Funding the arts

Posted on February 12, 2020 · Posted in Accounting & Business

Harvey Weinstein promised $5m to the University of Southern California’s School of Cinematic Arts as an endowment for women filmmakers.  As allegations surfaced about the Hollywood producer’s sexual abuse of women, the University decided this was a gift they could do without.

Charitable donations may reflect a desire to do good in the world.  But for some it is about improving a tarnished reputation.  Jeffrey Epstein, another man accused of massive levels of sexual abuse, was also generous.  The Massachusetts Institute of Technology received $800,000 from Epstein’s foundations.

MIT is now distancing itself from the disgraced financier.  MIT president L. Rafael Reif wrote an open letter, saying “despite following the processes that have served MIT well for many years, in this instance we made a mistake of judgment”.  It is undertaking a review to learn lessons, while those involved in decisions to accept Epstein’s money have apologised to his victims.

But ethical decision-making is complex.  Climate activists argue that energy companies should be shunned like tobacco companies.  Sir Mark Rylance ended his association with the Royal Shakespeare Company because of BP’s sponsorship.

Jess Worth, co-director of ethical pressure group Culture Unstained, argues: “As concern about the climate crisis intensifies, BP sponsorship has, rightly, provoked intense criticism, to the point where one of the judges of the National Portrait Gallery’s BP Portrait Award felt moved to speak out, and a British Museum trustee resigned over the issue.

“Careful due diligence within the framework of an ethical fundraising policy could have seen this coming, and predicted and avoided the reputational damage that cultural institutions part-way through BP contracts are now having to grapple with. Scrutiny over ethical funding has increased in recent years and charities should view this as an opportunity to make sure their values are coherent across all of their operations, and improve their transparency and accountability.”

BP responds that it “is one of the most significant corporate investors in UK arts and culture” and this “is part of the company’s wider contribution to society”.

Arts organisations and universities face difficult decisions in an environment of constrained public finances.  This was highlighted by a row over the Sackler family.  Photographer Nan Goldin refused to allow her collection to be displayed in the National Portrait Gallery because it agreed a £1m donation from the Sackler Trust, which benefits from profits from a family business, Purdue Pharma.  One of Purdue’s products is OxyContin, an opioid prescription drug that Goldin blames for an addiction after a bout of tendinitis.

Nearly 120,000 people a year worldwide die from overdoses of opioids, including prescribed drugs.  Only some of the Sackler family’s $13bn wealth comes from Purdue.  Recent beneficiaries of their money include the Hong Kong Film Festival, the Smithsonian Institution in Washington, London’s Serpentine Galleries and Old Vic theatre, Sussex University and King’s College London.

Following the row, the Guggenheim Museum in New York decided to cease taking funds from charities associated with the Sacklers – the museum had received $9m and houses the Sackler Center for Arts Education. The Louvre removed the Sackler name from its building, but said this was because the sponsorship period had ended.

The Sackler Trust issued a statement saying that the family has a “giving philosophy”, but has decided not to proceed with its donation to the National Portrait Gallery, as this would be “getting in the way of their mission”.  Oxford University will proceed with an £11m Sackler donation.  It is also accepting £150m from the founder and CEO of private equity firm Blackstone, Stephen A. Schwarzman, to create the Centre for the Humanities, named after him, whose remit will include the role of ethics in the application of AI.

A spokesman for the University says: “All major prospective donors are carefully considered by the University’s Committee to Review Donations under the University’s guidelines for acceptance.  The Committee considers the sources of an individual’s or organisation’s wealth and may reconsider a donor in the light of new information.  The University monitors significant developments in the public domain and the Committee considers donors when potential donations are brought to their attention.”

The Institute of Fundraising advises that donations should only be refused “in exceptional circumstances”.  These include where the gift is a proceed of crime; acceptance would be detrimental to achieving the charity’s purposes, for example by causing other donors, staff or volunteers to quit; or where the donor lacks the capacity to take the decision.  But, it adds, charities should have clear policies and processes on the acceptance and refusal of donations. Ultimately, charities have an obligation to know their donors.

In its report ‘Due diligence processes for potential donations’, the UK’s National Audit Office warns charitable trustees to exercise care when accepting money.  “Donations carry unique risks as a source of income and there have been high profile cases of the damage that can be caused if these risks are not well managed,” it says.  High risk donors include tobacco manufacturers, arms dealers and the adult entertainment industry, the NAO warns.

Charity trustees are under increasing pressure to raise private money.  But they can expect to be slammed for doing so if the donor’s reputation turns sour.

 

Giants of education and arts philanthropy

Chuck Feeney, a pioneer of duty free retailing, gave $6.3bn via Atlantic Philanthopies to good causes, including universities in Ireland.

Construction and insurance entrepreneur Eli Broad has donated $3.3bn, including to the Museum of Contemporary Art in Los Angeles.

Technology entrepreneur Li Ka-shing donated $1.4bn: China’s Shantou University was a beneficiary.