ARTS, CAPITAL AND THE LONG DEFEAT Part 3 of 3 What Would It Take?

In the first piece in this series, I argued that the 2026 Budget delivered nothing for the arts and that the government’s pivot to philanthropy can’t fill the gap. In the second, I borrowed from conversations in civil society and development to argue that scale - the unexamined virtue at the centre of every funding conversation - is structurally incompatible with the transformation the arts sector exists to produce. This final piece asks the practical question: if we stopped performing scale, what would we do instead?

Scale is the responsibility of the state

In health and development, Zack Petersen argues, only the state can truly scale. Organisations can prototype, de-risk, even deliver beautifully, but only the state has the fiscal architecture, mandate, and legitimacy to convert innovation into everyday service delivery.

The same is true in the arts. Only government can ensure that every community in Australia has access to cultural life - that libraries exist in regional towns, that children encounter the arts in school, that artists can sustain a practice, that the infrastructure of cultural participation is maintained across the country. That is a public infrastructure question, and it belongs to the state.

But the state has been walking away from this responsibility for nearly two decades. Per capita recurrent funding has declined 14% since 2007–08. Australia ranks 25th out of 31 OECD countries for government cultural spending as a share of GDP. State and territory governments have now overtaken the federal government as the largest source of cultural expenditure - not because states are spending more, but because the Commonwealth has retreated further.

The first demand, then, is simple and non-negotiable: government must own the scale question. It must ensure baseline cultural infrastructure exists everywhere, funded recurrently, without requiring individual organisations to perform growth in order to justify their continued existence.

Philanthropy without scale

If scale belongs to the state, what belongs to philanthropy?

Not substitution. Not gap-filling. Not the slow assumption of responsibilities the state has abandoned. What philanthropy is uniquely positioned to do is fund the things that government funding structures are too slow, too risk-averse, or too blunt to support: experimentation, emergence, the particular and the rooted, the new and the untested, and - critically - the work of transformation itself.

Petersen’s “$2 million thesis” offers an instructive model. He proposes that an effective civil society organisation needs only a modest, reliable budget underwritten by a small number of committed funders giving unrestricted, multi-year support. Not a project. Not a pilot. A stake in the ground. The founder doesn’t chase 200 grant applications and 100 donors. They find twenty people and institutions who believe in the vision enough to carry ten percent each. And then they do the work.

The dollar figure matters less than the principle. What Petersen is describing is a relationship between funder and funded that is built on trust, commitment, and a shared understanding that the work will not scale in the way traditional philanthropy fantasises about - and that this is not a failure but a feature. The philanthropist’s job, in this framing, is not to demand growth or reach or sustainability plans. It is to provide the conditions of stability in which embedded, relational, transformative work can happen.

The emerging literature on transformation-oriented philanthropy, particularly from the Joseph Rowntree Foundation and the Stanford Social Innovation Review, pushes this further. It argues that organisations undertaking the difficult work of structural transformation should be compensated for the risk they carry - through negative interest rates, through unconditional support, through accountability frameworks that measure what changed rather than what was maintained. The most radical proposition is the concept of a “hope dividend”: that the only required return on transformative capital should be the narrative of what was attempted and what emerged.

These ideas are provocative. But the principle underneath them is straightforward: philanthropy should fund transformation without demanding scale, and it should stop asking arts organisations to do the one thing their work is structurally incapable of doing - scaling without losing the relational conditions that make the work worth doing in the first place.

The doers’ side of the bargain

This is not only a demand on funders. As Petersen argues, the challenge is one of both doers and donors.

Donors must stop asking for scale and start asking what transformation requires. But doers must stop performing scale and start telling the truth about what their work costs, what it needs, and what it cannot become without destroying the thing that makes it matter. That is harder than it sounds. The performance of scale is a survival strategy, and for good reason: the moment an arts organisation signals difficulty, it triggers precisely the funder withdrawal that accelerates collapse. Speaking honestly about limits, about the impossibility of growth, about the prospect that an organisation might have run its course - these are acts of institutional courage that the current architecture punishes.

Which is why the sector also needs something it currently does not have: transition infrastructure.

Transition infrastructure

REGENERATE  argues that the sector’s funding architecture incentivises persistence at all costs. No board votes to close. No artistic director raises the possibility of an ending with funders unless the situation is already desperate. The gravitational pull toward continuation is immense.

The result is three predictable patterns that play out across the ecology. Slow collapse: years of declining reserves, mounting exhaustion, programming that becomes cautious, and then sudden failure when a single shock arrives. Persistent exhaustion: the organisation continues operating in conditions of chronic under-resourcing, technically persisting but no longer doing the work it exists to do. And forced outcomes: funders recognise unsustainability and push mergers that damage both organisations because the cultural and governance incompatibilities were never surfaced.

What is missing is not more funding for continuation. It is dedicated infrastructure for transition: funding for endings that honour what has been built, for mergers that are genuinely generative, for the preservation of institutional knowledge, for the human costs of organisational change, and for the emergence of new forms of cultural life from the spaces that transitions create.

These do not exist in Australia at any meaningful scale. REGENERATE proposes building them - not as a managed contraction strategy, but as a recognition that healthy transitions, including endings, are how a cultural ecology renews itself. A forest that never experienced fire would gradually become less diverse and less resilient. The arts sector works analogously.

Giving up scale as a lever for transformation

This is the hardest part of the argument, and the part I keep returning to.

What connects all of these threads - from Petersen’s long defeat, to Lewis’s theory of scale, to Tsing’s anthropology of capitalism, to REGENERATE’s call for transition infrastructure - is a single  proposition: that giving up the pursuit of scale might be the precondition for the transformation the sector actually needs.

Not giving up on ambition. Not giving up on impact. Not settling for less. But refusing to accept the terms on which the conversation has been framed - terms that treat growth as the measure of seriousness, standardisation as the price of support, and the performance of sustainability as a condition of continued existence.

What if rejecting scale is not a concession but a lever? What if it creates the time and space for organisations to think clearly about what they are actually for, who they are actually serving, and whether the form they have inherited is still the right vessel for the work? What if the organisations that resist the pressure to scale are not the failures of the ecology but its most vital participants - the ones cultivating the proximity, encounter, and obligation on which transformation actually depends?

Lewis puts it plainly: the organisations most faithfully cultivating the conditions of transformation are precisely the ones the sector’s architecture is least equipped to support. They are too small, too rooted, too particular, too resistant to the standardisation the sector has been trained to reward.

Petersen’s alternative is not passivity. It is leverage. Instead of one organisation chasing an impossible growth target, he proposes seeding an ecosystem of focused, rooted organisations - each competent, embedded, and context-aware - that together produce something that looks a lot like systems change. Not a franchise. Not a network of unicorns. A coalition of organisations fighting for the same thing: the formalisation of cultural life as public infrastructure.

In the arts, that would mean a fundamentally different architecture. Government owns scale: ensuring cultural infrastructure exists everywhere. Philanthropy funds transformation: backing the particular, the experimental, the emergent, and the transitional, without demanding growth. The sector builds its own transition infrastructure: the awareness, relationships, and practical tools to navigate change with intelligence and care. And every actor in the system - funder and funded alike - stops pretending that the relational, embedded, irreducibly particular work of making culture can be standardised into something that looks like a supply chain.

The long defeat

Paul Farmer looked at a human being, understood the obligation, and bent money, logistics, and politics until reality got closer to what justice required. The question he insisted on asking was not “What’s the cheapest way to do the minimum?” It was “What if it were your child?”

The arts version of that question is simpler than we like to admit. Does every community in this country deserve access to cultural life? If the answer is yes, then the obligation follows, and the question becomes whether we are prepared to fund as though it does.

The sector is not short of evidence. The transformation-oriented philanthropy literature offers frameworks for thinking about capital differently. Lewis and Petersen offer the language for the conversation the sector has not yet been willing to have. What is missing is the political will to act on any of it - and the collective courage, within the sector, to stop accepting the terms on which funding is currently offered and start articulating the terms on which it would actually work.

The arts in Australia cannot be produced overseas. They cannot be moved offshore. They can only be made here, in specific places, by specific people, in specific relationship with specific communities. That is not a limitation. It is the whole point.

This article draws on analysis from The Point / Australia Institute (Budget 2026); Figurative (Arts Impact Fund resilience data); A New Approach (Big Picture policy brief 2026); Zack Petersen, “Scale Is a Myth! Embrace the Long Defeat!” Stanford Social Innovation Review, March 2026; Jason Lewis, “The Butterfly Effect” series, April 2026; the Stanford Social Innovation Review supplement on transformation-oriented philanthropy (Winter 2025, Joseph Rowntree Foundation); and the REGENERATE white paper (Lieberman, March 2026).