merit, and some may be "shocked" or "offended" by certain drama, literature, paintings, or music funded by the Endowment. I can assure you that I am constantly striving to improve the review procedures at the Endowment, to invest our limited resources wisely, and to be certain that the work funded by this agency meets the highest standards possible. QUESTION: One grantee the committee has questioned, Fiction Collective 2 (FC2), describes itself in its own NEA grant application as the "riskiest" publisher of American literature, and note that its publications are not widely marketable. If few people are willing to buy these books of their own free will, why should they be forced to pay for them through their taxes? The Director of the Unit of Contemporary Literature at Illinois State University, where FC2 is located, noted that one of FC2's publications would likely be offensive to 85 percent of the population, and that he would not show this publication to his mother. Why is it appropriate to fund an organization that describes itself in this way? ANSWER: In its FY 1996 application to the National Endowment for the Arts, FC2 described itself in this way: For twenty-one years, FC2's mission has been to provide a professional, This type of publishing is "risky" because, as noted elsewhere in the application, literary value and economic viability do not always coincide. It is notable that four of the five most recent Nobel Prize Winners in Literature were unavailable to American readers at the time of the prize because their work was deemed insufficiently "marketable" by the large commercial publishing houses. By making available to American readers authors outside the market mainstream, FC2 and all not-for-profit publishers pursue an editorially driven mission, not an economically driven one. Some Americans are offended by books published by FC2, others are not. The Endowment is not familiar with the comments attributed to Charles Harris in the question. They are not in the FC2 application, and therefore advisory panelists and the National Council would not have based their adjudication on them. QUESTION: FC2 appears to have used the NEA imprimatur on several books that were not funded by the NEA. What is the penalty for misuse of the NEA seal? What enforcement mechanism does the NEA have to insure that its seal is not used improperly? ANSWER: Under the Terms and Conditions of Endowment grants, grantees are required to acknowledge the Endowment's support in all materials and announcements regarding the grant. Grantees are encouraged to use the NEA's logo in conjunction with the acknowledgement. The Endowment expressly reserves the right to disallow the use of an acknowledgement or the Endowment's logo. In the case of FC2, the grantee included the standard acknowledgement on materials published by the grantee, some of which were not supported by the Endowment's grant. This fact came to the attention of the Endowment and the General Counsel wrote a "cease and desist" letter to the grantee. The letter required that FC2 remove any reference to the National Endowment for the Arts from future publications, including promotional materials and reprints, which are not supported by an NEA grant. The NEA routinely reviews final reports, work samples and products for compliance with the grant terms and conditions. Failure to comply with grant terms and conditions can result in a range of sanctions, including ineligibility for future funding and request for return of the grant funds. QUESTION: In light of the problems with FC2's use of the NEA imprimatur, does the NEA plan to audit their use of the NEA grant? ANSWER: The final report for the FY 1996 FC2 grant is not yet due. Upon receipt of the final report, the Endowment will follow its standard procedures in reviewing it and determining its acceptability or the need to take further action. QUESTION: In recent testimony before the House Appropriations Committee you asked them to remove the restriction on grants to individuals --this is the same restriction that you mentioned in a "Dear Representative" letter to Congress as one of the reforms that has ended much of the funding of controversial art -- like the performers that filed the case recently decided by the Ninth Circuit. Why would you now call for this restriction to be lifted? ANSWER: I have consistently opposed Congress's elimination of grants to most individual artists because I believe it was patently unfair to blame an entire nation of artists for the perceived mistakes of a few. It sent a very negative message that artists can't be trusted. The fact is all creation of art, of invention, of science, begins in the mind of the individual. Without the individual artist, there can be no art, and some of this country's finest and most beloved artists and writers like poet Rita Dove, choreographer Alvin Ailey, composer/conductor Gunther Schuller received the breaks they needed with the help of a Federal grant. Many Members of Congress are simply not aware of the fact that they eliminated most grants to individual artists, and continue to believe that the Endowment gives such grants. In this respect, I believe it is important for Members to understand, and to take responsibility for the restrictions they have imposed on grant giving. Certainly there are some who believe it was the correct course of action. I am proud of the process changes that I have undertaken as Chairman to increase accountability in the grantmaking and monitoring process. I eliminated subgrants, tightened reporting, reorganized and made this agency more accountable to the public in many different ways. I have been very careful in all of my public statements to make clear that Congress eliminated grants to individual artists. QUESTION: Do you take "decency and respect" factors into consideration of the grants that you approve? Have you ever rejected a grant based on indecent content? If so, how many? ANSWER: During my entire tenure, we have been under a court injunction that prohibits the Endowment from enforcing the "decency and respect" clause in its authorizing legislation. Since 1992, when a federal district court decision first found the "decency and respect" provision unconstitutional and enjoined the Endowment from using this as a review standard, procedural reforms and restructuring have assured that projects funded by the Arts Endowment meet the highest standards of artistic excellence. The grant-making process at the Endowment today is far more accountable in terms of tracking up-front the use of taxpayers' money than at any time prior to my tenure. QUESTION: How many applications has the NEA received in each of the last 5 years? How many has it approved? ANSWER: The following chart displays the number of applications received, and the number of grants made, in each of the last five years. The reduction in applications in FY 1996 is due largely to the Congressional prohibition on grants to most individual artists. QUESTION: Does the NEA fund every grant that is approved by the panel review, as long as it is not rejected by the Council or the Chairman? ANSWER: The Arts Endowment makes grants to each application recommended for funding by advisory panel review, unless it is rejected, following panel review, either by the National Council on the Arts or, subsequently, by the Chairman. QUESTION: Do all grants received by the NEA make it to the panel review process, or does the NEA staff eliminate certain applications during a preliminary review? ANSWER: The Endowment's staff conducts a preliminary review that identifies applications that were not submitted in accordance with the applicable deadline or are otherwise ineligible for technical reasons. Late applications are returned to the applicant. The general procedure is to notify the advisory panel of the applications that the staff has determined to be ineligible; the advisory panel and the National Council vote to reject these applications. QUESTION: What is the average length (in time) of a grant review by a grant review panel. Are grants approved by a simple majority, or must the panel be unanimous? ANSWER: The length varies by the number of applications under consideration, the category, and the medium, among other factors. In FY 1997, for example, there were six meetings of the Combined Arts panels that considered grants to organizations in the four Endowment categories of Heritage & Preservation, Education & Access, Planning & Stabilization, and Creation & Presentation. Five of these panels lasted five days and one lasted four; each panel worked well into the evenings. FY 1998 panels will range from one to five days, averaging between two and four days. Advisory panelists score all applications using an automated balloting system. Under this system, each panelist rates each application on each of the three review criteria of artistic excellence, impact, and ability to carry out the project. The panel then reviews a ranked list, determines by consensus where to draw the line below which applications will not be recommended for funding, and discusses, by majority vote, whether particular applications should be treated as an exception to the general rule. QUESTION: Please provide a list of each panelist over the past four years, including the amounts of funds their organizations received in the year they sat on a review panel. What restrictions are in place to insure that there is no conflict of interest in awarding grants to panel members? ANSWER: The National Endowment for the Arts' selection of application review panelists is governed by three statutes: the National Foundation on the Arts and the Humanities Act of 1965 (NFAHA), as amended; section 208 of Title 18 of the United States Code; and the 1993 government-wide standards of conduct issued by the U.S. Office of Government Ethics. In the 1990 NFAHA amendments, Congress mandated that "in making appointments to panels, the Chairperson shall ensure that an individual who has a pending application for financial assistance under this chapter, or who is an employee or agent of an organization with a pending application, does not serve as a member of any panel before which such application is pending. The prohibition in the preceding sentence shall commence with respect to such individual beginning on the date such application is submitted and shall continue for so long as such application is pending." 20 U.S.C. 959(c). The 1990 legislation does not define "agent," nor does it include all the potential covered relationships which may give rise to a conflict or an appearance of a conflict. For greater definition, the Arts Endowment adheres to the prohibitions in 18 U.S.C. 208, the overarching statute with which all other conflicts and ethics rules and regulations must be consonant. Section 208 applies to all regular government employees and all special government employees. Panelists and Members of the National Council on the Arts are considered special government employees for the purposes of following all conflicts and ethics laws and regulations. Section 208(a) states that "whoever, being an officer or employee of the executive branch of the United States Government, or of any independent agency of the United States... including a special Government employee, participates personally and substantially as a Government officer or employee through decision, approval, recommendation, the rendering of advice, investigation, or otherwise in a judicial or other proceeding, application, request for a ruling or other determination, contract, claim ... or other particular matter in which to his knowledge, he, his spouse, minor child, general partner, organization in which he is serving as officer, director, trustee, general partner or employee, or any person or organization with whom he is negotiating or has any arrangement concerning prospective employment, has a financial interest ----Shall be subject to penalties." Under section 208 it is the relationship itself, not the exchange of money or other consideration, which creates a conflict or the appearance of a conflict. For instance, under section 208, the financial interests of an organization are imputed to its board members. It is the imputation of the organization's financial interest to the board member which creates the conflict. The fact that the grant applicant organization does not pay its board members a fee has no impact at all on whether one of its board members can review the organization's NEA grant application. The board member cannot. Having determined that section 208 specifically prohibits a board member from personally and substantially acting on a particular matter, such as a grant application, from an organization on whose board he serves, we return to section 959(c) of the Arts Endowment's legislation to determine whether the board member can sit on the panel, leaving the panel room during the discussion of the conflicted application. Section 959(c) tells us that the board member cannot sit on the panel. Further, section 959 does not include waiver or exception language for conflicted individuals. The panel selection process is also governed by the Office of Government Ethics's 1993 government-wide standards of conduct, which complement section 208, but also are broader. For instance, the Government-wide standards provide guidance with respect to the appearance of a conflict of interest. 5 C.F.R. 2635.502 provides that "[w]here an employee knows that a particular matter involving specific parties is likely to have a direct and predictable effect on the financial interest of a member of his household, or knows a person with whom he has a covered relationship is or represents a party to such matter, and where the employee determines that the circumstances would cause a reasonable person with knowledge of the relevant facts to question his impartiality in the matter, the employee should not participate in the matter unless he has informed the agency designee of the appearance problem and received authorization" from the agency ethics officer as to how to proceed. A covered relationship includes one with a person with whom the proposed panelist has or seeks a business, contractual or other financial relationship that "involves more than a routine consumer transaction;" a person who is a member of the proposed panelist's household, or who is a relative with whom the proposed panelist has a close personal relationship; a person for whom the proposed panelist's spouse, parent or dependent child is, to the proposed panelist's knowledge, serving or seeking to serve as an officer, director, trustee, general partner, agent, attorney, consultant, contractor or employee; or an organization, other than a political party, in which the proposed panelist is an "active participant." Participation is active if, for example, it involves service as an official of the |