Global Innovation & Entrepreneurship

Speakers:
Amar Bhidé, Columbia University
Jonathan Bowles, Center for an Urban Future
Matt Nimetz, General Atlantic
Vivek Wadhwa, Duke University and Harvard University

Moderator:
Garrick Utley, President, The Levin Institute

Held at the Levin Institute, April 1, 2009 | Reported by Theresa M. Wizemann

Highlights

• Private equity investments in new businesses will be one of the driving forces of the recovering economy.
• Nationwide, one quarter of all startup companies are founded by immigrants, the majority of whom are highly educated, with degrees in science, technology, engineering, or mathematics fields.
• The inadequacy of the visa and permanent residency programs results in thousands of immigrants being sent back to their home countries every month, including high tech entrepreneurs who could have started companies here.
• Immigrants are starting businesses at a much higher rate than native New Yorkers, but immigrant-founded businesses in New York are not progressing to the next levels of business success, as they are in other major cities.
• The implementation of technology is more important than the development of technology. The challenge for New York is not how to replicate Silicon Valley, but how take advantage of emerging new technology to improve the productivity of all entrepreneurs, native or immigrant.

New York is full of talented, ambitious, innovative entrepreneurs ready to put their ideas in motion. Who are they? Where do they come from? What challenges do they face? Where do they go when the challenges are too great? And most importantly, how can the city help them establish successful enterprises, and thereby grow as a global leader in innovation?

Investing in New York

Private equity will be one of the dynamic forces helping the economy grow again, said Matt Nimetz of General Atlantic, a global private equity firm with offices in New York City and worldwide. In assessing investment opportunities, value is most important, Nimetz said, and private equity investors are generally neutral to geography and industry. His firm looks for creativity and managerial skill as they try to identify the businesses of the future. Historically, businesses that private equity firms invest in are more productive, more successful, and provide more employment.

While the numbers of people directly employed in private equity firms are relatively few, the firms are large generators of economic activity. From 2000 through 2007, there were $2.7 trillion in investments generated by private equity around the world. General Atlantic invests $1.5 billion per year, around half in the U.S., and half in developing world and emerging markets, including India, China, and Brazil. Looking to the future, Nimetz said that there are currently around $1 trillion in commitments from investors to private equity firms worldwide. Every investment deal General Atlantic makes, even those outside the U.S., brings value to New York through employment and expenditures.

Should I stay or should I go?

Vivek Wadhwa of Harvard Law School and Duke University provided a global view of the talent in New York. Wadhwa and colleagues found that between 1995 and 2005, one quarter of all startup companies nationwide, and more than half the startups in Silicon Valley, were founded by immigrants (foreign nationals who are not U.S. citizens). They also found that one quarter of all patents filed in U.S. were filed by immigrants.

Why is there such a disproportionate representation of immigrants as founders of new companies? Wadhwa's research shows that these immigrants are highly educated, and that 75% have degrees in science, technology, engineering, or mathematics fields. But they often feel undervalued in their own countries, and come to the U.S. to be their own bosses and build wealth, entering with H-1B visas (work visas for those in "specialty occupations"). As a result of this influx, there are over 1 million skilled immigrants and their families in U.S. waiting for permanent residency or "green cards".

The U.S. grants a maximum 120,000 green cards per year to holders of H-1B visas, Wadhwa pointed out, and no one country may receive more than 7% of the total issued per year. Indian immigrants comprise 35%–40% of the pool of skilled workers and, given the statistics above, Wadhwa said it could be 30 years before an Indian immigrant arriving on a student visa eventually obtains permanent residency. Those on an H-1B visa are stuck in immigration limbo, essentially indentured to the company that employs them and sponsors their visa.

We are shipping off our economic stimulus, sending back tens of thousands who could have started companies.

Wadhwa predicts that the inadequacy of the visa and residency programs will result in a "massive reverse brain drain" of high tech talent. Interviews of 1200 returnees to India and China indicated that they are faring much better back home than in the U.S. with regard to career progression and quality of life. Correspondingly, interviews of 1200 foreign students in U.S. indicated that greater numbers than ever before intend to return home after graduation. Historically, 85% of Indian, and 92% of Chinese doctoral students in engineering stayed in the U.S. for at least 5 years after graduation. Now, only 6% of Indian, 10% of Chinese, and 15% European students want to become permanent residents.

"We are losing an entire generation of skilled immigrants, and the next generation as well," Wadhwa concluded. While the U.S. is bailing out defunct companies, we are shipping off our real economic stimulus, sending back thousands of immigrants every month, many of whom could have started companies here.

Taking New York's entrepreneurs to the next level

Immigrants are starting businesses at a much higher rate than natives born in New York City.

Thirty-seven percent of New York City residents are foreign born, said Jonathan Bowles of the Center for an Urban Future, an independent think tank in New York City. While the city may not have the strongest technology sectors, other sectors are quite strong, including transportation companies, food manufacturing, or daycare. Immigrants are starting these, and other businesses, at a much higher rate than native New Yorkers. A problem, however, is that immigrant-founded businesses are not progressing to the next level in New York as they are in other cities such as Los Angeles, where 22 of the 100 fastest growing firms were started by foreign born residents. Average receipts per firm are much lower in New York compared to the 10 to 15 top cities for Asian- and Hispanic-owned businesses. Bowles said there are too few immigrant vendors that grow to establish a store front, too few mom-and-pop restaurants and other business that open additional locations, and too few food manufacturers exporting to other communities.

This is both a policy and a cultural issue, Bowles said. Immigrants face a variety of challenges, including access to capital. There are very few microfinance programs in the U.S., and immigrants have generally not been incorporated into traditional economic development programs. In addition, they are generally not visible to angel investors, or the venture community. To ensure future economic growth, the city must more effectively tap this innovative and entrepreneurial population, and help those that start businesses to rise to the next level.

Development vs. implementation

Successful innovation and entrepreneurship is not worth very much unless it is broad-based, and improves the productivity and incomes of most of the work force, said Amar Bhidé of Columbia University. The production of high tech products can only account for a small fraction of the total income of any particular place, and high tech development itself does not provide widespread prosperity, or widespread progress. The implementation of technology is far more important than the development of technology, he said. Cities like New York were so successful for so long, not because they produced many high tech products, but because big cities are where electricity was most effectively put into broad use.

Innovation is being conceived much too narrowly, Bhidé said. The challenge for New York is not how to replicate Silicon Valley, but how to weave emerging new technology, where ever it may come from, into improving the productivity of all entrepreneurs, native or immigrant.

The city's academic research institutions are top ranked according to variety of key metrics, but this academic success has not seeded a technology sector the way it has in other cities. This is starting to change, Bowles said, but there is much work yet to be done to commercialize research in New York's academic institutions, and to encourage researchers to start businesses. Bhidé agreed that New York's academic institutions are among the finest, but expressed skepticism that academic institutions can have a meaningful impact on the economy of a state. Nimetz offered a different perspective, pointing out the potentially significant tertiary effect of institutions on the New York economy. For example, people from around the world come to Memorial Sloan-Kettering Cancer Center for treatment. They arrive with their families, who stay in hotels, dine in restaurants, perhaps attend the theater, adding dollars to the city's economy.

Growing in the shadow of the finance sector

People who invest are looking for the best deal, Nimetz said, and the success of some sectors dissuades businesses from coming to, or staying in New York. The financial sector is a major technology employer, and pays such high salaries, that it is hard for other businesses to compete for tech talent. In addition, rents in New York are very high, and affordable business space is limited. Nimetz added that at one time, there were many ethnically oriented banks. Consolidation of the financial community however, eliminated many of these institutions. He said though, that when people have good ideas, there is usually capital to be found, and many ethnic groups have networks of capital.

Finance is one of the great assets of New York, and we need to ensure that the city remains a global financial center. However the city is too dependent on Wall Street. New York needs to diversify, Bowles said, and needs to focus more on its natural assets, one of which is the growing immigrant population.

Innovation in the Life Sciences

Speakers:
Jonathan Bowles, Center for an Urban Future
René Bastón, New York Academy of Sciences
Ken Davis, Mount Sinai Medical Center
Donna Rounds, Hospital for Special Surgery

Moderator:
Garrick Utley, The Levin Institute

Held at the Levin Institute, October 27, 2009 | Reported by Theresa M. Wizemann

Highlights

• A cohesive biotechnology community has yet to emerge in New York City to the extent that it has in other high-tech regions, where life scientists, entrepreneurs, venture capitalists and investors, and attorneys with biotechnology expertise form a functional network.
• The number of venture capital firms in the city is limited, and only a very small portion of venture capital funding is invested in biotechnology.
• Most university- and medical school-based researchers are not in the position to carry development of their patented molecules through to a point where a pharmaceutical company would be willing to take the risk of licensing the technology.
• More programs to provide "gap funds" could help researchers in New York City advance their discoveries to the point of a licensing agreement or establishment of a startup company.
• "Proof of concept incubators" such as the East River Science Park can provide physical space for companies to grow, foster interaction between the science and business communities within the campus, and facilitate access to resources at New York's top research institutions nearby.

Expanding the life sciences community beyond the laboratory

New York City's scientific research institutions and universities offer prime opportunity for economic growth. Columbia University, New York University, the Rockefeller University, and Memorial Sloan-Kettering Cancer Center are just a few examples of the world-renowned research institutions that are based there. But despite the large number of life scientists working in the city, the biotechnology sector is still relatively weak. According to a recent report on life sciences and innovation in New York by Jonathan Bowles and the Center for an Urban Future, universities and research institutions have long been very important to the city's economy, and have created many jobs. However, the startup ventures and growth companies associated with these institutions have not yet reached the level of economic impact seen in other high-tech regions such as Boston, Silicon Valley, or San Diego.

New York City's scientific research institutions and universities offer prime opportunity for economic growth.

Bowles cited several findings from the report as to why New York still lags behind. One concern is the lack of a major engineering school. Only one of the city's engineering schools, Columbia University, is listed among the top 100 by research and development expenditures (ranking at number 50). Another finding is that, historically, university leaders have not been as entrepreneurial as those in the other regions, although Bowles noted that this is beginning to change.

A key finding of the report is that there is not yet a real sense of community in the biotechnology, or science and technology development sectors in New York. Other technology centers around the country have solid networks of scientists, entrepreneurs, corporate and angel investors, venture capitalists, and attorneys with biotechnology expertise.

The community aspect is extremely important, René Bastón of the New York Academy of Sciences agreed. The Academy has long focused on building communities of scientists, and fostering communication across disciples, institutions, and national boundaries. What is missing, said Bastón, is the connection between the sciences, and business and finance.

Spanning the academic money gap: License or start-up? Royalties or stock?

The divide between the science is business communities presents a financial barrier for research institutions. In the chain from patent to product, a critical missing link is money for early development, said Ken Davis of the Mount Sinai Medical Center. He described how, in the mid-1980s, he was unexpectedly approached by a pharmaceutical company interested in his basic research on Alzheimer's disease. That would be a very rare occurrence today, he noted. The pharmaceutical industry has changed dramatically over the past 20 years, and companies have become much more risk-averse.

In biomedical research centers city-wide, there is an extraordinary amount of intellectual property, but moving the technology from patents on paper to the formation of a company, or to a licensing agreement with a pharmaceutical or biotechnology company, is challenging. Generally, the patented molecules are still very early in the development process, and companies are less willing to invest in relative unknowns. Unfortunately, most university- and medical school-based researchers are not in the position carry development of their patented molecules through to a point where a company would be interested (e.g. by further study of pharmacokinetics or toxicity, possibly resulting in phase I clinical trials).

Academic institutions often face difficult choices in technology transfer.

In cases where a product or technology does reach the stage where there is commercial interest, CEOs of academic institutions often face a difficult choice regarding the path of development—licensing the intellectual property and collecting royalties that can fund further research, or taking the risk of starting a company in the hope of reaping the rewards. Davis noted that there is no government support available to help medical institutes facilitate technology transfer or corporate formation. He explained that hospitals cross-subsidize the associated medical schools, and with profit margins eroding and budgets being cut, there is no pool of money to dedicate to corporate formation.

There is also the challenge of balancing the dual roles of a research university. Clearly, as a member of the local community, the institution has a responsibility to contribute to development in the local region. But there is also the responsibility to ensure that discoveries are made available to society. A product that is never developed as a result of a failed startup company might have been viable if it had instead been licensed to an established company with the resources to bring it to market.

This is not strictly an institutional decision, and principal investigators differ in their preferences for entering into licensing agreements versus starting a company. Some researchers would rather receive the milestone payments associated with licensing agreements, and don't have the time or expertise to manage a start-up company, or are concerned about the high risk of failure. Others are very entrepreneurial, and are willing to risk time and effort for potential significant returns if the company is successful.

Life sciences as a business venture

New York is often thought of as the capital of money, and for research institutions looking for investors to help fund early stage development, it would seem that being based in New York City would offer an advantage. Surprisingly, Bowles said, the city does not have many venture capital firms. In 2007, of the 55 most active venture firms in United States, only 2 were located in New York City, compared to 27 in Silicon Valley, and 11 in Boston. And those venture capital firms that are in the city are not necessarily investing in biotechnology. In the fourth quarter of 2008 and the first quarter of 2009, there was only one venture capital investment in biotechnology in New York City, paling in comparison to 13 biotechnology firms receiving venture capital funds across the rest of the New York metropolitan area, 41 in Silicon Valley, 33 in Boston, and 17 in San Diego.

One issue is that biotechnology is a complicated area to invest in, and in New York there is an abundance of other investment opportunities that are easier for investors to grasp, and offer a quicker path to return on investment. Davis said that of the 65 trustees of Mt. Sinai Medical Center, half come from the financial sector, but only 2 have marginal knowledge about biotechnology, and none are involved in venture capital for biotechnology. Bowles and Donna Rounds of the Hospital for Special Surgery both stressed that venture firms often prefer to invest in companies that are nearby, and this lack of local venture capital firms that are interested in and knowledgeable about biotechnology is a significant gap.

Bastón agreed, and said that the city needs to encourage more venture capital firms to set up shop in New York, and to more readily consider early investment opportunities. Biotechnology seems to get lost in the shuffle, he said, with the majority of investor money in the city going toward areas such as finance and media. The city also needs to attract and maintain the interest of serial entrepreneurs, and offer training and information resources for young entrepreneurs.

Enticing investors, fostering community

One approach to help foster growth of the biotechnology sector in New York is to decrease the relative risk for investors. Davis described a proposal he and his colleagues developed for a 10-year, $10 million per year state-funded initiative to help span the development gap. According to the proposal, a consortium of medical school and outside consultants would review and select promising intellectual property and lead compounds discovered at New York research institutions. It would then facilitate further development, perhaps through phase I clinical trials. Although the proposal was tabled after a change in governorship, the overall concept is promising, and could promote the development of intellectual property from New York's research institutions while making it less risky for big pharmaceutical companies and others to make investments. Davis said, however, that at this time there is no state money for such an initiative.

"Gap funds" help support researchers developing licensing agreements or establishing start-ups.

Rounds noted that a number of institutions have started their own "gap funds," established to support researchers in the process of developing a licensing agreement or establishing a start-up company. A participant mentioned the BioAccelerate NYC Prize as an example of one such program available to New York City-based researchers.

Another common financial challenge for institutions choosing to form a company is renting laboratory space. While the biotechnology sector in New York has made significant progress over the past 10 years in the area of real estate, Rounds said that laboratory space in New York City can be more expensive than comparable space nearby, adding to the overall cost of doing business in the city. So while a company may start in New York because the founders want to be in the city, as the company grows and hires more employees, it may move to Westchester, Long Island, or Princeton, for example. Tax credits are available, but could be more beneficial, she said.

An initiative aimed at bringing science and business together is the nearly completed East River Science Park, which is the result of a major investment by the city and a commitment by corporate investors to help entrepreneurs succeed in the New York. The new state-of-the-art research and development campus is easily accessible and provides physical space for both start-up and established biotechnology companies. Having many ventures in one place fosters networking and communication within the campus, and with the surrounding universities and research institutes. The rent is still relatively high, however, compared to space outside the city, and young companies in particular may find the cost prohibitive.

Filling the pipeline

Bowles concluded that while the availability of dedicated space such as the East River Science Park is important, what is really needed is a steady pipeline of new startups and firms with growth potential to fill it. He urged the leadership of research institutions to foster entrepreneurship, rather than focusing primarily on royalties.

New York City has abundant scientific talent, and discoveries are always emerging from the world-class research being done here. The participants agreed that there is no need to import industry and businesses from elsewhere to grow the city's economy. Instead, New York City needs to better harness its existing biotechnology assets and help facilitate development locally. In particular, it must address missing links in the chain from patent to product, including limited local investment in early phase molecules. Leadership at the institutional, city, and state levels will also be important to bring more focus on biotechnology and life sciences in the city.

Robust proof of concept incubators, such as the East River Science Park and other programs to help researchers bridge the gap between academic research and startup ventures, are steps in the right direction. But for New York to succeed in the biotechnology sphere, scientists choosing to become entrepreneurs will ultimately need support, including help in building relationships with the New York-based business and financial communities.

Innovate New York: Arts and Culture

Speakers:
Kate D. Levin, New York City Department of Cultural Affairs
Reynold Levy, Lincoln Center for the Performing Arts
Tom Finkelpearl, Queens Museum of Art

Moderator:
Garrick Utley, The Levin Institute

Held at the Levin Institute, February 24, 2010 | Reported by Leslie Knowlton

Highlights

• New York City's long-held position as a capital of the arts stems back to its creation of the Museum of Natural History in 1869.
• Reflecting the City's ongoing commitment to culture, its Department of Cultural Affairs is the largest single arts funder in the United States, funding 33 major cultural institutions occupying City-owned buildings, and about 900 non-profit groups.
• The culture sector is vital to the economic future of New York City; more than 45% of tourists coming to the city do so for that purpose. In addition to its internationally known world-class institutions, the sector includes a robust small-business community that needs to be protected.
• While today's economy is indeed a challenge for arts and culture, the non-profit world is experienced at living on the edge and innovating accordingly.
• In the face of new challenges, New York City's cultural institutions are finding novel ways to increase revenues, attract new audiences, and improve quality.

A city that supports its arts

With deep cultural roots stemming back to the nineteenth century, New York City is undeniably one of the world's top cultural leaders. What are the innovative steps needed to keep New York City alive and maintain it as the vibrant capital of creativity in the nation and the world? What is needed to strengthen this leadership position, especially given today's challenging fiscal climate and ever-changing demographics?

"You can't talk about innovation unless you talk about the steady state off which you are trying to innovate," said Kate D. Levin of the New York City Department of Cultural Affairs (DCLA), the largest single arts funder in the United States. DCLA gives operational support for major cultural institutions occupying City-owned buildings. Said Levin: "Back in 1869, some citizens came to the government of New York and said 'build us a building and we will create a collection,' and that turned into the Museum of Natural History." Now DCLA's portfolio of institutions on City-owned property (CIGs) contains 33 institutions, including the Metropolitan Museum of Art, Queens Museum of Art, portions of Lincoln Center, Carnegie Hall, and the Brooklyn Academy of Music.

DCLA also funds about 900 non-profit organizations in exchange for their providing free or low-cost cultural services. DCLA also funds capital projects ranging from new facilities to equipment purchases in City-owned and non-City-owned cultural facilities. "We believe that kind of infrastructure is essential, and it's hard to attract private funding for those kinds of projects," Levin said.

In addition to funding programs, DCLA runs Materials for the Arts, a program that collects reusable items and distributes them free to non-profit arts organizations, public schools, and a variety of social, health, and community service agencies. DCLA also commissions public art through its Percent for Art Program, and performs a number of advocacy functions.

The economic value of the arts

While today's economy is a major challenge to the arts, the sector has always experienced fiscal pressure. "The sky is always falling on non-profit culture," said Levin. "It's sort of the world of Chicken Little because it's absolutely on the edge of trying to make things happen that don't necessarily quantify or fit any particular standard kind of role in the larger ecology of a society."

Levin said government generally views its job as provision of standardized services at standardized rates. Everybody wants their garbage picked up the same time every single week. But culture is valuable precisely to the degree that it's not standardized. "If every ballet company danced the same thing the same way, they wouldn't be making the contribution that we believe culture makes to our society and our civilizations," said Levin.

What can be somewhat quantified is culture's economic value to the City. "Over 45% of all tourists who come to New York City come at some level for culture," reported Levin. The top five cultural institutions have far more annual visitors than the top professional sport teams, and the creative sector employs almost three times more people than the legal sector.

Over 45% of all tourists who come to New York City come here at some level for culture.

Another important fact is that 50% of organizations applying to DCLA have annual operating budgets of less than $250,000, making it an enormously robust small-business sector. "Culture isn't some kind of ancillary add-on; it's essential to this city's survival," Levin said.

Pressure pushes innovation. "This sector is constantly on the edge of looking for new ways to attract audiences and make art," said Levin. "The whole sector is based on a passionate commitment and keeping it alive is extraordinarily important."

Fiscal innovation at Lincoln Center

Reynold Levy of the Lincoln Center for the Performing Arts noted that Lincoln Center has 12 world-class institutions, including the Juilliard School, Lincoln Center Theater, Metropolitan Opera, and New York City Ballet.

New York City is precisely the kind of supportive environment needed for the arts, evidenced by the $1-billion-plus renovation now occurring at Lincoln Center, he said. Still, expenses have far outpaced growth in ticket revenues and efficiency. In fact, said Levy, at least half the Lincoln Center institutions now run significant deficits, eating into endowment.

Trying to economize by cutting quality is not a solution. "You cannot play Beethoven faster," Levy said. "You can't cut a tenth of the rehearsal time. Much to the dismay of my CFO, that trumpeter who only plays three measures has to be in that orchestra."

You can't maintain quality by playing Beethoven faster.

That's why Lincoln Center sought and continues to seek new business means. One strategy was better utilizing its vast facilities that include 20 auditoria seating about 22,500 people. That led to Fashion Week's plan to move from Bryant Park to Damrosch Park at Lincoln Center this year. In another creative collaboration, Channel 13 will open a glass-walled studio at the base of the newly expanded building housing Alice Tully Hall and the Juilliard School. Lincoln Center and John Wiley & Sons, Inc. formed a new multi-year partnership to publish co-branded books. And further revenues come from center charges from the ticket call-in center, expanded to include non-profits outside Lincoln Center. "They don't want their patrons going to Ticketron, where they get ripped off by excess charges and where operators don't know their spaces," Levy said.

Keeping it fresh

Levy said it's important to try new things to ensure culture's survival and growth. One innovation was to identify the Park Avenue Armory as a great space not only for exhibitions but also for performing arts. In 2008, the Lincoln Center Festival presented the epic chamber opera "Die Soldaten" at the Armory, where the audience chamber literally moved on tracks from Park Avenue to Lexington Avenue and back nine times. Last summer, the venue housed the Festival's productions of Ariane Mnouchkine's "Éphémères" and Declan Donnellan's "Boris Godunov." After attending a performance at the Armory, Michael Boyd of The Royal Shakespeare Company decided to bring his troupe there for a six-week, five-play residency next year.

Governance is extremely important in innovation in arts institutions. "Lincoln Center decided it was really important to develop succession time moving from chair to chair," Levy said. "So we developed a series of vice chairs who we thought were potential successors." Also, chairs are designated at least a year before beginning operational responsibilities. Peter Gelb was appointed to head the Met 1.5 years in advance, giving him critical and valuable time to plan, meet board members, travel the world, and think about his initial seasons, said Levy. "So we think about innovation broadly in relationship to the content of the art, but also in relationship to the governance around it."

Innovation in response to poverty and diversity

More than a third of people living in New York City are foreign born. More than half of those households are in Queens, where 138 different languages are spoken. Finding innovative ways to attract the nation's most ethnically diverse population has been the mission of Tom Finkelpearl of the Queens Museum of Art, where attendance has increased and a large expansion is planned.

"If I were in another city, I might be trying to be the Whitney Museum, but we have to do something different here," he said. "We've decided to go as far in depth as possible to understand the audiences around us and engage those audiences."

Finkelpearl, who frowns on elitism and refers to himself as a populist, reported that his institution employs two full-time community advisors to engage immigrant communities, much of which does not speak English. Programs included a Photoshop course taught in Mandarin and sound design taught in Spanish. The organization is now launching an art therapy program for non-English-speaking immigrant families with autistic children. "We're the first museum in the country to do this," Finkelpearl said. "Because it's so unique, we reach corners of the funding spectrum that no one else has."

The Queens Museum is in Corona, a highly distressed low-income community that is not even availing itself of public services such as unemployment and Medicaid, said Finkelpearl. The museum uses social services as a model for what it offers. "Everything we do is free. Our community can't afford to pay to come to a museum, and one reason our attendance is up is that our economy is so bad."

The museum is also creating a studio program to bring Manhattan artists to Corona rather than to Berlin or Paris, places where they would have their same social milieu. "We're looking at all kinds of economic transformations," Finkelpearl said, including downsizing staff. "How do we go forward in this economic climate, with the decrease in funding from all sources and really radical and incredible increase in attendance?"

Lowering barriers to accessibility

Great art is utterly necessary but not sufficient to draw audiences and contributions.

Long seen as an elite institution, Lincoln Center has also taken steps to lower barriers to accessibility and attract new audiences in new ways. "All Lincoln Center constituents agree that in the 21st century, great art on stage is utterly necessary but not sufficient to draw the kinds of audiences and contributions that first-class institutions require," said Levy.

As part of the renovation now 85% complete, Lincoln Center converted a once-dark space into the David Rubenstein Atrium, a facility that sells day-of discount tickets, offers free performances, provides free Wi-Fi access, and creates an environment with seating and food where people can just hang out and relax. "We are creating an enormous amount of free programming and discount programming to get people to appreciate, understand, and enjoy the arts," Levy said.

New technologies assist innovation

Reliance on subscriptions has been replaced in many cases by more costly single-ticket sales, said Levin. Many cultural institutions are embracing sites like Facebook and YouTube to increase sales and attract new audiences. "Lots of small theaters—and there are 375 non-profit theaters in New York City—have Facebook pages, which turn out to be a very efficient way to sell same-day tickets."

Fears that putting performances on TV or YouTube would make people less likely to see live events have proven unfounded. Instead, such moves create an even more robust audience, said Levin. "You whet people's appetite for the real thing by giving them facsimile portions of it, so more and more institutions are leaving the building as it were to find an audience." Levy agreed, noting that last year, a million people saw the Metropolitan Opera in movie theaters around the world, and "Live From Lincoln Center" has a television audience as large as "Sex in the City."

"We're not going to die," said Finkelpearl. "We're very limber and nimble on our feet."