Can Silicon Valley save art without the Silicon Valley Bank?

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When the economy collapses, philanthropy suffers. Arts organizations in particular rely heavily on philanthropy, and many would not exist without the deep pockets and constant generosity of individual donors.

All of this raises serious questions about the subsequent impact of the Silicon Valley Bank collapse on the Bay Area art scene. First Republic Bank, which has become vulnerable since the SVB closed, is a major sponsor of some of the most prominent arts organizations in San Francisco.

First Republic donates at the highest possible level of corporate donations to the San Francisco Ballet, ranging from $100,000 to $250,000. The bank is also a corporate sponsor of SFMOMA and SF Symphony.

The arts in San Francisco make up a significant part of the city’s economic activity. The nonprofit arts industry generates $1.7 billion in economic output per year, as well as the equivalent of 36,828 full-time jobs, according to a report from the Economic Institute of the Gulf Council.

A man walks down Van Ness Avenue across the street from the Louise M. Davis Symphony Hall and the War Memorial Opera House. | Jeff Chiu/AP Photo

While it’s too early to correctly predict what the future holds for local art groups, the historical precedent gives us a glimpse of what could happen.

The Great Recession of 2008 resulted in one of the largest annual cuts in philanthropy since the late 1960s, with total national giving falling 7%. And while things improved slightly by 2011, donations still haven’t recovered to pre-crisis levels, according to a Stanford University report.

National arts organizations average about 40% of their funding from private sources, and the 2008 recession forced the closure of cultural institutions across the country, including opera houses in Baltimore and Connecticut, a theater in San Jose, an art museum in Las Vegas and dance company in New York

This time around, the arts are already suffering from the pandemic-related downturn, making it even more vulnerable to instability in the financial sector.

The recession may take some time to turn around, as there is usually a delay before philanthropy takes its toll – donations and grants do not immediately respond to market changes. However, donations to arts and culture are already lower than usual because so many resources have been devoted to fighting the pandemic.

While it’s too early to tell if the collapse of the SVB will affect arts organizations in the San Francisco Bay Area, the outlook is bleak. Even if local arts philanthropy efforts remain afloat, arts groups continue to face pandemic-related challenges. It could be years before arts organizations get a chance to fix themselves—if they can.

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