The $248.52-Billion Pie

The questions most often asked in our office pertain to money—specifically, how to get it. Whether people need money to survive in general or to produce a specific project, if they are coming from an arts background, it's instinctual that they first look at the nonprofit sector for support.

We're beginning to see a number of enterprising young artists who are learning how to put together a project, write a proposal, and approach individuals, corporations, or foundations for possible support. This is a powerful new trend that puts artists directly in front of potential funders. From my perspective, artists who take the initiative in this way are frequently serving as powerful advocates for the arts—directly and indirectly. They are learning what it takes to persuade people to contribute. They are also learning the fine art of winning friends and influencing people (to borrow from the title of the popular Dale Carnegie book). It's a win-win situation all around.

Still, there's an enormous amount of work that needs to be done to help this next generation of artists. They need to learn how nonprofits work, where the money can be found, how to write effective proposals, and how to speak persuasively about their ideas. All of this is too much for me to cover in this short column. So instead, I'll offer a quick overview of the nonprofit sector, its allowable purposes, and the money available for such purposes.

Funding for arts projects can be found—if you know where to look.

According to a published study by the Giving USA Foundation, $248.52 billion was given in 2004 to nonprofit organizations (defined by the I.R.S. as an organization whose mission is one of religious, educational, charitable, scientific, or literary purpose). The I.R.S. grants a nonprofit 501(c)(3) status to such an organization, which allows it to receive contributions from individuals and organizations that are tax-deductible for the donor. So, if you have formed a string quartet and registered your group as a "five-oh-one-see-three," the fact that donations made to your group are tax-deductible is an incentive for people to contribute. Incidentally, since this tax deduction represents revenue that the federal government is not realizing at the end of the year, it is actually the government's way of indirectly supporting charitable organizations, including the arts—something often overlooked when we criticize the government's paltry support for the arts through the N.E.A.'s budget. This is not to say that the government is doing enough; far from it. But we as intelligent citizens should acknowledge this support and perhaps look at additional ways to encourage contributions to nonprofit organizations through tax breaks.

The term "nonprofit" is a bit of a misnomer. I frequently hear people describe a nonprofit as an organization which cannot make a profit. Not true! The difference between a nonprofit and a corporation like Microsoft or Time-Warner is that the profits realized in a nonprofit must be channeled back into the organization and its services. The profits made by for-profit corporations are distributed to its shareholders.

The I.R.S. recognizes 10 categories of giving eligible to meet its requirements for allowable deductions: arts and culture, public and society benefit, education, foundations, health, human services, religion, environment/animals, international, and other.

Can you guess which of those 10 categories receives the largest amount of that $248.52-billion charitable pie? The answer is religion—which received $88.30 billion, or 35.5 percent of the total. The second largest category is education, which received $33.84 billion, or 13.6 percent. You would have to drop down to seventh place to find arts and culture, which received $13.99 billion, or 5.6 percent. But don't be misled into thinking that your ideas or projects fall exclusively under arts and culture.

Money for artistic projects can be found in areas such as education, human services, public and society benefit, and certain international endeavors. It's a matter of knowing what your mission is and how best to frame it. If you are a string quartet whose goal is to become an international touring group such as the St. Lawrence or Kronos Quartets, your mission statement might include a commitment to commissioning new works, which enables you to seek contributions under the arts and culture aegis. If you are also committed to arts education and working directly with school districts in rural communities, you can also seek contributions under the category of education. By widening your mission, you make it possible to reach out to more people who might find your mission appealing.

Finally, it's important to understand who gives, and how much. Of that $248.52-billion pie, $187.92 billion comes from individuals. This represents more than 75.6 percent of total giving! Foundations represent $28.80 billion; bequests, $19.80 billion; and corporations bring up the rear with a comparatively paltry 4.8 percent, or $12 billion. By now, you might conclude that your best chance to receive funding is by appealing directly to individuals. And I wouldn't dissuade you—because it's people who will be most affected by your winning proposal.

For more information on how to write a proposal, set up a nonprofit, or research potential donors, please visit the Office of Career Development, now located in Room 200C.

Derek Mithaug, director of career development, is a Juilliard faculty member and alumnus.