Special reportHands in their pockets
State funding for the performing arts is tightening up all over Europe. Theatres, concert halls and opera houses are having to learn how to milk the private sector
AT THE height of the appeal to redevelop the Royal Opera House in 1998, Sir Colin Southgate, the chairman, got a call from one of London's smartest networkers. His wife had found herself sitting next to an unusual man at a dinner the previous evening given by Gilbert Kaplan, a magazine publisher and famed conductor of Mahler's “Resurrection” Symphony. He seemed timid at first, but she quickly learned that behind the soft voice lay a powerful will. Had Sir Colin ever heard of an American named Alberto Vilar? Did he know that Mr Vilar was the world's biggest donor to the arts, and to opera in particular? Furthermore, Mr Vilar was living right on his doorstep, in London.
No, Sir Colin did not know that. But things changed when Michael Kaiser, then executive director of Covent Garden, heard about the conversation. Mr Kaiser invited Mr Vilar to tour the building works, and less than two months later Mr Vilar gave the Royal Opera House £10m ($16m), the biggest single donation it has ever received. He has since given another £10m and also bought tickets for two front-row stalls seats, A8 and A9, for every night of the season—a habit he has kept to this day, and one which he also maintains at the Metropolitan Opera in New York. In return, the board took the unusual step of naming the vaulting glass atrium, which links the front entrance with the old Covent Garden flower market behind, after its premium benefactor.
The genesis of the Vilar Floral Hall is more than merely a tale of money buying posterity. It is a symbol of the change that is taking place in the funding of the performing arts all over Europe. Herbert von Karajan, a conductor and maestro of the Salzburg Festival, was once asked by an American journalist what he did whenever one of his Salzburg productions ran over budget. “I call Vienna,” the maestro replied, “and the ministry sends more money.” Not any more. State funding of the arts is shrinking in real terms in many parts of the continent, even in countries, such as Austria, Germany, Italy and Russia, that have long been wedded to it. The state subsidy of the Berlin Philharmonic Orchestra has been reduced from 57% of its budget in 1997 to 48.4% last year, while that of the Teatro alla Scala in Milan has been cut from well over 50% to 44.3%. And that may be just the beginning.
Ticket sales, copyright fees and renting out halls make up part of the rest, as well as sponsorship and private philanthropy. But in some countries, particularly Britain, corporate sponsorship is becoming harder to get as turnover slows, shareholders grow more demanding and company executives are less certain that funding the arts is really so useful. As a result, theatres, opera houses, orchestras and other arts organisations are having to learn how to raise money more energetically themselves. En masse, it would seem, they are taking crash courses in how to ask donors for gifts, how to thank generous patrons to ensure that they keep on paying and how to lobby governments for tax changes that will help make giving more appealing.
Even the Salzburg Festival, where costs are covered by ticket sales and a generous public subsidy—topped up, when von Karajan was in charge, by that occasional call to Vienna—even Salzburg is adapting to the idea of soliciting sponsorship and private donations. At the beginning of August, the festival announced it has appointed Isabelle Harnoncourt, an Austro-American fund-raiser who cut her teeth at Carnegie Hall, to set up its first ever development office, which will be divided between New York and Salzburg. “We have always considered only our cultural future,”says the festival's president, Helga Rabl-Stadler. “For us in Europe, [fund-raising] is something completely new. But at least we are finally waking up.”
The transatlantic model
In America, the arts are—and always have been—almost wholly privately funded. Supporters of the National Endowment for the Arts (NEA) occasionally suggest that the American government's support for the arts is embarrassingly meagre—pointing out, for example, that the shipping costs for Operation Desert Storm alone could have funded the NEA for more than a century. But the absence of state intervention, combined with a helpful tax regime, are what have made the arts in America so self-reliant.
This is also the reason why the culture of philanthropy—with its rich trustees, its giving circles, its endowment funds and its professional fund-raising advisers—is so strong there. Generous donors who become trustees of arts or other non-profit organisations are expected to work in America by giving more money themselves, roping in their friends and buying whole tables at benefit evenings, all in a spirit of what is often described in philanthropic circles as “Give, get, or get off.”
Europeans, who are accustomed to a different way of supporting the arts, may find this bewildering and even crass. But they are getting used to it. Accurate figures on the scale and growth of non-state funding for the arts in Europe are still hard to get, but anecdotal evidence suggests that fund-raising is expanding. Moreover, it is developing according to a recognisable pattern: state subsidies are cut back and are replaced by corporate sponsorship, which in turn gives way, to a greater or lesser degree, to private funding. In some places, private giving is growing much faster than corporate sponsorship.
A number of things have come together to make this possible: a growing cultural self-confidence among successful people working in commerce and finance and a realisation that their money can make a real difference to the arts; the existence in Europe of an important group of American donors, of which Mr Vilar is only the most visible, who are teaching Europeans about aggressive American-style philanthropy; the hiring within a number of organisations—from the Salzburg Festival down to the tiny but highly successful London-based Orchestra of the Age of Enlightenment—of American development directors who have long experience of professional fund-raising; and the establishment of a number of intermediary bodies that advise arts organisations and donors about fund-raising.
There is now an Institute for Philanthropy in Britain, an academic body that collects research data and is linked to University College London; a European Assocation for Planned Giving, which advises tax lawyers and other professionals; and BDG& Associates, a newly established Brussels law firm whose entire practice is based on the philanthropic sector. America has long had such bodies, but in Europe they are completely new.
In addition, there has been a series of small but significant changes in the tax and legal systems of several European countries in the last year or two. Last March, Britain's chancellor of the exchequer, Gordon Brown, announced measures to simplify the way in which donors can use the tax system to maximise their gifts. British charities have long called for this, insisting that the friendly tax regime is what most helps fund-raising in America. (Republican proposals to do away with the estate tax may be a step backwards.) Mr Brown also did away with the minimum threshold for deductible gifts and extended the scope of such gifts to include shares. Gifts in kind may be included later.
This has already helped a number of arts organisations. The Aldeburgh Festivsal, which every summer puts on a series of highly regarded operatic and concert performances on the East Anglian coast and receives only a tiny public subsidy, has made particularly inventive use of this opportunity. Three years ago, the festival's chairman, Lord Stevenson (chairman also of the Pearson group, which owns 50% of The Economist), set up a small circle of friends to act as ambassadors for the festival. He chose about a dozen individuals, most of them wealthy, and insisted that their spouses be part of the group. Last year, one couple, Patricia and Robert Swannell, a vice-chairman of Schroder Salomon Smith Barney, which was then in the process of being swallowed up by Citigroup, gave £25,000 of Schroder PLC non-voting shares to the festival. Mr Swannell paid no capital-gains tax on the gift, which, with the tax rebate, cost him only £12,500. Mr Swannell also persuaded Citigroup to give a further £50,000, making it the festival's first principal sponsor. Aldeburgh has seen its income grow by more than 40% in the five years to 2001/02, and by far the biggest growth has been in gifts from private individuals.
In Italy, the law has been changed to allow the country's 13 most important opera houses and the orchestra and chorus of the Accademia Nazionale di Santa Cecilia in Rome to change their status from being state-owned organisations to private foundations. This, it is hoped, will help wean them off state subsidies, encourage them to make long-term contracts with large local companies and begin conventional fund-raising.
La Scala in Milan has been quick to take advantage of such changes, again with Mr Vilar's help. But even small opera houses, such as the venerable Teatro di San Carlo in Naples, Italy's oldest opera house, has a new director, Gioacchino Lanza Tomasi, who has signed up three companies that each give the theatre 500m lire ($230,000) a year and seven others that give 100m lire. In September, he hopes to start a development office for the first time.
Many Italian arts organisations hope that the government is taking notice of their efforts, and that, with an entrepreneurial right-wing party now in power, this expansion of private finance will be encouraged by the tax system. “We really need help in that area,” says La Scala's superintendent, Carlo Fontana.
A philanthropist's story
Opera is a very particular art form, but the way in which it is financed has lessons for all the arts in Europe. First, it is of limited interest, even in traditional opera-loving countries. Moreover, it is difficult to make opera much more accessible. Some opera houses have tried outside transmission, with big screens and plaza performances. Others have tried broadcasting it on television. Neither works terribly well, though the Metropolitan Opera's radio broadcasts are popular.
Worst of all for opera, its costs are very high. Even concert versions, with no staging, scenery or costumes, need soloists, orchestra and choruses. “Essentially,” says Elaine Padmore, the new opera director at Covent Garden, “grand opera is a 19th-century art form with 19th-century manning but 21st-century costs”. It needs dedication and vision, as well as deep pockets, if it is to continue being produced. For this reason, many lovers of the arts believe that opera is the miners' canary of the arts world. If opera continues to thrive, then so, probably, will the rest of the arts. If it cannot be saved, what else can?
Alberto Vilar does not see the world in such gloomy terms, yet he has an almost emergency-room dedication to the arts, and opera in particular. What makes him an unusual donor, in America as much as in Europe, is not just the enormous sums he gives but the focused way in which he channels his donations and demands public acknowledgment in return. His critics often accuse him of artistic meddling; he prefers to say that he supports productions he likes, and has no qualms in saying of others, “This is not for me.”
Asking for money
Mr Vilar concentrates his philanthropy in three broad areas: medicine, education and opera. He employs six people to sift through the requests for money, and each gift is preceded by a finely negotiated contract that sets out the terms of payment and the recognition that Mr Vilar is to receive in return. At the Royal Opera House it was the naming of the Vilar Floral Hall; other gifts carry other acknowledgments. Mr Vilar's first offering to Glyndebourne Opera was $500,000 to sponsor this year's new production of “Fidelio”. In return, he insisted that the programme carry his photograph in colour and an unusually worded, page-long acknowledgment of his support “at an unprecedented level”. When this writer accompanied Mr Vilar to a night at the opera last April, he had with him a printer's proof of the Glyndebourne programme. During the interval, he spent some moments correcting it.
Alberto Vilar is a 60-year-old Cuban-American who went from Havana to Puerto Rico and then to mainland America to study when he was 19. He made his fortune—and it really is a fortune—managing institutional emerging-technology portfolios and private accounts. He was one of the first institutional buyers of Cisco, Ariba and eBay. His is an avant-garde part of the market, but Mr Vilar regards his Amerindo Technology Fund as a long hold. In 1999 it gained 249% before losing half its value again last year, which means his kind of business is not for the faint-hearted.
Mr Vilar refuses to disclose his net worth, but says he can give away $100m a year without feeling it. He has always been generous. As soon as he got his first job, which paid him $7,500 a year, he began giving small sums to help a classmate's two young sons. Now older and richer, he just gives away more. In the past four years, he has given just under $200m to opera alone, including $35m to the Met in New York, large amounts to La Scala and a new sub-title system in the back of each seat in the Musikverein auditorium in Vienna. He has already paid to have the same system installed at the Met, where it has been a great success. Next, Covent Garden will be testing it, also thanks to him.
Last year, Mr Vilar made three other big gifts to opera. He gave $10m to the Los Angeles Opera and $14m to the Mariinsky Theatre of St Petersburg, where he will fund two new operas or ballets a year over the next three years, as well as a young artists' programme and a much-needed management office in New York. By far his biggest gift was to the Kennedy Centre in Washington, DC, now run by Mr Kaiser. The $50m donation will bring the Mariinsky Theatre to Washington for a summer season every year for the next decade.
Many feel (though they won't say so in his hearing) that Mr Vilar is oiling his own ego when he demands a certain bowing and scraping for such gifts. But he sees himself as a model for younger donors, and is convinced that public acknowledgment serves a purpose. Only if other people know how much he gives, and see how his philanthropy is publicly thanked, he says, will they be persuaded—some might say shamed—into following suit.
“When you have your name on a building,” says Mr Vilar, “it says, ‘Here's a world-class person who is giving money, and he chose us.' Isn't that the message?” He continues: “People say, ‘Oh, rich guy, he's got to be pampered.' I think that's unfair. You've taken Finance 101. What is the positive impact of my gifts? More people see opera. Costs are down. Productions are better. More people are trained.” For Mr Vilar, who is divorced and has no children, charitable giving is a mission. The only reason gifts are anonymous these days, he says, is because givers don't want you to know how small their gifts are.
Leading by example
More and more European arts organisations are learning the American art of private patronage. When John Studzinski, the American deputy chairman of Morgan Stanley International, joined the core fund-raising group for the Tate Modern in London, he made a substantial donation of his own. The first gift the Tate obtained, for £3m, had been made on condition that it found at least one other comparable donor. “There is a range of fund-raising acumen in Britian, but many institutions are clueless about how to raise money from individuals and from trusts and foundations. These people need to be approached. You don't take them out to dinner or waste their time with glossy brochures. What they want is a two-page executive summary. What is the project? How is it going to be managed? Where's the money going?
“You would shocked at how many time-wasters there are out there,” says Mr Studzinski. “People are often naturally mean. Philanthropy is something that has to be culturally learned through role-models. Alberto Vilar is a very good player-coach for the rest of the world.”
Just how good can be seen from the many small steps that are being taken, every day, by the various arts organisations he has benefited around Europe. At Covent Garden, a second generation of donors is preparing to begin an endowment fund for the Royal Opera House which will be launched towards the end of this year. In Germany, Mr Vilar is about to announce a major gift to the Berlin Philharmonic Orchestra and undertake a six-city tour, at the invitation of the German government, lecturing to audiences raised on arts subsidies why they should look with favour on enlightened philanthropy. And in Salzburg, where Mr Vilar spends his summer holidays with three tuxedos in his wardrobe (two black, one white), he is quietly championing a campaign by the presidents of the Salzburg Festival, the Musikverein and the Vienna Staatsoper to lobby the Austrian finance ministry for tax relief on charitable donations. Mrs Rabl-Stadler, Salzburg's president, laughs at the prospect. “He was very fierce. He said, ‘You musn't be complacent. You must go together and ask for the tax breaks.' We would never have thought of that. But we are all now waking up. What Mr Vilar is making us do is all so new.”
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