January-February 2005

Dear Friends,

In December 2004, our Board of Directors approved a grantmaking budget of $61 million for 2005, an increase of more than 13.5 percent compared with grants approved in 2004. This growth in our grantmaking is made possible by a combination of positive investment returns and continued prudent management of our operating costs. In the year ahead, Irvine will continue to focus its grantmaking in three program areas: Arts, Youth, and California Perspectives, which focuses on increasing public understanding of critical issues facing the state and infusing new ideas into the policy development process. In this issue of my President's Message, I would like to outline why we are dedicating a substantial amount of our grantmaking to the arts in California.

In fiscal year 2003-04, when the California Arts Council suffered a 94 percent budget cut - a drop from $18 million to $1.1 million in annual funding - California became the lowest-ranking state in the nation in per capita arts spending. While the rest of the nation spends an average $1.15 per person in arts funding, California spends three cents. Last year, 850,000 K-12 students received no arts programming whatsoever, despite recent research confirming that the arts improve students' learning and increase parental involvement in their children's education.

At the same time, the California Arts Council reports that the arts are a vibrant economic engine in California, contributing $5.4 billion annually to the state's economy, employing more than 160,000 individuals statewide, and contributing nearly $300 million in state and local taxes, ranking California as the nation's leader in arts-related industries.

Californians also benefit from another valuable, and less easily quantified, role the arts play in our state: enhancing mutual understanding and communication among diverse racial, ethnic, and socioeconomic groups. As the state undergoes unprecedented demographic change over the next few decades, experiencing dramatic shifts in population and ethnicity, improved cross-cultural communication will prove an essential commodity.

Given this weakened arts funding environment, and the verifiable need for and benefits of the arts for all Californians, the Irvine Foundation finds that its ongoing commitment to the arts may be more important than ever as we enter this new year. We have enjoyed a long and distinguished history of supporting the arts in California, and remain one of the largest statewide funders in the arts. In 2004, we awarded grants of more than $14 million through our Arts program, an all-time high for arts funding in one year. As we begin the new year, the Foundation is recommitting to ensuring that all Californians have an opportunity to participate in the arts and that arts organizations can thrive and find themselves on more solid footing in the years ahead.

As part of this commitment, I am pleased to announce Communities Advancing the Arts, a set of grants totaling $3.5 million, awarded in December to eight community foundations in California for two parallel purposes: first, for regranting programs to local arts organizations and/or individual artists, and, second, for capacity-building programs to increase support through donor education and cultivation. In view of the fact that many arts councils and commissions in California have fewer dollars for regranting public and private sector funds to artists and arts organizations, these additional regranting resources are critically important at this time. Communities Advancing the Arts joins the Foundation's longstanding partnership with community foundations in California with our belief in the importance of the arts to all Californians.

In closing, I would like to note that the Board of Directors elected its newest member, Regina L. Muehlhauser, in December 2004. We are delighted to welcome Reggie to the board, and we are eager to benefit from her substantive experience in both the finance arena and as an engaged and active community leader with numerous nonprofit organizations.

As always, I welcome and appreciate your comments and suggestions about this update or any aspect of our work.

Sincerely,

James E. Canales
President and CEO

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