Nineteenth International Conference on the Arts in Society

Abstract

This paper proposes an arts venture capital model to bolster the role of arts entrepreneurship facilitated by the National Endowment for the Arts (NEA). In the US, small-size nonprofit cultural organizations, constitute approximately 60% of the total 100,000 organizations as of 2015. However, these smaller organizations, particularly those with an annual budget under $50,000, often face obstacles in accessing NEA grants due to stringent eligibility criteria requiring a three-year program history and financial documentation. While the NEA’s annual appropriation represents a mere .003% of the federal budget in 2020, debates persist about its funding and role. Nonetheless, arts contribute extrinsic value to society, constituting 4.4% of the GDP in 2021 and showcasing a high return on investment of $1 in direct funding leveraging $9 in other sectors from NEA grants in 2020. To address the underutilization of small cultural organizations and harness the NEA’s potential, this paper proposes an arts venture capital model. Analogous to the modern venture capital concept formulated in 1946 for entrepreneurial firms lacking commercial loan evidence, small nonprofit cultural organizations share similarities. They require direct funding, often lack prior historical standards, and necessitate support and guidance for effective operation – characteristic traits aligned with the venture capital approach. Drawing inspiration from the U.S. Small Business Administration’s growth accelerator initiative, this paper advocates for an arts venture capital model within the NEA. This model amplifies the arts entrepreneur pipeline, fostering collaboration with local partners to fortify the sustainability of small-scale nonprofit cultural organizations.