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Don't Sell Private Generosity Short

Appeared in the Calgary Herald on June 3, 2004
Release Date: June 3, 2004
One of the final decisions that Sheila Copps made as Minister of Canadian Heritage was to deny the request of the Association of Fundraising Professionals (AFP) to have November 15th declared National Philanthropy Day. Philanthropy, she claimed, is too rich and too closely tied to money for Canadians to relate to.

Her remarks were reminiscent of those made by Glenbow Museum CEO Michael Robinson on this page last Friday, in which he imagined the possibilities for building truly great Alberta cities in a post-debt era. Rather than considering what he called the “selfish” option of cutting taxes, Robinson suggested that a debt-free Alberta government should invest in “unprofitable public capital infrastructure” such as libraries, theatres, museums, and sports arenas “which cannot be more efficiently or effectively provided by the private sector or non-governmental organizations.”

Both Robinson and Copps appear to believe that the private and non-profit sectors cannot be expected to support the arts, cultural and recreational amenities. If this view were widely shared, it would weaken the power and the potential of philanthropy to enhance the quality of life in our cities and communities.

The government spending prescription stems from several false assumptions about the role of government and the nature of so-called public goods. A public good produces what economists call “positive externalities,” benefits that cannot easily be captured by those who provide them. Traditional theories of economic efficiency suggest that public goods may be under-provided by the market, but this does not mean that they will not be provided at all, nor that market prices will make them inaccessible to low and middle income Canadians.

This is the point of philanthropy. True, Canada does not have the same tradition of major cultural philanthropy that provided Americans with Carnegie Hall, the Rockefeller Centre, and the Guggenheim Museum. Nor do we give as much to charity, on average, as Americans do. The point here is to understand why.

Government expenditures on culture are rising fast, hitting $6.8 billion in 2001-2002. Yet study after study shows that government spending typically “crowds out” private giving. This effect has been estimated to result in as little as 2 cents to as much as 53 cents in lost contributions for every dollar provided by government. After all, the government can only give what it first takes away in taxes from its citizens. The more government spends, the less disposable income individuals will be left with to give freely to organizations that provide the programs and facilities that they most value.

There is no reason to think that government could provide these cultural facilities more efficiently than either for-profit businesses or non-profit organizations. Indeed, as Auditor General Sheila Fraser pointed out in her most recent report, the government has been failing miserably in its job of managing Canada’s cultural resources. Fraser’s audit found, for example, that more than 90 percent of the book collections at the National Library of Canada are housed in buildings that do not meet accepted standards for temperature and humidity.

There is always room to improve management in private and non-profit cultural organizations. As John Hobday, Director of the Canada Council for the Arts noted in an interview with the Ottawa Citizen a little over a year ago, the real crisis facing the arts is not a lack of funding, but rather the “management deficit” plaguing many Canadian arts organizations. Higher salaries might attract better managers, but sloppy customer relations are often responsible for alienating audiences, reducing ticket sales, and increasing deficits.

Fortunately, such examples are rare. Notwithstanding his plea for government support, Michael Robinson himself was recently nominated for the Rozsa Award for Excellence in Arts Management. Such examples of excellence can go a long way to encourage donor confidence and support.

Like Robinson, I too look forward to the new possibilities that will be afforded Calgarians, and all Albertans, once the provincial debt is retired. Imagine the economic opportunities available to young, creative, and entrepreneurial individuals when the province is the lowest tax jurisdiction in North America. Imagine where these new Calgarians will choose to invest their extra disposable income when provincial income tax is reduced – or even eliminated! Imagine how the endowment of the Calgary Foundation will grow, and new private foundations will be established to help families and individuals reinvest their new wealth back into their community.

Calgarians above all should not sell short the willingness of individuals to invest privately in these things. The Alberta government can secure the long-term future of culture and the arts by cutting taxes and leaving individuals with sufficient resources to invest in the amenities that they truly value. This is genuine philanthropy, something we should all be able to relate to.