Arts Funding & “Private Benefit”

In a recent post to this blog, Lloyd Mayer reported on allegations that the Clinton Foundation improperly provided a “private benefit” to a for-profit company, and found them wanting. Among other things, Mayer noted that the Clinton Foundation did not provide a substantial benefit to the for-profit, and that its actions were consistent with its charitable purpose.

As a follow-up to Mayer’s post, I’d like to direct your attention to a story that recently came to my attention, which raises similar concerns. On June 22, 2014, the Greensboro, NC News & Record reported that it had formed an agreement with ArtsGreensboro, a charity that supports the Greensboro art community, to publish at least 70 stories about local arts topics during the following year, in exchange for an unspecified sum. According to the News & Record, it would not have published any (!) stories about arts topics without the agreement. In addition, the News & Record specified that it would retain absolute editorial independence and would not receive any “taxpayer money” from ArtsGreensboro.

For its part, ArtsGreensboro described the agreement as “an innovative agreement similar to the underwriting model for public broadcasting.” Which is true, except for the detail that public broadcasters are charities, but the News & Record is a business. While charities like ArtsGreensboro can make grants to other charities without implicating the “private benefit” prohibition, making a grant to a business is a much closer question.

Contemporary concerns about the agreement understandably were largely directed to the editorial independence of the newspaper. But I wonder about the “private benefit” prohibition as well. While neither the News & Record nor ArtsGreensboro reported the amount of money at stake, others have pegged the sum at $15,000. While not extravagant, it is certainly “substantial.” Of course, ArtsGreensboro can legitimately argue that its grant was consistent with its charitable purpose of promoting local artists and arts organizations. Arts charities routinely make grants to individuals and businesses in order to enable them to produce artistic works. And promoting the distribution of art journalism and criticism could fairly be characterized as a legitimate purpose for a charitable organization (see the Warhol Foundation). Nevertheless, it seems odd for charitable organization to pay a business to do what it should do anyway.

Brian L. Frye