Trends and Possible Futures
AmbitioUS is an initiative of the Center for Cultural Innovation to act as an experimental arm of the artist-support sector. Throughout the initiative, Angie Kim, President and CEO, will share her observations and reflections related to this cross-sector, experimental, and systems level work.
As the Center for Cultural Innovation (CCI) moves into the third year of AmbitioUS, we finally feel that we are more attuned to, and developing in alignment with, the nascent, alternative infrastructures that we’re helping to grow. Our research and funding experience has given us a better grasp of the state of play in the various fields of our foci. In no particular order, here are several key areas in which we’re planning to take action, as well as some trend forecasts for the immediate future:
1. Fostering New Artist Cooperatives
The number of artist-run and -owned cooperatives has increased in a very short time. We knew of fewer than a dozen such companies in 2019, but now we know of roughly 100 nationally, many of which started directly in response to COVID-19. One of our 2020 grantees, Artist Resource Community Chicago (aka ARC Chicago), shared that they started their artist cooperative because of the pandemic; artists’ circumstances are dire, yet, they felt that no help is coming their way. We hear this a lot. Artists, particularly younger artists of color, feel jaded about existing institutions and systems of support that have not trickled down enough to artists and their communities. Through CCI’s funding and training programs for artists, we hear their anxieties: Tenure-track job opportunities have disappeared, older mentors face retirement with no savings, founders of arts organizations have burnt out, and too many artists of color abandon their practice due to high costs of education, student-debt burdens, and markets — both commercial and nonprofit — that do not compensate them fairly.
Unfettered by institutional expectations, what artists starting cooperatives and collectives are trying to do today is quite thrilling. There are artists buying up historically Black, and now blighted, neighborhoods in Milwaukee; musicians reclaiming a distinctly Black musical heritage in Memphis; artists starting banks and community development efforts in the Midwest and South so that they re-enact cultural connectivity through commerce; and immigrant culture bearers sharing their heritage through food and craft businesses. Artists are turning to collective action for healing, community, solutions to social and environmental problems, and financial sustainability. In addition, this interdependence is happening intergenerationally: in mid-January, the founders of Taylor Guitars converted their business into employee ownership through an ESOP, an Employee Stock Ownership Plan, thereby passing down financial opportunity and security to another generation.
There are now so many artists working on transformative projects outside of the 501(c)3 sector. Consequently, arts and culture funders no longer have their fingers on the pulse of artists’ promising developments. Most grant funding is too sector siloed to support artists’ efforts in economic justice, community development, financial services, real estate, etc. (There is funding for artists working on social issues, but typically restricted to producing a work of art, not for their role as real estate developers, credit union innovators, and cooperative business owners.)
COVID-19’s economic recession has led to many in the arts community wishing for a return to WPA-type funding for artists. However, given how much artists are centering themselves in the change they want to see, we are encouraging support for artists and their collectives that are filling the gap in community infrastructure, especially in dispossessed communities that have lost social ties through loss of localized centers of commerce. While we believe artists should continue to benefit from patronage for their artistic production, these times call for investing in artists’ collectivizing efforts for the kinds of businesses and services that communities have lost and need. Yesterday’s WPA physical infrastructure projects are today’s arts and culture cooperatives that ground communities’ sense of identity. While for-profit cooperative businesses are not for everyone, everyone can benefit if the movement for cooperatives and cooperativism takes off.
2. Supporting Artists in Digital Spaces
The digital economy needs more — many, many more — small and mid-size businesses and online platforms owned by and for people of color. Nearly everyone is increasingly dependent on the digital economy (especially during COVID-19) for information, commerce, earning income, education, entertainment, social networks, and political action. Yet, systems are not fair and people are not safe when the terms of the expanding digital economy continue to be monopolized by a small, homogenous group of Big Tech founders. Artists, particularly artists of color, are arguably one of the most important types of technology innovators who can help both to democratize the digital domain and to shift power and accountability. (For example, check out AmbitioUS grantee Crux.) Artists’ interest in controlling their online businesses and platforms; automation via smart contracts; means of distribution; freedom of speech; and creative content/art; including copyright ownership, rights to reproduce, and terms of fractionalized ownership; make them well-suited to shape a digital space that is favorable to people, rather than corporate owners and venture capitalists.
Right now, efforts to build new enterprises online are fragmented, face high costs of entry, are discouraged through discrimination and exclusion, and lack access to the kinds of capital necessary to start or grow. In addition, the type of capital that is available is limited to bank loans (which is discriminatory and can hollow out/harm borrowers of color) and investment deals that are shaped by venture capitalists (the television show, Shark Tank, demonstrates their practices) that erode founders’ ownership and are exclusive to high growth (versus positive impact) enterprises. For startups able to get VC money, VC investors’ equity typically erodes ownership from those who have social-good intentions, requires extracting as much profit from consumers (and employees) as possible, and disconnects these companies from communities. Unfortunately, VC practices have overly shaped private foundation’s impact investing goals and practices.
BIPOC participation and ownership in the digital space is particularly stifled: Their lack of wealth due to a history of violence and dispossession means that they face greater hurdles to founding and growing businesses (Hamilton & Logan, 2019). In our investing work, we are experimenting with what it means to be friendly to start-ups. For example, we have used Simple Agreement for Future Equity agreements (SAFE) in a recent private equity deal. We see a need for those with public-good intentions (i.e., foundations and impact investors) to capitalize BIPOC small-business ownership, especially those that can shape the digital economy. (AmbitioUS grantee Zebras Unite is a community helping to “hack” harmful VC investment practices for terms friendlier to founders.)
The digital economy will be better when artists innovate ways to:
a. Retain ownership of their creative content;
b. Set favorable terms for the sale, profit, and distribution of their work;
c. Participate, support, and join online collectives and platform-based business cooperatives to access benefits and exercise power. For example, Debt Collective is one of the more powerful, non-union, collectives with sufficient bargaining power to affect student-loan policies, and Guilded is a new platform cooperative that demonstrates portability of worker benefits.
d. Invent online-specific, artist-friendly new practices and tools to shape new terms and technology, such as fractionalized asset ownership, bitcoin wallets, smart contracts, XR, and new distribution platforms.
When such outcomes work for artists, they set precedent and shape optimal conditions for all users, not corporations and profit-hungry investors. This era of digitization and automation is considered the next phase of the Industrial Revolution, so now is the most cost-effective and impactful moment to influence its development.
3. Building at the Intersection of Economic Systems and Culture
We’ve seen a lot of energy spent toward finding an alternative solution to the current paradigm of profit-over-all-costs capitalism and private-market ideologies of neoliberalism. We argue that solutions must be rooted in culture so as to be paradigm-shifting and authentic to the lives of people, especially those most harmed. Realizing cultural sovereignty (i.e., the ability of cultural communities to survive through independence and financial self-determination) requires the same set of conditions as vibrant, re-circulating, localized, and locally owned economies. By addressing the existential threats to their identity that BIPOC communities constantly face, this puts the unit of measuring economic progress on the conditions of people (vs. on economic growth).
When we support alternative economy trailblazers, we are trying to support the kinds of conditions that begat Tulsa, Oklahoma’s vibrant Black Wall Street; Oakland, California as the “Harlem of the West”; Kansas City, Missouri’s 18th & Vine jazz vitality, and Memphis, Tennessee’s Beale Street’s proliferation of American blues. These examples demonstrate that robust financial independence (marked by local business ownership and localized circulation of money) by communities of color can result in an amazing breadth of cultural and artistic expression — a pluralism that is needed to shape a new sense of national identity that reflects shifting demographics.
We are encouraging institutional funders to apply a cultural lens to economic systems. This priority moves the goalposts of the purpose of our economic system from that of generating wealth nationally to that of localized financial self-determination. Furthermore, funders can enact this change at micro levels: When attending to the economic conditions of communities through a lens of people’s cultural self-determination (i.e., who they are as a people and their self-worth), it can break the cycle of charitable behavior of figuratively and emotionally having grantees seek funding on bent knees with their hands out. This type of charitable-giving behavior is not appropriate for equity-enacting, strategic philanthropists.
4. Identifying and Democratizing New Sources of Capital
The world of investment is changing rapidly. Our support of East Bay Permanent Real Estate Cooperative, Boston Ujima Project, Next Egg (incubated by Sustainable Economies Law Center), and Moxi via the WeFunder platform has made us more aware of the growing new marketplace of retail investing in equities and other forms of alternative investment assets (artwork, real estate, direct public offerings, etc.). In 2019, retail investors (i.e., people who are nonaccredited investors investing directly without intermediaries and are not high-net worth individuals) accounted for 10% of stock market activity, and now make up 25% of Wall Street trades (Winck, 2020), thus indicating sizable growth. Outside of Wall Street, investments by retail investors under Regulation Crowdfunding (aka Reg CF under Title III of the 2012 JOBS Act, which went into effect in 2016) raised just $107 million between 2016–2018 (SEC, 2019). On May 25, 2020, Neil Patel wrote on Techstars, a startup accelerator company, that Reg CF and Regulation A+ (the latter allows for higher raises) enabled over $1.2 billion to have been raised thus far — a significant jump. Just one of many new equity crowdfunding sites, WeFunder reported that they have raised over $217 million for startups. All of this indicates a development of infrastructure that is shifting capital from Wall Street to Main Street, and allows people living on Main Street (i.e., “retail investors”) to be a more powerful influence on Wall Street (as evident in the story of GameStop).
While this infrastructure is being created and practices being invented, now is the once-in-a-lifetime moment to influence the trajectory of this new capital by investing in and de-risking the participation of BIPOC participation in this space. They need to be founders of intermediaries channeling this money, owners of businesses capturing a new and ready market of investors, and have a critical mass of participation so that their voices can be influential. Without their ownership-level participation, this promising new marketplace will re-enact the racial inequities of our current economic systems. Lack of diversity would be too bad because Reg CF and A+ have been touted as democratizing the kinds of private equity investing that were only available to one percenters of wealth.
5. Emerging BIPOC-Owned and -Governed Funds
Not only do we need BIPOC owners of infrastructure so as to structure capital flow, the supply-side of meeting new market demand by retail investors also requires more BIPOC-owned enterprises to invest in. Fortunately, we’re seeing that community-owned, collectively governed funds by and for BIPOC communities are starting to have their moment. Boston Ujima is the trailblazer and, being just a few years ahead of others, demonstrates what is possible for both accredited and unaccredited investors to support communities’ economic development. Besides our investment in Ujima, we are watching for when we can be financially supportive of a newly developing indigenous women’s fund, a collective of BIPOC community impact funds, and a Direct Public Offering by a community cooperative. These efforts are becoming the building blocks of newly forming alternative economic ecosystems defined and held by people of color. These funds capture money so that it flows into dispossessed communities and then re-circulates this capital locally as various forms of assets (new businesses, jobs, commerce, purchase orders, intellectual know-how, and collective accountability for weaving social ties). Unlike credit unions and CDFIs, these new types of funds are not just community-benefiting; rather; they are, more importantly, community-owned and -governed. This growth is what is necessary to grow the supply side of BIPOC-owned assets that impact investors (e.g., individuals and foundation program-related investments) are seeking. And, this market demand is growing because the 2012 JOBS Act allows nonaccredited investors to invest in private equity. At the same time, there is also a need to innovate and offer investable vehicles and products, like direct public offerings and investment notes for nonaccredited investors, to harness capital.
Regarding forecasting for the near-term, we see new possibilities as we move from the Trump-Pence to the Biden-Harris presidential administration:
6. Benefits and Protections for Independent Artists and Workers
Artists are three times more likely to be freelancers than the overall workforce, and their income unpredictability, relatively high student loan debt, and lack of health protections make them financially precarious. Had benefits and protections (like unemployment insurance and health care) included independent workers during COVID-19, then the shutdown would not have been so detrimental to individuals and would aid economic recovery.
That’s why we are hoping to see, at federal and state levels, an expansion of labor benefits and protections to include independent workers. The labor conditions of independent workers, as told through the lens of California’s arts workers, is described in a newly released report researched and authored by the Urban Institute, funded by Hewlett Foundation, and commissioned by us at CCI. This research makes us hopeful that extending labor recognition and protections to freelancers may be a possibility under this new administration. (The lead researcher of the report, Jenny Yang, is now the Biden-appointed head of the Office of Federal Contract Compliance Programs, where she will bring to bear her experiences on pay equity, anti-discrimination, fair labor policies, and expanding protections for workers.)
7. New Student-Loan Debt Policies
Student loan debt is a racial justice issue. Within the arts sector, this debt inordinately harms debtors and families of color and of immigrant backgrounds, especially Black and Latinx students, and bars them financially from pursuing arts careers. This means that the very artists we need to hear from, especially during times of civil unrest and racial injustices, are silenced.
At the same time, there is growing awareness that collectivizing individuals will become an increasingly important path toward community empowerment, as affirmed in this Urban Institute report. Organizations like Debt Collective, which collectivizes debtors to give them bargaining power over their creditors, may be more influential under the Biden-Harris administration. They had been struggling against Betsy DeVos’s Department of Education to help the thousands of student loan borrowers who have crippling loan amounts and exploitative terms. Under the Trump administration, we merely wanted to help Debt Collective keep going in their good work; we never expected that the Biden-Harris administration would make debt forgiveness a part of their agenda.
Admittedly, if I had more time last year, the contents of this post would have been broken out for shorter reading. Apologies for waiting so long, but the jam-packed nature of this post is a good indicator of how much knowledge and information we’re trying to share.
Hamilton, D., & Logan, T. (2019, March 4). Opinion: Here’s why black families have struggled for decades to gain wealth. MarketWatch. https://www.marketwatch.com/story/heres-why-black-families-have-struggled-for-decades-to-gain-wealth-2019-02-28
Patel, N. (2020, May 25). Equity crowdfunding: The future of financing. Techstars. https://www.techstars.com/the-line/pov/equity-crowdfunding-the-future-of-financing
Taylor Guitars. (2021, January 11). Taylor Guitars transitions ownership to its employees. Cision PR Newswire. https://www.prnewswire.com/news-releases/taylor-guitars-transitions-ownership-to-its-employees-301205654.html
U.S. Securities and Exchange Commission. (2019, June 18). Report to the Commission Regulation Crowdfunding. https://www.sec.gov/regulation-crowdfunding-2019_0.pdf
Winck, D. (2020, July 9). Retail traders make up nearly 25% of the stock market following COVID-driven volatility, Citadel Securities says. Business Insider. https://markets.businessinsider.com/news/stocks/retail-investors-quarter-of-stock-market-coronavirus-volatility-trading-citadel-2020-7-1029382035
Yang, J., Briggs, A., Shakesprere, J., Spievack, N., Spaulding, S., & Brown, S. (2021, January 19). Arts workers in California: Creating a more inclusive social contract to meet arts workers’ and other independent contractors’ needs. Urban Institute & Center for Cultural Innovation. https://www.urban.org/research/publication/arts-workers-california/view/full_report