Now that government regulation of investments and markets is suddenly back in vogue, it’s only a matter of time until the reformers and the ethical cleansers train their sights on the least regulated market of them all–the art market. This will take time, but stay tuned. As last week’s exchanges made clear, taking a measure of post-bailout art values is also an exercise for another day. Only the November auctions will give us clear signals about the market’s health or decline.
This gives us breathing room to look further afield. What are the wider effects of the financial meltdown? To launch what might be a recurring feature about “What’s next?” let’s look at what the latest turn of events means for nonprofits. The postmortems have already begun. The Wall Street Journal and the Washington Post published articles over the past weekend about nonprofits bracing for the worst. The Journal points out that U.S. charitable donations grew a paltry 1% in 2007–that’s before the bad news hit. And although, as the Post reminds, corporate donations amounted to only 3% of the contributed income of nonprofit arts groups, some of the most generous sources of corporate giving are likely to vanish, at least for now.
So what is a nonprofit leader to do? As always, the worst-hit will be mid-size groups with high overhead and weak fundraising potential. These would do well to take a look at the astonishing flexibility that giant financial firms have shown in this crisis. If Merrill Lynch can be sold in a day, arts organizations, too, can adapt. For museums, there are undeniable threats in this new environment, including the possibility of tougher Congressional scrutiny of tax exceptions and loopholes. But there might also be a distant silver lining in the form of lower acquisition costs and more revenue from visitors–museums are an inexpensive family pastime, especially compared to a weekend in Turks and Caicos.
The real benefits of an economic downturn for nonprofits may be less obvious. The pendulum may be swinging back to a point where nonprofit art-world institutions start to matter more again. Creative Time’s current event series, Democracy in America, which culminated with the well-timed opening of a sprawling exhibit of political art at the Park Avenue Armory last weekend (see picture) may be a sign of good things to come–evidence that the art world may be ready to rejoin the “reality based community.”