Perhaps it is because of my background but I have always had an issue with the American concept of what constitutes a non-profit organization. This time of the year the phone rings almost non-stop. Most numbers I know by heart (in 95% of the cases the Caller ID says “unknown”) and I don’t pick up. Some call so frequently that they are on an automatically blocked list, not ringing here at all. If I happen to answer, the telemarketer usually identifies the organization he/she is working for and thanks me for past support even though I have never had anything to do with them. Since it is nearing the year’s end, they rush to explain that my contribution will be tax-deductible. I have learned to ask if they are a professional fundraiser and what percentage their cut is, and also how much (or rather, little) of the funds collected actually go to the cause. At this point most of them hang up on me, unless they are proud of their track record, in which case I might be willing to help a humanitarian cause.The IRS has to give an organization their stamp of approval before it can qualify as a non-profit. However, the tax authorities don’t have the manpower to do any investigating and usually give it their blessing. Occasionally fraudulent organizations surface although they probably represent the tip of an iceberg. Recently in New York a totally corrupt “non-profit” was discovered. It had given absolutely none of its collected donations to help the homeless but instead filled the wallets and bank accounts of the people behind this scheme. Much of the money after 9/11 or Katrina never reached the intended victims but provided a cushy income to the founders of new non-profits that sprouted almost overnight.
Many affluent donors give large sums of money because of the tax benefits it offers them. They may also give a gift in poorly performing stock toward an endowment or overvalued real estate. Many actually end up making money by giving it away. A few years back it was popular for common folks to donate their old motor vehicles, often not even in working condition, and get a tax-deductible receipt for much more than the piece of junk was worth. The tax people were quick to pay attention to this and one no longer sees billboards advertising the previously popular method of lowering an ordinary Joe’s tax burden.
Back home, at least when I was still living there, donations offered no tax benefits and were only given by people for causes they saw important, such as to war veterans that the government had neglected for decades, and often to projects in faraway poor countries such as Namibia. If one were to give a thousand euros, that means donating the earnings of two thousand or more, due to the high taxation. Most of what operates with collected money here is paid for by the local or state government in Europe. Nobody would even think of donating money to a hospital or university, not to mention a museum. In America, Scandinavians have a reputation of being stingy and keeping their purse strings tightly closed. This is a purely cultural thing, a built-in way of reasoning.
I think that the United States should change the present rules and laws, and lower the amount of allowed donations to the same that political candidates can receive. Depending on the type of organization, this amount could be deductible, mainly if it is for humanitarian causes. People will give if they believe in a cause, as was evident in both Mrs. Clinton’s and Mr. Obama’s campaigns for the last election and the primary before that. If mega-donations no longer existed or the donor would be taxed for having given a gift, an ordinary person would be more likely to give his $100, or even $1,000, knowing that this contribution mattered. A rich donor would no longer be able to automatically sit on the board and decide how the organization should be operated. No more parties at the executive’s mansion for the well-to-do. If such parties needed to go on, why not choose people on random or through a lottery system? Someone, who had donated $50 when he/she really couldn’t afford to give more, would be pleased indeed to get such an invitation.
In order to qualify for a nonprofit status, certain guidelines should be met. The word NON-profit means just that. How do you justify that when an orchestra pays its musicians $125k, its executive director $500k and the man (or in rare cases, the woman) waving a stick an amount that would be more likely seen in professional sports than in the arts? I would argue that this business model is very much for-profit, at least very profitable to the people employed. “Non-profit” gives an impression that population at large will somehow benefit. With a food bank, a free medical clinic, a homeless or women’s shelter that clearly is the case, but many would question an opera company, an orchestra or a university which spends millions on its sports program. At least these organizations should offer free tickets or great scholarships for the needy. A major hospital is eager to raise funds but does it ever translate to forgiving people for their medical bills which are going to bankrupt them?
How about counting the average salary of people working in an institution? Make the limit somewhere in the 50k-60k range. As colleges and universities routinely pay little to their faculty, not to mention others such as custodians and librarians, a school president’s multi-million salary is easily absorbed. An orchestra such as the Oregon Symphony would no doubt qualify; however, the Philadelphia Orchestra would not most likely, no matter how much they complain about their financial situation. But if people really care about a cause, they’ll come forward to help. A baseball or football team isn’t asking for handouts to survive. They manage to pay their star players’ insane salaries because the 50,000 fans are willing to show up and buy tickets. Who knows, perhaps knowing that the “new” arts are for the people and by the people, there would be renewed interest in classical music.
The other option is to make an orchestra, an opera company or a ballet a state institution, such as a public university, and have the government decide on salaries and artistic matters. This, in my mind, would be the preferred solution. In the public model I bet all such organizations would be downsized and expected to be on the road constantly, to bring an art experience to people who presently live outside the close radius of the existing barn-like auditoriums. With smaller groups, there would be an almost endless number of performing arts centers in local communities, usually attached to their high schools. Locals are known to have greater pride and much more interest in their own events than in something happening in a distant big city.
The above is meant to be more food for thought, in creating a sustainable model for the arts. Just be careful and chew it well, so you don’t choke.
