Will NYC's Arts Organizations' Collective Multi-Billion-Dollar Gamble Pay Off?

Have you ever taken a drive through your town's most affluent neighborhood just for kicks? We have. We'd slowly inch, mouths agape, past stately mansions with their pristine and perfectly manicured lawns, and wonder what it would be like to live in that part of town.

We sometimes get the same vicarious thrill when examining the machinations of large arts organizations. The Museum of Modern Art. The New York Philharmonic. The American Museum of Natural History. They're a different breed. They play by different rules.

For example, a recent report titled "Diversity in the Arts," by the University of Maryland's DeVos Institute of Arts Management presented a few kernels of advice directed toward small-to-midsized organizations. One is that they should resist the siren song of costly capital expenses and instead focus on programming excellence. And another is that these organizations should abandon hopes of reigning in mega-donor dollars.

But if you read this recent article in the Wall Street Journal, that's precisely what larger organizations in the rich side of town are doing. Many of New York's most esteemed cultural institutions are embarking on costly real estate projects this year—bold expansions, tens of thousands of feet of new galleries, multi-million-dollar renovations, and brand new structures built from scratch. Many of these organizations are betting on the "Bilbao Effect," the idea that an architecturally exciting project makes an institution more of a destination.

Needless to say, it's a strategy fraught with risks.

Obviously, organizations face the depressing possibility of aborting construction if funds dry up. And then there's the issue on ongoing sustainability. As the New York Times notes, "If it's hard to raise money for new buildings, it's even harder raising money to sustain them." And yet, ironically enough, it's generally easier to raise money for something tangible than for unsexy operating expenses. (Have you ever seen a breathless fundraising letter pleading for money to pay for electricity?)

Given these challenges, one issue is the scarcity of dollars. The Times reviewed the dozen or so ongoing arts-related projects in the city and came up with an estimated price tag of $3.47 billion. With government funding for the arts waning, these organizations will rely on private donations, which, theoretically speaking, should be a finite resource, right?  Not so fast. As the economy rebounds (albeit slowly), donors are flush with cash. This dynamic is particularly acute in New York, where the gilded class seems to be doing just fine. As Michael Hamill Remaley, senior vice president for public policy and communications at Philanthropy New York notes, "The 1% is not hurting."

That said, big, risky capital expenditures won't be funded by donations alone, so many arts organizations in the city are thinking outside the box. The most effective and utilized strategy—one, mind you, that can be implemented by organizations elsewhere—is as old as philanthropy itself: naming opportunities.

But even the strategy of naming opportunities comes with its own set of considerations. It's an art, not a science—glorified matchmaking, if you will. Organizations need to pore over their donor lists, identify longtime supporters and match them with something aligned to their interests and aesthetics. Furthermore, why limit naming opportunities to building wings and annexes? Why not lawns, a grove of trees, or—and we're not making this up—a "passenger drop-off area?"

Ultimately, these organizations, by their very size, esteem, and situation in the wealthiest enclave of the country, can afford to ignore the warnings of the DeVos report and roll out massive new capital projects with their Rolodexes of mega-donors handy (assuming they still have Rolodexes). They just need to look occasionally under the couch cushions for spare change to make it happen.