End of an Era: With Corporate Donors In Retreat, Arts Organizations Ask, “Now What?”

Wilmington, DE. photo:  Joseph Sohm/shutterstock — Wilmington, DE. photo: Joseph Sohm/shutterstock

Whenever the threat of public funding cuts to the arts comes up, we instinctively ask if philanthropy—specifically, large foundations and deep-pocketed patrons—will fill the gap. A piece by Alan Jordan in Wilmington, Delaware’s News Journal points to a missing piece of the puzzle: the corporate donor.

The only problem? Like government funders, many corporations are also in retreat.

Jordan is the executive director of the Delaware Symphony Orchestra, an institution whose funding comes from a relatively small pool—approximately 500 disproportionately generous donors. The DSO receives 19 percent of its revenue from ticket sales and other earned sources. The rest comes from contributions.

The DSO is not alone in this regard. A 2013 League of American Orchestras study showed that for the first time, ensembles no longer earned a majority of their ticket revenue from the subscription packages.

Jordan acknowledges the risks of this funding model. "Our auditors and others have cited the precariousness of relying so heavily on the largesse of a few major donors. How will we fill the void when these most generous contributors are no longer able to continue their support?"

Normally, Jordan and other executives in his position would turn to the two most logical sectors to fill the void. Unfortunately, both governments and corporate donors are politely backing away.

The End of the "Dupont Era"

On the government side, the DSO sustained a 14 percent reduction in state support, despite strong increases in attendance, sales growth, and other positive trends. Arts organizations nationwide may face more of the same in coming years as state government faces a growing fiscal squeeze because of soaring pension costs. Yet, in Delaware, the shrinking footprint of the region’s once-mighty corporate overlord may be even more alarming.

The conglomerate DuPont was founded in 1802 by Éleuthère Irénée du Pont near Wilmington. The company's headquarters shifted to downtown Wilmington in 1907 with the construction of the DuPont Building. The symbolism was strong: Occupying the entire block bound by three streets, the building was a point of civic and cultural pride for Wilmington residents.

Then, in late 2014, the company announced it was moving its corporate headquarters to the suburbs to save money.

The move came as a huge blow. "I think people really were proud of saying, 'This is the home of DuPont.' And when they said 'home,' they meant right there in downtown Wilmington," said Delaware historian Susan Mulchahey Chase.

As you can imagine, the DSO's Jordan is understandably concerned with DuPont's departure. Perhaps more disturbingly, DuPont's retreat is symptomatic of a larger trend. The region's large companies are "in the process of fading," in terms of their physical presence in the city, and with it, their collective philanthropic footprint.

What's more, as we've reported, a larger trend in corporate philanthropy is that companies are becoming more strategic in their giving. Currying community goodwill is fading as a goal, replaced by a focused drive for impact in specific areas where firms feel they can add value with their expertise and maybe also see dividends to the long-term bottom line. Investments in workforce development and STEM education are examples of this. Such giving is a good thing, but there are winners are losers from this shift—and local arts organizations are more likely to find themselves in the latter group.

Unintended Consequences

While DuPont's exodus was based, at least partly, on cutting costs, Jordan attributes corporations’ "fading" Wilmington presence to the unintended consequences of government policy.

The city is famously home to half of all publicly traded U.S. companies and more than 60 percent of Fortune 500 companies. And yet you wouldn't know it from walking around downtown. Money flows in and out of Wilmington, but it rarely stays. To remedy the problem, the government, according to Jordan, is "requiring community reinvestment contributions from some business sectors," thereby siphoning away corporate funds that could possibly flow to the arts.

It doesn't help that corporate funding for the arts—in Wilmington or anywhere else—isn't particularly robust to begin with. (I couldn't help but notice that the arts were nowhere to be found on DuPont's Corporate Philanthropy page.)

And so, from a practical perspective, "elected officials and business development experts are all predicting that the future corporate climate in Wilmington will be predicated on many new, small, entrepreneurial companies that will, in aggregate, fill the voids left behind by DuPont and other industrial giants," says Jordan.

A New (and Uncertain) Normal

Therein lies the $64,000 question: Will these new companies actually step in to fill the void created by "fading" corporate giants?

It’s by no means a sure thing. "Legacy" companies like Dupont are the philanthropic equivalent of a Model T Ford, a relic of Gilded Age arts philanthropy—think Rockefeller, Carnegie, and Mellon—that now seems rather antiquated. Newer and more agile companies, especially those in the tech sector, have yet to "grow into" their philanthropy, while others, as noted, want to see a quantifiable bang for their buck.

We see this tension play out most acutely in the Bay Area. Despite operating in a region awash in dot-com billions, "highbrow" arts organizations struggle to stay afloat, while others, like the Silicon Valley Ballet, infamously shuttered its doors.

So now what?

Changing the Narrative

Jordan hits on a common theme across recent IP arts coverage: Organizations hoping to engage these new and agile companies will need to embrace projects that address social causes that map to the company's larger philanthropic goals—and then some.

"Remaining corporate leaders, along with smaller companies and entrepreneurial start-ups, will need to see support for the arts as an investment in the community: One that will improve the climate for employee retention and recruitment, draw visitors, and encourage area residents to participate in larger numbers."

Jordan doesn’t let politicians off the hook, either. Arts proponents will need to "encourage their elected officials to change the current discourse about the value of arts and culture in a civil society. We are not a 'frill' for the elite, but an integral component of the fabric of life."

Causes for Cautious Optimism

It’s challenging stuff, but arts organizations across the U.S. are moving the needle in an encouraging direction.

Bay Area organizations like the San Francisco Ballet have enjoyed success in rolling more casual and socially focused "highbrow" arts experiences. Cincinnati's ArtsWave embeds support for the arts within larger workplace giving campaigns, thereby creating a "gateway arts" experience for workers who may have never set foot in an opera hall.

And slowly but surely, conventional wisdom across the corporate world is shifting. Recent studies show that companies that provide employees with enriching arts experiences enjoy higher workforce morale and retention rates.

Last but not least, the dual forces of retreating corporate philanthropy and rising private philanthropy are upending conventional perceptions and labels.

Consider the term "company town." Wilmington was the quintessential company town—economically, culturally and politically. But who's to say private philanthropy, combined (ideally) with a more engaged citizenry, can't collectively assume that mantle?

We see this shift most acutely in rural areas where funders gobble up real estate as part of larger arts-based development efforts, and while Wilmington is a far cry from, say, Monson, Maine, arts organizations really have no choice, do they? They're running out of options.

"The DuPont Co. and the DuPont family have created and nurtured a uniquely rich arts environment here in Delaware,” Jordan said. As for the fate of the state’s arts ecosystem moving forward? "It is now up to the community that remains."