I’m thinking a lot about how artists and small organizations are similarly structurally cash-poor (we try hard to make art, not save or earn money), and about the boundary in the arts between the structurally cash-poor actors and the structurally cash-rich ones: foundations, governments, Big Content(tm), corporate donors, and individual wealthy people.

I got started on it after reading a blog post from Adam Huttler of Fractured Atlas. He was mainly fighting off Michael Kaiser, but he made an interesting comment about the budgetary culture of non-profits and the inability to experiment:

Chronic Undercapitalization – For decades, our sector has frowned upon surplus budgets and retained earnings, making it impossible to accrue reserves. As a result, we live perpetually on the razor’s edge of survival, permanently dependent on philanthropic support.

Recently, efforts like the National Capitalization Project have sought to address this issue, and they are moving the needle in some important areas. But let’s be honest: a $100K cash reserve doesn’t really change anything. We need war chests. We need the financial freedom to take on hugely ambitious projects with game-changing potential but high probability of failure.

The way he describes the arts non-profit as perpetually on the razor’s edge got me thinking that organizations are structurally cash-poor in just the same way that artists are. We’re inclined to spend everything we can on art instead of saving, whether that means choosing lower paying work to make more time for art-making or spending all of a year’s revenue on art in the same year. And it leads to the same inability to experiment, change, grow, or strongly determine your own future.

It may be odd to think of a lot of the organizations that exist to support artists financially and professionally as being in largely the same permanently leaking boat, but that’s what this implies. And in a lot of ways it makes sense. These organizations are made up of people who want to make great art instead of making lots of money, and it makes sense that they’d have a similar relationship to money.

Where the structurally poor meet the rich

Once we know that individual artists and arts organizations have this in common, the next question is this: how far does it go? Where do people stop being this way?

As organizations get bigger, and start having endowments, they stop being as much on the razor’s edge, but because of the cultural factors Adam points out (as well as legal restrictions on endowment spending, donor restrictions, etc.), that doesn’t necessarily mean much in terms of flexibility to do big new things at your own discretion.

To find where the structural cash-poverty stops, and where the flexibility make big decisions begins, you have to look at where the capital is in the arts economy. You have to look at the rich: the foundations, wealthy donors, corporations, governments, etc.

And those wealthy actors have fundamentally different interests than the structurally cash-poor ones, and at the same time they have a lot of power over what artists and arts organizations make and do. There is no one way that this relationship is structured, and often it’s not one relationship but many.

The striking thing about this to me is that the decision-making power, the ability to implement your new big ideas, is completely mismatched across these relationships. Everyone sitting around the table is fundamentally interested in art, and usually not in furthering their own personal agenda, but the power dynamics put the arts organization in same category as the individual artist: structurally cash-poor and therefore less in control.

Crowdfunding and Capital

Focusing on the idea not of poverty overall, but of structural cash-poverty in particular, I think helps us try to understand how crowdfunding changes the situation.

Crowdfunding doesn’t make artists or organizations rich, but the fact that crowdfunding is an option changes the relationship of the artists with the capital. An alternative source of potential dollars, and of a potentially sustaining community that’s deeply engaged with the vision of the artist or the organizations, can change everything. It doesn’t have much of an impact on direct poverty or wealth, but it does change how structurally cash-poor an artist or organization is.

But how much? For some organizations or individuals it will change things a lot, for others not as much. What are the factors that control how much it will change things? Crowdfunding is a rapidly growing part of our creative economy. How big will it get, and how quickly will it get there? Will big capital be a driving force in making art in 100 years? If so, what are the failures of such a market by contrast with the one we’re used to having?

How does crowdfunding change the nature of the complex relationships that cross the boundary between structurally cash-poor actors in the arts world and the sources of capital?

It sometimes even seems that this ‘structurally cash-poor’ quality is what separates those of in ‘the arts’ from the rest of the population, independent of how much money anyone actually has.

Implications beyond the non-profit world

How does crowdfunding change the capital relationship in the for-profit world? And what’s different about the relationship between the structurally cash-poor and the capital in that world? Medium-sized for-profit arts organizations tend to be on the razor’s edge because they are low overhead businesses, just as non-profit ones are for other reasons.

Big Capital in for-profit arts (record labels, publishing companies) has an investment role that doesn’t really exist in the non-profit arts, which has a different approach to intellectual property. What does that mean for the relationship to capital and crowdfunding’s impact on that relationship?

Obviously we can start with a case study of Amanda Palmer and Louis CK.

There’s a whole career’s worth of really great arts economics research tied up in these questions, but I’m too much of a composer to actually go and do it.

But I do want to keep thinking and writing about these things, even though I’m too busy making art to go and do hard research. I want to keep working on these questions. I think they’re really interesting.

It gets really good when you start looking at the upheaval that’s coming in professional artmaking, participation in creativity, and the nature of the labor force.