Sequestration Blues

Anyone out there interested in what it will be like to show up for work on January 2^nd, the day “sequestration” begins and nearly $600 billion in spending cuts and revenue enhancements automatically go into effect?  Want to know what it will be like to have to decide which bill to pay, and which stores to buy supplies in?  Need help figuring out which services are essential and which are luxuries?

Then contact your local arts organization.  They’ll tell you.  They live this life pretty much every day of every year.  In good times and bad, nonprofit arts organizations relentlessly prepare themselves for the inevitable “doomsday” scenario in which a key donor passes away, the promised corporate gift fails to materialize, or the storage facility with all the sets and costumes burns down.

Extremely well-managed non-profits have developed a two-tiered financial cushion.  The first tier is a six- to 12-month cash reserve fund that will allow them to operate at current capacity without interruption, and will buy them time to make additional plans for more austerity or for replenishing their coffers in due course.  The second tier is the much less liquid endowment fund whose corpus may, under duress, be accessed but only with a great deal of hand-wringing by trustees, legal counsel, and parties “of interest.”

Unfortunately, when I last checked, most non-profit cultural organizations in Vermont barely have a positive fund balance much less a reserve account or an endowment. So with January 2^nd fast approaching, what will become of them?  How will they survive?

The short answer is they will do what they always do.  They will cut where they need to, explore new ideas and new collaborations (within their means, of course), and create, present, perform, exhibit, compose, and write their way towards, inevitably, the next crisis...

But wait, you say, it’s not just the cuts that will happen. It’s the tax increases especially on the wealthy that will result in significantly more pain for the nonprofit sector.  Who will underwrite the next production if not the wealthy donors whose taxes are low and discretionary income is high?  If their charitable deductions are capped, what will happen? How will we cope?

Two things: first, people who have a lot of money give to charities because they believe in the charity's mission, not because they get a tax deduction.

Second, this reminds me of a conversation I had a few years ago with my then-eighth-grade child. “Dad, I just spoke to my friend who just finished 9^th grade math and he told me all about quadratic equations and functions and I’m really sure I’m going to fail math next year.”  I assured him that by the time he got to this point next year his teachers would have taught him everything he needs to know. 

Like all good teachers, life has a tendency to prepare you for what is coming next.  Whether it is a macro-cosmic issue like global warming or a so-called fiscal cliff, or a micro-personal issue like learning quadratic equations, life has a way of giving us the time and resources to learn how to navigate through what seem like insurmountable shoals and emerge into a new awareness.  As far as the fiscal cliff is concerned, I agree with Warren Buffet. Congress will figure it all out.  Maybe not by January 1, but certainly soon thereafter. 

Until then, I’m going to get out as much as I can and enjoy the season.  I have places to go, people to meet with, hand-made, high-quality gifts to buy, and four extraordinary artists in Brattleboro to celebrate!