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The following is a transcript of the speech given at the National Arts Centre Ottawa, Canada September 18, 2002 Roundtable Discussion My comments today on The Importance And Power Of Private Philanthropy In The Classical Performing Arts are organized into three highly interrelated topics: I. The vision that a philanthropist must have for the arts and for the role his or her philanthropy can play in realizing that vision. II. Why give at all, let alone in size. More specifically, what are my own personal motivations for giving to the arts, and for believing that I can help influence the arts and giving in general. III. What lessons has my experience in arts philanthropy generated from which other arts organizations, including Canadian, might benefit. 1. A VISION AND ROLE FOR THE ARTS ' I have always believed that the classical performing arts are a very important part of our cultural legacy, which deserves to be preserved. Music has been the largest source of enjoyment in my life. I consider it a major tragedy that so many people today will go through life without any exposure whatsoever to the classical performing arts. The chief culprit in my opinion starts with an education system that emphasizes things like driver education and sports over music education, and uses the higher costs of music education as a facilitating excuse. To me, music is an essential field of education that demands our complete support: (I would have liked to have had the opportunity to be here last year to offer my views on INVESTING IN YOUTH AND EDUCATION IN THE PERFORMING ARTS when my friend, Jim Wolfenson, was the keynote speaker.) My support for the arts is largely spread over four areas: new opera, choral and symphonic productions and coproductions; new technology for the arts (which largely involves opera translation titles that go on the back of seats); education programs, and the rebuilding of physical structures. I provide major philanthropic support to some 15 organizations in the classical performing arts in the US, Europe and Russia, including eight training and development programs; plus support for several colleges and universities that are committed to fostering arts education, training and development. Why do I give to these particular areas, especially to opera, which has been characterized by some in the press as the last costly and outdated foothold of the leisurely rich? It is because I believe opera is about fabulous music, the best trained voices in the world, and the cultural enrichment of our lives. Its substantial, and never ending needs, fall into three fields: the development of new singers, the development of new audiences and new productions. Why do I give largely to top ranked Opera Houses rather than to far lesser known one's? Because the large, well known Houses set the standard for other Houses to follow, and have been major survivors through thick and thin. 2.THE SECOND QUESTION I WANT TO ADDRESS IS WHY GIVE AT ALL? AND WHY GIVE IN SIZE? I would cite 4 reasons for giving: 1. To share one's wealth and good fortune with others and with society at large. 2. The opportunity to support specific philanthropic activities that are of great interest to you – especially where one's giving could have a significant impact on the direction of that activity. I cite ahead several examples of projects and gifts of mine that just might have an impact on the arts. Other examples would be a Computer Science Center being built at my undergraduate College, because I want the opportunities I had in technology to be made available to the College's students. I also fund four nationally ranked research hospitals in the US that focus on illnesses and clinical treatments that I believe will lead to new breakthroughs in disease treatments that could benefit many. 3. Another related reason for giving is to use it as a cornerstone for building the type of legacy and example you want to leave behind. 4. There are two other key professional purposes for giving. First is to fund the "project" under consideration. The second equally important reason is to set an example for others to emulate. It is a myth that very large donors give anonymously. It is for this reason that I believe large gifts should be publicized, in order to leverage the impact of the gift. Unfortunately, there is a deep-seated European bias that believes naming gifts are a self-serving conceit of donor recognition. My answer is rubbish; in fact, I maintain that it is just the opposite. We should make no mistake, however, that a large naming gift intended to enlist others runs the risk of incurring some degree of public antagonism. Recognizing that there could exist a thin line between pride of authorship and immodesty, let me cite four arts projects I have undertaken where I can lay some claim to having had an impact on the arts in a measurable way. 1. The Vilar Center for the Arts – Vail/Beaver Creek. This is a world class beautiful year-round community that lacked a performing arts center. Now it has one with 75 performances a year, with up to 20% in classical music and 15-20% for children. 2. The Vilar Opera Translation Titles. These are the back of the chair titles that were initially installed at the Metropolitan Opera in New York. They are now in Vienna, and are expected to open in London this Friday, and on the 16th of October in Barcelona – available in up to 7 languages. This is probably the biggest achievement in the cause of audience development in the history of opera. 3. The Kennedy Center's Vilar Institute of Arts Management. This is a program that trains the future managers of the "Carnegie Halls" of the arts world. 4. Young Artists Programs. Modeled on the highly successful program at the Metropolitan Opera, there are now four new programs in London, St.Petersburg, Russia and the US, that are giving promising young singers two year programs in all aspects of stage-career training at major Houses. III. WHAT LESSONS HAS MY OWN EXPERIENCE GENERATED FOR OTHERS: OR, WHAT ADVICE CAN I GIVE INSTITUTIONS LIKE THE CANADIAN ARTS CENTRE By way of background, I believe there are some very big changes ahead that could favorably influence the growth of arts philanthropy, at least in the US and Europe, where I have a lot of experience. I believe that there are two likely developments that could increase US and hopefully Canadian philanthropy over the next one-to-two decades, and in turn help the arts. I belong to the school of thought that believes that today's senior generation will pass on to their next-of-kin some percent of their accumulated wealth, some portion of which would then be expected to go to fund new philanthropic foundations. The tax laws of the US favor this historic, generational transfer of wealth. The recent loss of wealth in the US stock market is certainly not without precedent; it is also partly cyclical in nature in that it is tied to the health of the economy. Perhaps more importantly, it does not preclude new wealth from being created by others in new industries in the years ahead. It is also a fact that a lot of the US stock market wealth loss has been offset by increases in private home equity values. The second factor to consider is the entirely new wealth that will be created over the balance of this decade and next by the significant restructuring of the world economy into what I would call the third wave of technology in 40 years, namely, the Internet-networked wave which will be driven by e commerce, the integration of all software facilitated by new web services, and by the widespread development of broadband across businesses and consumers. Technological advances have traditionally fueled huge cycles of great new wealth as was the case with railroads, cars, and planes. From the perspective I've gained over the past 35 years as a pioneering investor in electronic and medical technology, I believe that the build-out of the new digital, Internet-networked economy over the next decade plus could generate several trillion dollars in new wealth around the world. I believe that smart arts organizations need to start thinking and planning for their ability to capture a fair share of this new wealth. At this point, a rhetorical question to ask is whether the arts should be privatized by philanthropy. I find it bizarre, if not rather annoying, that I have been charged with trying to import US styled philanthropy into Europe, the UK, and Russia, when in fact I believe the US system of funding the arts is nuts. The right mix of support for the arts I believe, is a combination of private and public funding, which is not the case in the US – which is almost entirely private funding dependent. It seems as though the early American puritan settlers from Europe, who admittedly had no government revenue, to draw upon, purposely set it up this way – to avoid any public support for the perceived work of the devil. Whatever the ills and adverse side-effects are of capitalist business cycles, great fortunes have been made in the stock market over the years that have been channeled into philanthropy. This includes the likes of Bill Gates, Gordon Moore of Intel, Ted Turner, George Soros, amongst others. I. The Press (which I will comment on further ahead) II. The lack of a cultural tradition of family/individual giving in many places. (This is more of a 20th Century phenomenon in Europe, the UK, and Russia, caused in no small way by the devastation of two World Wars. This had the unintended effect of giving private support an extended honeymoon as a result of government itself having filled this necessary funding vacuum.) III. Government itself. This involves namely two issues: 1. The use of tax benefits 2. The need to educate people in private philanthropy, principally that it is not in competition with Government support. Social compacts with Government, as many in Europe have come to believe out of convenience and ignorance, should not preclude private philanthropy and government support from working together. IV. The Economy. Hopefully today's cyclical weakness will give way to a global recovery starting next year. Let me return to perhaps the most troublesome issue, namely THE PRESS: From my experience, the biggest single negative force in philanthropy is bad journalism. Please note that I said bad journalism. Press coverage of philanthropy is quite different from music criticism, which I think is a legitimate part of the arts that serves a professional purpose. Music critics however, will very likely have been professionally trained at what they do; this is quite unlikely to be the case in the coverage of arts philanthropy. There are two key reasons why bad press concerns me. Firstly, it can inhibit the development and growth of philanthropy. Secondly, bad press can kill a golden opportunity of bringing reader's attention to new acts of philanthropy that just might educate and incentivize others to give. I do not advocate that the press should do anything more than simply report the news; what it shouldn't do is attack the giver and scare others away. LET'S MOVE ON TO THE ROLE OF GOVERNMENT. COULD THERE BE A NEW ROLE FOR GOVERNMENT IN PRIVATE ARTS FUNDING? (This is not intended to be an oxymoron) First, I ask somewhat sarcastically, why should people support something that is important to them and to society such as the arts, education, medical research, simply because the government is giving them a tax break. (Birthday tie analogy;) Tax Considerations The US case is highly misunderstood by Europeans for two reasons. Half the people in the US take no deduction at all, and gifts given out of capital that exceed one's annual income can't be deducted. You can't earn $1 million a year, and try to deduct a $25 million gift that came from capital and not income. Yet for psychological and other reasons, especially in the case of smaller gifts, in which tax deductions are important and useful, I would argue in favor of implementing marginal changes over time in charitable tax benefits. This also requires arts organizations to lobby this effort – which is not easy. WHAT CAN PERFORMING ARTS INSTITUTIONS THEMSELVES DO TO APPEAL TO LARGE SCALE PRIVATE PHILANTHROPY? First, classical music including opera and ballet, involves passion, affinity and enjoyment. Music lovers generally want to be part of the total experience. This should not be hard to exploit. My experience is that the people that most appreciate what philanthropy does are the real music lovers who actually see many performances. Arts institutions need to be imaginative, creative and proactive to get their fair share of philanthropy. I would suggest the following for starters: Arts organizations should design very specific programs to work with the press on what a specific gift means and does for the House. Institutions should think about donor recognition, come up with major projects that make sense to donors, such as education. A lot of people want to have a part in developing tomorrow's talent. As I have said elsewhere, any gift has two real purposes. First is to fund a given project. A second equal purpose is to use the gift as a tool to motivate, incentivize, and attract other donors. There is nothing more credible than a gift in hand. That is why I believe major gifts should be publicized. LARGE SCALE NAMING PROJECTS SHOULD BE CREATED FOR SPECIFIC DONORS IN MIND These are very specific ongoing projects that are identifiable for their size, purpose, etc., which Houses ought to be able to tailor to a major patron. Occasionally the mega, one-off project appears – such as the Disney Frank Geary Philharmonic Hall in Los Angeles, The Royal Opera House in London, The Kleines Festspeilhaus in Salzburg. The four projects I now focus on make good naming projects. An example is the Translation Titles – hopefully a half dozen houses will soon have them. Education: In addition to the Kennedy Center Arts Management Project, I'm very interested in getting young people into Houses. This is fertile ground for fundraising and patronage. People like to help young people; The Young Artists Programs at the MET, which I support, has literally been replicated by me in four other places. MATCHING gifts are something that make sense and that work. I have successfully deployed them in Los Angeles, the MET, and Salzburg. OTHER SUGGESTIONS FOR LEVERAGING PATRON DEVELOPMENT € Don't spend a lot of time looking for the next Bill Gates – the time and cost can't be justified. € Don't stack the Board of Directors with people who have not given elsewhere. € Create intelligent and appealing "Recognition" for major gifts as noted above. € Patrons lounges can be effective. € Tailor Program brochures to recognize new productions, gifts, etc. € Use the example of a "stage bow" for donors. In sum, for patron development to be very successful, I think it needs to be treated as though it were a business service: what does the "client" or patron need in order to be happy. One must think like a product manager who strives for client loyalty and growth in annual fees/revenues. In conclusion, I think private philanthropy has the wherewithal to continue to grow in the US and Europe, (albeit the latter is from a very low base), for different reasons, but it is really up to the arts organizations themselves to devise specific program initiatives that can work. I would venture that the ultimate success of philanthropy, at least for Europe, will require a highly integrated, three-prong program that involves incentivizing and educating individuals/families into a culture of giving; a helping "educational" hand from government, and at least a neutral press. Thank you.
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