ARTS PANEL OK’S GRANT PROGRAM

At Gov. George Deukmejian’s urging, the California Arts Council on Monday approved a radically new method to increase its annual budget by turning more to the private sector for support.

The new California Challenge Program is a $1.85-million grant program that will require nonprofit arts organizations having a budget of $200,000 or more to match their grants exclusively with private sector funds from corporations, foundations and individuals. It represents about two-thirds of a fiscal 1988-89 budget increase request the council approved here Monday.

Organizations receiving council grants have traditionally had to match their awards. But during the agency’s 11-history, the institutions have always been allowed to use private and public funds, such as city grants, to do so. The new program, which would begin in July, 1988, if approved by the legislature and the governor, also stipulates that matching dollars come only from sources that have never given to the arts or that are increasing their total philanthropic contribution.

“This represents something that is quite novel for the council; innovative,” said council chairman Harvey Stearn at the meeting. “It’s a chance to get increases in state funding, but at the same time generate more private-sector dollars--and that’s of significant interest to the governor” who has suggested to Stearn, other council members and staff that they devise such a plan.

The new program, Stearn said in an interview, “reflects the emerging attitude of the council, nine of whose 11 members, including Stearn, were appointed by Deukmejian. “Now we have to start to put together” the program’s mechanical details, many which have yet to be ironed out.

The council’s total budget increase request of about $3 million--which would raise its $14.5-million budget to $17.6 million--also includes $1.2 million in new funds for various needs, including grant programs with traditional matching requirements. Since 1983, the council has sought $3 million for these needs. However, the program (formerly called the Donor Initiative Program) could raise the agency’s budget by $4 million in its first operating year if all its private funds are won. The council’s budget has not increased by more than about $1 million annually since 1980.

Sixteen members of the arts community--an unusually large number for such hearings--testified Monday about the new program. All applauded the effort to increase arts funding in the state. But every one voiced concerns about the new method.

Robert Holley, executive director of the California Theatre Council, feared that the long-term stability of arts organizations with budgets of more than $1 million may be threatened by the new program. He was also concerned that the council’s 1988-89 budget proposal contained no request for additional new funds free of the new matching requirements for these institutions.

The new program stipulates that the bigger arts groups--more of whom have recently been competing for about the same number of dollars--must raise three private dollars for every council dollar for a one-year grant. These grantees may not reapply for funding in this category of the program the following year, and the grants are to be used only for new projects.

“Forcing the institution of new programming in order to qualify for new funding, requiring an unrealistic (private sector) match . . . and limiting the funding to one year, is like trying to erect an elaborate addition to a building which has an eroding foundation,” Holley said.

Allowing only one year to raise these private funds, as this part of the program specifies, “is unrealistic” and “invites failure,” he added.

Complaints that the new program excludes small and mid-size arts organizations also were heard. And many who spoke up requested--unsuccessfully--that recipients be allowed to match their grants with the same funds they would use to match grants in other similar programs, such as the National Endowment for the Arts’ Challenge III initiative.

Jeanette Mackelwee contributions manager for the Carter Hawley Hale Foundation, cautioned that corporate philanthropic giving “currently is declining” and urged that the council advise arts organizations to seek their matching funds for the program from individuals, not corporations.

But many stressed that only a drum-beating public relations campaign--led by Deukmejian--will enable the new program to fly.

“To make this work, there needs to be a hook . . . to go out and get new and increased dollars,” said Bill Moskin, an arts management consultant. “I suggest (the council) suggest to the governor ways the governor’s office can be involved.”

The new challenge grant program (which does allow arts organizations already receiving council State-Local Partnership grants to match their awards with some new and increased public monies) was sent to the department of finance Tuesday along with the rest of the council’s entire 1988-89 budget proposal. If approved, the package will be submitted to the Legislature in January.

Also if approved, the program would signify the first time that a private-sector matching requirement as outlined in the new initiative becomes a built-in part of the council’s own budget.