(Illustration by Adam McCauley)
Editor’s Note: This article covers a paper presented in June 2017 at the Stanford Center on Philanthropy and Civil Society’s fourth annual Junior Scholars Forum. The event brings together new researchers, including graduate students, postdoctoral fellows, and junior faculty, whose work covers civil society, the nonprofit sector, and philanthropy.
Which arts-focused nonprofit organizations get funded, and how do funding patterns affect their survival? Leah Reisman, a PhD student in sociology at Princeton University, looked for answers to these questions in Philadelphia.
Nationwide, the nonprofit arts and cultural sector is facing two challenges. First, it has struggled to recover from the Great Recession, which shuttered some organizations and left others underwater from expansions they launched before the downturn. Second, it has strived to remain relevant in the face of changing demographics. As baby boomers age and the public grows more diverse, artists of all forms are figuring out how to draw new audiences to existing artistic traditions, as well as how to evolve the art so that it speaks to them. In the past two decades, approximately 40 percent of nonprofit arts organizations have failed, according to IRS records.
Reisman chose the city where she currently lives to examine the survival of arts-focused nonprofits, because of a rich data set of Philadelphia arts funding available from the Social Impact of the Arts Project at the University of Pennsylvania’s School of Social Policy & Practice.
In addressing nonprofit mortality, previous sociological research has concentrated on organizations and their peculiar characteristics, such as size, type, and management structure. Reisman’s research focuses instead on the philanthropic ecosystem as a whole and funding relationships between nonprofits and funders. Her analysis finds that who funds a group is important for its survival, independent of how much money it gets from those funders. “Institutional linkages—in this case external legitimation and endorsement by powerful actors— are important in explaining the survival of nonprofit arts organizations,” Reisman writes.
Using an inductive clustering analysis, Reisman considers the flow of money from funding groups—both governmental and private—to arts and culture organizations in Philadelphia over a 14- year period, from 1997 to 2011. She finds three main clusters of funding groups that funded similar sets of nonprofits over time. Each cluster had its own preferences for what a successful grant applicant looked like in terms of organizational structure, audience, and any socialaction goals, Reisman says. The first consisted of federal arts agencies. The second was a group of locally based funders with a high level of formality in their grants processes, including the Pennsylvania Council on the Arts and the Philadelphia Cultural Fund. Any group that met eligibility criteria could apply for grants from this cluster of funders. The third funding cluster included several different local nonprofits that followed informal processes for grantmaking. Members of this cluster typically did not have a website or published grant application criteria, and applicants had to be invited to submit a proposal for a grant.
Reisman’s analysis uncovers several interesting results. For example, organizations funded by the high-formality cluster were significantly more likely to survive the 14-year period of the study than organizations that did not receive funding from this group, she says. Larger organizations were also more likely to get funding than small groups, and organizations located in poor or minority areas of Philadelphia were less likely to survive. One question these findings raise, Reisman says, is “How are we categorically excluding certain groups from access to resources?”
There are two possible explanations for the study’s conclusions, which require further research to determine, Reisman says. Organizations that received funding from the high-formality cluster may also have received intangible benefits, such as legitimacy, access to mentorship and networks, and training. Or the high-formality cluster may have been particularly good at picking organizations that were likely to survive, and such survival characteristics may have been embedded in the more formal application process. Funding may predict survival, or likelihood of survival may predict funding. Funders should consider how their practices affect the local arts ecosystem, Reisman says, because they “can result in the inequitable treatment of certain organizations.”
Reisman’s research points to a major issue in the nonprofit world, says University of Arizona sociologist Joseph Galaskiewicz. It is difficult to compare nonprofits and determine whether an individual nonprofit is effective when deciding whether to grant money. Funders have to rely on “crude indicators” for a nonprofit’s organizational health, including audience figures or whether someone affiliated with the funder sits on the organization’s board, he says.
“A major theme in her work, and in the work of most of us, is that in a grants economy, you don’t have the kinds of clear market signals that will efficiently allocate resources, so you have to use these rather indirect indicators of quality,” he says.
Leah Reisman, “Arts Funding Ecologies and Organizational Survival: The Case of Philadelphia,” 2017.
Read more stories by Chana R. Schoenberger.