This text is responding to philanthropy's influence on the US arts and culture. It analyses the problem through nonprofit art organizations such as MOMA and the smaller one as MANA contemporary.
THE CULTURE OF PHILANTHROPY
Nedko Bucev
2022
The Culture of Philanthropy 1
In a discussion between Luis Camnitzer and Pierre Restany in the Museum of Fine arts in Havana, Restany explained how postmodern art and culture work. Hi gave the audience the following example: Four people meet in an office in New York. They are a collector/Money guy, a gallerist/ art dealer, a journalist/art critic, and Johnny, an unknown artist. The Money guy offers them a deal to make some money, and they agree. Here is the scheme. He pays the art dealer for the gallery space and the event organization, the journalist for spreading the word in the media, and Johnny for making some artwork. Five years later, the Money guy, the owner of Johnny’s artworks. He sells those artworks to the secondary market or a museum's collections through the gallery. The gallerist takes a good commission, and the Money guy makes a 3000% profit. The journalist/art critic sells hundreds of thousands of books with the history and art theory of the artist he discovered. The artist Johnny has a house in the Hamptons with a drinking shack and is walking on the street as a legend. Twente
1 Philanthropy, charity, and non-profit is used in this text with similar meaning.
years later, people go to the museums and learn art history, aesthetics, and culture from Johnny’s artworks.
If we keep the three characters and substitute the art dealer with an art foundation, the story could have this development. The Money guy registers an art foundation in New York. He takes a part of the tax money (which is not his but anyway) and donates them to his foundation, ergo- to himself. The foundation makes an art exhibition of Jimmy, the son of Johnny. The curator of the art foundation enlightens the media on how important Jimmy is to the art world. The Money guy buys all works of Jimmy with another part of the tax money. Five years later, he appraisals the same artworks with a 3000% price increase and donates them to his foundation- ergo to himself. Finally, the Money guy does not pay any taxes next five years. Ten years later, his foundation became an art museum with his name on the main entrance. The scheme works and works well for the last 120 years. Between 1865 and 1920, the United States became the world's leading industrial capitalist nation with a growing working class that increasingly insisted on sharing the fruits of industrial production and the brutal competition among American industrial companies. Both factors originated the need for a “not-for-profit” or “nonprofit” organization. It was introduced in 1896, and the first private foundation was established in 1907 by Russell Sage. In 1911 and 1913, the Carnegie Corporation of New York (started by Andrew Carnegie with a donation of $125 million) and the Rockefeller Foundation (created by John D. Rockefeller with a gift of $35 million) were founded, mainstreaming the modern private foundation. “At 2019 World Economic Forum at Davos, billionaire Michael Dell, the 25th-wealthiest man in the world, weighed in on new proposals to tax the very wealthy. Dell said he was “much more comfortable” giving through his private foundation “than giving…to the government.” He’s not the first billionaire to confuse his obligations to society and conflate charitable giving with paying taxes. 2 On the other hand, private foundations came in response to the lack of interest by the American government in funding education and health, and arts for everybody. Health care was virtually unregulated, and health insurance was nonexistent. The Illiteracy among adults was between 13% and 20%. State support for arts was also absent. The government practically spent money only for defense.
2 https://www.thenation.com/article/archive/philanthropy-charity-inequality-taxes/
In 1913 the Federal Income tax was from 1% to 7% and increased between 1917-1942 from 4% to 17%. It was an excellent time to start cheating on taxes. So philanthropy had social reasons, but what began as a good intention ended as a legal form of tax avoidance. Suppose the capitalists had paid their taxes, or even before that, if the government determined the right amount to be paid for the society to guarantee its needs, there wouldn’t be a need for philanthropy. What is seen as a moral gesture is nothing more but a consequence of a previously created unfair wealth distribution. With its appearance, philanthropy immediately became another tool of the capital to exercise its power. Capitalists were/are using the needs of society for education, health, and arts as they are better pleased. For 120 years, resolving social problems was/is not a priority of the system. It goes the same. In 2021, were established and functioning 142,831 private and 3,098 corporate foundations in the United States. Combined, these private foundations employ 8,300 people, earn more than $132 billion in revenue annually, and have assets of $1.1 trillion. The American government is okay with it. In form 501(c)(3) IRS changes the rules for tax exemption this way. “Individuals may deduct qualified contributions of up to 100 percent of their adjusted gross income. A corporation may deduct qualified contributions of up to 25 percent of its taxable income. Contributions that exceed that amount can carry over to the next tax year.”- and “There is no limit to how much money a nonprofit can reserve. The key is in the organization's financial management, whether that means reinvesting the reserve back into the nonprofit's mission or ensuring financial security by saving money .” - and lastly, “There is no limit on how much a nonprofit organization can earn.” 3 Returning to arts and culture, according to the New York Times, “Wealthy collectors, of course, have long saved millions of dollars in federal taxes by donating art and money to museums and foundations. A growing number of private tax-exempt exhibition spaces like it is that their founders can deduct the full market value of any art, cash, and stocks they donate, even when the museums are just a quick stroll from their living rooms. Thanks partly to the skyrocketing value of art and the growing number of collectors who buy it as an investment, private museums — sometimes in out-of-the-way locations and with strictly limited public access — have proliferated in the last decade. While these jewel-box museums can house extraordinary work and offer a small group of art lovers an unusual viewing experience, critics wonder whether taxpayers are helping subsidize wealthy collectors’ multimillion-dollar purchases with little public benefit. And at a time when
3 https://bizfluent.com/info-8490232-much-can-make-nonprofit-organization.html
concerns about inequality have heightened criticism of government policies that favor the wealthiest sliver of society, these tax breaks have come under sharper scrutiny.” 4
It wouldn’t be incorrect to state that MOMA, Princeton University Art Museum, and The Newark Museum of Art, for example, are some of the preferred tax-avoiding institutions for wealthy Americans. According to 990 tax form for 2016, MOMA received 301M contributions and grants for 2017- $293M, 2018-$135M, 2019-$244M, and 2020-$166M. All amounts do not include PS1. Or Mana Contemporary, which is Jersey City’s MOMA. Mana’s Eileen S. Kaminsky Family Foundation and Monira Foundation received $1.5M for three years from unknown donors in exchange for cultural events. The building of Mana in Jersey City is a store of private collections of known and unknown collectors. Public access is only by appointment with a tour guide and specific days and hours. The exhibition program is chaotic, and it is not unusual to come to an exhibition space with lights off or locked for access. It is not uncommon to see half of a billion collection of Warhol in a room next to half-floor empty walls. Visiting many events at MANA in Jersey City and Miami, I cannot recall a clear curatorial concept or long-term cultural strategy. Philanthropy is how wealthy people avoid taxes. The social effect of it is a by-product. It does not matter to the philanthropist who the artist is or how important the art is; meanwhile, his name is on the gallery's façade and the catalog's front page. It could be nicknamed with the two words Philanthropy Culture, where the second does not matter much. As everything in America tends to be big, Philanthropy Culture is growing bigger and bigger. In 2017 the total donations to charitable organizations were $410.02 billion (2.1% of GDP), which increases between 3.0% to 5.2%in each year. As a comparison for the same fiscal year (FY) 2017, the US federal, state, and local public funding for the arts totaled $1.39 billion. “According to a 2019 report by the Center for Civil Society Studies at Johns Hopkins University, nonprofits account for roughly one in 10 jobs in the U.S. private workforce, total employees numbering 12.3 million in 2016. Over the decade since 2007, nonprofit jobs have grown almost four times faster than for-profit jobs.” The Philanthropy money is followed by an army of intellectual bureaucratic servants who do not create or apport to the society but, even worst, implant the rules of the Philanthropy Culture.
4 https://www.nytimes.com/2015/01/11/business/art-collectors-gain-tax-benefits-from-private-museums.html
The main form of organization of the Philanthropy culture is a family or corporate foundation. Its structure is modeled after the corporate network. Example Fig 1.
As it is seen, it is a hierarchy-based structure between decision-makers and service staff. As a rule, the board of directors is the philanthropist’s family or trusted business partners. The rule includes appointing as director a prestigious intellectual or well-known public figure with the reason to increase the public trust in the activities. As the philanthropy organization is publicly exposed, the board of directors should look inclusive of all races and gender affiliations. For example, the Rockefeller Foundation board of directors looks like the ONU. The headquarter of a non-profit, by definition, should be in a corporate-looking building in the middle of an economic, financial, or publicly centered place, at a convenient distance from governmental institutions and the media. Example Fig 2
A common rule for the salaries and bonuses of the non-profit executives to be in six figures and comparable to the wages of the profit executives. The bigger the charity’s budget is, the bigger the CEO’s wallet is. Not surprisingly, the higher the charity’s total expenses, the more likely the CEO will earn higher compensation. Charities with over $200 million in total costs report a median pay of $526,679 for their CEOs. In contrast, charities with $1 - $3.5 million in total expenses report a median income of just $97,158. 5 It is not unusual for one person to be a director or board member in more than one organization and receive two salaries. “It is popularly supposed to transfer money from the rich to the poor. This is not the case. In the US, which statistics show to be the most philanthropic of the nations, barely a fifth of the money donated by big givers goes to the poor. A lot goes to the arts, sports teams, other cultural pursuits, and education and healthcare.” 6 Philanthropy is not a substitute for a fair and progressive tax system and robust public investments in poverty alleviation, infrastructure, economic opportunity, social protection, and culture. By definition, the capitalist state is a function of the wealthy class, and there is a peaceful coexistence between them. Look at the tax system in the US. There are exceptions where philanthropists threaten the state and its institutions as their political interests please them.
Five https://www.charitynavigator.org/index.cfm?bay=content.view&cpid=1803 6 https://www.theguardian.com/society/2020/sep/08/how-philanthropy-benefits-the-super-rich
“Charles Koch on the right, or George Soros on the left, have altered the public policy. More than $10 Billion a year is devoted to ideological persuasion in the US alone. “ 6
The idea that a philanthropist’s money is their own to do as they please is deep-rooted. Some philosophers argue that each individual has full ownership rights over their resources – and that a rich person’s only responsibility is to use their resources wisely. John Rawls, one of the most influential philosophers of the 20th century, saw justice as a matter of fairness. He argued that citizens discharge their moral responsibility when they contribute their fair share of the taxes governments use to care for the poor and vulnerable. The better-off are then free to dispose of the rest of their income as they like. But what the rich are giving away in their philanthropy is not entirely their money. Tax relief adds the money of ordinary citizens to the causes chosen by wealthy individuals. Depending almost wholly on capitalist charity, American culture equals the Third World countries. Philanthropy culture is terrible for society in the long term. First, philanthropists come from the dominant social class and do not want equity, diversity, and inclusion. In the second place, foundations cannot guarantee long-term cultural and social policies because they depend on the profit of the donor. The rich fund arts because of profit tax benefits, no gain, no culture. Socially and culturally important tendencies could be missed in a bad economic period. Foundations can not take risks and foresee creative processes because they are not cultural but corporate institutions. The culture of philanthropy is a thesis with no antithesis, which makes development impossible. Museums accumulate a donor-dependent heritage and shape cultural history for upcoming generations.
Nedko Bucev August 2022
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