The new National Arts Stabilization Fund, a fair-haired child of the Ford Foundation, was greeted yesterday with enthusiastic cheers from arts officials.
After 12 years of experimentation and organization, the Ford Foundation announced it is organizing the independent, multimillion-dollar foundation to help arts groups across the country pay their bills and keep some money in the bank.
The fund's board will have its first meeting Aug. 17. But it has already received pledges of $7 million from the Ford Foundation, $1.5 million from the Andrew W. Mellon Foundation and $500,000 from the Rockefeller Foundation.
"We expect to have $26 million in leverage funds within five years," said Marcia Aldrich Thompson, a senior program officer at the Ford Foundation, who is credited by many with initiating the plan.
"Most arts organizations are founded with talent and energy but no capital," said Thompson. "In the first months of their fiscal year, they have to put out money for tickets, rehearsals, theater rent and public relations, before they can get any money from ticket sales. So often they've had to borrow money from banks. Our strategy is to help them become their own lenders.
William M. Ellinghaus, the American Telephone and Telegraph Co. president who is soon to be chairman of Channel 13, the New York public television station, has accepted the chairmanship of the NASF board. "For those of us interested in supporting the arts--this program, to make it easy for them to go on a fiscally sound basis--is a fine idea. We have gotten an enthusiastic reception from all of the corporate officials we have talked to," said Ellinghaus.
Franklin A. Thomas, president of the Ford Foundation, said the new program is essentially an "incentive and reward strategy. We will not only give them money but a cadre of business professionals, who will help them remove their deficits and go on a more businesslike basis. A sound business plan is a necessary part of it.
"Most arts groups are undercapitalized, have difficulty in securing credit and are constantly stretched to raise funds to supplement earnings; many have accepted financial crisis as a way of life . . .
"NASF will pool contributions from corporations, foundations and other donors, both public and private, national and local, to improve the long-term financial health of our primary cultural resources."
The new fund will make two types of grants, ranging from $150,000 to $1 million each, to an estimated 100 organizations in the next five years. The grants will either liquidate a deficit or build a working capital reserve.
In the first case, if the arts group reduces its deficit by about half, with money raised from new sources, the new fund will pay the rest of the deficit.
In the second case, to build a working capital reserve, the new fund will place money in a kitty, allowing a group to borrow funds from the kitty. But the group first must complete the fiscal year in the black.
Thompson said both the Ford Foundation and the Mellon Foundation have tried the procedures with great results.
The announcement, in a statement prepared for release today, brought enthusiastic congressional reaction.
Sen. Claiborne Pell (D-R.I.), the only sponsor still in Congress of the original bill establishing the Arts and Humanities endowments, said: "The size of the money is a delightful shocker. It's just the sort of private action we had envisaged when we wrote the endowments bill, but we haven't seen such a large response. I'm glad to see the private foundations coming in as a consortium. I am encouraged because in addition to the money, the plan is to provide teaching techniques to help arts institutions with their cost-accounting and staff efficiency."
Rep. Sidney Yates (D-Ill.), a longtime congressional advocate of the arts, called the new organization's plan "tangible and practical, a move in the right direction."
David Saltonstall of the Mellon Foundation said, "It is premature to say how far we'll go. We recognize the plan as a valuable tool for financial management."
Howard Klein of the Rockefeller Foundation said, "We hope to come back next year with more money, eventually $2.5 million. The timing makes the plan seem as though it is a response to Reagan. But it actually began with Marcia Thompson in the early '70s."
The White House disclaimed responsibility for the organization, albeit with some envy.
Diane Brokaw, executive director of the President's Committee on the Arts and Humanities, said the Reagan group had no part in forming the fund. "I wish it had been my idea. We haven't had any participation in the plan, but this is the kind of thing we believe should be done."
"We can't claim the credit," said Peter Roussel, White House deputy press secretary. "We applaud their perseverance. It's the sort of private sector initiative the president has emphasized."
J. Carter Brown, director of the National Gallery of Art, hailed the new organization as "the best initiative to come out of the private foundations. The Mellon Foundation has tried such grants and they've worked well. Too often, grants are given to institutions for some glamorous new programs which often increase the strain on the recipient. Sometimes the grant does more harm than good.
"As a graduate of the Harvard Business School, I am keenly aware that management is a keen factor in not-for-profit organizations."
Francis S.M. Hodsoll, chairman of the National Endowment for the Arts, said, "It's a terrific plan to help eliminate deficts. The bottom line is that the private sector is alive and well."
Hodsoll added that the Arts Endowment challenge grants, which must be matched 3-to-1 with new and increased contributions, also are designed to create endowments and cash reserves for arts groups. "We've given $110 million in challenge grants in the past five years, $21 million in fiscal 1983, which has been matched by $800 million to date. We may soon give $1 million in a challenge grant."
William J. Bennett, chairman of the National Endowment for the Humanities, "finds the new fund an interesting and promising idea," said Terry Krieger, his spokesman. "He didn't know about the program . . . but he wants to study it further."