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Artists' Communities Make Case for Public Worth

Publication Date: 
May 2007

In May 2005, The MacDowell Colony appeared before the Board of Selectmen in Peterborough, New Hampshire, to discuss their application for property tax exemption, as New Hampshire nonprofits are required to do annually. In a surprise move, the Board said they had doubts about The MacDowell Colony’s eligibility for the charitable property tax exemption defined by state law, beginning a two-year legal battle that resulted in a court decision in March 2007 in favor of the Colony. In the 22-page ruling which persuasively makes a case for residency programs, New Hampshire Superior Court Justice Gillian Abramson writes: “Charitable institutions, such as MacDowell, that are aimed towards enabling artists to significantly contribute to the well-being of our society should be supported, not discouraged. By fostering the creation of the arts, MacDowell serves a charitable purpose for the benefit of the general public through its artist-in-residence program.” The decision comes in the midst of MacDowell’s centennial year, and enthusiastically affirms a century of supporting the creative work of artists by the field of artists’ communities.

While the case began as an issue of property tax exemption, the lawsuit raised much larger questions: What public good is served by residencies, both for society at large and for local communities? And how can a retreat-style residency -- one that provides visiting artists with seclusion from the public -- demonstrate its value to the community?

To be sure, residencies come in all forms -- many are part of larger arts and cultural institutions, others foster interaction between artists-in-residence and the local community as a core component of their missions, while still others offer residencies, exhibitions and other opportunities for local artists. Among Alliance members, more than 85% of residencies have other programs that are offered to the public. But town-and-gown tensions can persist despite open studio visits, poetry readings, exhibitions, in-school programs, and the like. The mysteries of the creative process and the myths of artists’ colony life beg the century-old question: What goes on there? The idea of creative time as precious and rarified, the need for isolation, the culturally embedded disconnect between artists’ work and “real” work -- all contribute to a public lack of understanding and reluctance to value the residency itself.

Artists’ residencies are research-and-development labs for the arts. Time and space to develop new work, apart from distractions, scrutiny, and expectations. Environments that encourage experimentation and risk-taking that challenge our ideas. This creative process is paralleled in the sciences, and some well-known scientific R&D centers have even borrowed artistic language to describe themselves: for example, the renowned Salk Institute for Biological Studies in La Jolla, California, states its aim is to serve as a “crucible for creativity” to pursue questions about the basic principles of life. The Institute is a well-guarded fortress, elite, private and mysterious. The need for seclusion, the support necessary for innovation, the time it takes to develop something to be ready for public consumption and criticism, are essential to this pursuit. But in the arts, we devour the products -- the books, performances, films and exhibitions -- with little regard to the process and the people involved in their creation.

The influential Urban Institute study* released in 2003 echoes this, with its now infamous statistic: 96% of Americans value the arts, while only 27% value artists. Recent cultural shifts, however, indicate that the creative process is increasingly important -- to corporate and community sectors alike -- and that may well translate into greater support for the institutions that serve artists and their creative work. From Geek Ranch for computer programmers, to creativity retreats for executives, to reorganization of office spaces to foster free expression, the R&D concept that artists’ residencies represent is being recognized as a model for innovation and achievement.

The Tax Debate

What does all this have to do with property taxes? With artists’ residencies operating as some of the largest land-holders in the arts in the US, a great deal. New Hampshire’s per capita income is the 7th highest in the nation, while the overall tax burden is 2nd lowest. With neither sales tax nor state income tax, property taxes are the essential revenue source for state and municipal operations. And with the potential for more than $125,000 a year to gain in property taxes, Peterborough’s Town Administration decided to ask The MacDowell Colony and most of the other nonprofits in town to “pay their fair share.”

Tax-exemption is an issue that cuts across layers of government: organizations are incorporated as not-for-profits in their state and then granted 501(c)3 status by the federal government; the state makes property-tax exemption determinations, but it is the local town that collects property taxes, and thus bears the burden for exempt institutions. The criteria for exemption status varies from state to state, and some nonprofits are taxed (or make payments-in-lieu-of-taxes -- PILOTs) based on a portion of their property that is deemed not in service to the organization’s charitable purpose. For example, some colleges pay property taxes on cafes or shops run on-campus, under the argument that such activities are not essential to the educational purpose for which the school received its charitable exemption. How towns determine what to charge, and to whom, varies widely and -- especially in the case of PILOTs -- is often shrouded in mystery. In Peterborough, in the year that MacDowell’s exempt status was challenged, nearly a dozen organizations were asked to make PILOT agreements, while others -- including all churches -- were approved with little or no review. (In another New Hampshire town, the town’s legal counsel wrote a memo regarding a nonprofit under review, stating “I don’t know if they’re exempt; let’s just send them a bill and see if they pay it,” underscoring the lack of clear policy or guidelines for determining property tax exemptions.)

Principle and Precedent

The Town initially asked MacDowell for one-third -- roughly $42,000 -- of a full tax assessment, which was equal to the Town’s portion of the tax (as distinct from the schools’ portion). Other Peterborough nonprofits were asked to make similar payments to cover the town’s costs for municipal services, instituting, in essence, a minimum tax on charities.

The issue for The MacDowell Colony was, and still is, much greater than the money at stake. The burden of increasing its fundraising efforts to cover a new expense troubled MacDowell’s leadership, but there were more fundamental reasons for declining the PILOT. On principle, by yielding to this pressure, MacDowell would be implicitly accepting the Selectmen’s argument that it does not advance a public good through its program. And as a precedent, MacDowell’s acceptance of the PILOT would have sent a signal to other towns if they, like Peterborough, chose to send tax bills to local nonprofits in hopes of finding a new revenue source. So MacDowell declined the Town’s request for a PILOT, the Selectmen voted to deny the Colony’s application for exemption, and MacDowell was sent a $50,000 tax bill (MacDowell paid a total of $143,000 in 2005 and 2006, which, if the Judge’s ruling stands, the Town will reimburse plus interest).

The decision to go to court -- which meant risking their exemption entirely -- was not an easy one, but one MacDowell’s Executive Director Cheryl Young believes in. “The thing that I have noticed most is that people who work in nonprofits are very susceptible to just saying yes when asked to give. It is what we do, it is what our whole life is about: community service. The hard part is conveying to the nonprofit boards and leadership that it is okay to say no when you meet all the standards for nonprofits -- they are rigorous standards, and it means that everything you do is a contribution to the community. Responding to the town’s request that you divert the funds you raised for your cause to their operations is simply wrong-headed. It’s like taxing the schoolhouse.”

MacDowell is also sensitive to the impact the case could have on other nonprofits, and on the residency field as a whole. “We take seriously our role as a leader in our community, and felt it was our responsibility as one of the larger nonprofit institutions to stand up for the principle of property tax exemption, both for MacDowell’s standing as an organization with tremendous public value and for the smaller organizations in town who weren’t in a position to fight back,” says Cheryl. “And as a model for so many other residencies around the country, we know that what happens to MacDowell affects the standing of our peers.”

In fact, the taxman has already come after several other artists’ residencies. The Fine Arts Work Center, in Provincetown, Massachusetts, for example, faced a challenge in the early 1990s when the town assessor wanted to charge real estate taxes on the property it owns. The Work Center brought the matter to the state tax courts and won.

18th Street Arts Center in Santa Monica, California, has been providing a residency program, exhibitions and performances, local nonprofit office space, and studios for local artists since 1988. Their 1.25-acre property was privately owned for the first decade; when it was sold to the organization in 1998, 18th Street applied for a property-tax exemption. The case turned into a five-year struggle, but in the end a full exemption was granted. A few years later, the County tax assessor challenged the exemption on spaces leased to individual artists on a long-term basis. Now the organization pays partial property taxes (which amounts to about $17,000 annually) but is exploring its options for regaining a full exemption. While the amount is not insurmountable, it cuts into 18th Street’s ability to serve both visiting and local artists and nonprofits. Ironically, it is the very thing that seems to fulfill the greatest immediate community need -- providing local artists with studio space below market rate—that is being taxed.

Making the Case

Making the case for MacDowell raised several issues which apply more broadly to the field of artists’ residencies: that the property is used to directly support the organization’s charitable purpose; that, without production requirements, residencies must still articulate the impact of their program; and that, while the primary beneficiaries of residencies are a select group of artists, organizations demonstrate the value of their programs to the general public and the local community.

Space is the place: With such a variety of residencies -- ranging from a small store-front studio to 22,000 acres of ranch land—there is no formula for determining the exact amount of space or facilities “necessary” for operating a residency. More important is the sense of place each residency offers—including its landscape, community, buildings, geography, and history -- that forms the community within. The ability to serve artists of all types and in a variety of ways, whether they require wide open space and seclusion in nature or close-knit urban collaboration to create new work, is one of the field’s greatest strengths.

MacDowell’s property includes thirty-two independent studio buildings -- forty buildings in total -- to provide artists-in-residence with the privacy MacDowell believes is essential for artistic risk-taking and innovation. These rustic, unassuming cabins, however, are the reason for the hefty potential tax bill. The Town of Peterborough argued to the court that “the property is not used and occupied directly for charitable purposes because artists who are admitted into the program have the discretion to use the property, including the studios, for any purpose they see fit.” MacDowell asserts that the studios in their “private, secluded natural setting,” as well as the dormitories, common buildings, and other facilities are essential to the artistic process by providing “creative nourishment and support.” Nearly a dozen alumni supplied affidavits in support of MacDowell’s property, stating, for example, that the “seclusion of the studios and the structure of MacDowell allowed us to focus for long periods of time, providing the mental and physical space for us to write our book.”

In artists we trust: In arguing against MacDowell’s use of the property, the Town of Peterborough raised a more fundamental issue: that because “there is no requirement that the artists do anything creative, or otherwise, while at Peterborough,” the artists-in-residence “use MacDowell for their own personal and private interests” rather than for the advancement of art. Trusting artists to spend their time in ways most conducive to their creative work while in residence is a core value of residencies, whether an artist’s creative process requires a walk in the woods, time in front of a computer, conversations around the coffee pot, or twenty-four hours in the studio. This trust extends to the physical environment as well, allowing artists to decide their needs for themselves by providing a space that supports both the solitary and social aspects of creative work. Artists who have done residencies unequivocally attest that not having anyone looking over their shoulders actually contributes to their artistic productivity; thankfully, the court agreed, with the judge stating that there is great evidence that a residency in fact stimulates the production of art.

The Town’s objections reflect the distrust our society has for artists’ work and by extension, organizations that serve living artists. Alison Bernstein of the Ford Foundation writes: “The public often views the profession of ‘artist’ as not serious. The way artists earn a living may seem frivolous, and artists are often seen as indulging in their own passions and desires which bear no relation to the everyday experiences of most workers.” Judge Abramson wrote in her ruling in the MacDowell case: “For society to enable the production of art, it must necessarily support the artist. Art does not appear from thin air. It is created by an artist. The artist uses a process to make his or her art.” And in supporting this process, “by providing artists with an environment conducive to creating such art,” residencies make a significant contribution to society.

Think globally, act locally: Value to the broader society does not necessarily translate into local community support. And proving service to the public good is itself a challenge, as residencies are once-removed from the tangible products of that service (they do the work that supports the work of artists, rather than produce the artwork itself; go one step further, and you’ll discover the Alliance’s challenge—doing the work that supports the work that supports the work of artists!).

Artists’ communities, which are process- rather than product-focused, often struggle to demonstrate their impact with hard data. It can be years after the seeds are nurtured in a residency program before the work surfaces in the public realm. As such, the organizations are as likely to enjoy international renown as they are to suffer from local obscurity, or worse, resentment. Being a point of local pride can be a great challenge when an organization’s most compelling asset -- its artists -- come and go behind closed gates and without obligation to interact with the public, and residencies have not always been known for their transparency and participation in the community. But for artists’ communities to be truly relevant and recognized as a significant source of support for artists, it is not enough to operate in the shadows.

Judge Abramson found that “MacDowell encourages art by supplying the tranquil environment that artists need to make their art. In so doing, MacDowell benefits not only the artists admitted to the program, but also the general public by facilitating the creation of art.” But beyond the trickle-down argument, how does the benefit to society as a whole translate to local community benefit?

Where “art for art’s sake” was once sufficient, today the arts advocacy landscape is littered with economic impact studies and graphs on the so-called creative economy, but neither tells the whole story. Statistics and anecdotes go hand-in-hand, and we can’t have enough of either to make a compelling case for supporting artists in their creative work. For MacDowell, national and statewide recognition were not enough to demonstrate local benefit, and the lawsuit highlighted the work the Colony does in the local community: Colony fellows donate works to the Peterborough Town library, visit local classrooms, give readings and slide talks at MacDowell Downtown, and open their studios for MacDowell’s annual Medal Day weekend. While participation in these activities is optional for the artists, Judge Abramson recognizes that “such artistic contributions occur only because MacDowell maintains its artist-in-residence program in Peterborough.”

While engaging the public through its artists-in-residence can be beneficial for all parties, ultimately it is the responsibility of the organization -- not the artists -- to build strong community relations. Most residencies find that it takes a combination of public programming, community involvement by staff and board members, on-site events, encouraging artists-in-residence as good neighbors and ambassadors, strategic allegiances, and frequent communication about the organization to build and maintain community support.

For Ragdale, in Lake Forest, Illinois, making the case meant convincing the City to extend its lease to the artists’ residency. Alice Hayes, Ragdale’s founder, donated the property to Lake Forest in 1986, with the understanding that the Ragdale Foundation be able to operate it as an artists’ community until 2010. When Ragdale’s Executive Director Susan Tillett arrived in 2000, they were in the process of renegotiating their agreement with the City. But with only a decade left on the lease, they found they were not able to raise capital funds, and not everyone was supportive of the property’s arrangement. “When I became Executive Director, I was surprised that not everyone in Lake Forest saw Ragdale as a great cultural asset,” says Susan. “There was some grumbling about the property being off the tax roles and what did those artists, who weren’t even from Lake Forest, do for the community anyway?”

Ragdale was asking the city for a 99-year lease, in exchange for Ragdale taking over the care of the historic property (which is a major expense). In the course of City Council meetings in 2000−2001, Ragdale made every effort to show that the organization was an active and valuable part of the community. They focused on demonstrating that they provide public access to working artists engaged in the creative process—through Artists-in-the Schools, public tours and studio visits, large-scale family days where people of all ages work with Ragdale alumni on art projects, as well as public readings and book events by residents and alumni who have published successful books and speak not only about the product, but also the process of writing and how Ragdale contributes to that process.

While the relationship with the town seemed strained at times, “It turned out to be a very good exercise for us to have to clarify our mission and articulate our value to the community,” Susan explains. “Without having made an effective case to the City, we very well might not have received our 99-year lease. I still report to City Council once a year and stress the extent and value of our programs to the community. I am pleased to see that today the Mayor and City Manager regard us as a model of public/private partnership!”

While the ruling in The MacDowell Colony’s case certainly doesn’t settle the argument for the public value of residencies permanently, the precedent it upholds and the enlightened words of Judge Abramson offer residencies a persuasive argument and a foothold in a sea of cultural misunderstanding. The underlying sentiments the case brings to light serve as a reminder that there is still much to do in making the case for the work of today’s artists. And yet, many others are sharing in this struggle: United States Artists, whose motto is “art comes from artists,” the National Endowment for the Arts who continues to increase its attention to residencies as a critical form of support for individual artists, the Center for Creative Innovation who helps artists achieve economic independence, the Pollock-Krasner Foundation and the MacArthur Foundation in their no-strings-attached trust of artists. If the work of the last century has been establishing the field of artists’ communities as a vital network of support for artists, the next century may well be dedicated to advocating for the benefit artists bring to our world. The tide is rising, and residencies -- along with their allies -- can lead in the cultural shift toward valuing innovation, creativity, and yes, artists.

* “Investing in Creativity: A Study of the Support Structure for U.S. Artists,” published by the Urban Institute, 2003.

As this goes to press, the Board of Selectmen of Peterborough has filed an appeal with the court. For a copy of the March 2007 Superior Court ruling, please download here.