How a hotel tax pays the flutist, and other money ideas

In Aspen, Colo., you buy real estate and it benefits the arts. During a pilot program in San Diego, you could eat out for the arts. And in Texas, arts organizations smile when you stay in a hotel or motel.

These are just some of the ideas being tried out to bolster funding for cultural organizations.

Faced with possible cuts in federal and state support, arts groups across the country are reaping more revenues through everything from "arts taxes" to travel card donations. Some of the dollar-raising gimmicks have been around for a while. Others are just now being hatched in the face of President Reagan's austerity drive.

One of the more popular measures is a "percent-for-art" law. It requires that every time a state building is erected or renovated a certain percentage of the money be used to install visual art.

While not raising money directly for the arts, this approach often benefits local artists by having some of their works end up on a tax collector's wall or in city hall chambers. At least 15 states have instituted such laws, and the idea is now being picked up by some cities. Madison, Wis., for instance, requires its new government houses to include art. Other states are trying to boost art revenues through a surcharge on local hotel and motel taxes. Since the Texas Legislature provided the option in 1977, 56 communities have chosen to raise levies and give local arts groups up to 1 percent of the hotel bill. While the measure doesn't exactly thrill all hotel operators, it has done a lot for the arts organizations. In Houston more than $2 million was raised in fiscal 1980.

Aspen, Colo., has come up with its own novel approach. The local arts council reaps a small percentage every time real estate is sold. The revenue, however, first goes to renovate the opera house. Money not used for the building, up to $100,000, would go to the arts. Last year the council received a fast clip.

In Massachusetts, another unique approach went awry. A weekly statewide "arts lottery," started up last year to fund local art groups, failed in nine months, partly because of a stiff $5 ante per bet.

In some areas, art groups themselves are being encouraged to raise more money , under the sweetner of more public funding. Kentucky, for example, uses a challenge grant system to fund nonprofit arts institutions that meet state eligibility standards. For every dollar raised by the local arts group, the state chips in 25 cents.

The incentive helped spur local arts groups to raise $3.2 million in 1980 -- a threefold jump from 1975, the first year of the program. To be eligible for matching funds, each arts institution must raise at least the amount it raised the year before.

"The challenge grant gave the organizations an incentive to get themselves together and seek a broader base of funding," says Nash Cox, director of the Kentucky Arts Council.

An extension of the matching concept is being looked at for corporate shareholders. Dr. Robert Sproull, president of the University of Rochester, has suggested shareholders be given the option of donating part of their dividends to charitable institutions, with the corporation matching the gift. Under this plan, the charity gets double the amount it would through a direct personal donation. The loser is the Internal Revenue Service, which doesn't get to grab its share of corporate and personal income tax on the dividend. Some accountants worry the plan wouldn't fly with the IRS, although congressional efforts are under way to make it feasible.

In Oregon, the hope is that arts will gain credibility with other individuals as well. The state has just approved a tax checkoff for the arts, in which residents have the option of giving a portion of their income-tax refunds to the state arts commission.

On the national level, Rep. Fred Richmond (D) of New York is pushing a similar idea. His bill would give the money directly to the arts council in the taxpayer's county. Critics, however, point out that once one group gets money from refunds, everyone will want one. The unenviable result: income-tax forms that look more and more like shopping lists for charities.

Other ideas are being tried out to spur more grass-roots support. In Madison , Wis., federal, state, city, and county employees can now deduct money from their paychecks for the arts, and the local arts council hopes local corporations will adopt a similar plan for their employees.

"It not only makes money for us, it saves money for us," says Bill Murphy, director of the United Performing Arts Fund. Direct mail campaigns, he explains , are becoming too costly for many of the smaller organizations.

In California, arts agencies in four communities are benefiting from another unusual source of funding, this one from the American Express Company. Under a recent three-month pilot project, the international travel card giant donated a few cents to the local arts council for every American Express card transaction in the city. There was also a contribution given for new cards approved for local residents. The booty collected in three months: $300,000.

Still, many cultural groups are finding they, themselves, must take a more aggressive stance in fund-raising.

"Some of the [museum] galleries I live near are realizing that they're not going to get money just for being there," says Oregon state Sen. Richard Bullock , an ardent art supporter. "They're looking at programs where there is a trade-off."

The Contemporary Crafts Gallery in Portland, Ore. has been able to book an exhibit on wood crafts because it solicited the funds from local wood products industries.

Another idea being increasingly used by many arts organizations to tug on corporate and individual purse strings is the united arts fund. Under this approach, arts groups band together to solicit funding in a one-shot campaign, similar to the United Way. A study of united arts funds by the New York-based American Council for the Arts found that when art organizations solicited funds from businesses as a group, average funding rose by 145 percent.

There is at least one problem with this approach, however: When it comes time to disbursing the largess among the arts groups, few are ever fully satisfied with their take.

When pitching for money from corporations, many cultural groups are finding that they have almost as much to offer businesses as businesses have to offer them.

"We see people contributing to the arts not for philanthropic reasons, but for their own revenue," says Karyn St. Lorraine, director of communications for San Diego's art council. In this period of drastic cuts, arts organizations may have to tap that attitude for their own purposes . . . and perhaps for their own survival.