of California are significant forthe future production and consumption of arts and culture. The population of California is both growing and becoming more ethnicallydiverse. California is experiencing the largest growth in Latino and Asian populations of anystate in the U.S.,and its white population is nowa minority. These trends are more acute in California than the rest of the U.S. — 26 percent of the state’s residents are foreign born (compared to 11percent of the U.S. population as a whole),including 68 percent of its Asian population and 47percent of its Latino population.1 In addition, 20 percent of California residents speakEnglish “less than well”in the home,compared to 8 percent of the U.S. as a whole.2 As well as growing faster,California’s non-white population is proportionallymuch youngerthan its white counterpart. This is particularlytrue forLatinos,due to the demographics of immigration and higherbirth rates in this group. Whereas approximately 20 percent of the white population in California is over65,this is true foronlyabout 4 percent of the Latino population. About 36 percent of California’s Latinos are under18, compared to about 20 percent of the white population.3These trends suggest that California is likelyto become even more diverse overthe coming years. California has both some of the wealthiest and some of the poorest communities in the Western world.4As more wealthypeople seekreal estate in California’s coastal areas,the cost of living is rising and lowerand middle income residents are moving inland. The substantial migration from the coastal areas to inland communities is causing a rapid increase in population in areas that do not yet have the infrastructure to handle it. Manyof those moving to the interiorare newimmigrants,particularlyfrom Mexico and Central America,creating large communities in areas that were formerlysparsely populated and mostlywhite. San Bernardino,Riverside and Imperial Counties were 75 percent white in 1990,62 percent in 2000 and the white population is expected to be in the minorityby2010.5 Currentlyone out of 10 Californians lives in the Inland Empire. It is the fastest growing region in California and one of the fastest in the U.S. The region’s population is expected to reach over5 million in 2020 (and according to the most recent Census,it is alreadymore populous than 25 states in the country). This region is one of the poorest and least-well educated in the state,although there are also an increasing numberof middle-class home buyers looking foraffordable real estate outside of the coastal cities. There is job growth in the region,howeverit is not enough to keep up with the expanding 1 U.S. Census. In Powerpoint “021024-SW-JF7 Strategic Planning Data” from The James Irvine Foundation. 2 Public Policy Institute of California, 1990 data. In Powerpoint “021024-SW-JF7 Strategic Planning Data” from The James Irvine Foundation. 3 U.S. Census. In “021024-SW-JF7 Strategic Planning Data” PowerPoint from James Irvine Foundation. 4 O’Donnell, Jeri. Ed. “The Threat From Within.” 5 Cherny, Andrei. “The New California: Demography is Destiny in the Golden Gate.” U.S. Census. PAGE 3 | THE JAMES IRVINE FOUNDATION CRITICAL ISSUES FACING THE ARTS IN CALIFORNIA: A WORKING PAPER population,and manyof the available jobs are lowpaying orrequire long commutes to coastal communities.6 Income levels in California are widelydisparate bydemographic group,although these generalities maskthe wide diversitywithin all racial and ethnic categories. Latinos and African-Americans are generallyon the lowend of the earning scale,while Asians and whites are generallyat the high end. Twenty-eight percent of the state’s Latino population and 24 percent of the African-American population are belowthe povertylevel,compared to 17percent of the state as a whole and 13 percent nationally. Only10 percent of the white population is belowthe povertylevel,while 13 percent is in the top 10 percent income bracket.7The income disparityis expected to growif real wages forthe bottom 50 percent continue to decline as theyhave forthe last 20years,and those forthe top 10 percent continue to rise.8 Income is tightlylinked to educational attainment,and California’s Latino population is significantlyless likelyto be college educated than anyothergroup. African-Americans fall behind in literacyand college readiness. California is facing a significant challenge to prepare its population with the skills and knowledge necessaryto sustain itself in the 21st century. The state is in poor,albeit improving,economic shape to address these challenges. The government is in an extended fiscal crisis and pursuing a combination of spending cuts and borrowing to avoid deficits and correct the enduring structural deficit. This has provided momentum forthose who call fordownsizing government’s role in all sectors,including the arts. Lawmakers are increasinglyreluctant to spend moneyon social services that are perceived as frills,restricting public appropriations to “basic needs.”As a result,the last few years have produced significant cuts to funding forhighereducation,child care,social programs and the arts and culture.9 These cuts derive partlyfrom ideological opposition to government spending,but they are also a reaction to the blurring of lines between the commercial and nonprofit sectors. The increasing influence of the market in all spheres of American life is forcing nonprofit sectors traditionallyshielded from the marketplace (academic institutions,cultural organizations,nonprofit health providers,forexample) to compete with commercial enterprises forcustomers,societal validation and resources.10Whereas 40years ago,the distinction between nonprofit and commercial entities in all sectors seemed clear, todaymore and more nonprofits are assuming commercial strategies and vice versa. 6 Downs, Anthony. “California’s Inland Empire: The Leading Edge of Southern California’s Growth.” 7 PPIC and 2000 Census from Irvine PowerPoint. 8 RAND.“The Threat from Within.” 9 The cuts in support for higher education also have an impact on the arts, as participation rates in nonprofit cultural institutions correlate closely with levels of educational attainment. 10 Yüdice, George. The Privatization of Culture. PAGE 4 | THE JAMES IRVINE FOUNDATION CRITICAL ISSUES FACING THE ARTS IN CALIFORNIA: A WORKING PAPER The traditional rationale forgovernment support — to offset market failures and address issues of equitable access to public goods — no longerseems to applycompellinglyto all previouslyfunded nonprofit sectors. This is particularlyrelevant in the arts,given the dominance of the entertainment industryin the California economy. Rapid advances in technologyand electronic communications are profoundly changing the lifestyle choices of Americans. This trend could affect California profoundlyas the state’s relativelyyouthful population quicklyadopts newcommunication tools. Television, radio,computertechnology,iPods,DVDs,MP3s,video games,and the newnetworking capacities of the Internet are transforming the waypeople work,get information,connect with others,share resources,and build community. The rate of change precipitated bythese inventions is likelyto increase in the coming decade. We discuss the implications of these developments forthe arts in greaterdepth in the Access chapterof this paper. ROLE FOR CULTURE Afterfourdecades of expansion and diversification in the numberand type of nonprofit cultural providers,encouraged byfunding from government,foundations,and individuals, the nonprofit cultural sectornowfaces serious challenges to its future viability. One of the main threats is a shift in the waythe public values culture,both in style and in substance. George Yüdice describes this as a change in the “legitimation narrative”used to justify government investment in the arts from one which valued the arts fortheirown sake to one which insists that the arts prove theirsocial oreconomic worth.11This reflects the extent to which market principles have been integrated into all facets of American life. Increasingly,it is assumed that the market can provide what people want,including cultural experience,and that government should focus exclusivelyon the services people need that are not provided bythe market. Lacking robust data to prove it is essential,and amid increasing doubt that it is in fact so,the nonprofit cultural sectorhas struggled overthe past decade to justifyits public value in these terms. Cultural producers that are able and willing to adjust to changing conditions are succeeding,those that can’t orwon’t are becoming obsolete. Manynonprofit arts organizations,insulated foryears from the immediate effects of market shifts,have continued to operate underan outdated understanding of what the general public values. Individual organizations and the sectoras a whole have increased fixed costs consistentlyoverthe past 40 years bybuilding newfacilities and adding programs,even while attendance and earned and contributed revenues remain stagnant orfall.12There is nowa serious imbalance: the current level of public participation and financial support is not sufficient forwhat the nonprofit arts sectorneeds to survive. As a result,increasing numbers of organizations are facing significant financial hardship. 11 Yüdice. 12 McCarthy, Kevin, et. al. Performing Arts in a New Era. PAGE 5 | THE JAMES IRVINE FOUNDATION CRITICAL ISSUES FACING THE ARTS IN CALIFORNIA: A WORKING PAPER If we use a broad definition of cultural participation,including attending “lowbrow” cultural events such as movies and street fairs,playing in a garage band orpainting on Sundays as well as attending museums,regional theaters and other“high brow”institutions, people’s engagement with the arts is healthynationwide. Some estimates which include the “unincorporated arts,”defined as community,avocational,orfolkarts,suggest that as many as 95 percent of American adults participate in some kind of cultural activityon a regular basis. Manyof these activities are bynature more participatorythan the traditional nonprofit arts.13 Despite remarkable levels of personal engagement in manydifferent kinds of arts activity,audiences at nonprofit arts organizations are generallyflat orshrinking,and it is generallyaccepted that the field of cultural institutions is overcrowded. The nonprofit arts are competing forconsumerattention not onlywith othernonprofit arts groups,but with the full range of commercial and nonprofit leisure options available. The commercial arts sector, once thought to be inferiorin qualityto the nonprofit arts sector,nowserves large parts of the nonprofit sector’s formermarket. This will be explored in more detail in the Access chapter,but it appears that the era of the nonprofit arts organization’s preeminence in the American cultural landscape is coming to a close. Enabled bya system that shielded it from the immediate effects of supplyand demand,much of the nonprofit arts sectorhas remained blind to broadertrends shaping the creation of and participation in culture. As theysee the pulling awayof audiences and funders,manycultural nonprofit groups still preferto believe that the current challenges are a result of a cyclical economic downturn. To the contrary,the evidence suggests that this is a permanent structural change. The environment forarts and culture in California and the rest of the U.S. has irreversiblychanged,and the nonprofit arts sectorhas reached a breaking point where it must adapt to evolving technologies and consumerdemand or become increasinglyirrelevant. Inaction or“business as usual”is not a viable option. Proactivelyconfronting these challenges and strategicallyworking toward solutions as a sectoris the most sensible wayforward. In the following pages,we outline five majorfactors impinging on the future health and vitalityof the nonprofit arts sectorthat will serve as the starting point forfurther discussion. These factors are not unique to California,but the paperattempts to layout their particularrelevance forCalifornia where appropriate. The issues described in the following pages are inter-related and are best considered togetherin anydiscussion of howto fostera vibrant cultural ecologyin the state of California. The section on Access discusses howtechnologyhas fundamentallychanged the production,distribution and consumption of culture and the impact that this is having on the traditional nonprofit cultural institution. Cultural Policy explains the need fora shared 13 According to researchers Moni Peters and Joni Cherbo. Referenced in Jackson, Maria-Rosario, et. al. Art and Culture in Communities: Unpacking Participation. PAGE 6 | THE JAMES IRVINE FOUNDATION CRITICAL ISSUES FACING THE ARTS IN CALIFORNIA: A WORKING PAPER understanding and compelling arguments about the public value of culture. Arts Education explores the historyof arts instruction in California public schools and,because of its broad- based public support,its potential as a galvanizing issue. The Nonprofit Business Model discusses the failings of the traditional nonprofit business model in the evolving environment and the challenges of providing what artists and the public nowwant and need. Finally, The Next Generation of Artists and Arts Managers explores howthe changes in the environment forculture necessitate that artists and arts managers develop newskill sets to be successful. Taken together,these five issues frame the most important challenges to the future vitalityof the arts in California. Addressing them can form the basis of strategic,multipronged- interventions that will build and support a healthierand sustainable cultural sectorgoing forward. PAGE 7 | THE JAMES IRVINE FOUNDATION CRITICAL ISSUES FACING THE ARTS IN CALIFORNIA: A WORKING PAPER Key Issue — Access As a result of the Internet and othercommunications technologies,consumers nowhave access to more information about theircultural choices than everbefore and are better informed and more discerning about howtheyspend theircultural dollar. Television,radio, the Internet,the proliferating arrayof electronic communication instruments and the global market forculture allowwiderand more democratic distribution of artistic offerings and facilitate participation in active as well as passive forms of cultural consumption.14Affordable personal and home media deliverysystems allowprivate consumption of high quality, affordable cultural goods and these options are competing more and more successfullywith the live experience. As these technologies allowpeople to curate theirown artistic experiences (what formerchairman of the National Endowment forthe Arts Bill Iveycalls “the curatorial me”), there is a corresponding growth in specialized products and cultural micro-markets served byfor-profit players. Manyof the most successful entities in the for-profit cultural market, including Netflixand Amazon,are premised on the idea of appealing to niche markets on a massive scale. Chris Anderson,the editorof Wired magazine,refers to this as “the long tail” of cultural consumption.15As technologyreduces the marginal cost of offering additional products to consumers,these businesses challenge the nonprofits’assertion that theyalone offerhigh qualityart “you can’t get elsewhere.”These newculture-related businesses offera huge varietyof artistic products at price points that are hard to beat. Forinstance,a MIT studyestimated that Amazon was able to offerthe user2.3 million booktitles,as opposed to 40,000–100,000 at the typical bricks and mortarbookstore.16 No one has yet figured out howto translate the long tail business model forthe live experience. The institutionalized nonprofit cultural sectorsuch as museums,theaters,orchestras and ballet companies and traditional corporate cultural providers such as film studios and the recording industryare struggling to manage in this newcontext,yet artistic creation is flourishing. Applications to arts schools and graduate programs in the arts are at an all-time high.17 Nationally,these schools enroll more than 500,000 arts majors and graduate more than 100,000 young artists each year.18 Newtechnologies are making some forms of artistic creation less expensive to produce,even as theymake otherforms obsolete. An increasing numberof artists are successfullyself-producing and self-marketing,building wide networks 14 Cowen, Tyler. In Praise of Commercial Culture. Also, Maribel Alvarez. There’s Nothing Informal About It. 15 Anderson, Chris. The Long Tail: Why the Future of Business is Selling Less of More. 16 Brynjolfsson, Erik, Michael D. Smith and Yu (Jeffrey) Hu. “Consumer Surplus in the Digital Economy: Estimating the Value of Increased Product Variety at Online Booksellers.” 17 Van Ness, Elizabeth. “Is a Cinema Studies Degree the New MBA?” 18 Dempster, Douglas. “American Medicis: Training and Patronizing Professional Artists in American Universities.” PAGE 8 | THE JAMES IRVINE FOUNDATION