Is This How to Save the Arts and Nonprofits in the Face of Gentrification?

photo:  Dan Schreiber/shutterstock

photo:  Dan Schreiber/shutterstock

With rents rising, artists fleeing and techies keeping their checkbooks closed, institutional arts funders represent the last line of defense in a Bay Area region quickly morphing into an antiseptic playground of the gilded tech plutocracy.

OK, maybe that's a little harsh.

But things do look rather bleak for arts organizations when a one-bedroom apartment in San Francisco rents for $3,377 a month. Fortunately, all hope is not lost.

A recent post reported that the William and Flora Hewlett Foundation is giving 10 local arts organizations $150,000 each to commission major new musical compositions from world-class artists. Another recent development is a $3 million commitment from the Kenneth Rainin Foundation to the Community Arts Stabilization Trust (CAST) to protect Bay Area arts and cultural organizations from displacement.

(The sound you are hearing is a collective sigh of relief from the Bay Area arts community.)

Keeping arts organizations from fleeing to cheaper pastures is a huge issue for the Rainin Foundation. Back in 2013, it provided $5 million in seed money for CAST, partnering with the Northern California Community Loan Fund and San Francisco’s Office of Economic and Workforce Development. The goal was buying and leasing properties to stabilize arts organizations in San Francisco's resurgent Central Market and Tenderloin neighborhoods. 

Success soon followed, as CAST secured permanent and affordable spaces for two iconic San Francisco arts organizations, the Luggage Store Gallery and CounterPulse. 

The Rainin Foundation was pleased with what it saw. In 2016, Rainin, along with—you guessed it—the Hewlett Foundation, awarded CAST an additional $1.3 million to start a capital fund to initiate an arts real estate acquisition program in Oakland and launch a pilot program that provides technical and financial assistance to arts groups.

And now, Rainin has allocated $3 million in additional funding to help CAST realize an ambitious goal to acquire 100,000 square feet of space for arts groups by the end of 2018. With this funding, CAST will "expand and prioritize its work in Oakland to create permanently affordable spaces for arts organizations" and continue its work in San Francisco.  

"CAST is a proven model to address affordability—one of the biggest issues facing the Bay Area," said Jennifer Rainin, the CEO of the Rainin Foundation, which is endowed with the wealth of her late father.  

The model in question finds CAST working with real estate developers, city government, local arts commissions and other stakeholders to help arts nonprofits navigate an out-of-control real estate market. Solutions include acquiring properties for lease/buyback by arts organizations, master leasing to sustain affordable rents, and building the capacity of nonprofits to afford them a permanent asset without jeopardizing their core operations. 

In other words, CAST is far more than a check-writing organization based in a region where money talks. Rainin clearly values this approach, and its recent infusion is proof that it plans to batten down the hatches in San Francisco and the rapidly gentrifying Oakland.

And therein lies the silver lining in the thick fog persistently enveloping the most expensive city in the U.S.

Think the Bay Area's arts ecosystem is in trouble now? Imagine what it would be like without the Rainin and Hewlett foundations.

Could this same kind of active leadership work in other pricey cities? Rainin hopes so, seeing its project as a model for other cities—and funders—facing gentrifying real estate markets that crowd out nonprofits. It even put together a handy online resource detailing the approach. According to Shelley Trott, director of arts strategy and ventures, “It’s a blueprint that other cities can adopt to help secure affordable arts spaces. This collaborative strategy connects resources in the community to the space needs of arts and cultural nonprofits. At the center of the model is a real estate holding company like CAST that works with partners to buy buildings on behalf of arts organizations.”

Of course, arts organizations are only one set of Bay Area nonprofits feeling threatened by the area’s sky-high rents. Social service organizations, which serve many of those whom gentrification has left behind, are in continual danger of being priced out themselves. According to a survey conducted by Northern California Grantmakers’ Nonprofit Displacement Project, over 80 percent reported concerns about the impact of high price on their financial sustainability. That survey effort counted other big Bay Area funders like the Silicon Valley Community Foundation, the San Francisco Foundation and the Walter and Elise Haas Fund among its supporters.

The anti-displacement efforts of Bay Area grantmakers stress the importance of public sector collaboration on these projects, in addition to private resources and assistance from CDFIs and the like. So far, both San Francisco and Oakland have been receptive. Last year, San Francisco Mayor Ed Lee put forward $6 million to protect nonprofits in the city from displacement. But with rents stuck in the stratosphere, the Bay Area's future as a center for a robust nonprofit and cultural sector remains an open question.