Endowments of most major foundations and not-for-profit groups are gazing down at shrinking financial wells, primarily due to the stock market. This economic situation can only spell bad news for the arts, whose not-for-profit groups can also view their other major funding sources—state and local governments—battling their own budget demons.
The endowment news comes from an Aug. 8 report in The Chronicle of Philanthropy, an article headlined "Off the Charts." Writers Michael Anft and Ian Wilhelm explain that the shaky market has hacked away at funds' incomes, including those of foundations that support the arts, and endowments of individual arts groups around the nation, including certain theatres and dance companies.
The struggling economy has "caused foundations to consider reducing grants, forced wealthy people to think twice about donating gifts of stock, and put a chill on charitable contributions in general," the article states.
The writers illustrate the seriousness of the situation by citing statistics that nine of the 10 largest private foundations' assets, in the first half of this year, fell by a cumulative $8.3 billion. And that was before the market took a steep dive this summer.
"We're looking at future commitments and how to balance them with the economic reality," said Rebecca W. Rimel, president of the Philadelphia-based Pew Charitable Trusts. Pew is a major contributor to the arts, so a slide in the trusts' finances would naturally concern arts groups nationwide. And concerned they must be, because the foundation has reported losing some $300 million since December 2001.
As a result, Pew is considering reducing its 2003 funding by $20 million, from $180 million to $160 million. The trust has also scrapped its "annual, semiannual, and quarterly payments" and instead will now use "monthly installments as a way to ease the foundation's cash flow," the Chronicle reported.
Arts Feeling Crunch
Some individual arts groups' endowments have fared poorly due to the market. The Chronicle's seven-page report shows The Alley Theatre in Houston witnessing a $6.6 million drop from $24.6 million in 2001 to $18 million this year.
The Pittsburgh Ballet Theatre's endowment has fallen from $8.5 million to $7.7 million.
The article shows that Minnea-polis's Guthrie Theatre's endowment has gone unscathed, staying at $45 million over the last year. But the Guthrie has suffered other financial problems.
The Guthrie received a major lightning bolt earlier this year when Minnesota Gov. Jesse Ventura vetoed a $35-million bond issue approved by the state legislature, freezing the Guthrie's planned major new arts complex in its tracks. The money represented about 28% of the total funding for the riverfront complex. The Guthrie board of directors has vowed to regroup and recoup.
But the story of the Gurthie's struggle with getting state funding will merely fall in line with those of other arts groups nationwide. Throughout the U.S., individual states and cities have been struggling with proposed budget deficits.
So, from seeking foundation grants to calling on state arts agencies' tightened budgets, theatres and dance companies are going to have to present sound cases for funding. But for those who hope to establish or build an endowment, the immediate future looks grim, because stock-market analysts are not only looking at a shrinking market, they also don't see a sound turn upward any time soon.