In the Arts, Let Them Sell Stock

By Russell C. Pomeranz

This article originally appeared in the New York Times on April 5, 1992.


The financial strength of many nonprofit arts institutions has been sapped by a tiresome recession and dramatic cuts in government funding. In addition, remaining government funds have been subject to odious administrative parameters and intense public scrutiny. Such is the result for any activity supported by tax dollars in troubled times. Therefore, the arts must turn further to the private sector to secure their future.

Most major art organizations are nonprofit. While they are exempt from taxes, they are denied access to sources of growth capital available to for-profit organizations, forcing them to rely on wealthy donors and major corporations.

To expand their financial base, increase interest in the arts, and offer an unusual investment in a societal good, arts organizations should be allowed to issue stock. The goal is to offer investors a share of ownership, a role in the management and a modest return. Single investors would be limited to 5 percent to 10 percent of the total stock to maintain diversified support To prevent institutions from being dismantled, ownership would also be restricted to income from operations and exclude the assets of the museum. Returns would reflect the organization. For example, an up-and-coming modern art museum might offer interesting growth potential, while the Metropolitan Museum of Art would be considered a blue chip.

The concern that such a plan might lead non-profit arts institutions to focus only on the financial side of their mission is to deny what already occurs in most arts organizations, especially in these difficult times. With greater access to capital, the pressure to raise money would be eased, allowing the organization to concentrate more on programming and less on solicitation. In addition, increased public disclosure of financial records and oversight by stockholders might force management to continue to abandon some of the policies of a more casual era.

Ultimately our societal goal is to preserve the artist's and the art institution's integrity and mission, without sacrificing their ability to make and display their art. We should not ask whether the government should give money to the arts. Rather we should explore ways in which the government can facilitate money-raising for the arts. Let the critics, scholars and people decide what is art, without worrying about whether the taxpayers are getting their money's worth.