One of the questions I receive most often whenever I write about the arts is, "Why can't the arts pay for themselves? Why are public or private contributions required?" (These questions are frequently asked in far more colorful language.)
There is a simple answer rooted in two economic problems that affect all arts organizations.
The first, and most problematic, is that arts organizations have a very difficult time achieving productivity improvements. Most every other industry improves worker productivity annually. This is crucial because productivity improvements mitigate the impact of inflation.
But arts organizations have a difficult time improving the productivity of their performers, typically the largest expense item for an arts organization. Orchestras do not play Beethoven's Ninth Symphony faster every year. We do not have fewer performers in Hamlet than when it was written hundreds of years ago. A Balanchine ballet that required 32 dancers in the 1950s still requires 32 dancers today.
As a result, costs go up more quickly in the arts than in other industries because we do not accommodate some of the impact of inflation with productivity improvements.
This problem with escalating costs is compounded by the second economic problem faced by arts groups: once a theater or gallery is selected, one has literally set in concrete the real earned income potential for the organization; one simply cannot sell more tickets than one has seats.
This means that expenses continue to rise while real earned income is held steady. This creates an income gap that continues to grow over time.
How can we fill that gap? The primary approach has been to raise ticket prices. The problem is that we have raised prices so high that we have disenfranchised too many potential arts patrons. When people say the arts are irrelevant, I have to disagree; the arts are simply too expensive. Whenever we have free performances at the Kennedy Center the performances are filled -- especially for symphony and ballet.
Price increases have become a bigger problem given the emergence of so many inexpensive electronic substitutes. For the price of two of the best seats to the Metropolitan Opera one can now buy a computer and watch Maria Callas and Joan Sutherland on YouTube for free.
Another approach to filling the income gap has been to start auxiliary businesses, though few if any arts organizations have been successful balancing the books with unrelated business income.
The only other choice open to not-for-profit arts groups is to raise money -- from government and private donors. In this country, unlike the rest of the world, the vast preponderance of money contributed to arts groups comes from private sources -- individuals, corporations and foundations. Our Puritanical heritage still influences the degree of federal government support for the arts; the notion that music and dance were evil meant that the federal government did not directly support artistic endeavors in a substantial way.
The rising importance of contributed funds is a result of the increasing size of the income gap. It is a problem that will not go away and requires more and more sophisticated management of arts groups.
That is why I started the Kennedy Center Arts Management Institute and why I have lobbied for two decades for more funding for arts management education in this nation. We spend so much training young singers, dancers, musicians and actors and spend so very little training the people who will employ them -- and who face a growing income gap that simply won't go away.