When everything closed in March of 2020, my critical interest was on the potential for new forms of exhibitions or presentations and a hope that the extraordinary circumstances presented in a mass state of exception would propel us into radically redefining a new normal — at least in terms of how we engage with visual art. This interest was soon eclipsed by the physical, political, and especially economic realities of our collective situations. My inherent skepticism about real, meaningful change kicked in when I saw what was happening all around. In a moment before Republican obstinance solidified and the world was doing whatever it could “#WithMe,” the federal government passed massive economic measures. Considering the issues of the then-competitive primary elections, there was a moment where social sentiment should have pushed law makers for national healthcare, the elimination of student loan debt, and a universal basic income. There was a moment, in light of the “unprecedented” circumstances, when these measures stood a chance. But that moment passed and the reality that our economic relationship to government is inadequate in the best of times sunk in deep.
Therefore, not only are arts organizations, and by extension artists and gig workers, put in a bind by temporarily closing, but the established funding models — specifically government funding through hotel occupancy taxes together with the reliance on a small pool of established donors — are grossly inadequate. The pandemic did not cause this inadequacy; it brought it into stark contrast. We need to radically rethink the ways in which culture is funded, and this essay contains an idea for that. We need to think more like venture capitalists and less like the PTA bake sale committee.
Locally, one of the most glaring revelations of the last year has been our state leadership’s disregard for our health and safety — physically and economically. Ironically, those conservatives in power who have based their arguments against big, scary, federal governmental imposition are more than eager to do the same for Texas cities. They continue to deny local responsibility to municipalities under the rhetoric of state’s rights. I am aware of the argument that municipalities have no constitutional rights, but for what it’s worth, the GDP of Dallas is more than that of Thailand’s and just shy of Sweden’s. The same is true for Houston. These two cities represent more than 60% of the state’s GDP. Our five largest cities make up more than 85% of Texas’ GDP. Why the leaders of these municipalities are denied the responsibility of regulating the amount of people in a restaurant is beyond my understanding.
As the events of 2020 unfolded, it quickly became clear that the financial forecasts for arts organizations were not good, to put it mildly. The projections are grim: a third of all arts organizations could close forever, hundreds of millions of dollars have been lost, and not surprisingly, art industry jobs that can’t be executed remotely have been temporarily or permanently cut. Hundreds of artists, performers, and freelance workers have had their events cancelled or postponed, and more importantly, lost untold expected income and support. In April I counted myself among the partially furloughed, and in June, among 19 million-plus unemployed workers — a fact that has still not changed for me or for more than 10 million other Americans. Institutionally, this has disproportionately affected entry-level workers, low-paid workers, and those involved in audience engagement. It’s no secret that those cuts have disproportionately affected women, people of color, and younger workers. Similarly, many preliminary attempts to balance the equation of representation in the visual arts — by way of exhibitions and projects — have been muted by the simple fact that no one can experience them. Sadly, attempts for long-term equity through significant institutional positions and advances are affected by hiring freezes and budget cuts. It will take considerable economic expansion in order to regain what has been lost in a year, much less grow and thereby create new opportunities. Recovery in the arts will come after there is economic recovery at the sources from which its pittance of funding is supplied. This will not happen within the next year.
I have always had a fascination with the stock market, trading, and the theoretical creation of capital from nothing other than capital. It’s primarily from a Marxist standpoint that this has interested me. For me, the mechanics of capital’s creation beyond the sale of one’s labor or commodities aligns with the surplus of value in things like art. In June my academic fascination switched to an active pursuit of the market as I started learning about trading and investing. I’ve spent a lot of hours over the last six months reading, practicing, planning, and, of course, making and losing money. In March, at the moment of the first viral surges and business lockdowns, the S&P 500 and all other indices lost around 30% of their values. By June, the S&P had recovered 90% of its losses, and by October, all the major American indices had surpassed their previous levels and ended the year notching all-time record highs. A lot of people have made a whole lot of money in a very short amount of time if they knew what they were doing. Keep in mind that during this same time, the president recommended injecting bleach and failed to use his powers to compel industry to “re-tool” to combat the pandemic. Congress failed to extend aid to the unemployed. Meanwhile, the state of Texas took this opportunity to ban abortions and sue cities for imposing mask mandates. This dysfunctional governance all but guaranteed that arts institutions would reopen at their own risk or remain closed, and many that reopened inevitably re-closed. Perpetual delay. At this point, I couldn’t tell you if anything is open or not. I stopped thinking about visiting.
While actively applying for jobs and co-supervising my own elementary-aged virtual pupil, I started researching bonds and fixed-income funds to add to my collection of securities. By accident I found the Texas Permanent School Fund. It sounds boring, except it’s not. The Texas Permanent School Fund (PSF) was created by the state legislature in 1854 with $2 million to benefit public schools of Texas. This came about as a result of a $10 million payment from the United States in 1850 in exchange for giving up land claimed as the Republic of Texas. The PSF, and by extension the Permanent University Fund, are sovereign wealth funds, meaning they are government-owned investment funds that buy and manage stocks, real estate, other equity funds, and commodities. The fund is valued at over $46.5 billion. The PSF’s net investment value, including real estate and land holdings managed by the state’s land board, has grown $2-4 billion per year over the past 10 years. Every year some of those gains are released to Texas public schools. While the origins, management, and investment tactics of the state’s fund are entangled with historic settler-colonialism and profits from slavery, the longevity and leverage of the fund represent a model of endowment that could very well serve the arts in Texas. The PSF itself is far from perfect and there are serious ethical questions surrounding it, but the important fact is that, like the Permanent University Fund or any other institution’s endowment, it provides a financial foundation. As a model, what is important is that its scope is statewide, and not siloed by district, city, or individual institution.
This is unique because it runs counter to our society’s approach to financial assistance. Texas’s refusal to expand Medicaid as part of the Affordable Care Act means that several million residents are uninsured because they will never qualify for Medicaid in Texas. Additionally, once you are denied Medicaid from your state, you are not eligible for deep-subsidy plans through the ACA. You are offered unaffordable health coverage because the state you live in made a political decision about it. Second, unemployment pay is a lifeline — like a foam life preserver in an ocean — that will keep you above water temporarily. But you will inevitably drown. Unless someone pulls you out or something substantial helps you to shore, you will go under. Only so much productive work can be done from a position of desperation. While insecurity can motivate creativity and production, precarity — or the impending threat of insolvency — cannot. I’ve been worse-off, so I am not complaining. Millions of Americans are in this position; I hope you reading this reminds you of this systemic plight. This scenario will not improve in Texas unless the institutions that employ and pay individuals have some sense of financial security.
The problem is that too many arts organizations — and by extension the artists and audience they serve — face a prolongation of the economic effects of the global pandemic under the inadequate systems of conciliatory funding already in place. There must be alternatives; we are experiencing the inadequacy of our current models, and now is the time for some new approaches. What I would like to propose is a fund. An investment opportunity that is actively managed and dedicated to funding arts organizations in Texas, perpetually and consistently. This would be modeled as a sector endowment like the PSF, professionally managed and grown, an instrument benefiting nonprofits and investors financially.
If you like, you could think of it as a collective funding agency with co-operative membership by institutions and individuals. I’d rather think of it as a tradable security that offers a viable way to fund visual art in Texas. I am focused on contemporary visual art, not because I don’t recognize the existential crises faced by all performers and others in the arts industry, but because contemporary visual art in Texas is what I know. The same should be approached for the performing and literary arts as well.
Like the PSF, the money in this fund would be allocated to institutions to better the public good with no expectation of monetary return on their part, with eligibility criteria in place. (The PSF was large when it was established in 1854, with $2 million, which is equivalent to $62 million today.) The target beneficiaries for this fund would be small-to-mid-size non-profits, and those without endowments and legacy donors. An operational organization would be used to allocate funding to eligible organizations, while a professional investment firm would oversee and execute the investment plan — the two entities would work together. The fund would be public and tradable in order to benefit from individual and institutional investors in other states and countries, who can benefit in turn from the “tax efficiency” of doing so. As a mutual fund, or especially an exchange traded fund (ETF), this is possible.
There are numerous benefits to this approach. First, the economics of scale — if resources are pooled and leveraged, investors can benefit more than they could individually — that’s the mutual part of a mutual fund. And this is the opposite of arts organizations competing for limited local and state resources. Secondly, this expands the traditional notion of the donor. Donors-as-investors may actually receive monetary returns on their part if that is their desire.
Involvement in this venture could be approached in two ways: as a philanthropic expense, or as a potential return on an investment. Meanwhile organizations can rely on at least one stream of stable (and hopefully substantial) income. I envision that the fund could completely fund some organizations, and contribute considerably to others. Need a new building? Like municipal bonds for infrastructure, arts organizations could get a bond from the fund. The same donors that would underwrite those arduous capital campaigns could instead contribute to the fund; the organization is issued the bond at low interest paid to the fund, and investors theoretically get the full value of the bond back at its maturity.
Lastly, this could reinvent corporate involvement in the arts. For those of you scarred by development work, imagine that, instead of going to a business and asking for in-kind donations for cheese plates and discounts on hotel rooms in exchange for printing logos in vinyl, the fund solicits large corporate investments with the deal that a million shares in their company’s stock will be bought at market price in the following days. I imagine a lot more possibilities opening up that way.
This is a serious financial proposal — a proposal to fix our current funding scarcity and heavy reliance on governments to dole out the scraps from H.O.T. taxes and building budgets. This is an effort to materially help visual arts organizations in Texas. At what point in time does trickle-down economics start working? It doesn’t. How much longer do we expect to keep going to the same donation wells? The present moment is proof of the over-extension of donors and the exhausted expectation that the same people are going to support the non-profits that need them.
I want to see the visual arts materially supported in a substantial way, not dismantled because the funding models we currently use have proven to be wholly inadequate. I don’t want to see arts organizations in Texas close, I don’t want to see their employees struggle — taking furloughs and reduced pay. Too many arts workers are already dismally paid. I want Texas to be a viable option for those of us looking for opportunities in arts and culture. Artists struggled to maintain livelihoods before the pandemic and the subsequent closures and cancellations. It is hard for me to accept that we are faced with at least another year of austerity and the potential for massive reductions in our industry at the same time that corporate revenue grows and the stock market hits all-time highs. The inequality of the current economic recovery is staggering, but there have to be means to not only keep us from drowning, but to get to a better place.
The opinions and views expressed here are my own. I have no positions in any securities mentioned, and no plans to initiate any positions within the next 24 hours. Readers should verify all claims and do their own due diligence before investing. Content intended for informational purposes only, not investment advice, or a recommendation of any security, strategy, or account type. Past performance of a security or strategy does not guarantee future results or success.