NATIONAL ENDOWMENT FOR THE ARTS 

1100 Pennsylvania Avenue, NW

Washington, DC 20506-0001

202.682.5400
National Endowment for the Arts

 

How the United States

Funds the Arts

 

Third Edition

 
November 2012

NATIONAL ENDOWMENT FOR THE ARTS

1100 Pennsylvania Avenue, NW

Washington, DC 20506-0001

202-682-5400

arts.gov

Produced by the NEA’s Office of Research & Analysis

Joanna Woronkowicz, Senior Research Officer

Bonnie Nichols, Research Analyst

Sunil Iyengar, Director

First edition prepared by Tyler Cowen, Department of Economics, 

George Mason University.

Second and third editions revised by the staff of the National 

Endowment for the Arts.

Editorial and publication assistance by Don Ball

Designed by Fletcher Design

Cover: Hubbard Street dancers Jonathan Fredrickson and 

Jessica Tong performing at the Art Institute of Chicago below 

Sky Above Clouds IV by Georgia O’Keeffe. Photo by 

Todd Rosenberg, courtesy of Hubbard Street Dance Chicago 

Printed in the United States of America

Library of Congress Cataloging-in-Publication Data

CIP Data available in PDF version of the report at arts.gov

Voice/TTY: 

(202) 682-5496 

For individuals who are deaf or hard-of-hearing.

Individuals who do not use conventional print may contact the Arts 

Endowment’s Office for AccessAbility to obtain this publication in an 

alternate format. Telephone: (202) 682-5532

This publication is available online at arts.gov, the Web site of the 

National Endowment for the Arts.
CONTENTS

Preface by Rocco Landesman ................................................ v

I. Overview ...................................................................................1

II. Direct Public Funding for the Arts .....................................3

III. Other Public Funding for Arts and Culture .................. 11

IV. Private Giving and Tax Incentives ................................. 18

Conclusion................................................................................. 25

Selected References ................................................................ 26

national endowment for the arts iii

vi how the united states funds the arts

Not-for-profit theaters, 

like the 

Signature Theatre 

in New York City, shown 

here in a production of August Wilson’s King 

Hedley II, combine public 

support with private 

donations and earned 

income to cover the costs 

of producing a season of 

plays and musicals.

Photo by Carol Rosegg
the infrastructure for arts and cultural 

support in the United States is 

complex and adaptive. Citizens who 

enjoy the arts can choose from a 

wide array of drama, visual and media arts, 

dance, music, and literature available in formal 

and informal settings—theaters, museums, and 

concert halls, but also libraries, schools, places 

of worship, open-air venues, restaurants or 

nightclubs, and, via technology, at home or on 

the move. In the last two decades, the number 

of arts and cultural organizations has grown, 

even as revenues from sales and attendance 

NatioNal ENdowmENt for thE arts 1

I.

ovErviEw

1. Direct public funding 

(NEA; state, regional, and 

local arts agencies)

2. Other public funding, 

direct and indirect (various 

federal departments and 

agencies) 

3. Private sector contributions 

(individuals; foundations; 

corporations)

three 

broad 

Categories 

of u.s. 

arts 

funding

revenue sources of Not-for-Profit Performing arts Groups 

and museums in the u.s.

foundations

9.5%

Corporations

8.4%

individuals

20.3%

Earned income

40.7%

interest and 

Endowment

income

14.4%

local

3.3%

federal

1.2%

state

2.2%

Contributed income

44.9%

Estimates are based on an analysis of 

2006-2010 data from the Urban Institute’s 

National Center for Charitable Statistics 

(NCCS) and the U.S. Census Bureau’s 

Economic Census. Various other data 

sources were also used where estimates 

were missing or for validation.
2 how the united states funds the arts

by state, regional, and local arts agencies; 2) 

funding from federal departments and agencies 

other than the NEA; and 3) private sector 

contributions, which make up the lion’s share of 

contributed income for arts organizations. This 

third revenue stream flows from individual and 

corporate donors and from charity foundations, 

and it flows more smoothly because of 

incentives in the U.S. tax system. 

Regarding the not-for-profit arts sector, 

an analysis of performing arts groups and art 

museums alone shows that roughly 45 percent 

of their funding, in aggregate, comes from 

government and private sector contributions. 

The remaining 55 percent of these organizations’ 

total revenue can be assigned to earned income 

(ticket sales, subscriptions, etc.) and interest 

from investments, such as an endowment. 

(See pie chart on page 1.) 

Earned or contributed, both means of 

income are unpredictable. Consequently, 

arts organizations face a two-sided challenge. 

On the one hand, they must cope with rising 

expenditures for artists, artworks, productions, 

and educational projects. On the other, they 

must forecast the revenue needed to support 

their program goals.

Given this dual responsibility, it is easy 

to understand how, for people outside the 

American art world, the nation’s funding system 

might appear labyrinthine in scope. After all, the 

U.S. system is comprised of public and private 

entities, tax policies, legislative allocations, 

donated bequests, restricted endowments, 

education mandates, and social agendas. The 

hierarchy of government agencies, composed of 

city, county, state, regional, and federal strata, 

is itself a dizzying scheme, especially to people 

whose own nations have highly centralized, 

state-directed systems. It’s no wonder, then, 

that the financial mechanisms of American arts 

policy and practice are poorly understood.

2012 NEA grantee Dakshina dance company, 

featuring founder Daniel Phoenix Singh with 

Melissa Greco Liu in Frida. 

Photo by Stephen Barnovics, courtesy of Dakshina

have risen to all-time high levels. These 

trends coincided with growth in publishing, 

broadcasting, and other media industries, and 

the arrival of new technology platforms for 

arts creation. 

In recent years, arts managers not only have 

weathered an economic recession; they have 

been challenged to address evolving patterns 

of arts participation, which include a blurring 

of genres, categories, and traditions, as well as 

shifting boundaries between the professional 

and amateur arts sectors. To navigate this 

changing landscape, while working in a fiscally 

tough climate, U.S. artists and arts organizations 

must rely on a network of allied but independent 

funding sources. 

In the following chapters, this monograph 

identifies three basic types of financial support 

for the arts: 1) direct public funds awarded by 

the National Endowment for the Arts (NEA) and 
The U.S. arts system has no single 

benefactor, no overarching arbiter or 

agency, no Ministry of Culture. Instead, 

a variety of government subsidies 

compose roughly 7 percent of the nation’s 

total investment in not-for-profit arts groups. 

The NEA is the largest single funder of the arts 

across America, but the majority of direct public 

funding still flows from a combination of other 

federal, state, regional, and local agencies.

Direct public support is not used to impose 

arts policy. Instead, government decisions on 

arts funding tend to be driven by experts in a 

given field or discipline. Candidates for those 

funds are almost always subject to rigorous peer 

review, which ensures that the awards are based 

on merit, not on policy aims or on political 

favoritism. In any case, direct grants do not 

finance the bulk of artistic activity in the U.S.; 

they fill gaps, enhance arts education, nourish 

arts creation, assist in the presentation and 

delivery of artworks, and enable preservation. 

These grants thus complement, and do not 

replace, other means of arts funding. As an 

example, the NEA requires, for most grants, that 

the recipient organization couple the amount 

awarded with an equal or greater amount of 

other, nonfederal contributions, as will be seen 

in a brief overview of the NEA.

A. National Endowment for the Arts

Established by Congress in 1965 as an 

independent federal agency, the NEA is 

national endowment for the arts 3

II.

direct public FUNDING for the arts

the designated arts organization of the 

U.S. government. The Arts Endowment is 

dedicated to advancing artistic excellence, 

creativity, and innovation for the benefit of 

American individuals and communities. It has 

played a substantial role in the development 

and preservation of dance, design, folk 

and traditional arts, literature, media arts, 

museums, music, opera, theater, and visual arts. 

Congressional consideration of the agency’s 

annual funding occurs within the House and 

Senate Appropriations Committees—specifically, 

in the two subcommittees overseeing the 

U.S. Department of the Interior, Environment, 

and Related Agencies. In 2012, the agency’s 

appropriation was $146 million, of which 80 

percent went toward grantmaking.

A Peer Review System

Grant applications submitted to the Arts 

Endowment are reviewed, in closed sessions, 

by advisory panelists. Each panel is organized 

around a specific discipline: artist communities; 

arts education; dance; design; folk & traditional 

arts; literature; local arts agencies; media arts; 

museums; music; opera; presenting; research; 

state and regional; theater and musical theater; 

and visual arts.

Panels are comprised of a diverse group of 

arts experts and other individuals, including at 

least one layperson, with broad knowledge of 

the areas under review. Membership changes 

regularly. Panels recommend projects to be 

supported, and Arts Endowment staff reconciles 
these recommendations with available funds. 

Next, the panel recommendations are 

forwarded to the National Council on the Arts, 

which consists of 18 renowned artists, arts 

administrators, scholars, and arts patrons 

appointed by the President and confirmed by 

the U.S. Senate. Six members of Congress serve 

on the council in a non-voting capacity. These 

ex officio members serve two-year terms, while 

the remaining council members serve staggered 

terms of six years each.

The council convenes three times a year 

to review panel recommendations and make 

their own recommendations to the NEA 

chairman. The chairman, then, reviews the 

recommendations for grants and makes the final 

decision on all grant awards. 

In Fiscal Year (FY) 2012, the agency made 

2,158 awards, ranging from $5,000 to $150,000 

per award; the most commonly awarded amount 

was $10,000. It is estimated that for each $100 

the Arts Endowment awarded in FY 2012, arts 

groups raised an estimated $910 in contributions 

and earned revenue. 

4 how thE UNitEd statEs fUNds thE arts

aPPliCaNt

PaNEl 

rEViEw

(by discipline) 

NatioNal 

CoUNCil oN 

thE arts

NEa 

ChairmaN

NEa Grant review Process

Bulgarian-american saxophonist Yuri Yunakov leads his band during their performance at the 2011 NEa 

National heritage fellowship concert, where he was awarded the country’s highest honor in the folk and 

traditional arts. 

Photo by michael G. stewart
The Arts and the

American Recovery and 

Reinvestment Act of 2009 

In February 2009, President Barack Obama 

signed into law the American Recovery 

and Reinvestment Act (ARRA) to create 

and protect jobs in the aftermath of the 

2007-2009 economic recession. ARRA 

recognized the not-for-profit arts industry 

as an important sector of the economy 

and, consequently, the NEA distributed $50 

million in recovery funds to preserve artsrelated jobs threatened by the decline of 

philanthropic support during the recession. 

Through ARRA, the NEA awarded 637 

one-time grants totaling $30 million; the 

remaining $20 million in ARRA funding was 

distributed through state and regional arts 

organizations.

Types of NEA Funding

The NEA awards most grants through its Grants 

for Arts Projects program, which has two 

categories: Art Works and Challenge America 

Fast-Track. Art Works supports the creation 

of art that meets the highest standards of 

excellence, public engagement with diverse and 

excellent art, lifelong learning in the arts, and 

strengthening communities through the arts. 

Activities for which the NEA makes awards 

include the commissioning and development 

of new work, the presentation of performances 

or exhibitions at home or on tour, arts 

education projects (including standards-based 

learning activities for children and youth), the 

preservation of significant artworks, and the 

innovative uses of new models or technology 

to create work or engage audiences. Art Works 

grants generally range from $10,000 to $100,000.

Challenge America Fast-Track grants help 

organizations extend the reach of the arts to 

underserved populations whose opportunities 

to experience the arts are limited by geography, 

ethnicity, economics, or disability. These grants 

focus on simple, straightforward local projects 

including festivals, exhibits, performances, 

public murals and sculptures, environmental 

art, and cultural tourism. The review process 

for Challenge America Fast Track applications is 

expedited and all grants in this category are for 

the amount of $10,000. 

In 2011, the NEA started awarding Our 

Town grants to support creative placemaking 

projects, which contribute to the livability of 

communities and place the arts at their core. 

These grants support projects that may 

include planning, design, and arts engagement 

activities, and which reflect the distinctive 

qualities of their communities. Grants awarded 

in this category must involve two primary 

partners (a not-for-profit organization and a 

local government entity) and usually range 

national endowment for the arts 5

from $25,000 to $150,000. 

Another recent category of grants is 

Research: Art Works, which currently provides 

$10,000 to $30,000 to support analyses of data 

on the value and impact of the arts in the U.S.

The NEA also bestows individual fellowships 

in literature, and lifetime achievement awards 

in jazz and folk and traditional arts. In addition, 

the NEA funds various arts initiatives through 

strategic partnerships, including those with 

other federal agencies.

As further evidence that the Arts 

Endowment’s grants portfolio is diversified, 

it is important to note that 40 percent of the 

agency’s funds are required by law to go to 

the 50 states’ and six U.S. jurisdictions’ arts 

agencies, as well as to the nation’s six regional 

arts organizations, thereby providing indirect 

support for arts projects in thousands of 

communities nationwide. 
B. State/Regional Arts Agencies

The NEA and the state and regional arts 

agencies are partners in funding the arts. 

When, in 1965, Congress established the Arts 

Endowment, 23 states had official arts agencies 

or councils. Since the NEA was required to 

apportion funds to any state that established an 

arts agency, it is no coincidence that within a 

few years of 1965, nearly every state had an 

arts agency. 

The New York State Arts Council (NYSCA) 

was founded in 1960 and provided an early 

model for other state arts agencies and for 

the Arts Endowment itself. In terms of total 

legislative appropriations, NYSCA is the largest 

state agency—its FY 2012 appropriation was 

$36.2 million. On a per capita basis, New York 

still ranks high in terms of its appropriations as 

compared to other states; in FY 2012, however, 

states such as Minnesota, Hawaii, Rhode Island, 

Wyoming, and Maryland surpassed New York in 

terms of per capita arts appropriations. 

Federal appropriations to the Arts 

Endowment exceeded state legislative 

appropriations to state agencies until the 

mid-1980s. In 1979, the NEA appropriation 

was nearly 90 percent greater than state 

appropriations to arts agencies. The year 1986 

was the first in which state funding surpassed 

NEA appropriations, and state appropriations 

have remained greater than the NEA’s in each 

6 how the united states funds the arts

Per Capita State Arts Agency Appropriations, Fiscal Year 2012

Based on an analysis of data from the National Assembly of State Arts Agencies

Washington, DC = $6.50

$3.75 to $6.50

$1.80 to $3.74

$1.00 to $1.79

$0.65 to $0.99

$0.25 to $0.64

Less than $.025

NOTES: The Arizona Commission on the Arts receives 

no legislative appropriation. However, it received $1.4 

million in other state funds generated from state business 

license revenues. The Kansas Arts Commission received 

no appropriation in 2012. In 2013, a new arts agency will 

take its place, the Creative Arts Industry Commission, with 

$700,000 in funding from state government. 
planning requirements, close to 90 percent 

of NEA state partnership funding is allocated 

via formulas that reflect state populations and 

equal state proportions. The remaining funds—

roughly 10 percent of NEA state partnership 

outlays—are awarded to states competitively. 

In aggregate, state arts agencies received 

$260.1 million from FY 2012 state legislative 

appropriations. For the same time period, the 

Arts Endowment’s contribution to the agencies 

was $32.9 million.

The Arts Endowment and state arts 

agencies also collaborate via six regional arts 

organizations whose members are the state 

national endowment for the arts 7

subsequent year. State arts funding reached its 

peak year in 2001 when appropriations to state 

arts agencies exceeded federal appropriations to 

the NEA by 77 percent. 

State arts agencies use NEA-provided 

Partnership Agreement funds in conjunction 

with state-appropriated funds to support locally 

determined initiatives. Each state arts agency 

receiving NEA support is required to develop a 

statewide plan that ensures appropriate use of 

state agency grants. Planning is inclusive and 

responsive, reflecting the goals and activities 

determined to be most important to that state. 

Provided that state arts agencies meet these 

Golden Dragon Acrobats at a school performance 

for nearly 1,500 students, followed by a public 

performance for more than 1,000 people, in 

Aberdeen, South Dakota, as part of the NEA Regional 

Arts Touring Program through a grant by regional 

arts organization Arts Midwest. 

Photo by Dawn Sahli Photography

Minnesota’s Clean

Water, Land, and Legacy 

Amendment 

In addition to legislative appropriations, states 

use various other means to fund the arts. In 

2008, voters in Minnesota passed the Clean 

Water, Land, and Legacy Amendment to its 

state constitution. The amendment permits 

the state to levy a 0.375 percent state sales 

tax (less than 4 cents on a $10 purchase), 

which is expected to generate $7.5 billion in 

statewide support for clean water sources, 

wildlife habitat, and parks and trails for 

over 25 years. The amendment also allows 

the state to allot nearly 20 percent of its 

proceeds to the Minnesota State Arts Board 

(and the state’s regional arts councils) to fund 

arts education partnerships, state touring and 

festivals, public access to arts events, and 

new opportunities for artists. As a result of 

the amendment, in 2009 the Minnesota state 

legislature appropriated $93 million in funding 

to support arts and cultural projects between 

July 2009 and July 2011.
8 how the united states funds the arts

State Arts Agency Appropriations and 

the 2007-2009 Recession

Both federal and state government appropriations to the arts have declined since the 2007-

2009 economic recession. In 2009 and 2010, the NEA’s annual appropriations increased by 

$10.3 and $12.8 million, respectively, but were then reduced in 2011 by $12.8 million and in 

2012 by $8.7 million. Annual appropriations to state arts agencies have continued to decline 

in recent years. In 2009, appropriations declined by $25 million, and were again reduced by 

$37 million in 2010, $17.9 million in 2011, and $13.9 million in 2012.

Consequently, several state arts agencies have had to contend with major restructuring 

or elimination proposals. In FY 2012, for example, all state funding for the Kansas Arts 

Commission was eliminated, and in the following year, the duties of the Kansas Arts 

Commission were transferred to the new Creative Arts Industry Commission within Kansas’ 

Department of Commerce. 

In Wisconsin, state legislators approved a 68 percent reduction in funding to the 

Wisconsin Arts Board (WAB) and an altogether elimination of the WAB’s Percent for Art 

program, which placed artwork in state government buildings. Furthermore, the WAB was 

consolidated into the state’s Department of Tourism.

Note: Figures are in current dollars.

Based on an analysis of data from the National Assembly of State Arts Agencies

$500

$450

$400

$350

$300

$250

$200

$150

$100

$50

$0

1970 1972 1974 1976 1978 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012

Total Appropriations to the NEA and State Arts Agencies, 1970–2012

Appropiations to the NEA Appropriations to State Arts Agencies

Millions
national endowment for the arts 9

arts agencies: Arts Midwest; Mid-America Arts 

Alliance; Mid Atlantic Arts Foundation; New 

England Foundation for the Arts; South Arts; and 

Western States Arts Federation. In 2011, the total 

budget of these groups was $42.2 million. The 

NEA awards regional partnership grants to these 

organizations; in FY 2012 such awards totaled 

$6.5 million. 

C. Local Arts Agencies

Perhaps nowhere is the decentralization of 

the U.S. arts funding system better reflected 

than in the range and influence of local arts 

agencies. Currently, there exist about 5,000 

local arts agencies operating across the nation 

in cities, towns, counties, and regions. They 

function as councils or commissions, or as 

city departments, and are funded by various 

sources: the NEA; state arts agencies, municipal 

budgets, and private donations. Many of the 

larger local arts agencies are now funded 

through a dedicated revenue stream, such as 

hotel/motel tax revenues.

In FY 2012, the NEA awarded 37 grants to 

local arts agencies, totaling $1.2 million through 

its Locals program. In addition, nearly two-thirds 

of the Arts Endowment’s FY 2012 Our Town 

awards were made to projects in which a local 

arts agency was either a lead applicant or a 

primary partner. The NEA also supports local 

arts agencies through grants in arts education 

and folk and traditional arts. 

As with state-level grants, local and city-level 

grants and investments preceded establishment 

of the NEA. After the success of the Chicago 

World’s Fair in 1893, many American cities 

set up art commissions as part of their urban 

planning policies. Frequently their budgets 

were no more than a few thousand dollars, 

but they had authority to commission public 

improvements and artworks. In some cases, 

Recycled bicycle art by Troy Neiman sits adjacent to the arts organization, Bicycle Inter-Community Art and 

Salvage (BICAS), which is part of Tucson’s Historic Warehouse Art District undergoing cultural asset mapping 

by the local arts agency Tucson Pima Arts Council, supported by an NEA Our Town grant.

Photo by Sally Krommes for the Tuscon Pima Arts Council
10 how the united states funds the arts

including museums, art spaces, historic 

buildings and neighborhoods, and symphony 

orchestras. In 1982, the NEA initiated the Locals 

program, which offered competitive grants that 

were highly leveraged at the local level. The 

program’s purpose is, and continues to be, to 

stabilize and support local arts agencies.

The importance of local arts agencies lies in 

their ability to adapt to changing conditions on 

the ground. In addition to administering grant 

programs, local agencies serve as advocates 

and help attract a wide range of community 

resources to support arts and culture. Thus, 

local arts agencies might host professional 

development workshops for artists, coordinate 

marketing efforts for local arts groups, or 

conduct and publish research on the arts. Many 

local agencies have also become increasingly 

involved in cultural tourism initiatives or 

serve as partners in neighborhood economic 

revitalization efforts. Alternatively, such 

agencies might organize public performances, 

festivals, or exhibitions, oversee a community’s 

public art program, or even own and manage a 

local cultural facility. 

these institutions provided independent support 

for the arts instead of solely commissioning 

works for public buildings and spaces.

As a nationwide influence, the Works 

Progress Administration in the 1930s is often 

credited as the precursor to the local arts 

agency movement. Thousands of murals and 

artworks emerged from cities and towns across 

the nation, integrating art into everyday life, and 

creating greater community interest in the arts. 

Urban involvement in the arts grew steadily 

after the Second World War. Illinois’ Quincy 

Society of Fine Arts (founded in 1947) and 

North Carolina’s Winston Salem Arts Council 

(founded in 1949) were among the first local 

arts agencies in the U.S.

In the latter part of the twentieth century, 

many American cities decided to expand their 

presence as regional arts centers and magnets 

for tourists. This tendency gained momentum 

when, in 1974, the NEA invited “governmental 

units, including cities, counties, and villages” to 

apply for a grant to participate in an American 

Bicentennial initiative called “City Spirit.” 

Gradually, city governments moved toward 

subsidizing a wide variety of artistic institutions 
Either independently or in partnership 

with the NEA, other federal 

departments and agencies also 

support arts and culture. Some have 

the ability to direct funds to artists and arts or 

cultural organizations, while others specialize in 

producing, archiving, or exhibiting artworks or 

performances for the public’s benefit. Still other 

federal entities use arts and culture to boost a 

broader strategic mission, goal, or initiative.

A. Direct Funding Sources

Apart from the NEA, there are a number of 

other federal agencies and programs that fund 

artistic or cultural activities. An example is the 

Arts Endowment’s sister agency, the National 

Endowment for the Humanities (NEH), which 

promotes and provides funding for scholarly 

research and public programs in history, 

philosophy, literature, religion, ethics, and 

jurisprudence. In FY 2012, the NEH’s federal 

appropriation was $146 million.

Recent projects funded by the NEH include 

the Digital Public Library of America; the first 

facsimile of Igor Stravinsky’s original score to 

his 1923 ballet, Les Noces; digital preservation 

and access to the AIDS Memorial Quilt; and 

a documentary film-screening on American 

popular music. The NEH also funds programs for 

public television, makes grants to museums for 

exhibits and the preservation of art and artifacts, 

and supports scholarship on the humanities and 

history. 

how the united states funds the arts

III. 

Other Public FUNDING for Arts and Culture

A digital display of the AIDS Memorial Quilt, here shown on display in Washington, DC in 2000, was built 

with an NEH grant to allow users to view and interact with individual panels. 

Photo courtesy of the NAMES Project Foundation
12 how the united states funds the arts

Preservation and museum support coincide 

with the role of another independent federal 

agency, the Institute of Museum and Library 

Services (IMLS). Created in 1976 as the Institute 

of Museum Services, IMLS funds institutions as 

varied as museums, zoos, botanical gardens, 

and libraries. In FY 2012, IMLS’ appropriation 

was $232 million. Of this total, $29 million 

was allocated to museums, while most of the 

remainder went to libraries.

Cultural programming, meanwhile, is made 

available to the American people on public 

television and radio. The Corporation for 

Public Broadcasting (CPB), founded in 1967, 

is a private not-for-profit corporation, whose 

board members are chosen by Presidential 

appointment. CPB provides funds to local 

public television and radio stations as well as 

to content producers and distributors, such as 

the Public Broadcasting Service (PBS), National 

Public Radio (NPR), American Public Media 

(APM), and Public Radio International (PRI). 

CPB’s appropriation for 2012 was $444 

million. Seventy percent of the funds go directly 

to individual local television and radio stations, 

as required by law. In total, CPB supports 350 

local public television stations and more than 

900 local public radio stations. In FY 2012, 

CPB allocated $222 million in public television 

station grants, and $69 million in public radio 

station grants. Public television broadcasting 

draws roughly equal parts of its funding from 

government (federal, state, and local) and 

the private sector (viewer memberships and 

corporate and foundation support). By contrast, 

government (all levels) provides only 25 percent 

of funding for public radio broadcasting.

In addition to awarding direct grants 

and contracts, some federal programs offer 

resources or services to arts organizations. 

For example, the Federal Council on the Arts 

and the Humanities—administered by the 

NEA—oversees the Arts and Artifacts Indemnity 

Program, which insures foreign and domestic 

objects exhibited in American museums.

The Arts and Artifacts Indemnity Program 

was created by Congress in 1975 for the purpose 

of minimizing the cost of insuring international 

exhibitions. In 2007, Congress expanded 

eligibility under the program to include coverage 

of works of art owned by U.S. entities while 

on exhibition in the U.S. Since its inception, 

the program has indemnified more than 1,100 

exhibitions, saving U.S. museums more than 

$365 million in insurance premiums. The 

international indemnity program provides up 

to $10 billion in total coverage at any one time, 

while the domestic indemnity program, which 

started in 2007, provides up to $5 billion in total 

coverage at any one time.

B. Federal Museums and 

Performing Arts Centers

Still other agencies and programs operate their 

own public libraries, museums, or performing 

arts venues. Some of the more prominent ones 

appear in this section.

Since 1976, the Library of Congress and 

its American Folklife Center have been active 

in gathering the records of diverse cultures. 

The folk archives collection has grown 

tremendously, both in number of items and in 

breadth of coverage, and includes a wide range 

of folklife expressions dating from the end of the 

nineteenth century through the early twentyfirst. Today there are more than three million 

items of ethnographic documentation in the 

archive, representing over a hundred years of 

fieldwork. Issues critical to the center include 

digital preservation, Web access, and archive 

management. 

Founded in 1846, the Smithsonian Institution 

consists of 19 museums and galleries, the 
national endowment for the arts 13

The National Gallery of Art is supported by the federal government, but its world-famous collection has 

come from private donations. 

Photo courtesy of the National Gallery of Art

Indian. In 2003, Congress established the 

National Museum of African American History 

and Culture, making it the 19th Smithsonian 

Institution museum. Construction is expected to 

be completed in 2015.

The National Gallery of Art (NGA), one of 

the world’s premier art museums, received a 

Congressional appropriation of $128 million in 

2012. The NGA’s history exemplifies the private/

public partnerships that are the hallmark of 

American arts institutions. Opening on the 

National Mall in 1941, the gallery and its first 

West Building were conceived and funded by 

donations from the A.W. Mellon Educational 

and Charitable Trust—the family foundation 

National Zoological Park, and nine research 

facilities. The Smithsonian is an independent 

institution within the federal government. A 

Board of Regents, comprised of the Chief Justice 

of the Supreme Court, the Vice President, six 

members of Congress, and nine citizens, governs 

the institution. Regular appropriations come 

from Congress, and totaled $811.5 million in FY 

2012. Its private endowment stood at $1 billion.

The Smithsonian includes the Hirshhorn 

Museum and Sculpture Garden, the National 

Portrait Gallery, the National Museum of 

American Art, the Renwick Gallery, the CooperHewitt Museum of Decorative Arts and Design, 

and the National Museum of the American 
14 how the united states funds the arts

insofar as they affect the federal interest and 

preserve the dignity of the nation’s capital.

Also notable is the U.S. Department of 

Education’s Arts in Education program, which 

funds Kennedy Center educational programs 

for children and youth, and awards grants to 

VSA—the international organization on arts and 

disability. The FY 2012 Arts in Education budget 

was nearly $25 million.

C. Other Arts-Related Programs within 

the Federal Government

Many federal departments and agencies 

use the arts as a way to advance their own 

distinct strategic missions. Relative to the 

total appropriations of these agencies and 

departments, the amount of funding for these 

programs is often quite small. Even so, the range 

of federal programs incorporating the arts is 

an important part of the story that reflects the 

highly diversified nature of arts funding in the 

U.S. 

Take, for instance, the United States 

Geological Survey (USGS), which conducts 

research on the U.S. landscape, its resources, 

and natural hazards. As part of its mission, USGS 

uses Landsat satellite technology to produce 

color-enhanced images of Earth through 

its Earth as Art series, a joint initiative with 

NASA. In addition to posting these images on 

its website, the USGS has displayed them on 

the windows of its building and as part of an 

exhibition at the Library of Congress.

The Department of Defense (DoD) uses 

the arts in various ways to help boost the 

morale of the nation’s armed forces and their 

families. Funding for the nation’s military bands 

(i.e., Air Force, Marine Corps, Army, Navy, 

and Coast Guard) totaled $388 million in FY 

2012. Each year, Armed Forces Entertainment, 

DoD’s agency for providing entertainment to 

2012 Appropriations for 

Selected Federal Entities 

Funding Arts and Culture

(in millions)

Smithsonian Institution.......................................$812

Corporation for Public Broadcasting........$444

Institute of Museum and 

Library Services.....................................................$232

National Endowment for the Arts................ $146

National Endowment 

for the Humanities................................................ $146

National Gallery of Art ........................................$128

Department of Education .................................. $25

Kennedy Center for the Performing Arts... $23

Presidio Trust..............................................................$12

Institute of American Indian 

and Alaska Native American Culture 

and Arts Development ...........................................$8

Advisory Council on Historic Preservation...$6

Commission of Fine Arts .......................................$2

of Andrew Mellon, banker, industrialist, and a

former U.S. Secretary of the Treasury. Major 

donations of art also came from Samuel H. 

Kress, Joseph Widener, and Bernice Chrysler 

Garbisch, among others. Designed by architect 

I.M. Pei, the East Building opened in 1978. It 

houses much of the NGA’s modern art, as well 

as a research center and library. A sculpture 

garden opened in 1999 and provides the 

museum’s setting for works of modern and 

contemporary sculpture.

The John F. Kennedy Center for the 

Performing Arts receives a direct appropriation 

from Congress ($23 million in FY 2012), as does 

the U.S. Commission of Fine Arts (CFA) ($2.4 

million in FY 2012). The CFA’s primary function 

is to advise the U.S. and District of Columbia 

governments on matters of design and aesthetics 
national endowment for the arts 15

U.S. military personnel overseas, hosts more 

than 1,200 shows at 270 military installations 

around the world. Tops in Blue, a program 

within the U.S. Air Force, allows troops and their 

families stationed worldwide to be entertained 

by an expeditionary group of performers. 

Air Force members compete annually to be 

part of the group comprised of vocalists, 

musicians, dancers, comedians, magicians, and 

dramatists. Similarly, keeping in the tradition 

of “Entertainment for the Soldier, By the 

Soldier”—a phrase coined by Irving Berlin—the 

Army Festival of the Arts features a broad range 

of performances produced and developed by 

servicemen and women.

The U.S. Army, Air Force, Marine Corps, 

Navy, and Coast Guard all hold extensive art 

collections focused on recording the history of 

America at war. The Army’s premier collection 

of 12,000 works of art includes not only works 

by popular artists such as Norman Rockwell, 

but also those created by American soldiers and 

which capture their own personal stories about 

military life. 

The Bureau of Educational and Cultural 

Affairs (ECA) at the U.S. Department of State 

fosters mutual understanding between the 

people of the U.S. and those of other countries 

by means of educational and cultural exchange. 

The ECA accomplishes its mission through a 

range of programs, including American Music 

Abroad, which sends musicians from the 

United States to more than 40 nations annually; 

Museums Connect, which connects American 

communities with communities abroad through 

museum-based collaborations; DanceMotion 

USA, a series of dance company programs to 

showcase the diversity of American dance; and 

Arts Envoys, which sends a variety of American 

artists to perform for audiences abroad.

For nearly 40 years, the General Service 

Administration’s (GSA) Art-in-Architecture 

program has commissioned artworks for new 

federal buildings nationwide. The program 

has completed over 350 commissions since 

its inception in the early 1970s. Through the 

program, the GSA reserves one-half of one 

percent of the estimated construction costs 

for federal buildings to commission American 

artists to create site-specific artworks. The 

Fine Arts Collection is also administered 

by the GSA. One of the nation’s oldest and 

largest public art collections, it consists of 

mural paintings, sculpture, architectural or 

The U.S. Marine Band performing at a wreath-laying 

ceremony at the Marine Corps Memorial in Virginia.

Photo courtesy of the Marine Band
16 how the united states funds the arts

Through its Sustainable Communities 

Initiative, the U.S. Department of Housing and 

Urban Development (HUD) awards grants to 

create strong, sustainable communities by 

connecting housing to jobs, fostering local 

innovation, and helping to build a clean energy 

economy. In 2010, HUD awarded a handful 

of grants to communities with art-related 

purposes. Examples include projects by the 

Colorado Department of Local Affairs to revive 

its African-American jazz and cultural heritage 

as an economic development strategy, and 

by Radford, Virginia, to develop a regional 

plan focusing on arts and cultural heritage. In 

FY 2011, HUD allocated $100 million for the 

program in total.

Many national parks house and preserve 

collections of artworks and artifacts and support 

residency programs for artists, under the aegis 

of the Department of the Interior. In FY 2012, the 

U.S. National Park Service (NPS) allocated $109 

million for the stewardship of cultural resources, 

which includes the preservation of cultural 

landscapes and maintenance of a museum 

collection filled with artworks and artifacts. 

NPS’ Artist-in-Residency (A-I-R) program offers 

writers, visual artists, and performing artists the 

opportunity to create and interact with visitors 

in 397 national parks and historic sites around 

the U.S. 

Through the use of photography, programs 

within the U.S. Forest Service, such as Discover 

the Forest and Get to Know Your Forest, have 

encouraged the public to respect the nation’s 

forests, partly through recognizing their beauty. 

In FY 2011 the Forest Service spent over $1.5 

million on these programs alone.

SeThe programs listed at left help to illustrate 

how some departments and agencies within 

the federal government use the arts to advance 

their respective missions. There are also many 

partnerships between the NEA and other 

environmental works of art, and works on 

paper dating from 1850 to the present. These 

civic works of art are in federal buildings and 

courthouses across the country. In addition, 

more than 20,000 small moveable New Deal 

works of art are on long-term loan to museums 

and other not-for-profit institutions.

Selected U.S. Departments 

or Agencies Using the Arts 

in their Programs 

Federal department, 

agency, or bureau

Sample programs that 

use the arts

U.S. Geological 

Survey

Earth as Art

Department of 

Defense

Military bands

Armed Forces 

Entertainment

Air Force Tops in Blue

Army Festival of the Arts

Military art collections

Department of 

State/Bureau of 

Educational and 

Cultural Affairs

Various literary and 

performing arts programs, 

e.g., American Music 

Abroad, DanceMotion USA, 

and Arts Envoys

General Service 

Administration

Art in Architecture

Fine Arts Collection

Department of 

Housing and Urban 

Development

Sustainable Communities

National Forest 

Service

Discover the Forest

Dance and theater 

programs for children

National Park 

Service

Cultural Resource 

Stewardship

Artists-in-Residence

Expressions of Freedom
national endowment for the arts 17

opportunities within the arts and human 

development, and a National Academies 

workshop on the relationship between the 

arts and health and well-being outcomes in 

older adults. 

agencies and departments that exist within the 

federal government. 

In 2011, the Arts Endowment partnered 

with 13 agencies and departments including the 

Department of Education, the National Science 

Foundation, the Institute of Museum and Library 

Services, various National Institutes of Health 

units, and leadership from the U.S. Department 

of Health and Human Services (HHS). 

Representatives from each of these agencies 

and departments serve on the Interagency Task 

Force on the Arts and Human and Development. 

The group’s mission is to catalyze new research 

opportunities, partnerships, and informationsharing to advance public knowledge about the 

arts’ role in human development. 

Formation of the group resulted from a 

2011 research and policy forum and a 

subsequent white paper exploring the 

relationship between the arts and positive 

health and educational outcomes at various 

segments of the lifespan—from early childhood, 

to youth and adolescence, to older adult 

populations. The paper is titled The Arts and 

Human Development: Framing a National 

Research Agenda for the Arts, Lifelong Learning, 

and Individual Well-Being.

The Task Force convenes researchers and 

practitioners via webinar to discuss research 

and evidence-based programs on the arts and 

human development. In the spring of 2012, 

for instance, the Task Force hosted a webinar 

presentation on the use of digital storytelling in 

Native Aspirations, a project supported by HHS’ 

Substance Abuse and Mental Health Services 

Administration that works with Native American 

and Alaska Native communities to help them 

build prevention programs to address youth 

violence, bullying, and suicide.

Other recent and ongoing Task Force 

activities include an NEA- and NIH-led 

literature review and gap-analysis of research 

National Intrepid Center 

of Excellence (NICoE) at 

Walter Reed National 

Military Medical Center

In 2004, the NEA collaborated with the 

Department of Defense to launch Operation 

Homecoming: Writing the Wartime 

Experience to help U.S. troops and their 

families chronicle their wartime experiences 

through professional writing workshops held 

on military installations, writers’ centers, and 

military medical centers. The project resulted 

in a published anthology of submitted works, 

educational resources on creative writing, as 

well as two award-winning documentaries. 

In 2012, the NEA began a new phase of 

the project, this time in partnership with 

the National Intrepid Center of Excellence 

(NICoE) at the Walter Reed National Military 

Medical Center in Bethesda, Maryland. NICoE 

is a relatively new facility dedicated to 

providing care to service members and their 

families affected by traumatic brain injury and 

psychological health conditions. Over a yearlong pilot phase, Operation Homecoming 

will offer expressive and creative writing 

workshops for troops as part of their clinical 

rehabilitation. The two agencies plan to work 

together on designing a research protocol 

to evaluate the effectiveness and impact 

of expressive writing as part of NICoE’s 

interdisciplinary care setting.
18 how the united states funds the arts

When an individual or 

corporation donates to 

the arts, there are often 

two distinct acts of charity 

involved. First there is the donor’s financial 

gift. If the recipient is a tax-exempt not-forprofit group, however, one should consider—

as a separate gift—the amount of additional 

revenue foregone by the U.S. government. This 

secondary benefit is realized as a tax deduction 

for the donor, and, along with the yearly 

tax payments waived for the not-for-profits 

themselves, it represents the most significant 

form of arts support in the United States. As a 

term, “tax incentive” is singularly appropriate; 

for every dollar the U.S. Treasury foregoes per 

tax deduction, donors are motivated to give 

private not-for-profits an additional donation 

in the range of 80 cents to $1.30, according to 

recent estimates.

A. Individual Giving

Americans donated approximately $13 billion to 

the category “Arts, Culture, and the Humanities” 

in 2011, the most recent year for which such 

data are available. In per capita terms, the total 

amounts to about $42 for each individual in 

the U.S. Individual donors account for about 

three-quarters of all charitable giving, with 

bequests, foundations and corporations 

providing the balance.

Since 1917, any donation to a tax-exempt 

not-for-profit organization has qualified as a 

potential deduction for the tax-paying individual. 

It is required only that the taxpayer itemizes his 

or her deductions, rather than take the standard 

deduction allowed by law. Today only about 36 

percent of American taxpayers—the majority 

in the highest income brackets—itemize their 

tax deductions, but it is possible that many nonitemizers give as well. More than 75 percent of 

charitable contributions come from itemizers. 

Individuals and households with larger 

incomes donate greater shares of that income to 

arts and cultural organizations. Among tax filers 

with adjusted gross incomes of $200,000 or more 

in 2005, 15 percent of charitable donations went 

to arts and cultural organizations. That share 

was only 1 to 2 percent among households with 

smaller adjusted gross incomes. For individuals 

with adjusted gross incomes over $200,000, the 

donation of a dollar to a not-for-profit institution 

reduces taxes between 33 and 35 percent, 

depending on whether the filing is individual or 

joint. Thus, the U.S. government foregoes $0.33 

to $0.35 for every $1 donated to a tax-exempt 

arts organization. In total, the U.S. government’s 

foregone revenues from charitable donations 

are expected to reach $230 billion between 

2010 and 2014.

Donations to other tax-exempt, not-forprofit institutions—such as universities and 

churches—are also deductible. The U.S. tax 

system thus favors decentralization of notfor-profit activities, rather than any particular 

conception of what a not-for-profit should do. 

Not-for-profits with artistic programs may serve 

as talent spotters, direct producers of creative 

IV. 

private giving and tax incentives
national endowment for the arts 19

outputs, donors, marketers, educators, event 

organizers, or preservers of the past. Many 

not-for-profits are small and informal, such as 

volunteer community groups.

More than one million public charities 

(the category covering most not-for-profit 

arts, cultural and humanities organizations in 

the U.S.) registered with the Internal Revenue 

Service in 2011. They are the engines of 

philanthropy, both as donors and recipients. To 

claim tax-exempt status under the U.S. tax code, 

not-for-profits must have one or more of the 

following characteristics: “charitable, religious, 

educational, scientific, literary, testing for 

public safety, fostering national or international 

amateur sports competition, [or] the prevention 

of cruelty to children or animals.” They cannot 

serve private interests, and are restricted in 

their amount of political lobbying. Because by 

definition they cannot operate for profit, such 

groups often devote considerable time and 

resources to fundraising. Arts, cultural, and 

humanities organizations made up 10.9 percent 

of all public charities that filed tax forms in the 

year 2009. 

Indeed, donations of volunteer time—equal 

in scope to over 38,000 full-time volunteers per 

year—are a large part of philanthropy in the 

U.S. In 2011, 1.3 million adults in the U.S. 

volunteered a total of 65 million hours to arts 

and cultural organizations. Volunteers tended 

to be highly educated and mainly female. 

Thus, by applying the average hourly earnings 

($25) of a full-time, college-educated woman in 

2011 to the total number of hours volunteered 

that year, it is possible to estimate the value of 

arts and cultural volunteering at more than 

$1.6 billion. 

B. Foundation and Corporate Giving

In the U.S., American foundations are significant 

in their size and scope. Recent estimates put 

foundation assets at around $583 billion. The 

Percent of Individual Charitable Contributions 

by Adjusted Gross Income, 2005

Recipient Under 

$100,000

$100,000 to 

$200,000

$200,000 to 

$1 million

Over 

$1 million

Arts and cultural 

organizations

1% 2% 15% 15%

Religious organizations 67% 57% 23% 17%

Combined purpose fundsa 9% 11% 11% 4%

Organizations devoted to 

helping meet basic needs

10% 12% 6% 4%

Health organizations 3% 6% 5% 25%

Education organizations 3% 6% 32% 25%

Other 7% 6% 8% 10%

a

 Organizations that pool funding to support a coalition of charities. Examples include the United Way and the Combined Federal Campaign.

Source: Congressional Budget Office
20 how the united states funds the arts

creation of new foundations is ongoing, yet at 

a slower rate than before the 2008 economic 

recession. From 1990 to 1999, 35 percent of the 

nation’s currently active, larger foundations 

(with assets over $1 million) were established, 

and 23 percent were established between 2000 

and 2009. Between 2007 and 2008, however, 

the number of these foundations grew at a 0.5 

percent clip—the slowest annual rate since 1981. 

The foundation sector consists of more than 

just a few major institutions. A 2009 estimate has 

the top 10 institutions accounting for roughly 

48 percent of foundation arts funding; the rest 

come from widely scattered sources. The Ford 

Foundation is one of the largest in terms of 

assets; in 2011, its $10.3 billion endowment 

generated more than $50.8 million for the 

arts and culture. Ranked by amount donated, 

however, the American Art Foundation, Inc., in 

New York was the top arts foundation of 2009, 

giving $111 million to this category. In 2011 the 

Walton Family Foundation gave $800 million to 

the Crystal Bridges Museum of Art—the largest 

cash donation ever made to a U.S. art museum.

The Ford, Mellon, and Carnegie Foundations, 

among many others, have supported a wide 

variety of cultural enterprises. Support from 

the Ford Foundation, for example, helped 

to establish the Corporation for Public 

Broadcasting and the American Film Institute, 

both founded in 1967; and the Rockefeller 

Foundation supported the establishment of 

Lincoln Center (1956) and the Museum of 

Modern Art (1929).

In addition to these larger entities, small 

private or family foundations also give 

significant amounts to the arts. The legal and 

institutional environment of the U.S. supports 

the number and diversity of these foundations. 

Some institutions foster more mainstream 

projects, while others specialize in supporting 

the avant-garde. Small foundations can be 

Crowd-Funding

for the Arts

In recent years, an alternative method of arts 

support has emerged through crowd-funding, 

a term used to describe the collective efforts 

of individuals who network to pool financial 

support for individuals and organizations. 

Crowd-funding typically applies micro-giving, 

or many small donations made through an 

online platform. In addition to raising funds 

for the arts, crowd-funding has been used to 

support activities such as citizen journalism, 

political campaigns, and scientific research, to 

name just a few.

ArtistShare, for example, is the first fanfunded Internet-based record label. Launched 

in 2000, ArtistShare has produced the 

Grammy Award-winning Concert in the 

Garden by jazz musician Maria Schneider as 

well as albums by comedian Rick Moranis and 

by Phish guitarist Trey Anastasio.

Since its inception in 2009, Kickstarter has 

raised $283 million for nearly 29,000 creative 

projects ranging from film, music, visual arts, 

theater, and dance to publishing, design, 

fashion, and technology. In August 2012, the 

Lyric Cinema, an independent film theater 

in Fort Collins, Colorado, used Kickstarter 

to raise more than $158,000 to upgrade to 

digital projection equipment; and 99% Invisible 

raised $170,000 for its award-winning radio 

program about design and architecture. 

Crowd-funding for the arts is not limited to 

private-sector servers such as ArtistShare 

and Kickstarter. In 2011, the Arts & Science 

Council (ASC) of Charlotte, North Carolina, 

began the crowd-funder Power2Give.org, 

which supports projects by ASC grantees. 

By October of that year, Power2Give had 

fully funded 37 projects at arts organizations, 

including $10,000 to the North Carolina Dance 

Theatre for its production of the ballet, Bolero.
well-suited at identifying and addressing 

unmet community needs, and they can assist 

in identifying additional funding sources for 

undercapitalized projects. 

Different kinds of foundations offer 

distinct advantages as donor models. Legacy 

foundations allow an individual to make a 

gift during his or her lifetime and receive a 

tax deduction in the current year. The gift 

is not passed along until the individual dies; 

meanwhile, the individual can receive income 

from the gift assets. Family foundations allow 

the board of directors to be comprised of family 

members only.

While in 2010 foundations donated over $2.2 

billion to arts and culture, foundation giving 

has been on the decline since the economic 

recession—with a 29 percent drop in the 

amount donated from 2008 to 2010. Foundation 

giving, in general, has experienced a modest 

uptick since 2010. 

Corporate giving is also more decentralized 

than commonly believed. Almost threequarters of arts spending comes from smaller 

companies with revenues of less than $50 

million. Ninety percent of that money goes to 

local arts organizations. Data from 2010 show 

that 28 percent of all businesses surveyed gave 

money to the arts, and that businesses devoted 

an average of 5 percent of their philanthropic 

budgets to the arts. 

Corporate giving, like private and foundation 

giving, has been influenced by public policy 

decisions. Corporations have received tax 

breaks for supporting the arts since 1936. As 

with individuals, corporations give more to 

the arts when they receive tax benefits for 

doing so. Many of the tax benefits for the arts 

are piecemeal in nature; they are not easily 

measured in aggregate. For instance, artistic 

institutions benefit from local tax breaks and 

legal provisions, often under the guise of urban 

national endowment for the arts 21

ARTPLACE

ArtPlace is a collaboration of 10 leading 

foundations and six of the nation’s largest banks 

to accelerate creative placemaking across 

the U.S. 

Participating foundations include the Bloomberg 

Philanthropies, the Ford Foundation, the James 

Irvine Foundation, the John S. and James L. 

Knight Foundation, the Kresge Foundation, the 

McKnight Foundation, the Andrew W. Mellon 

Foundation, the William Penn Foundation, the 

Rockefeller Foundation, and the Rasmuson 

Foundation. Participating financial institutions 

are Bank of America, Citi, Deutsche Bank, Chase, 

MetLife, and Morgan Stanley.

ArtPlace also has invited eight federal agencies 

to serve as advisors and offer lessons from those 

agencies’ own place-based funding efforts: the 

NEA; the departments of Housing and Urban 

Development, Health and Human Services, 

Agriculture, Education, and Transportation; and 

the White House Office of Management and 

Budget and Domestic Policy Council. 

In 2011, ArtPlace granted $11.5 million to arts 

organizations across the country with the goal 

of supporting economic development in those 

communities. Examples include ZERO1—an arts 

and technology network in San Jose, California, 

that works to promote creative thinking; Food 

Chain, a program led by the organization 

ArtPlace, in which artists and farmers work 

together to create vibrant marketplaces of 

food, art, and ideas in southern Wisconsin; 

and Artsipelago, an initiative led by the Tides 

Institute & Museum of Art in Eastport, Maine, 

that helps strengthens connections between 

related arts and cultural initiatives to stimulate 

ideas for creative placemaking.
renewal. Skillful artistic entrepreneurs can 

put together packages of direct and indirect 

subsidies, drawing on a wide variety of sources.

Consider one example. The Minneapolis 

Artspace organization wanted to renovate a 

decrepit warehouse and turn it into artists’ 

apartments and studios. The organization 

started by going to the State Housing Finance 

Agency and applying for Low Income Tax 

Credits available for renovation projects. These 

credits are paid for by the federal government 

but allocated through state governments. 

22 how the united states funds the arts

Northern Warehouse Artists’ Cooperative in St. Paul, Minnesota, is a former warehouse turned into artists’ 

studios by Minneapolis’s Artspace. 

Photo by Jeffrey Hanson 

160%

140%

120%

100%

80%

60%

40%

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

Foundation and Corporate Giving to Arts and Culture, 2000–2010

Index Year: 2003 = 100%

Foundation Giving Corporate Giving

Index

Source: Index data come directly from Americans for the Arts’ (AFTA) National Arts Index. To calculate the indices, AFTA used data from the 

Conference Board and the Foundation Center.

Note: An index is a standardized measure that tracks change in a variable from a defined point in time. For example, the graph shows that total foundation giving in 2006 was 119% of total foundation giving in 2003; and total corporate giving in 2004 was 93% of total corporate giving in 2003.
national endowment for the arts 23

The project had an estimated value of $20 

million, which meant that the available tax credit 

was about $900,000 per year. This sum is paid 

out yearly for 10 years, or $9 million in total. 

Artspace used these tax credits to get a bank 

loan of $7 million, and then set up a corporate 

partnership, in essence “selling” the tax credits 

to the corporate partner for cash. 

Artspace also financed 20 percent of the 

$20 million cost from the Historic Tax Credits 

available through the U.S. Department of the 

Interior, again “selling” these tax credits for 93 

cents on the dollar. Of the $20 million total, $11 

million was now in hand, and construction could 

begin. County and state tax programs served 

to complete financing, and the remainder was 

raised from private foundations, again with 

an implicit tax break for the donations. Other 

inventive designs for supporting the arts likely 

will follow in coming years.

Another novel approach is that of the Arts 

Council Silicon Valley. The Council recognizes 

that organizations must work within an 

environment that provides financial incentives 

for businesses to donate to the arts. Therefore, 

it has devised inventive programs for employers 

and corporations to create efficient donation 

strategies beneficial to their portfolios.

As with foundations, corporate giving 

to the arts has been on the wane since the 

economic recession. In contrast to individual 

and foundation giving, however, donations to 

the arts from corporations have fallen more 

precipitously. Between 2006 and 2010, the 

amount of corporate giving to the arts and 

culture fell by 48 percent. 

D. International Comparisons

Regarding arts and cultural funding, direct 

comparisons between the U.S. and other 

countries are awkward because of several 

factors: varying forms of indirect support for the 

arts through foregone taxes; varying definitions 

of what constitutes art; and exchange rate 

conversions that may not reflect real differences 

in cost of living. Nonetheless, it is possible to 

make a few generalizations, particularly with 

respect to European and U.S. models.

Similar to the U.S., other countries 

implement arm’s length or arts council models 

to allocate government funding for the arts. 

Some of these countries also have ministries or 

departments of culture to set cultural policy. 

Comparison of Funding by Selected Arts Councils and Agencies

Budget per capita

(U.S. dollars)

Data year

Arts Council of Wales $17.80 2012/2013

Arts Council (Ireland) $16.96 2012

Scottish Arts Council $14.52 2009/2010

Arts Council of England $13.54 2010

Arts Council of Northern Ireland $12.36 2011/2012

Australian Council $8.16 2010/2011

Canada Council for the Arts $5.19 2011

Creative New Zealand $2.98 2009/2010

National Endowment for the Arts $0.47 2012
24 how the united states funds the arts

the U.S. and some countries in the European 

Union (EU). “Value-added” taxes, commonly 

used in Europe, are consumption taxes in which 

a tax occurs each time a business in the supply 

chain purchases products. Reduced value-added 

taxes on cultural goods (e.g., buying music, 

paintings, or sculptures) are the most significant 

form of indirect government subsidies to the 

arts in the EU. For example, the U.K. applies 

a value-added tax of zero on the purchase of 

books and printed or copied music.

Individual private philanthropy is not as 

prominent in many European nations. Although 

few such programs have been implemented, 

there do exist other indirect subsidies to 

incentivize giving throughout Europe, driven in 

part by diminishing federal budgets. Germany, 

Italy, and Greece offer reduced inheritance 

taxes, sometimes as much as 60 percent. Under 

an ordinance, Austrian businesses are offered 

tax breaks for sponsoring cultural events. 

Cultural investments that generate a certain 

level of profits in the Netherlands are exempted 

from charges on capital returns. The U.K. leads 

the EU in mechanisms to stimulate private giving 

to the arts; as a result, charitable giving reached 

0.73 percent of the country’s GDP in 2005—

similar to the cases of Canada and Australia, 

which gave 0.72 percent and 0.69 percent of GDP 

respectively in the same year. The U.S. gave 1.67 

percent of GDP to charities in 2005.

The primacy of private, as opposed to 

public, support for the arts and culture in the 

U.S. largely relates to American social and 

cultural traditions. In addition to embedding 

support for the arts in the tax code, the U.S. 

applies a level of professionalism in fundraising 

unknown in many other countries throughout 

the world. 

Moreover, just as the U.S. government supports 

the arts through other funding mechanisms, 

such as forgone tax revenue, many other 

countries also have diverse ways of supporting 

culture. Therefore, while a cross-country 

comparison of selected arts council and agency 

budgets illustrates vast differences in direct 

government funding of the arts, it is important 

to keep in mind that many countries, to varying 

degrees, use indirect sources to complement 

what governments do not provide directly.

Indirect support of the arts, usually in the 

form of tax benefits, is in some cases as large or 

larger than direct government support in both 

Lottery-Based Funding in

the European Union

In many EU countries, lottery funds for 

culture are an important source of private 

investment in culture. Although a rather 

new measure, the use of lottery funds is 

gaining importance in the EU with the 

search for additional revenue for the 

cultural field. 

In the Netherlands, for example, lottery 

funds for culture derive from state-owned 

and private lotteries, where the contribution 

of the latter can exceed that of the 

national lottery. Annually, lottery funding 

for culture represents about 10 percent 

of the Netherland’s central government 

expenditure on culture. And in the U.K., 

over £125 million in lottery funding was 

awarded to the arts in 2010; another £94 

million went to the support of heritage.
national endowment for the arts 25

40 years. New arts organizations are constantly 

emerging––bringing new styles and perspectives 

to cultural life. No single agency or individual 

can set an artistic agenda for the nation; the 

contrasting values and tastes of different 

funders ensure a rich diversity of art works; 

tax incentives promote innovative methods 

of private support; and decentralization helps 

regional heritages and local communities retain 

their integrity.

What we see today is the spirit of American 

enterprise—in the past so successfully applied to 

commerce, technology, and politics—increasingly 

applied to the art world. In its comparatively 

short existence in the life of civilizations, the U.S. 

has produced an enduring legacy of cultural 

achievements, and leaders are fast recognizing 

the centrality of artistic expression and creativity 

to a healthy society. The American system of 

free enterprise, coupled with public support, is a 

proven means of fulfilling the NEA’s motto, “Art 

Works.” 

A merican arts funding is a 

complex and evolving system 

of entrepreneurial initiatives, 

philanthropic foundations, and 

government agencies. The public and private 

aspects of support are ever in flux, and the 

mechanisms of delivery mingle the best of 

charitable giving with entrepreneurial ingenuity. 

Funding goes to artists, museums, theaters, 

orchestras, schools, presses, community centers, 

cities, and states, and the purpose of funding 

ranges from the creation of new art to the 

preservation of the old, from teaching children 

basic skills to providing master artists with 

needed resources.

The funding network is diverse and 

perplexing, to be sure, and sometimes arts 

organizations do not survive the vicissitudes of 

the economy. But, simultaneously, the flexibility 

of the American system may be credited with 

fostering the substantial rise in art-making and 

arts participation that has occurred in the last 

Conclusion
26 how the united states funds the arts

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SELECTED References 

Much of the information included in this monograph came from 

conversations with various federal agency and department representatives. 

We use numerical estimates from the most recent years available. 
NATIONAL ENDOWMENT FOR THE ARTS 

1100 Pennsylvania Avenue, NW

Washington, DC 20506-0001

202.682.5400