To be fair, most arts organizations are also doing various outreach programs. Summer camps for kids that they run at a loss just to expose kids to the arts. Deeply discounted or free performances for school groups. Stuff like that. It’s not putting meals on tables, but it does in some small way contribute to making the beneficiaries more well-rounded individuals, which perhaps has some societal benefit.
But it wouldn’t be crazy to split out the portion of the funds that go to outreach programs vs keeping the lights on. I think the practical implications are pretty tricky though.
I think the bigger issue is with foundations. I can set up a charitable foundation to help an AIDS Hospice in Africa. Then I “need” to go to Africa to visit the Hospice.
$200 limo to/from airport
$10,000 round-trip business class airfare
$160 for 2 nights in fancy hotel near Hospice
$60 meal expense for 2 days
$500 donation to Hospice
$2500 week-long Safari
I can have the foundation pay for all but the last expense and it will count as “program expenses”. The Hospice only got $500, but I just saved my marginal tax rate * $10,920.
Instead of spending $12,920 for the safari vacation, by giving $500 to the Hospice and visiting it in person, if my marginal tax rate is 35% then I spent $10,920 * .65 + $2,500 = $9,598.
I saved $3,322 and a Hospice got $500.
And you could easily doctor the numbers to make it even more egregious.