A shake-up in funding has some Minnesota arts groups on edge.

Three of the state’s corporate foundations are revamping their grant programs, leaving theaters and dance troupes, museums and orchestras looking for new ways to pay for core activities. The Target Foundation recently notified many arts organizations that it would be phasing out the big, flexible grants on which they depend. Wells Fargo is switching from charitable grants to sponsorships, while 3M is focusing on diversity.

Those announcements amplify a decline in corporate giving that some arts organizations have been feeling for years. Companies’ foundations are giving less flexible funding that can feed a group’s general work. Instead, they’re aiming their dollars at sponsorships — which come with strings attached — or specific projects.

In some cases, under corporations’ new granting guidelines, arts organizations could still qualify. Diversity? That’s their mission, too. But in other cases, the arts need not apply. General Mills, for example, has moved much of its giving to food security.

“There’s a number of businesses that want to align their giving priorities with their business priorities,” said Katie Berg, director of development for the St. Paul Chamber Orchestra. “That’s a big change. … Historically, giving to the arts has been more about a general sense of philanthropy in its purest form.”

According to a Grantmakers in the Arts report last year, “Corporate support for the arts has not fared well since the start of the new century.” While overall giving by all types of foundations rose 59% from 2000 to 2014, support for arts and culture dropped 3%, after adjusting for inflation.

Nationwide, corporate foundations are putting their money into causes that line up more closely with their company priorities, said Steven Lawrence, the report’s author. Meanwhile, newly formed foundations are less likely to give to the arts.

“The future is really a little scary for the arts sector,” he said.

Key piece of the money puzzle

Minnesota arts groups are sorting out what this flurry of announcements means. Many worry about the loss of general operating support, the most flexible — and thus coveted — form of funding.

Some corporations argue that their shift in priorities won’t leave Minnesota arts high and dry.

The Target Foundation, which awards about $9 million a year to Twin Cities area arts and social services organizations, told arts groups that it is “evolving” its grants program. The company has not announced details about its new approach. But officials pledged that Target will “maintain a similar level of support in the coming years,” according to a statement from Jennifer Silberman, vice president of corporate responsibility. Including non-foundation corporate support, such as sponsorships, “about a third of Target’s philanthropy in the Twin Cities area will be directed toward arts and cultural institutions, averaging approximately $5 million annually.”

For decades, the 3M Foundation has provided grants to Twin Cities nonprofits. This year, 30 arts organizations nabbed grants ranging from $5,000 for Youth Performance Company to $120,000 for Ordway Center. Some go to projects, others to general operating support.

Starting next year, the Maplewood-based company will aim general funding at only culturally specific organizations or arts agencies with clear diversity-related missions. The rest will go toward specific projects that “advance important conversations about equity, diversity and inclusion,” said Michael Stroik, director of 3Mgives.

“So there certainly will be historical partners that will not receive general operations funding even if they have in the past — and vice versa,” he said.

Local arts groups are crossing their fingers. St. Paul-based TU Dance has used 3M’s grant, totaling $10,000 in 2019, to subsidize scholarships for its dance students. Support from corporate foundations — including $15,000 from Target for general operations — is a key part of the nonprofit’s budget, which also relies on nonprofit foundations and touring revenue.

“Everybody’s questioning the same thing,” said TU’s managing director, Abdo Sayegh Rodriguez. Will these foundations focus exclusively on education, on the environment? “Are they going to disregard the arts? We don’t know.”

Target is a longtime leader

To be sure, Minnesota is rich with arts funding, both public and private. Led by Target — and Dayton’s before it — Twin Cities area corporations have long boosted the local cultural scene.

Last year, the Target Foundation granted about $9 million, a number that’s stayed steady for a decade. But this winter some nonprofits began receiving phone calls and e-mails: The foundation would be “shifting away” from those organizations, offering multiyear exit grants to cushion the blow.

“We were shocked,” said Mary Delorié, director of development for the Cedar Cultural Center, an internationally focused music venue on Minneapolis’ West Bank.

The foundation is revamping its priorities “to ensure we continue supporting our community’s needs now and in the future,” said Target’s Silberman in a January statement. Officials at the company have promised to continue funding arts organizations in other ways — including their highly visible sponsorships. Think Target Free Thursday Nights at Walker Art Center.

“Partners also will have the opportunity to be considered for new grant funding when applications open later this year,” Silberman said. Target officials have declined to comment on when the new criteria might be released.

At the Cedar Cultural Center, the $40,000 annual grant it got from Target will be stepped down gradually over several years. “It’s not like pulling a Band-Aid off,” Delorié said. “They really are being methodical and thoughtful and communicative about it.”

The Cedar also gets grants from the Minnesota community foundations McKnight and Jerome, which are “the local heartbeat … in terms of providing continuous support,” she said. Recently, the Cedar has been looking to national funders for its work, including its Midnimo project featuring Somali artists.

Like many arts organizations, it’s also turning more to individual donors. But making up that Target money “won’t happen overnight,” she said.

Looking for ‘the sexy thing’

Many arts groups praised Target for offering exit grants to soften the blow. “We do have time to prepare,” said James Haskins, the Guthrie Theater’s new managing director.

In 2018 the Guthrie received $160,000 from the Target Foundation, $65,000 from 3M and $44,000 from Wells Fargo. Target provided general operating support. 3M’s dollars went toward education programs. And the Wells Fargo gift added to the theater’s annual fund.

Operating support is “what we all most crave,” Haskins said, but big players such as the Guthrie also earn significant funding via sponsorships.

The Minnesota Orchestra, which received $250,000 from Target last year, also has seen a shift from “straight-up philanthropy to sponsorships,” said Carolyn Egeberg, vice president of advancement. In exchange for funding, companies get perks such as complimentary tickets, backstage visits and public recognition that often goes beyond a discreet logo in a program.

Egeberg prefers sponsorships: “I think it tightens the relationship” and brings new audience members into Orchestra Hall.

Still, the orchestra has seen a 40% drop in corporate philanthropy and sponsorships since fiscal 2009. “That’s the wow,” Egeberg said. But put those dollars in the broader context of the orchestra’s $36.7 million operating budget, and it’s “a single percentage point of our overall revenue.”

Wells Fargo provides funding to a dozen arts and culture organizations, including the Walker, the Minneapolis Institute of Art and the Science Museum of Minnesota. The company’s funding for the arts has remained level, said spokesman John Hobot, but starting this year some of that support is being shifted to sponsorships “to help the nonprofits develop innovative strategies to create visibility for their activities and events, while also helping to build the organizations’ membership.”

In its 25-year history, Juxtaposition Arts in north Minneapolis has seen shifts in foundation support before. “If you’re a nimble organization, you’re able to adapt,” said co-founder Roger Cummings. In recent years, some foundations have focused on equity and diversity — a good thing for the visual arts center. But the move to program-specific or sponsorship-specific dollars is a concern.

Programs are “always the sexy thing,” Cummings said. “It’s like philanthropy ‘Shark Tank.’ There’s always a new, sparkly, shiny program.” But consistent, day-to-day funding for infrastructure is “essential to growth and development in communities that are under-resourced.”