Since the United States was declared independent, it has made almost a conscious effort to do things differently from the United Kingdom. Politically, economically, and socially, these are two very different nations with very different ideals. Culture and the arts, although considered of value on both sides of the pond, have long been approached somewhat contrarily by the two countries in terms of funding. Open a performance program at the Apollo theatre in London and you will see a few acknowledgements of sponsors, perhaps an advertisement or two. In contrast, the average performance program here in the US is chock full of sponsorship acknowledgements, advertisements, and thanks to various donors, partners, and contributors. This is a small discrepancy between the two countries perhaps, but it hints at a much larger issue: the difference between publicly funded and philanthropically funded cultural sectors.
First and foremost, it is important to understand that the United States and the United Kingdom are operating in very different contexts. The US has a population of 316.6 million, while the UK is home to just 64.1 million people. The federal budget for fiscal year 2015 in the United States is $3.9 trillion versus a projected £731.4 billion in the UK (less than $1.2 trillion). As an English citizen who has lived in America for nearly four years, I have often been able to observe how different the British and American economic systems are, and how this in turn impacts upon the production, marketing, and perception of the arts. America advocates minimal government expenditure and maximized privatized global capitalism, whereas the UK supports a mixed economy with an emphasis on social and cultural programs. In the UK, governmental spending often equates to around half of the GNP. While Americans argue that a privatized marketplace creates more efficiency within government, the UK insists that such an approach creates a corporate-dominated society. Such a difference in viewpoints has created somewhat of a cultural divide between the two, with each backing their own methods as the most effective. So which is the more effective model? And can lessons be learned by both sides to achieve a more efficient funding strategy in the future?
In order to properly understand the discrepancy between public spending on the arts in the US and the UK, a per capita figure is very telling. In the US, the federal government, states, and localities appropriated a combined $1.14 billion to the arts in FY2013, amounting to a total per capita investment of 6 cents per week. In FY2014, each person in England contributed 14p (22 cents) per week specifically to the arts and culture. This figure highlights the sheer lack of public funding dedicated to the cultural sector in the US. However both countries, despite their differences, have flourishing cultural sectors.
The UK funds the arts through a balance of public investments, earned income, and private sector funding. This balance provides the UK with the strength of the mixed economy that shelters arts organizations, at least partially, from financial crises in any one strand of funding and other harmful effects. England has neither the dependence on public money that is seen in other European countries, nor the dependence on philanthropic and corporate giving that is the primary feature of the US system. Although recent cuts to the arts following the 2008 recession have forced the British government to cut spending on the arts by a vast amount, experts argue that a move towards philanthropy is not in the best interest of the sector:
“Ministers claim that philanthropy is the answer, but it never was. In the US, relying on donors deadens the arts, filling their boards with the conservative-minded, failing to stimulate experiment and imagination”.
Despite this, the coalition government made it clear soon after coming to power in May 2010 that it was pursuing an agenda of encouraging private investment and philanthropy in the arts. This was marked by the launch of an initiative called 'The Big Arts Give', in conjunction with the organization Arts & Business that facilitates funding partnerships between arts organizations and businesses. However, although private investment is encouraged in the UK in the wake of spending cuts across all sectors, the latest government agenda clearly states that “it is not, and should not be, the role of philanthropists to plug the gap left by receding public subsidy of the arts and heritage... It is also unlikely that British philanthropy will ever resemble that in America, for reasons of size and culture". So although philanthropy is on the rise in the UK, it is not anticipated to be a substitute for public funding, but instead a supplementary financial resource.
The primary benefit to the UK system of funding is really for the British citizens as art consumers. Public funding results in more accessible art, with lowers ticket prices and, as is the case for the majority of larger institutions, facilitates free entry to museums. Advocates for the British funding model would argue that privatized investment in the arts results in a corporate-style sector that quickly loses sight of the real purpose behind each organization as financial need becomes the focus of day-to-day operations. A reliance on development is not only time consuming, but can be costly too. Research shows that each year nonprofits spend anywhere between $0.12 and $1.50 per dollar raised on fundraising costs. The real issue with philanthropically funded organizations therefore is with consistency, both in funds donated and fundraising practices. If philanthropic fundraising removes ties to government, it does not eliminate links to the economy as a whole. In times of economic instability, philanthropy decreases just as much, if not more, than government spending. According to The Chronicle of Philanthropy, charitable giving in the US by the rich dropped by $30 billion during the recession, a decrease in 15.3%.
I don't want you to think that I am biased as a Brit though, the UK model is certainly not infallible. In 2012, after a round of 15% budget cuts (the same decrease in revenue seen in charitable giving here in the US), more than a ninth of UK arts organizations who lost their funding intended to close, and another 22% considered themselves “at risk of failure” simply because they had no plan B when it came to sustainability. Furthermore, those who support the American model would argue that an over-reliance on public money drains the economy. While UK nonprofits are tied inextricably to public spending policy, a privatized nonprofit sector can be more independent, and self-sufficiency promotes sustainability in the long term, regardless of politics. Indeed, a lack of public money is not congruent with a lack of revenue. In fact, philanthropy has, on the whole, been an effective model in the United States. While in the UK donations like Lloyd Dorman’s £10m gift (around $16m) to the National Theatre are the exception rather than the rule, the US consistently sees incredible sums of money being donated to cultural institutions. For example, in 2011 the family that owns Wal-Mart famously donated $800m to the Arkansas Museum of American Art in 2011, and this is not even the largest gift to the arts in US history. J Paul Getty, whose bequest to his California museum in 1982 would be worth $2.5bn in today’s money, still holds this record.
So what incentivizes these gifts? The answer to this is not a straightforward one. There are those that donate for personal reasons, for the love of the organization or even the art form, but the key difference between philanthropy in the US and in the UK lies in tax exempt donations, whereby individuals and corporations are encouraged to donate for tax incentives. In 1917, the US government announced that any donation given to a tax-exempt nonprofit organization qualified as a potential deduction for the tax-paying donor. In spite of the UK’s move to increase philanthropy in its arts funding strategy, it is a significant omission from the UK government's "philanthropy strategy" that it suggests no reforms to the tax or gift-aid systems to encourage contributions.
Even without tax incentives, the UK has definitely begun to embrace philanthropy as a source of revenue, and likewise a move towards the UK model in America has also been noted in recent decades. Over the past twenty-one years, total public funding for the arts by federal, state and local governments increased by 15.6%. The National Endowment for the Arts (NEA), which distributes public money among cultural institutions has markedly increased grant-giving in recent times. This, coupled with the nation’s existing philanthropic philosophy has been extremely beneficial to the US cultural sector. This fact is illustrated perfectly by the NEA, who assert that in 2012 "every dollar that the NEA gave in grants typically generated seven to eight times more money in... earned revenue".
In spite of all this, a synthesis of UK and US models is highly unlikely, at least in the foreseeable future, and it's mainly because of the very different values of the two countries. During World War II, Britain's finance minister recommended to Winston Churchill that they cut arts funding in order to better support the war effort. Churchill's reply was, "Then what are we fighting for?" This remark resonates with the enormous difference in values between the US and the UK. In the UK, funding for the arts is a central platform for every major political party, and funding is often distributed in a decentralized way at a local level by councils making it hard to attack during budget-cut discussions. In the US, funding for the arts is unfortunately not a priority, and the centralized method of distribution makes it an easy target for cuts, while at the same time distancing the funding from the organizations in a huge way.
So while both models have their advantages and disadvantages, the most effective model perhaps would be a combination of the two. If the US could take any lesson from the UK, it would be to increase the value (and therefore the public funding) of the arts sector, and develop arts-funding models directly related to cities, towns, and regional communities. The UK in turn could learn to depend less on public money and develop funding strategies that rely more on earned income and philanthropic giving instigated by the organization’s themselves, further encouraged by tax exemptions. Either way, it's the mark of a civilized society that its citizens all have access to arts, culture and heritage, so let's make it a priority, yeah?!
British-born arts blogger living in Houston, Tx. A mixture of Street Art, Fine Art, Installation, and anything weird and wonderful. Follow me if that sounds like your cup of tea.