The Role of Nonprofits

While Mirae Kim was a graduate student in Pittsburgh, a conversation with a friend clarified her future research interests. As Kim describes it, her friend said: “My mom always makes a donation every year to the Carnegie Museum, though she rarely visits it.”

When Kim asked why, her friend answered, “Well, she is a Pittsburgher, and she feels like it’s just ‘our thing.’” Kim realized, “So, as a community member, she feels like she is obliged to make some gift every year; it’s just something that she has to do. And I just got so fascinated: why do people make [these gifts]? Why do they feel they need to do that?” It was a practice she had not seen growing up in South Korea or studying abroad in New Zealand. In the United States, however—particularly Pittsburgh, a city known for charitable giving—Kim was intrigued by patrons making small donations—under $100—to arts organizations. Moreover, arts organizations’ share of revenue from individual donors was huge: “It wasn’t just a small amount,” Kim emphasizes, “but often fifty percent or more of their revenue stream.” She wanted to learn more: why do people make these gifts? What is the role of small gifts? What kind of contribution does the nonprofit sector make to the community?

Kim’s research seeks to answer these questions. She evaluates the role of nonprofits arts organizations, teasing out their attraction for patrons and donors and examining how these organizations engage with their communities. This focus grows out of her own interest in the arts, fostered during her international education. “I had this picture in my mind that I wanted to be working in the arts industry, but apparently I wasn’t an artist myself,” she reflects. Since that was the case, she asked herself, “what are the ways that I can stay in the arts industry?” Arts management, Kim decided, would allow her to make connections between art and the public, bringing communities and artists together. Her boundless curiosity about the role of nonprofits in the community, along with a dearth of scholarship specific to arts organizations, led Kim to her scholarship as a way of making a meaningful contribution to nonprofit research.

Kim’s work focuses on how arts organizations engage with the communities they serve. Leaders of arts organizations, she establishes, are increasingly concerned with civic engagement. Whereas education and audience development have long characterized community engagement, the past decade has seen a shift to organizations utilizing their programs to prompt conversations. As an example, Kim describes how a theater company collaborated with a local soup kitchen and with nursing homes to create plays based on the stories their clients told. Inspired by the program, Kim relates, the company initiated further community engagement programs. This greater interest in engagement led them to seek out funding from groups interested in community action. Kim sees this trend spreading through other arts organizations as they move beyond education—bringing people together to have them talk about issues, or incorporating community themes into their own artwork.

In her research on civic engagement, Kim is driven by the question of why certain organizations dedicate more of their resources to these programs than others. “There are theaters,” she elaborates, “that think—oh, we have to put the best theatrical art on the stage and that’s all we have to do.” Some skeptics even see civic engagement programs as a funding ploy. In reality, most arts organizations fall along a spectrum in how they promote community engagement. Kim’s 2014 Nonprofit Arts Survey—sent to over 3000 arts organizations—asks questions both about the organizations’ characteristics and its activities. From their answers, Kim draws connections between each one’s main focus and its organizational attributes. In this way, she ascertains the factors describing an emerging type of nonprofit that is concerned both with producing art and with community engagement.

Kim posits that the new civic engagement focus is the most recent strategy for arts organizations to keep themselves afloat, financially. Because nonprofits depend on their communities to support the organizations with their charitable gifts, an engaged community is essential. Nonprofit arts organizations, in particular, derive a large share of their revenue from individual donors. “In the past,” she explains, “arts organizations incorporated as nonprofits could serve as just arts organizations that happen to be nonprofit—they didn’t have to consciously think about their nonprofit status, per se.” Increasingly, however, nonprofit arts organizations struggle to compete with social service nonprofits for funding from governments and private donors. In addition, arts organizations must compete for audiences with other entertainment options. She concludes: “That’s another reason why the community engagement, the civic engagement of arts organizations is getting so much attention these days. To survive.”

Financial stability challenges the way nonprofit organizations function in the United States, and how we understand their role. “Sometimes, they look [to us] like they are private organizations performing public services,” Kim explains, “and they get government contracts for social programs, to bring those services to the people. But at other times,” she continues,” we see nonprofits as the medium for political actions, or a place where people build their public participation; or as a place where people just get together and build their sense of community.” Though she dislikes the term “government failure,” Kim offers this theory as one that attempts to explain the proliferation of nonprofits, and explains that the government does not provide a full complement of services to the community. Arts and cultural services are an important example of this theory in practice. While the government does do some cultural work—parks and recreation departments, for instance—it cannot support everything. “They can support a symphony orchestra in one city,” Kim elaborates, “but cannot [also] bring a chamber orchestra for teenagers.” Rather than seeing this as government failure to provide enough services, Kim emphasizes that the government subsidizes nonprofits by providing remarkable tax benefits for charitable giving. Government indirectly supports nonprofit organizations, through tax exemptions for both the organization and its donors. Particularly for high-earning individuals, these tax breaks make them more likely to give. “The government can meet the demands of only the majority population,” Kim maintains, “and there are certain demands that are left unfulfilled. And that’s where nonprofits come in, to fill those gaps.”

In collaboration with a colleague who studies immigration policy, Kim’s newest project takes a new approach to the study of nonprofit growth in light of “government failure theory,” investigating whether rapid growth of immigrant populations in new destinations affects the nonprofit sector in those communities. More diversified racial and ethnic communities, Kim explains, will necessitate a greater array of public services and cultural organizations. The team’s preliminary analysis finds that these new destinations are indeed experiencing rapid growth in their cultural and service organizations.

With these preliminary findings, Kim’s work reiterates that community engagement is vital for nonprofit organizations. Individuals acknowledge the value of their community’s nonprofits with charitable gifts that allow the organizations to continue providing services. “When individuals recognize [a nonprofit’s] effort,” Kim reflects, “they want to express what they value. And that’s why they make the small donations, to show their support and to show ‘this is what I value about what we have to have in our community.” As her friend’s mother in Pittsburgh, patrons’ small gifts show their support not only for a single organization but for an entire community. In mapping the ways that arts organizations engage with and enrich their communities, Kim’s research offers cultural nonprofits a path forward.