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This paper examines three recent street festivals in New York's Lower East Side sponsored by arts institutions. It analyzes the ways in which the institutions have expanded their community role to serve as forums for urban issues and potential generators of innovative design-based solutions. We argue that arts institutions have increasingly used the philosophy of 'design thinking' to tackle public issues previously reserved for city governments and nonprofits. We examine the festivals as competing models for how best to engage the public over issues such as housing, transportation, and environmentally conscious development. In particular, we ask what participatory process design brings to urban issues and how 'design thinking' can be compromised by frequent corporate partnerships (Zolberg 2000). Finally, we consider how museums use design thinking as a new ideological rudder to expand their role into public policy. We assess the pitfalls of this process including the often-uneasy professional relationships between traditional community groups, proponents of 'design solutions,' and arts interventions based on an earlier activist tradition. [ABSTRACT FROM AUTHOR]