04 October 2005
U.S. Supports the Arts Through Blend of Public and Private Funding
Decentralized system encourages cultural diversity
Washington -- One hundred fifteen million dollars. Twelve billion dollars. The first number represents the 2003 budget of the National Endowment for the Arts (NEA), the largest U.S. government-funded source of grants to artists and scholars; the second an estimate of annual private U.S. spending on the arts. Behind these divergent figures lies a decentralized, largely voluntary and highly dynamic commitment to nurture and encourage cultural institutions. While this system differs from some other nations’ more centralized arrangements, it nonetheless is rooted deeply in American history and enjoys broad support among the American people.
The United States remains to this day a comparatively decentralized nation. Many services provided elsewhere at the national level here are dispensed by states and localities, or through voluntary organizations. Indeed, most Americans refer to their “federal” rather than national government. While the federal government plays an important role in sustaining a vibrant cultural environment, individual Americans, corporations and other private institutions supply most of the funds. Among the strengths of this system is its dynamism: thousands of different funding sources sustain a wide and changing variety of artistic endeavors, including some for nearly every taste.
Government Funding
NEA Chairman Dana Gioia has observed that the centralized European model of art sponsorship “grew out of a tradition of royal and aristocratic patronage that in modern times has been assumed by the state.” The United States, by contrast, never possessed either royalty or a hereditary aristocracy. Founded in the name of individual freedom, it developed a system that relies heavily on private philanthropy, supplemented by government grants and incentives to encourage private giving.
The federal government provides approximately 2 percent of arts funding, and state and local arts agencies about 8 percent. Government grants, however, often have significant “seed” and “multiplier” effects. Even modest federal grants can be important to a fledgling organization, and federal recognition often legitimizes a new artist or institution in the eyes of private donors. NEA, the largest single federal grant source, estimates that each grant dollar attracts to the recipient institution seven dollars to eight dollars in private donations and earned revenue.
Since many funding decisions are shifted away from Washington, U.S. artists have less need to justify their work to government bureaucrats, and no government agency wields too large an impact on American cultural life. NEA, as Gioia has written, “has never possessed the resources to impose its will on the American arts world.” Also, since the number of philanthropists is correspondingly large, a greater variety of artistic endeavors can secure funding. There are in America, for instance, more than 1,500 professional theaters, 1,200 symphony orchestras and about 120 opera companies. In a continent-spanning nation where many live far from the leading urban cultural centers, a decentralized arts policy helps bring art closer to the people.
Private Funding
Possibly the single greatest federal contribution to the arts is the charitable income tax deduction, which allows most Americans to subtract from their income tax obligation their donations to qualified nonprofit organizations. Americans would support the arts regardless — their tradition of private philanthropy long predates the income tax itself — but with the deduction in place, private giving far outstrips direct federal grants.
Estimates for 2003 suggest that private donations to artists and arts organizations exceeded $12 billion, or $42 for each American. About half this total came from individuals, a third from foundations and the rest from corporations.
Americans’ financial support of the arts is not limited to donations. Compared to their European peers, U.S. cultural institutions rely more heavily on ticket sales. More than 40 percent of an American orchestra’s revenue, for instance, typically comes from concert income. By comparison, a German orchestra might derive 80 percent of its revenue through direct government aid. The U.S. approach allows each individual to support with his or her entertainment dollars the music, theater and literature he or she prefers.
A similar pattern appears in the realm of noncommercial radio and television broadcasting. In the United Kingdom, taxpayers are required to pay a license fee for the support of those broadcasts, regardless of whether they choose to listen to or view them. In the United States, government affords a measure of funding, but public broadcasters, including local stations of the Public Broadcasting Service (television) and National Public Radio (NPR), rely on, seek and receive donations, both large and small, from their viewers and listeners. Upon her death in 2003, Joan Kroc, widow of the founder of the McDonald’s hamburger chain, left to NPR the sum of $200 million, while thousands of listeners purchased “memberships” in their local stations, often for sums well under $100.
In a historical context, Kroc’s gift was not particularly unusual. Successful American entrepreneurs long have turned to philanthropy. The steel magnate Andrew Carnegie gave away more than $350 million, building among other things 3,000 public libraries and a major university. "I resolved,” he said, “to stop accumulating and begin the infinitely more serious and difficult task of wise distribution." Foundations established by other business titans like Henry Ford, John D. Rockefeller and many others continue today to fund artistic endeavors. No accounting of arts in the United States would be complete without an understanding of the crucial interplay between the public and private sectors.
Nations seek to cultivate a rich artistic and cultural life by supporting the arts in ways that comport with their particular values and historical experience. The United States supports the arts through a flexible system that leverages public funding while encouraging private generosity and individual decision-making.
For Additional Information, see National Endowment for the Arts publication, “How the United States Funds the Arts” (PDF, 31 pages).
See also The Arts in America: New Directions, which includes an interview with NEA Chairman Dana Gioia
(The Washington File is a product of the Bureau of International Information Programs, U.S. Department of State. Web site: http://usinfo.state.gov)
