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Cities and Symphonies: Will the Music Stop?

Orchestras, large and small, are struggling financially, and that’s bad news for cities.

When the Nashville Symphony Orchestra worked out a last-minute deal in June to pay off lenders and avoid a bankruptcy auction of its $123.5 million concert hall, it was a reminder that urban cultural institutions face a host of financial challenges similar to those of the cities in which they reside.

The Nashville Symphony's specific fiscal problems stem from a complicated financial arrangement it made with banks to pay for the construction of its concert hall in 2006. But like other major orchestras, it faces long-term fiscal difficulties too. Nationally, a number of professional orchestras have declared bankruptcy, while others have had to cut back on performances, musicians and community outreach programs. Some of the cities that have seen their orchestras file for bankruptcy include Honolulu, Philadelphia and Syracuse, N.Y.

Like a hometown professional sports team, having a top-tier orchestra brings civic pride as well as cultural benefits to a city. Nashville is no exception. Better known for its country music, Nashville's symphony has in recent years taken off in terms of status and recognition, garnering awards and a reputation for elevating contemporary American music. In 2006, the symphony built a magnificent 1,833-seat hall and looked to be on its way to holding a spot in the upper echelons of America's orchestras.

Instead, a series of problems put it on the ropes. The Great Recession dried up private contributions, and then in 2010, a flood damaged the hall. Budget shortfalls and a withdrawn letter of credit, left the symphony on the brink of bankruptcy. Fortunately, assistance from a benefactor helped the orchestra avoid it, but deeper budget cuts are still needed.

There are more than 1,800 orchestras in the U.S., but only about 20 percent have professional musicians, according to the League of American Orchestras (LAO). The rest are volunteer, youth or collegiate orchestras. Whether they have a $19,000 budget or one that tops $90 million -- the range given by LAO -- just about every orchestra receives private and public support.

As it turns out, indirect government grants are part of an orchestra's largest source of revenue. Thanks to their tax-exempt status, private donations are an orchestra's main source of funding. "For orchestras, roughly 37 percent of their revenue comes from private contributions and those contributions are very reliant on their tax-exempt status," says Heather Noonan, vice president for advocacy at LAO. "Sometimes that version of government support can be a little less obvious to the general public."

As for direct support, all three levels of government provide grants to orchestras. These make up the smallest slice of the revenue pie at 3 percent. The National Endowment for the Arts pumps in money at the federal level, while arts agencies do their bit at the state level. Locally, cities also provide grants, either through local cultural agencies or directly from general revenue funds. The local portion of government support for orchestras had been on the rise, increasing to 45 percent of all government grants in 2005, from just 32 percent in 1987, according to a study by Robert Flanagan of Stanford University's School of Business. That was, until the Great Recession.

But the picture is not all that bleak. Many professional orchestras continue to do well as do volunteer orchestras scattered throughout large and small cities. Take, for example, the Genesee Symphony Orchestra, based in Batavia, N.Y., (population 15,465). Attendance at the Orchestra's concerts has outgrown the theater it uses at the Genesee Community College. Despite some grant cutbacks, the Orchestra's $70,000 budget remains in the black, allowing the orchestra to perform at local schools and engage with the city in a variety of ways, creating a special relationship "that binds this orchestra to the community," Kenneth Pike, orchestra president told the Batavia Daily News.

Cities tend to have close, supportive relationships with their orchestras, according to Noonan. "For many cities, having a healthy orchestra is an important indicator of the city's civic health overall," she says.

Orchestras have an economic impact on cities, from employing musicians and engaging scores of volunteers to bringing patrons downtown on concert days. But there's also the intangible impact of creativity, collaboration and artistry, which occurs when one hears a performance or when members of an orchestra interact with students. "There's a sense of distinct public value that orchestras bring to a city," says Noonan. Take that away, and the loss can be felt long after the music stops.

Tod is the editor of Governing . Previously, he was the senior editor at Government Technology and the editor of Public CIO, e.Republic’s award-winning publication for IT executives in the public sector, and is the author of several books on information management.
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