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TABLE OF CONTENTS

INTRODUCTION STATE OF THE ARTS


Patricia C. Jones, Alliance for the Arts

2 4 12 19

WHO PAYS FOR THE ARTS?2010


Michael Hickey, The Municipal Art Society of New York

THE ECONOMICS OF THE NONPROFIT ARTS SECTOR IN NYCA LOOK AT THE ECONOMIC IMPACT
Anne Coates, The Municipal Art Society of New York

ARTS

FINANCIAL CONDITION OF NEW YORK CITY NONPROFIT ARTS AND CULTURE ORGANIZATIONS
Hilda Polanco and John Summers, Fiscal Management Associates

20

DIGEST

FUTURE OF NYC ARTS RESEARCH: A POSTSCRIPT


Lane Harwell, Dance/NYC Anne Coates, The Municipal Art Society of New York

24

2012

METHODOLOGIES APPENDIX ACKNOWLEDGMENTS

25 28 29

Introduction
Arts Digest 2012
When we look at the conversation about resilience and livability across the globe, the highest-ranking cities boast a rich, vibrant and diverse cultural life. New York City is no exception. Arts and culture have been central to The Municipal Art Society of New Yorks (MAS) mission since its founding in 1893 by architects, painters, sculptors and civic leaders to create murals and monuments for New Yorks public spaces. This thread of cultural activity has been carried through the Adopt-a-Mural and Adopt-a-Monument programs, our tours, our collaboration in Place Matters with City Lore, advocating for good design over the years, and perhaps most recently through Tribute in Light, a spectacular public art project done with Creative Time. In 2011 MAS forged a new collaboration with the Alliance for the Arts that would continue the strong legacy of research, advocacy and convenings stewarded by that organization. From 1977 the Alliance was our citys leading researcher of arts and cultural activity. As MAS is no stranger to the arts, neither is it a stranger to research. With deep roots in evidence-based work to support its advocacy, in 2010 MAS embarked on a new longitudinal measurement: the MAS Livability Survey. In 2011, the Survey identied that New Yorkers in many parts of the city especially outside Manhattanare not satised or do not connect with their local arts and culture offerings. With our deepened arts advocacy and research capacity, it is now possible for MAS to further examine this challenge to livability in New York. And, in assuming this agenda at a time when tools for data collection and analyses are shifting and strategic policymaking and fund development are critical, MAS has the opportunity to be of great service to the cultural eld and our city. MAS is pleased to publish this collection of research, which taken together tell a story about the nonprot arts community during the challenging
1

economic downturn, which began in 2008 and cut deeply into the arts community. They also tell a story that illustrates that despite challenges, we now see signs of recovery and hopefulness. There are many indicators of resilience and sustainability discussed hereamong them nancial health, attendance, number of programs and workforce. Overall, what we see is that despite the recent long economic downturn, the nonprot arts community is scrappy and nimble. Art making and audience building have continued at the highest levels of creativity and excellence, and New York Citys cultural community has been doing a terric high-wire act in keeping their doors open during these difcult past few years. Each of the four articles in this collection reports on analysis that uses as its sole data source the Cultural Data Project (CDP). The CDP is a longitudinal and granular data set maintained by the Pew Charitable Trusts and is emerging as the national standard for data collection in the arts and cultural sector.1 The analyses presented in this collection are varied, demonstrating not only the depth of information available but also the different ways of interpreting the data to weave a narrative of the resilience of the nonprot arts sector. This collection looks at the economics of the arts, the sources of income, the general state of affairs, and some new ways of measuring the nancial health of the nonprot cultural organizations that make this city so very livable. What is impact and how do you measure it? New measures of impact are in the works all around uswhether it be the vibrancy indicators being developed by ArtPlace to measure its investments in creative placemaking and therefore the impacts of these efforts on communities (which is at the heart of MASs livability agenda), or the intrinsic impact model developed by WolfBrown for Theatre Bay Area, looking at this heretofore elusive impact, now quantiable. Its tantalizing to think about how this would be employed for every discipline, and we look forward to it.

The CDP enables arts organizations to enter nancial, programmatic and operational data into a standardized online format. A number of funders in New York, among them New York Citys Department of Cultural Affairs and the New York State Council on the Arts, now require their applicants to complete CDP proles as part of their funding applications. Organizations can then use the CDP to produce a variety of reports designed to help increase management capacity, identify strengths and challenges and inform decision making. The CDP licenses data for research purposes; MAS and the Alliance both obtained licenses to do the research contained in this publication.

The impacts of arts and cultural activity are many, and not all explored here. We at MAS felt that a state of the arts could not be offered without

While this collection focuses on nonprot cultural groups, we recognize the nely woven network of goods, services and workers connected to this sector. We also know that the nonprot arts sector is closely connected to the commercial one, often serving as a pipeline of work or talent. At the same time that there has been a proliferation of new arts groups entering the market and joining the ranks of 501(c)(3)s, there has been a profound philanthropic shift since 2008 in a host of different waysgiving levels, giving priorities, business models for grantmaking, among them. There is a great story of opportunity to be told hereto leverage the extraordinary public/private partnership in support of the arts (combined with an ability to earn revenue) and to stimulate and nurture creativity and engagement with one of New York Citys greatest assets: its cultural life. There is a growing opportunity for short-, medium- and long-term collaboration, partnership, merger and adoption of programs of one organization to another, as MAS has done with the Alliance for the Arts. And, there is an opportunity for new, or renewed, support for the artsin the form of philanthropic investments to ensure the cultural elds resilience through support for general operations, cash reserves and capacity building. As MAS addresses our citys resilience in all of its work, we have put the artsand their vibrancy, resilience and sustainabilityat the core of our work. This collection of research informs our work going forward, and we hope it is of equal use to the cultural community and its supporters. We hope you see in the data not only the challenges our arts and cultural institutions face, but opportunity to strengthen the eld. At MAS, we are committed to advancing arts and culture to improve the livability of our city, and to engaging policymakers, funders, sister advocates and the wider cultural community in this effort. This digest establishes important benchmarks and is only a starting point for discussion about where we are now as a eld and for where we are going. Vin Cipolla, President The Municipal Art Society of New York

Arts Digest 2012


INTRODUCTION

an economic impact piece but say wholeheartedly that it is not the only impact to be considered. Who Pays for the Arts? underscores what we all know: the face of funding cultural activity has changed. More and more, especially for the largest groups, earned income has outpaced contributions; but even for the smallest organizations (as studied in the aggregate) it is a signicant piece of the funding pie. The Alliances State of the Arts looks at a broader swath of cultural activity than do the others, embracing the full potential of the data offered by the CDP. Its report includes organizations whose offerings include cultural activity, but not exclusively. These groups applied for support to one of the funders requiring use of the CDP and therefore appear in the data for the study years. It is a great reminder that cultural activity in this city happens in many places beyond performance spaces, museums and historic housesincluding libraries, parks, media organizations (nonprot television, radio and online media) or higher education institutions that see arts and culture as a key piece of their offerings. We believe that the livability of this cityof any cityrelies heavily on a vibrant cultural life. In addition to publishing updates to the traditional portfolio of Alliance research, all of which we believe are important to understanding the nonprot arts sector and its contributions, impacts, opportunities and challenges, we asked Fiscal Management Associates to help us think about what new indicators could be developed to help us understand the health of the nonprot arts eld, which would, in turn, help inform our work to support the arts in MASs livability agenda. We are pleased to include those here. We encourage our readers to take in the whole picture presented here, through four different lenses. Each tells an important part of the story about this elds activity, impact and sustainability. There are a few

cautionary moments, to be sure; we hope that they will be viewed as tools for nuanced understanding of some of the particular challenges that the cultural community faces.

State of the Arts


Arts Digest 2012
Patricia C. Jones, Alliance for the Arts
The Alliance for the Arts is pleased to be able to present this rst comprehensive look at the State of the Arts, a review of the economics, services and well-being of more than 1,300 nonprot arts organizations based in New York City. The Alliance has been producing reports on the arts in NYC, New York State and the metropolitan region since 1977, including the inuential 1983 The Arts as an Industry. This is the rst time, however, that we have been able to provide a comprehensive portrait of the citys arts organizations over a multiyear period, thanks to the data collected by the Cultural Data Project. It is particularly fortuitous that these data are available now, starting with FY2008, for this has been a tumultuous period for the city as a whole, including the nonprot sector. This report could not have been completed without the unstinting help of the staff of the Cultural Data Project for reports and data analysis; it was made possible by funding from the New York Community Trust and the Booth Ferris Foundation and the New York City Department of Cultural Affairs. The State of the Arts will be the nal report by the Alliance for the Arts which is shutting its doors by the end of this year. After 35 years serving New York Citys cultural community, the board of trustees has decided that the Alliances services to the eld can best be fullled by the adoption of key programs by two other critical NYC institutionsWNET for our online cultural information services through NYC-ARTS and the Municipal Art Society for our advocacy, research and convenings. We know that they will both continue as strong stewards of our programs.
Other Total 0 52 12 246 30 897 2 95 0 35 44 1325 Museums & Visual Arts Dance Music Other Performing Arts Theater Councils, Services & Support 6 2 9 5 6 2 15 30 32 23 39 15 77 93 135 59 184 100 12 4 15 6 17 9 3 1 8 2 5 0 113 130 199 95 251 126

the commercial theater, lm, visual arts and music companies they have spawned or inuencedplay a critical role in the citys economy. The 1,325 organizations that have contributed to this study have a combined annual revenue of nearly $5.5 billion; while the majority are based in Manhattan, they are located in all ve boroughs and in every City Council district.

Arts Organizations by Discipline and Borough


Organization Type Community Arts Education & Instruction History Media Arts Science & Nature
BRONX KINGS NEW YORK QUEENS RICHMOND TOTAL

4 7 4 3 4

19 21 7 28 5

39 71 19 82 8

14 3 7 3 3

4 4 5 1 2

80 106 42 117 22

Source: Alliance for the Arts, Cultural Data Project

But this situation is relatively recentbefore 1960 only 153 (11.5%) of the current nonprots were in business. In the next 20 years, coinciding with the formation of the National Endowment for the Arts and the New York State Council on the Arts, twice as many organizations (323) were formed, and another 535 came into existence between 1980 and 1999, at a time when

Summary
New York City, home to more than 1,300 nonprot arts organizations, is

arguably the cultural capital of the United States. And these nonprotsand

the NYC Department of Cultural Affairs, recently formed as an independent agency, expanded City funding to include organizations not located on

vast majority of this income went to the 113 largest organizations$4.604 billion. The remaining 1,212 organizations received some $831 million, with $546 million contributed and $285 million earned in their latest scal year.

Arts Digest 2012


STATE OF THE ARTS

City-owned property. Even with the economic ups and downs of the past decade, another 309 groups were started just in the 11 years since 2000. The arts (including universities with a strong arts focus; zoos, parks and botanic gardens; public television and radio; historic houses and history museums; and community arts programs) now permeate every facet of our lives, and small organizations abound. In New York City, 406 groups (31% of the total) have budgets of less than $100,000, and another 421 have budgets between $100,000 and $500,000. At the other end of the scale, the 113 organizations with budgets of more than $5 million a year comprise just 8.6% of the total number of groups, and another 238 have budgets between $1 and $5 million. In spite of this diversity, the largest groups receive the lions share of both earned and contributed income. In the latest scal year reported, the 113 largest groups earned 89% of the total earned revenue for all 1,325 organizations and 80% of the total contributed income. They also received 88% of all NYC government support and 85% of government support at all levels. The 974 groups with budgets of less than $1 million a year brought in just 3% of the total earned revenue and 6.2% of all contributed income, even though together they represent 73.5% of the total number of groups in the city.

EXPENSES
Total expenses for all groups totaled $5.150 billion. Again, the majority of this total was spent by the 115 largest groups (total expenses of $4.381 billion). So 8.6% of the organizations were responsible for 85% of total expenditures and 86.7% of total income. The largest expense category for all organizations is personnel, ranging from a low of 43.6% of total costs for groups under $100,000 to a high of 59.6% for large organizations with budgets between $1 and $5 million. The smallest groups spend just under 11% on salaried employees, and the most on outside artists/performers, 24.5%. The two largest budget categories spend the most on salaried employees48% and 47.3% respectivelyand the least on outside artists/performers (3.3%) and professionals (3.8%), as they were able to bring most of these functions in-house. This pattern held true across all disciplines, in varying degrees. The smallest organizations also spent the largest percentage on administrative and programming costs. But with total expenses of just $19.2 million for 406 groups, none of these categories represent a substantial expenditure per organization, where the average budget size is just under $50,000. New York Citys arts groups as a whole weathered the recent nancial

This study looks at the total impact of all 1,325 groups, but also breaks out the data by budget size and discipline category. For those 535 groups which reported scal data for 2008, 2009 and 2010, we look at the impact the current recession has had on their nances and the services.

storm in reasonably good shape. Income surpassed expenses by nearly $285 million overall last scal year, and while most of this surplus was earned by the largest groups ($224.5 million) groups in every other budget category had surpluses ranging from 2% to 26% of income over expenses, with the smallest groups faring the best.

The Economics of the Arts


REVENUE
For the 1,325 NYC arts organizations in this study revenue was nearly evenly divided between earned income of $2.707 billion and contributed income of $2.727 billion the same year, for a total of $5.435 billion. The

EMPLOYMENT
Personnel costs are the largest single expense for all arts organizations in NYCartists and independent contractors for the small organizations (under $500,000), salaried employees for the largest ones. In total, cultural

organizations employed 120,283 people in their latest scal year23,310 fulltime and 32,905 part-time employees, and 64,068 independent contractors.

PRODUCTIONS
In their latest scal year, New York Citys 1,300+ arts and culture organizations presented:

Arts Digest 2012


STATE OF THE ARTS

These numbers translate to 40,410 full-time equivalent employees and represent just over 54% of total expenses. In addition, arts groups depend on another 82,855 full- and part-time volunteers and 16,684 board members. Only 12.6% of the smallest organizations reported any full-time employees; 14% reported employing 308 part-time employees; 85.5% reported hiring 10,234 independent contractors, most of whom were artists or programrelated (9,880). Many of these smallest groups also reported full- or part-time volunteers, with 112 groups (27%) using 283 full-time volunteers and 308 organizations (74%) using nearly 8,000 part-time volunteers. At the other end of the spectrum, the largest organizations reported employing nearly 19,000 individuals full-time and almost 20,000 part-time, most either artists or program-related. Just over 100 of the organizations with budgets more than $5 million reported also hiring more than 16,000 independent contractors, including nearly 15,000 artists or program-related individuals.Almost half (47%) of all groups now offer health insurance and make a contribution toward the cost; 21% offer some form of pension or retirement plan. Combined with the large number of part-time and independent workers, this means that most individuals working for most arts groups are adequately compensated, either salaried or with full-time employment or benets.

20,119 live productions 56,446 performances 4,242 exhibitions 89,879 classes and lectures 3,058 tours 6,973 world or national premieres 10,821 workshops or readings of new works

ADMISSION PRICES
The median ticket price across all arts groups and for all types of events (excluding workshops) is $18.40, ranging from a low of $5 for history groups to a high of $20 for performing arts organizations and a $10 average for museums. For children, seniors and students median prices are lower, averaging $10 a ticket. The spread of prices can be extremefrom a low of $1 a ticket to highs over $1,000.

MEMBERSHIPS AND SUBSCRIPTIONS


Memberships and subscriptions remain the primary way many individuals support the arts groups of their choice. The arts community has just under 2 million members and subscribers. Museums have the largest number of committed supporters in the form of membersmore than 420,000.

The Arts and the Community


ATTENDANCE
More than 35.5 million people paid to attend arts events offered by New York City arts groups, and groups reported a total audience of 155 million for free eventsincluding public radio and TV. Most were offered by Manhattan-based groups, but more than 2.5 million people attended paid events in Staten Island, 4.2 million in the Bronx, 6.7 million in Queens and 7.7 million in Brooklyn. The largest number of attendees visited museums, science centers, and zoos and botanic gardens (nearly 9.6 million paid

Media organizations, including libraries, public television and public radio, have a strong membership base of over 408,000, and science and nature organizations follow with 243,446 members. The performing arts, which used to depend heavily on a strong subscriber base for much of their nancial stability, appear to be less dependent on subscribers today. Music organizations, ranging in size from the Metropolitan Opera and the New York Philharmonic to 64 groups with budgets under $100,000, have a total subscription base of just 108,344, while dance groups have only 11,451 subscribers. Theater companies fell in between, with 92,418.

visitors to museums and 7.3 million+ to science or nature centers.

VOLUNTEER SUPPORT
Volunteers are critical to all arts groups, but especially to those with

income from 2008 to 2009. Contributed income dropped in nearly all categoriesespecially in individual and foundation supportbut the biggest impact was in investment income where groups of all sizes experienced substantial losses in both 2008 and 2009. Investment losses in 2008 totaled more than $77 million, a loss that grew to more than $1.171 billion by 2009. While all types and sizes of organizations experienced investment losses, most smaller groups had less to lose; the largest losses were sustained by the largest visual and performing arts organizations, which together accounted for $62.6 million in losses in 2008 and $1.146 billion in 2009. Luckily, most groups did not have to sell their investments in order to meet their expenses, so the total realized investment losses in 2009 only amounted to $93 million, as compared to more than $1 billion in unrealized losses. By 2010 many of these investments had begun to turn around, giving groups a positive return in 2010, for a total of $454.5 million in investment and interest income, both realized and unrealized. Removing all investment and interest income from total earned income in each of the three years would have given these 554 groups $962 million in earned income in 2008, $966 million in 2009 and $954 million in 2010. Admission income grew over these three years, but this increase was offset by decreases in most other categories. Contributed income also fell in most categories over the past three years; the one bright spot was government support, particularly NYC government, which increased its support to these arts organizations by more than $50 million from 2008 to 2009 to a total of $295 million. City support to the largest organizations increased even more$78 million or 44% increases that were offset by decreases to smaller organizations. While the total fell back somewhat in 2010 as the City faced its own economic

Arts Digest 2012


STATE OF THE ARTS

budgets under $500,000. Six hundred groups308 with budgets less than $100,000 and 291 with budgets between $100,000 and $500,000reported having nearly 39,000 full- and part-time volunteers, as compared to only 3,500 employees. In addition, the smallest groups had nearly 3,000 board members, or almost 10 times as many board members as staff, making most of these groups largely volunteer directed and led. Again, the largest organizations had the greatest number of volunteers per organization, with 67 groups reporting a total of 18,192 volunteers, and all 113 reporting a total of 3,748 board members, for an average of 33 members per organization.

PROGRAMS FOR CHILDREN


Arts education and other programs for children continue to be an important function of many groups. Some 10.25 million children and youth attended events or visited arts groups in the study year, with 3 million attending theater performances and another 1.5 million visiting science centers, zoos and botanic gardens. Besides encouraging children to visit their institutions individually, with family or friends, many organizations offer education programs for school groups or take programs to the schools. A total of 122,634 school groups visited organizations in their latest scal year, and organizations offered 7,505 off-site programs in the schools. A majority of these programs were offered by visual arts groups, particularly science and nature centers and museums and galleries. Education organizations and museums offered the largest number of in-school programs, 2,078 and 1,057 respectively.

Recession Trends: 20082010


Five hundred fty-four groups reported data for each of the past three years, 2008, 2009 and 2010. Thus, we can track the impact of the recession on a signicant number of arts groups and extrapolate to the eld as a whole.

problems, it still represented a 12.6% increase over 2008 and did much to offset losses in other categories. State government support fell across all budget categories, to $40.8 million in 2009 from $52.2 million in 2008, but recovered partially to $45.3 million in 2010. Federal government support increased in 2009 and 2010, from $33.4 million in 2008 to $43.7 million in 2009 to $58.4 million in 2010.

INCOME

In general, 2009 was a very difcult year for all groups, no matter their budget size. Groups experienced substantial decreases in earned and contributed

At the beginning of the recession in 2008 these 554 organizations as a whole were still operating in the blackincome exceeded expenses by

increased by 27% over the three years and the number of program personnel increased by 20%, though the full-time equivalents in these two categories dropped by 15.5% and 13% respectively. Total volunteers grew from 29,000 to 40,000, most to help with programs; measured as full-time equivalents, the number of total volunteers also increased from 3,500 to 6,700, an increase of 92%.

Arts Digest 2012


STATE OF THE ARTS

$169 million. By the following year, income had dropped by more than half, but arts groups had not, as a whole, been able to reduce expenses. Expenses actually increased by $75 million, resulting in a net loss of over $1.3 billionmost of which, of course, was due to unrealized investment losses. The biggest losers were museums and galleries, science and nature centers and presenting organizations. By 2010, as investments began to turn around, total income had once again reversed and even increased over 2008 to $2.7 billion. At the same time, organizations were able to reduce some expenses, so that their total expenses totaled under $2.4 billiona decrease of just under $64 million resulting in a net surplus of $332 million.

ATTENDANCE
Even while these groups were struggling to raise funds and keep costs under control, they were managing to increase their programming and reach signicantly larger audiences: between 2008 and 2010 the number of attendees at all events, paid and unpaid, increased from more than 43 million to nearly 81 million, and the percentage of the audience who attended for free increased from 51% to 74%. (It should be noted, however, that nearly half of the increase in the audience for free events came from media organizations, including public TV and radio.) The number of attendees at paid events actually dropped slightly over the three years, from 21.3 million to 20.9 million. This was especially true for Manhattan-based organizations, where paid attendance fell from 8.97 million in 2008 to just over 7.89 million in 2010. Subscribers also decreased, particularly for dance, music and theater companies. The number of performances, exhibitions, lectures and commissioned works all increased slightly over the three years, although touringwhich is particularly expensive and often sponsor-dependentfell by 80%.

EXPENSES
One of the problems facing many arts groups is their high percentage of xed costs. As Professors Baumol and Bowen famously wrote in their study of the performing arts in 1965, you cant cut the number of players in a symphony to make an orchestra more efcient. But groups did cut some full-time employeesmostly in administration and fundraisingand hired part-time employees instead. While they hired more artists/performers and other program contractors, they gave them fewer hours, resulting in a 7% decrease in spending on outside artists/performers and an 18% decrease in program personnel funding over the three years. But facility and administrative costs are harder to cut. Nearly all disciplines and budget sizes saw an increase in facility expenses.

PERSONNEL
Although total salary costs increased slightly from 2008 to 2010, the number of full-time employees fell by more than 10%, partially offset by a 5% increase in part-time employees, particularly artists and program employees. Groups also turned increasingly to independent contractors

both artists/performers and program personnelin order to continue their programming at stable levels. The number of these artists/performers

Arts Digest 2012


STATE OF THE ARTS

Characteristics of CDP New York City Arts Organizations


Community Arts & Education Community Arts Education 106 18 28 11 38 11 Total 186 49 48 21 52 16 Visual Arts (History, Science, Nature, Museums, Galleries) History 42 6 17 4 9 6 Media Arts 117 34 50 10 15 8 Science & Nature 22 1 1 1 7 12 Museums & Galleries 113 8 35 18 26 26 Total 294 49 103 33 57 52 Dance 130 42 52 16 15 5 Music 199 97 63 13 19 7 Performing Arts Other Performing Arts 95 28 18 10 28 11 Theater 251 96 85 30 31 9 Total 675 263 218 69 93 32 Service, Support and Other Service/ Support 126 27 43 21 25 10 Other 44 18 9 3 11 3 Total 170 45 52 24 36 13

Total Number of Orgs Smallest Small Medium Large Very Large Borough Location Brooklyn Bronx Manhattan Queens Staten Island Average Expense ($) Total Expense ($) Total Revenue ($) Earned/Contributed Subscribers / Subscribers/ Members Paid Attendance Children Attendance Number of School Groups Off-Site School Programs

80 31 20 10 14 5

19 4 39 14 4 1,561,714 124,937,101 151,576,444 36%/64% 46,260 / 46,260/ 47,786 462,924 135,801 939 131

21 7 71 3 4 6,592,825 698,839,403 771,156,990 76%/24% 19,236/ 7,721 559,604 294,892 8,356 2,178

40 11 110 17 8 4,428,906 823,776,504 992,733,434 69%/31% 65,496/ 55,507 1,022,528 430,693 9,295 2,309

7 4 19 7 5 2,227,310 93,547,026 126,232,739 21%/ 79% 1,200/ 1,200 / 33,436 1,615,079 669,472 15,010 407

28 3 82 3 1 5,297,173 619,769,199 641,124,384 24%/ 76% 67,023/ 67,023 / 408,235 1,422,021 624,916 10,750 398

5 4 8 3 2 29,858,710 656,891,625 561,272,370 38%/62% 0/ 243,446 7,331,129 1,545,568 29,725 242

15 6 77 12 3 9,906,145 1,119,394,406
1,344,738,144

55 17 186 25 11 8,468,035 2,489,602,406 2,673,367,637 47%/53% 90,343 / 1,105,466 19,959,021 3,702,958 83,482 2,104

30 2 93 4 1 1,298,309 168,780,184 179,067,508 62%/38% 11,451/ 3,624 1,987,918 358,004 1,246 427

32 9 135 15 8 2,902,894 577,675,935 442,727,063 43%/57% 108,344 / 102,391 1,924,604 274,415 5,214 504

23 5 59 6 2 5,406,233 513,592,121 567,158,844 38% / 62% 26,643 / 48,278 3,035,250 680,941 4,496 348

39 6 184 17 5 1,249,834 313,708,402 360,143,450 54% / 46% 92,418 / 41,450 6,054,569 3,029,263 4,186 742

124 22 471 42 16 2,331,491


1,573,756,642 1,549,096,865

15 2 100 9 0 1,536,018 193,538,288 192,905,228 38% / 62% 28,482 / 158,464 882,083 1,486,121 13,313 906

12 0 30 2 0 1,581,172 69,571,580 96,905,820 38% / 69% 658 / 16,621 640,555 291,175 1,402 165

27 2 130 11 0 1,547,705 263,109,868 289,811,048 36% / 64% 29,140 / 175,085 1,522,638 1,777,296 14,715 1,071

64%/36% 22,130/ 420,349 9,590,792 863,002 27,997 1,507

46% / 54% 238,856 / 195,743 13,002,341 4,343,623 15,142 2,021

Arts Digest 2012


STATE OF THE ARTS

Characteristics of CDP New York City Arts Organizations, continued


Community Arts & Education Community Arts Education Total Visual Arts (History, Science, Nature, Museums, Galleries) History Media Arts Science & Nature 375,406,663 57.1% 86,771,604 13.0% 35,625,322 5.4% 159,088,036 24.2% 8,801 459 5,523 359 2,460 42-26-32 627/ 4,517 5,007 Museums & Galleries 488,799,850 43.7% 210,664,882 19.0% 134,986,829 12.1% 284,942,995 25.5% 12,006 1,838 7,560 567 2,042 42-18-40 1,939/ 4,827 18,226 Total Dance Music Performing Arts Other Performing Arts 225,533,026 43.9% 175,125,322 34.0% 52,371,179 10.2% 60,562,594 11.8% 25,158 17,124 6,212 284 1,538 6-17-77 1,241/ 5,138 16,726 Theater Total Service, Support and Other Service/ Support 102,459,877 52.9% 21,946,605 11.0% 19,603,257 10.1% 49,528,549 25.6% 1,615 3,657 1,601 184 518 16-19-65 1,848/ 7,605 21,200 Other Total

Total Personnel Expenses ($) % of Expenses Facilities Expenses ($) % of Expenses Programming Expenses ($) % of Expenses Administrative Expenses ($) % of Expenses Total Employees Artists/Performers Program Fundraising General Admin %FT-%PT-%IC Board/ Volunteers Total Events FY 2008 - FY 2010 Trend Dataset Expenses % Change Expenses % Change Total Revenue % Change (excluding unrealized investment income) Paid Attendance % Change

69,424,917 55.6% 27,325,048 22.0% 6,837,261 5.5% 21,349,875 17.1% 4,140 1,966 1,598 57 519 26-22-52 1,037/ 1,676 5,818

459,314,469 65.7% 103,543,240 15.0% 37,823,430 5.4% 98,158,264 14.1% 13,106 6,676 4,853 286 1,291 24-32-44 1,500/ 12,951 19,575

528,739,386 64.2% 130,868,288 16.0% 44,660,691 5.4% 119,508,139 14.5% 17,246 8,642 6,451 343 1,809 24-29-46 2,537/ 14,627 25,393

46,412,306 49.6% 20,442,038 22.0% 7,958,832 8.5% 18,733,850 20.0% 1,941 876 792 70 203 27-28-45 738/ 2,015 3,104

341,451,424 55.1% 81,982,986 13.0% 111,755,840 18.0% 84,578,949 13.7% 6,480 1,349 4,026 258 846 50-16-33 1,343/ 3,694 62,240

1,252,070,243

107,990,875 64.0% 20,516,257 12.0% 24,019,783 14.2% 16,253,269 9.6% 5,995 3,586 1,728 151 531 11-38-51 1,164/ 2,031 9,151

358,303,587 62.0% 45,791,472 8.0% 45,277,221 7.8% 128,303,655 22.2% 15,303 10,370 3,362 342 1,230 11-35-53 2,149/ 20,436 12,067

173,138,345 55.2% 43,336,928 14.0% 73,229,151 23.3% 24,003,978 7.7% 19,778 11,394 6,642 323 1,419 6-43-51 2,429/ 13,193 36,125

864,965,833 55.0% 284,769,979 18.0% 194,897,334 12.4% 229,123,496 14.6% 66,234 42,473 17,943 1,100 4,717 8-31-62 6,983 / 40,798 74,069

38,396,893 55.2% 8,637,609 12.0% 3,365,919 4.8% 19,171,159 27.6% 5,9961 664 614 29 308 34-19-47 669 / 4,772 2,399

140,856,770 53.5% 30,584,214 12.0% 22,969,176 8.7% 68,699,708 26.1% 7,576 4,322 2,215 213 827 20-19-61 2,517/ 12,377 23,599

50.3% 399,861,510 16.0% 290,326,823 11.7% 547,343,830 22.0% 29,228 4,522 17,901 1,254 5,551 43-21-36 4,647/ 15,053 88,577

11.8% 75.5%

-4.0% 6.4%

-2.1% 13.7%

-13.2% 8.0%

15.7% 11.1%

0.3% -5.6%

-1.7% 4.8%

-0.6% 2.6%

-1.2% 1.6%

-10.7% 0.6%

15.7% 18.6%

6.3% 25.1%

5.2% 14.4%

0.0% 3.2%

-63.1% -51.0%

-17.2% -9.8%

36.3%

-4.1%

0.7%

8.4%

27.3%

-44.4%

-43.4%

-39.7%

-17.2%

-25.8%

4.4%

8.5%

-3.0%

-3.0%

-58.1%

-17.5%

-24.0%

-3.0%

-6.8%

0.4%

168.2%

-0.9%

10.7%

5.3%

3.0%

-37.0%

-16.6%

-1.7%

-9.4%

18.3%

-24.8%

8.8%

10

Source: Alliance for the Arts, Cultural Data Project

CONCLUSIONS
It is clear from the information presented here that the nonprot arts

New York Citys nonprot arts are a critical component of its role as an international creative center. The large institutions, which account for most of the public and private support, are major tourist attractions and serve millions of visitors; the small- and mid-size organizations are critical to their communities and are often the innovative engines that drive new work and open new artistic possibilities. Yet, the majority of workers in the eld are underemployed, with most working part-time or as independent contractors, and rarely receiving adequate benets.

Arts Digest 2012


STATE OF THE ARTS

in New York City are both a robust economic generator and a source of services used by New Yorkers citywide. Thanks to support from all sectors government, foundations, corporations and especially individualsthe arts have survived the economic recession and are continuing to offer a wide range of free and low-cost programs. However, there are some issues that should be kept in mind. First, an unprecedented number of nonprot arts organizations have come into existence over the past 20 years. A total of 578 of the current 1,325 organizations (44%) were founded between 1992 and 2011. Groups with budgets under $5 million are already competing for a comparatively small portion of total arts revenue. If groups continue to form at the pace they have over the past few decades, it is hard to see where the increased funding necessary to support them will come from. Those groups with budgets under $100,000 survive thanks primarily to individual support (from board members and volunteers as well as audience and contributors) and government support. While few have paid staff, they spend an average of 29% of their expenses on administrative costs. Given the increasing competition for limited resources, this may be an opportune time for funders and policymakers to consider innovative ways to encourage the sharing of administrative costs and management staff, including strategic mergers and other forms of collaborative behavior. Although the eld has bounced back from the enormous decits of 2009, it will take time for many of groups to recover from investment losses. Luckily, while most groups had substantial realized losses from investments and interest ($93 million total), this sum was dwarfed by unrealized losses of more than $1 billion. But the extent to which the largest organizations depend on investment income is something to be concerned about in the future, as is the management and investment of those funds.

If NYC is to retain its preeminence as the nations cultural capital it will need to nd better ways to retain the artists and other employees who are critical to that role. Everyone concerned about the continued health of the cultural sector government, funders, corporate leaders, policymakers and individual supportersneed to think carefully about new approaches to strengthen the entire sector. We hope that this report has offered some insight into the strengths and weaknesses of the sector, and that it will help all of us ensure its future health.
Patricia C. Jones is an independent consultant who is currently serving as the Interim Executive Director of Eyebeam Art + Technology Center. She led the Alliance for the Arts as Executive Vice President from 1977-1990 and served as a trustee from 1990-2011. She is currently the Alliances Acting Executive Director. 2012, Alliance for the Arts/The Municipal Art Society of New York. All Rights Reserved

11

Who Pays for the Arts?2010


Arts Digest 2012
Michael Hickey, The Municipal Art Society of New York
Historically, Who Pays for the Arts?1 has attempted to answer the fundamental question of how nonprot cultural organizations in New York City earn their daily bread. New York City is host to a tremendous variety of cultural partners. They range from very small organizations run on a shoestring budget by a single dedicated artist, to major cultural institutions with hundreds of millions of dollars in total annual income and hundreds of specialized staff. They also vary tremendously by geography, creative aesthetic, operational structure and purpose. Naturally, making comparisons among such a wide array of organizations is challenging. Nonetheless, Who Pays for the Arts? offers a valuable framework for observing trends, and raises important questions for future researchers to consider. analysis (see the Methodologies section on page 25 for greater detail), but it also illustrates an important reality: the overwhelming majority of New York City cultural organizations are relatively small and locally based. Overall, income from all sources was as follows:

Earned income represented 53% (or $1.3 billion) of total income for New York City nonprot cultural organizations in 2010 Private contributions were 30% (or $750 million) Government contributions were 17% (or $420 million). Of this amount, New York City funding represented $292 million in income, or 12% of all revenues reported.

Summary Findings
Similar to previous iterations of Who Pays for the Arts?, this analysis focuses on a single year of activityfrom January 1 to December 31, 2010. This creates a useful snapshot, and provides a basis to compare trends within the sector year over year. For the rst time, this analysis makes use of data provided through the Cultural Data Project (CDP), analyzing 723 organizations2 that reported total income of nearly $2.5 billion in 2010. As in prior versions of this report, the majority of total income went to a small group of very large organizations. Just ve organizations (all with annual incomes of more than $100 million) accounted for nearly $1 billion of the total (or 40%), and just 40 organizations (all with budgets more than $10 million) accounted for $1.9 billion of the total (or 76%). Indeed, average income for all organizations in 2010 was $3.4 million, while the median income was less than $250,000, indicating that all revenue categories were strongly skewed by these very
1

These percentages are all consistent with the 2010 Who Pays for the Arts? report (which looked at 2009 data), with private support being down slightly (2%) from the prior year, and government support increasing slightly (3%) from the same period. Note: the inclusion of capital commitments in the 2010 data for this report may impact comparisons to prior years studies when capital commitments were not included as income.3

Average Income by Type and Size2010

few large organizations. This is important because it poses challenges for


Who Pays for the Arts? was previously published by the Alliance for the Arts, now adopted and published by MAS. Please see the Methodologies section beginning on page 25 for important details about this data set. Please see the notes regarding the impact of capital contributions in Methodologies.

< $100K Public Funding Private Support Earned Revenues 9,444 18,229 16,995

$100K - $500K 53,060 94,891 107,276

$500K - $1M 125,458 244,073 342,152

$1M - $5M 392,877 762,507 1,048,046

> $5M 5,305,559 9,345,129 17,241,662

12

1 2 3

Source: The Municipal Art Society of New York, Cultural Data Project

While there are important similarities among organizations of all sizes (for instance, all categories rely heavily on earned revenue as their primary

touring, royalties, publications, interest on investments and miscellaneous income) on overall income appears to indicate that many groups have developed strategies to support their operations through alternative (and frequently entrepreneurial) means.

Arts Digest 2012


WHO PAYS FOR THE ARTS?2010

source of income), there is still signicant variation between the ranges (for small organizations, 38% of total income came through earned revenues, while this number was more than 50% for the very largest organizations). On the other hand, private contributions from individuals, foundations and corporations make up a more substantial portion of income for the very smallest organizations ($18,000 on average). This may simply indicate that smaller organizations have fewer opportunities to maximize earned revenues in comparison to larger groups, and must therefore rely more on private support to help sustain their operations. For smaller organizations, public support appears to play a slightly more important role in comparison to their larger peers. A more detailed analysis below shows that sources of public support (city, state and federal) can vary greatly by organizational size. The map in the Appendix shows that the great majority of organizations captured by CDP are located in Manhattan, including the subset in this report. Note that there are important exceptions not captured in this report, as many cultural organizations and entities are not part of the CDP data set (including for-prot cultural entities, individual artists and many small cultural nonprots that choose not to participate in CDP). The detailed income analysis below looks more deeply at variations among organizations by size, and also begins to examine how geography affects the distribution of income streams.

Total Income by Percentage2010

Source: The Municipal Art Society of New York, Cultural Data Project

Even within the category of Earned Income, there is signicant variation by organizational size.

Average Earned Income by Type and Size2010

Earned Revenues
As noted above, earned revenues are the primary source of income for the nonprot cultural sector. A more detailed breakdown of subcategories within earned revenues offers some useful insights. As in prior years, Admissions, Support from Individuals, and Other Earned Revenues are
Source: The Municipal Art Society of New York, Cultural Data Project

For the very largest organizations Admissions and Other sources of income account for nearly 75% of total earned revenues, while for the very smallest organizations they account for barely 50%. For all organizations Tuition

13

the three leading revenue categories. The major impact of Other Earned Revenues (comprising space rentals, merchandising, food services, parking,

and Workshops and Contracted Services made up 25%33% of all earned income, with the exception of the very largest groups, where these two

on average for the very largest groups). The chart below further breaks out Other income into a number of subcategories by organizational size, and the top three subcategories are highlighted.

Arts Digest 2012


WHO PAYS FOR THE ARTS?2010

categories combined shrink to just over 5%. Intuitively, one expects that organizations vary their revenue strategies based on their size and capacity. It is striking, however, that those organizations with more than $5 million in annual income appear to have a very different strategy in comparison to their smaller peersrelying much more heavily on both Admissions and Other income rather than classes, workshops and contracted services. As in other aspects of this analysis its important to view the scale of this variation. The chart below provides average income in each of the earned revenue categories by organizational size. This is telling for several reasons. For smaller organizations, earned revenue streams are fairly consistent across all ve categories, while for larger organizations there is substantial variation between categories. Importantly, for very large organizations admissions and other income are dramatically larger on average than for their peers. Indeed, even as income in all categories grows larger, Admissions and Other income appear disproportionately higher for those organizations with more than $5 million in annual income.

Percentage of Other Income by Size and Category2010


<$100K Miscellenaeous Earned Gift Shop & Merchandising Rentals Touring Dividends & Interest Concessions Parking Gallery Sales Special Sponsorships Advertising Royalties Media Subscriptions Gains on Investment 21% 6% 20% 21% 1% 4% 0% 12% 4% 6% 2% 2% 1% $100K$500K 14% 10% 25% 28% 4% 1% 0% 6% 6% 3% 3% 0% 0% $500K$1M 9% 7% 24% 13% 3% 1% 0% 34% 3% 3% 0% 1% 2% $1M-$5M 17% 3% 31% 18% 11% 1% 0% 3% 3% 5% 2% 0% 4% >$5M 32% 28% 14% 7% 7% 7% 2% 1% 1% 0% 0% 0% 0% Total 31% 25% 15% 8% 7% 6% 2% 2% 1% 1% 0% 0% 0%

Average Earned Revenues by Size and Category2010


<$100K Admissions Fundraising & Events Contracted Services Tuition & Workshops Other Avg Total Earned 5,269 2,354 3.721 2,008 3,642 16,995 $100K$500K 22,852 14,570 20,060 18,650 31,145 107,276 $500K$1M 63,222 85,820 57,005 54,862 81,243 342,152 $1M-$5M 252,769 228,728 147,293 158,084 261,171 1,048,046 >$5M 6,104,121 2,239,066 519,003 730,160 7,649,312 17,241,662 Grand Total 604,986 257,009 87,440 107,127 746,612 1,803,264

Source: The Municipal Art Society of New York, Cultural Data Project

On average, Miscellaneous Earned income totaled 31%, Gift Shop sales totaled 25%, and Space Rentals totaled 15%. Overall (with the exception of Miscellaneous Income), Space Rentals and Touring generated the most other income for smaller organizations; with gallery sales providing an important supplement (a remarkable 34% for mid-size organizations between $500,000 and $1,000,000 in annual income). For the very largest organizations, after miscellaneous income, gift shops and merchandising were the most lucrative (accounting for more than 40% of all revenues in this subcategory). Note that in 2010, the very largest organizations showed losses on Realized Gains on Net Assets (totaling more than $2 million in losses). Under better

Source: The Municipal Art Society of New York, Cultural Data Project

The category of Other income remains a signicant source of revenue for organizations of all sizes, and indeed ranks as the largest earned revenue category for 4 of the 5 income ranges. Larger groups collect nearly one-third

14

of their income from Other earned revenue sources ($7.6 million annually

market conditions, its conceivable this source would have ranked higher in Other Income for entities with more than $5 million in total annual revenues.

The chart above breaks out average private support according to budget size. Note that that the very smallest organizational category and the very largest were particularly impacted by support from individuals. One speculates that those organizations with more than $250,000 in annual revenues more easily qualify for foundation and corporate support (in part because many require a formal audit, an important accountability measure), while the very largest organizations appear better able to secure large contributions from high-net-worth supporters.

Arts Digest 2012


WHO PAYS FOR THE ARTS?2010

One would expect wide differences in the earned revenue strategies between small and large organizations, but these dramatic differences are worthy of further analysis.

Private Contributions
Support from individuals, corporations and foundations remains a crucial element to overall organizational income. In 2010, organizations in the data set collected nearly $750 million in private support, which comprised, on average, 30% of all revenue. Smaller organizations surpassed other categories by generating some 40% of their total income through private sources, while the very largest organizations relied on private support for less than 25% of their revenues. Indeed, in the analysis there is a clear trend between the size of the organization and its reliance upon private support (the clearest of all three major revenue categories: earned, private and public).

Income by Borough
The chart below indicates the percentage of each income source by New York City borough. Manhattan appears to have stronger earned revenues in comparison to other parts of the city. Possible reasons for this could include that Manhattan-based organizations command higher ticket prices, or attract more rentals, or are better able to maintain signicant relationships with corporate partners and foundations via proximity. While such answers are beyond the scope of this report, they could be fruitful areas for further analysis.

Average Private Support by Size2010

Income by Borough2010
Foundations Corporations Individuals Government Support Private Support Earned Revenue

< $100K Foundations Corporations Individuals 6,388 1,541 10,370

$100K - $500K 48,361 12,288 34,243

$500K - $1M 141,812 23,598 78,663

$1M - $5M 395,731 89,636 277,140

> $5M 2,193,895 1,093,652 6,066,582 Source: The Municipal Art Society of New York, Cultural Data Project

Manhattan cultural organizations represent the overwhelming majority of groups included in this study (68% of all those captured). It appears that Manhattan does have a higher concentration of these groups than the

Source: The Municipal Art Society of New York, Cultural Data Project

15

other boroughs of New York City, although it is also possible that many groups located outside Manhattan do not submit proles to the CDP for

on average than their peers, while Bronx groups appear to receive more funding on average from state sources. City support appears comparatively well distributed among Bronx-, Brooklyn- and Manhattan-based groups, with organizations in Queens and Staten Island receiving less than organizations in the other three boroughs. These differences may be affected by variations in average organizational size, among other issues, and would benet from further analysis. While its difcult to tell how representative this data set may be of all cultural activity, it clearly indicates that revenue concentrations

Arts Digest 2012


WHO PAYS FOR THE ARTS?2010

various reasons. Nonetheless, this study shows 87% of all income reported being earned by Manhattan-based organizations. Similar to overall income trends, the analysis shows that Manhattan-based organizations also receive the majority of public support dollars.

Government Support
Total Government Support by Borough2010
# Groups / Borough Bronx Brooklyn Manhattan Queens Staten Island Total 32 128 491 50 22 723 All Public Support 21,146,650 67,660,056 303,691,545 18,088,450 6,927,840 417,514,541 Total Federal Support 3,456,090 5,363,801 54,823,252 1,932,152 206,303 65,781,598 Total State Support 3,759,400 9,356,142 43,057,915 2,252,064 584,895 59,010,416 Total City Support 13,806,660 52,839,510 205,543,463 13,878,054 6,123,708 292,191,395

vary considerably geographically alongside the concentration of cultural groups themselves.

Trends in Income: 19952010


Historically this report has examined income trends by comparing only organizations for which data is available each year studied from 1995 to the present. Surprisingly, over the years this comparison group has dwindled in size from 374 originally to 114 organizations at present. This bears a closer look in subsequent analyses. Because fewer organizations are being counted, less income is being recorded and analysis may therefore signicantly underreport actual revenue trends. Furthermore, this 114-member subgroup appears to

Source: The Municipal Art Society of New York, Cultural Data Project

Average Government Support by Borough2010


# Groups / Borough Bronx Brooklyn Manhattan Queens Staten Island 32 128 491 50 22 Avg Public Support 5% 16% 73% 4% 2% Avg Federal Support 35% 14% 36% 12% 3% Avg State Support 34% 21% 25% 13% 8% Average City Support 24% 23%

comprise larger organizations (as measured by overall income), which may skew analysis and cause ndings to inaccurately represent income trends among all types of organizations, especially those that are smaller. The trend analysis also attempts to compare organizations that have

23% 15% 15%

reported their income over the years through several different sets of data. As noted above (and as detailed in the Methodologies section), in the current study capital contributions may be counted as income (whereas in prior years capital contributions were not). It is expected that this would cause income trends for the 2010 study group to be somewhat inated

Source: The Municipal Art Society of New York, Cultural Data Project

While the majority of public support still ows to Manhattan, this appears

(especially from public sector sources, which tend to be larger contributors to capital projects).

16

to occur because Manhattan-based groups receive more federal dollars

Arts Digest 2012


WHO PAYS FOR THE ARTS?2010

Income Sources for Trend Sample for Specied Years from 1995 to 2010 (in 2010 Dollars)

1995
Government Private Contributions Earned Income $146 $314 $349

1997
134 354 425

1999
142 380 497

2004
118 320 610

2005
115 312 653

2006
117 335 703

2007
125 355 757

2008
127 352 800

2009
126 333 858

2010
288 345 747

Source: The Municipal Art Society of New York, Cultural Data Project

Overall the study group shows a modest increase in total income from 2009 to 2010 (up 4.8% to $1.38 billion); the trend is quite mixed, with Earned Income dropping by almost 13% in the same period, while Government contributions were up nearly 130% from the prior year. As noted above, the reduction in Earned Income may reect the smaller population of the survey, while the increase in Government support could reect the inclusion of capital dollars as income. While this analysis provides some useful indication of changes within the nonprot cultural sector, further study would appear necessary. Overcoming the challenges of comparing groups across multiple years presents certain difculties, yet it seems an important aspect of understanding how the nonprot cultural sector is responding to changing economic conditions, or

Summary Comments
The overwhelming majority (71%) of cultural organizations captured by CDP in 2010 have budgets under $1 million in annual income. If we add those organizations under $5 million in annual income, this includes fully 91% of all organizations in this study. While there is substantial variation among this population of small to mid-size cultural organizations in all income categories, there are even greater variations between this 91% and the remaining 9% of very large nonprot culturals. There are a number of areas where these differences are particularly pronounced, and where further study could provide some compelling insights into observed differences:

17

adapting new income generating strategies.

Large cultural nonprots have developed endowments that provide signicant sources of ongoing operational support and stability, even

despite downturns in the market during this period. Smaller nonprots most likely do not have the same opportunities to amass these

Arts Digest 2012


WHO PAYS FOR THE ARTS?2010

resources, leaving them less well situated to weather downturns.

Large organizations rely more on Admissions and Other Income categories such as merchandising and gift shop sales. This ability to merchandise based on a prominent brand is itself an asset that smaller culturals are less likely to possess. This is perhaps why smaller organizations tend to rely more on touring and space rentals as key elements to their earned revenue strategies, attempting to maximize the value of their artists and facilities.

Very small organizations seem to have substantial challenges accessing private and corporate support, and must thus rely on a network of individual funders to provide much of their private contributions. Very large organizations appear to be successful at leveraging the support of high-net-worth individuals so that contributions from this category are dramatically larger than from corporations and foundations.

In terms of public support, it is worth noting that while Manhattan appears to have more cultural nonprots and therefore greater total income on average New York City public support per organization is similar to that of Brooklyn and the Bronx. This nding would benet from greater analysis to see how this might be affected by variables such as organizational size and creative discipline.
Michael Hickey is a former community development banker and nonprot executive. In addition to his current work as an arts and economic development research fellow for the Municipal Art Society, he also serves as an independent consultant to the nonprot and philanthropic sectors.

18

Arts Digest 2012

The Economics of the Nonprot Arts Sector in New York City A Look at the Economic Impact
Anne Coates, The Municipal Art Society of New York
The Alliance for the Arts pioneered this research with the Port Authority of New York & New Jersey with the rst academically correct study of the economic impact of the arts and demonstrated to us all over two decades how important the arts are as an industry. It is, indeed, a vibrant industry, lled with creativity by its nature, tenacity and optimism (if evidenced only by the number of new nonprot arts groups founded since 2000, numbering more than 300). The diversity, creativity and breadth of arts activity in New York City, as well as its dynamism, are important contributors to our citys economy. This analysis estimates the impact that the nonprot arts sector has on the citys economy, through expenditures made by those organizations, and through the employment of thousands of New Yorkers. The multiplier for this industry is approximately 2, which means for that every dollar of direct spending, another $1 of economic activity is generated for New York City. This is a strong multiplier for an economy such as New York City, which is both large and mature. The multiplier is well grounded in that a high proportion of workers and suppliers of services to the nonprot arts sector are actually located here in New York City, as well as recognizing that there is still, as cited by the Alliance for the Arts, some amount of leakage to areas outside the city from the wages of commuters and from the payments to suppliers based elsewhere.1 And while social and intrinsic impacts are not the focus of this analysis, we Theres a nely woven network of services in this industryjobs created, taxes paid, and goods and services of other New York City businesses and workers. This analysis estimates the impact of the nonprot arts sector2, including in it direct expenditures of nonprot arts groups, and of their audiences
1

The direct impact of the arts in the study year is estimated at $3.9 billion. The total impact, direct and indirect, of the nonprot arts sector in New York City for the study year is estimated to be $8.1 billion. When compared to the total impact from the 2006 Arts as an Industry study, and adjusted for ination, we can estimate modest growth in the industry since that study, despite the economic downturn of 2008. This is not surprising, given the growth in the pipeline just prior to the beginning of the recession. Still, we need to be cautious here, since we are not comparing apples to apples. We cannot make a direct comparison to previous studies and decisively conclude growth or a rate of growth due to the nature of the data sets studied, the questions asked that generated the collection of data, and the groups represented in each study. (While having a great degree of overlap, there is not a 1:1 correlation between the study groups). Still, there is sufcient overlap to infer modest growth here. And, there is a need to pursue regular checks, using this new data sourcewhich will make a yearto-year comparison possible. The nonprot arts community has a more than $8 billion economic impact on New York City each year. That is a substantial driver of economic activity, something that takes place in neighborhoods all over the city and involves thousands of cultural workers and millions of visitors and attendees.

cannot forget them. We cannot ignore the intrinsic impacts of this activity the substantial impact to education, social fabric, the quality of life, the creativity itself and the output of a volume of cultural vibrancy that some argue is unequaled around the globe.
Anne Coates is Vice President, Arts and Cultural Development at The Municipal Art Society of New York.

and visitors, as well as the indirect and induced ripple effect of these expenditures. This is an estimate of how the arts contribute to our economy.

19

1 2

Alliance for the Arts, The Arts as an Industry: Their Economic Impact on New York City and New York State, 2006. This analysis used a CDP data set from 2008, 2009, 2010 as with the State of the Arts analysis, which also appears in this publication, using the most recent year reported for each organization. However, large outliers were excluded from this estimate, as they heavily skewed the impact numbers. A more detailed explanation appears in the Methodologies section on page 25.

Arts Digest 2012

Financial Condition of New York City Nonprot Arts and Culture Organizations
Hilda Polanco and John Summers, Fiscal Management Associates
Recent years have been a nancially challenging period for nonprot arts and cultural organizations in New York City. While nonprot arts groups are frequently used to making do in nancially constrained circumstances, evidence from a sample of more than 500 organizations shows that organizations nancial challenges have, on average, worsened since 2008s global (and local) nancial crisis and ensuing recession. The sections below detail several measures of both operating activities and nancial position (in terms of resource accumulation, as well as the liquidity of these resources), showing that the median nonprot arts organization, already in a challenging situation, was measurably (and negatively) affected by the broader nancial challenges. A majority of organizations in the New York City nonprot arts sector, then, are operating at a nancial decit, negating their ability to accumulate reserves for future operations or to weather additional economic challenges.

Percentage of Organizations with Operating Decits

Operating Results
The key metric we at FMA focus on for a single years nancial performance is operating results, or the extent to which an organization produces a surplus (or decit) from its operations.1 By this measure, their most recent scal year was a challenging one for many nonprot arts organizations, as slightly more than half (53%) of New York City arts organizations ran an operating decit. The median operating margin2 for all organizations in this sample was a negative 0.5%. As may be expected, the recent recession resulted in a worsening of operating results among these organizations. In scal 2008 (which for most organizations in the sample ended prior to the economic crisis that fall), 47% of organizations ran an operating decit (median margin of positive 0.1%), already indicating widespread nancial challenges within the sector. By scal 2009, that number had increased to 54% of organizations, with an operating decit and the median operating margin turned negative at -0.7%.
1

Source: Fiscal Management Associates, Cultural Data Project

Median Operating Margin, All Organizations

Source: Fiscal Management Associates, Cultural Data Project

The 2010 numbers were practically identical to 2009.

20

1 2

In analyzing the nancial statements of not-for-prot organizations, one should consider only unrestricted revenues in determining operating results. Also note that, for purposes of our analysis, operating results do not include gains or losses from investments, whether realized or unrealized. Operating margin is net income as a percentage of total income, here again excluding investment gains or losses.

Balance Sheet Metrics

Here again, we see a signicant proportion of the citys arts and culture nonprots in a nancially precarious situation. For their most recent reported scal year, the median organization had 1.5 months of operating expenses available as liquid unrestricted net assets. This is well below a commonly cited (if not often achieved) benchmark of 3 months of available operating reserves; in fact only 38% of organizations in this sample reached that level. Even more disconcertingly, 31% of organizations in the sample actually had a negative LUNA balance, indicating that funds are in essence being borrowed from restricted asset categories (or other sources) to address the lack of liquid unrestricted net assets. Organizations with a negative or only narrowly positive LUNA metric have very little nancial cushion with which to pursue opportunities or mitigate risks.

Arts Digest 2012


FINANCIAL CONDITION OF NEW YORK CITY NONPROFIT ARTS AND CULTURE ORGANIZATIONS

Operating margins, of course, focus on a single years activities, so it is important to also consider balance sheetbased metrics that show the nancial position of organizations as accumulated over time. (To editorialize for a moment, if there is one lesson we would convey to stakeholders in the nonprot arts sector, including managers and boards, funders and interested observers, it would be to give at least as much attention to the balance sheet as to operating results in assessing the nancial condition of an organization. In our experience, balance sheet metrics are far too often underemphasized or overlooked in this sector, resulting in a lack of awareness of organizations true nancial position and sustainability.) The key question to be answered here is, what nancial resources does an organization have for purposes of carrying out its mission? An organization with limited resources has a correspondingly limited ability to invest in new programs, productions or collections; to guard against future nancial challenges or risks; or in extreme circumstances even to manage routine cash ow and pay staff and creditors on a timely basis. Some measure of an organizations net worth is the key metric to consider in assessing overall nancial position and health. We at FMA pay close attention to an organizations liquid unrestricted net asset balance (LUNA), which consists of that portion of an organizations unrestricted net assets that could be converted to cash relatively easily if necessary in essence, (unrestricted) current assets such as cash, receivables and inventory along with investments in marketable securities. A challenge for many organizations is that, while their balance sheet may show a comfortable unrestricted net asset balance, some portion of that balance may consist of a building, equipment, sets and props or other assets that cannot realistically be liquidated to actually cover organizational expenses. Our LUNA measure isolates that portion of an organizations net assets that can actually be used to cover expenses, maintain properties,
1

Percentage of Organizations with Negative Liquid Unrestricted Net Assets

Source: Fiscal Management Associates, Cultural Data Project

The three-year trend shows that many organizations in the citys nonprot arts sector have been negatively affected by the economic downturn. In scal 2008, the median organization had liquid unrestricted net assets equal to 1.8 months of expenses; in 2009 that declined to a median of 1.5 months of expenses. (2010 showed some rebound, to 1.7 months.) Similarly, the percentage of organizations with a negative LUNA balance jumped from 25% in 2008 to 30% in 2009 (29% in 2010).

guard against downturns and pursue new opportunities.

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In nonprot accounting, net assets are classied as unrestricted, temporarily restricted or permanently restricted based on the absence or presence of donor-imposed restrictions as to the use of the assets. Unrestricted net assets carry no restriction as to their use and are therefore available at the discretion of an organizations management and board. A positive unrestricted net asset balance does not necessarily imply the liquidity of those assets, however.

If a negative LUNA balance is at the very least a warning sign to organizations about the sustainability of their nancial situation, a negative total net asset
Budget Range Small Medium Large Institutional Less than $500,000 $500,000 to $2.5 million $2.5 million to $20 million Greater than $20 million

Number of Organizations
(varies by year)

Percent of Sample
(varies by year)

Arts Digest 2012


FINANCIAL CONDITION OF NEW YORK CITY NONPROFIT ARTS AND CULTURE ORGANIZATIONS

balance is a true red ag. A negative total net asset balance means that an organizations liabilities exceed its total assets (technical insolvency), and while not equivalent to default or bankruptcy, is clearly an unsustainable position over the long term. Here again we see that recent years have exacerbated the nancial struggles of many nonprot arts organizations.

280-288 158-159 82-90 21-22

51%-52% 29% 15%-16% 4%

Percentage of Organizations with Negative Total Net Assets

Source: Fiscal Management Associates, Cultural Data Project

Looking at the data segmented by organization size provides a more contextualizedand complicatedpicture of the nancial situation of the citys arts nonprots. While in recent years larger organizations have struggled more than smaller ones with maintaining protable operations, serious nancial vulnerability remains more likely for smaller organizations than for larger ones. The table below shows median operating margins over the three-year period for organizations in each budget category.
Source: Fiscal Management Associates, Cultural Data Project

Operating Margin
2008 Small Medium Large Institutional 1.1% -0.4% -0.7% -3.8% 2009 -1.2% 0.0% -1.8% -5.3% 2010 0.0% -0.1% -2.6% -10.8%

In scal 2008, 8% of organizations in the sample were in a negative total net asset position. In 2009, that number increased to 10%, and further increased to 12% in 2010. For their most recently reported scal year, nearly one out of every eight nonprot arts organizations in New York City was technically insolvent.

Segmentation Analysis
In analyzing nancial data it is often appropriate to segment the data according to organizations budget size, particularly when (as with New York arts nonprots) the range of budgets is so wide. We therefore segmented for further analysis the 550 organizations included in the trend analysis by their reported annual expenses and found that the overall trends discussed
1

Source: Fiscal Management Associates, Cultural Data Project

Small- and medium-size organizations have been, on average, able to roughly break even operating results over the course of a year. On the other hand, large- and institutional-size organizations have been more likely to run substantial operating decits, and to experience an increase in those decits over the course of the period.4 In general, we suspect that smaller

above do mask some internal variation among organizations.

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Note that operating results in this analysis do not include investment gains or losses, or (because of limitations in the data) spending rate draws from an endowment, which are more common among larger organizations than smaller ones. Investment related income may, therefore, be able to subsidize some organizations operating losses, which may (or may not) be sustainable given the size of and returns on those endowments.

organizations have lower xed costs and fewer long-term commitments, therefore allowing them more exibility to scale back programs or

longer-term adjustment of the nancial reality of the nonprot arts sector, is an issue that will require more time and data to evaluate. In the meantime, however, we hope that the analysis presented here highlights some important trends and themes for the sectors leaders to consider. Foremost among those trends is the decline in (already small) operating margins across the sector, so much so that more than half of the organizations in our sample are experiencing operating decits. operating decits. While smaller organizations appear to have been less affected by this trend than larger ones, perhaps because of greater operating exibility, very few organizations appear to have the ability to consistently generate the surpluses necessary to build reserves for future operations (or to mitigate against further economic challenges). Additionally, while the trend of increasing levels of insolvency (negative

Arts Digest 2012


FINANCIAL CONDITION OF NEW YORK CITY NONPROFIT ARTS AND CULTURE ORGANIZATIONS

operations when faced with limited revenues. Larger organizations, on the other hand, often have very high xed costs and commitments to programs months or even years in advance, which limits their ability to scale back in the short-term in order to avoid decits (putting a premium on access to nancial reserves in such situations). Breaking down the analysis by budget size also provides important context for the observation above that, among the sample as a whole, roughly one in eight organizations is technically insolvent (total liabilities exceeding total assets). As the table below shows, this condition is much more likely among smaller organizations in the sample.

Percentage of Organizations with Negative Total Net Assets


2008 Small Medium Large Institutional 11.6% 7.7% 4.7% 0.0% 2009 15.3% 11.0% 2.5% 0.0% 2010 15.8% 13.2% 3.9% 0.0%

total net assets) is mostly concentrated among smaller organizations, the lack of a nancial cushion in the form of liquid unrestricted reserves is a concern across the board. Median reserve levels for organizations at all budget categories hover around the two-month mark, meaning that many organizations lack the resources to invest substantially in new programs or infrastructure or to guard against future nancial challenges or risks.

Source: Fiscal Management Associates, Cultural Data Project

Given the factors unique to any particular organization, there is no onesize-ts-all solution to the challenges facing the sector. But the importance

Note that the bulk of organizations in a negative total net asset position are in the small- and medium-size categories, and that that percentage grew across each of the three years in the analysis. Organizations in this situation require close attention from management and boards (as well as donors and other stakeholders) to ensure that nancial challenges are resolved in such a way as to maintain organizational sustainability.

of liquid unrestricted reserves to organizations long term nancial health and sustainability, and the difculty of generating such reserves in the current environment, should be a top consideration for the sectors leaders, funders and stakeholders.
Hilda Polanco is Managing Director and John Summers is Manager of Research and Development at FMA (Fiscal Management Associates). FMA is a management consulting rm to nonprot organizations focused on helping its clients in the arts and culture and other sectors with nancial and business planning, scal infrastructure development, and outsourced accounting services.

Conclusion
While the analysis here only includes three (very eventful) years worth of data, it points to trends that should continue to be monitored at both the

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sector-wide and organizational levels. Whether the trends seen since 2008 will reverse as the broader economic recovery progresses, or represent a

Future of NYC Arts Research: A Postscript


Arts Digest 2012
Lane Harwell, Dance/NYC Anne Coates, The Municipal Art Society of New York
This digest both extends the Municipal Art Society of New York (MAS) and the Alliance for the Arts legacies of research and breaks new ground. It offers not one point of view on sector health or impact, but multiple perspectives on how our arts institutions are working and creating value in a difcult economic climate. The patterns of activity and the nancial dynamics discussed in State of the Arts, Who Pays for the Arts?2010, and The Economics of the Nonprot Arts Sector in NYC demonstrate, at least in part, resilience and growth. The Financial Condition of New York City Nonprot Arts and Culture Organizations, which closes the digest, offers a much starker view, calling into question the long-term sustainability of the arts and culture in our city. If, as the Financial Condition of New York City Nonprot Arts and Culture Organizations found, nearly one out of every eight arts groups is technically insolvent (negative total net assets), this does not mean that doomsday bells are tolling. Rather, it means that weall of us working together have the responsibility to gauge solvency over time, create policy and invest the appropriate resources to ensure organizational adaptability to socioeconomic and environmental shifts. Arts research is only as strong as the data it is based on. The Cultural Data Project (CDP) provides far more regular and accurate data than has been previously available to researchers. In publishing this digest, which tracks data over time, MAS goes beyond the rst-ever reports driven by the CDP, which offer time-specic snapshots: the State of the Arts and Dance/NYCs discipline-specic State of NYC Dance. It also suggests new directions for using the CDP to measure the arts economic impact and nancial condition, and possibilities for future NYC arts research. practices. The need for arts research is heightened in climatesright now, in our citywhere responsiveness and strategy are required to face challenge and change. MAS is committed to help meeting this need in the context of its livability agendato understanding the arts and culture as catalysts for making New York a more livable city. As MAS builds its research agenda, it will look to this digest and beyond to explore what information is most useful to arts organizations and their supporters. There is untapped opportunity in the CDP for comparative arts studies between cities to recognize competitiveness, unity and geographic dynamism. As with the State of NYC Dance, there is opportunity to illuminate disciplinary distinctions, blurred boundaries and synergies. There are individual success storiesinstitutions bucking nancial trendswhich may offer clues for good, scalable practice. But understanding the arts as a catalyst for livability, integral to urban planning, design and preservation, also requires looking beyond institutions both to artists and the commercial arts, and across service and business sectors. There is value in looking citywide and at specic neighborhoods, to better understand the opportunities and challenges for the arts to be leaders in the sustainability and resilience of our diverse communities. Again, this digest may provoke not one conversation, but many. Ultimately, it is an invitation to arts organizations and their supporterspolicymakers, investors and sister service organizations aliketo join MAS in realizing the future of NYC arts research. Working together, we can imagine and create new research exploration that will strengthen the arts and change New Yorkers lives for the better.
Lane Harwell is Director of Dance/NYC and serves as the chair of the new MAS Arts Advisory Committee. Anne Coates is Vice President, Arts and Cultural Development, at The Municipal Art Society of New York.

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As a foundation for advocacy, arts research is a critical driver for policy and fund development, awareness building and improved management

Methodologies
Arts Digest 2012
This digest was informed by a long history of knowledge and data published in multiple reports by the Alliance for the Arts. That organizations studies drew upon data from a number of sources over timeincluding the Citys Department of Cultural Affairs, the New York State Council on the Arts, 990 annual federal lings, individual surveys and personal follow-up. This collection of research, however, relies solely on data provided through the Cultural Data Project (CDP). This rich resource offers highly detailed information regarding the economic activity of individual arts and culture organizations. Except where noted below, the following notes apply to all analyses in this digest. sections, but instead reected them in their balance sheets in their CDP data prole; but others did include capital income and expense in their income and expense statement reporting. This is particularly troublesome as capital contributions and expenses tend to be large in comparison to other categories of income and expense, and can dramatically skew ndings. Ideally, capital contributions and expenses would be clearly segregated from other types of income and expense reporting to allow for clearer analysis, but that is beyond the scope of this report. Unrealized net gains on investments were excluded from income analysis.

DEFINITION OF TERMS
The data set used in each of the analyses in this publication is limited to nonprot cultural organizations located in New York City that use the CDP to create the nancial documents needed to apply for support from their funders, including the New York State Council on the Arts and the New York City Department of Cultural Affairs. Data used is from the most recent scal year of those available for each organization. Availability is based on two main factors: a data prole was submitted by a cultural organization for a particular year (2008, 2009 and 2010), and that data prole was veried and categorized as review complete. Those organizations whose proles had not achieved review complete status cannot be included in any licensed analysis. Each analysis identies the year(s) of data studied. All data are self-reported by the organizations, and the organizations alone are responsible for their accuracy.  For-prot cultural institutions, individual artists, and nonprot cultural organizations that do not apply for funding from New York City, New York State or other CDP participating funders are not included in this analysis. Thus, very large for-prot cultural enterprises (like major Broadway theaters) and very small creative leaders (such as an unincorporated dance company or theater troupe) are not included in any of the analyses in this publication. While there are important advantages to working with CDP data, there are challenges in comparing these results with those from prior Alliance reports. There are also inherent challenges within the CDP where reporting may not be consistent in certain categories. The main challenges encountered by the analysts included: Organizations using the CDP have a certain amount of discretion in how they report capital contributions and capital expenses along with other types of income and expense. Some organizations did not include this data in the income and expense     The following terms and categories are used throughout all articles in this publication:

EARNED REVENUES are broken into ve categories:


 ADMISSIONS and box ofce income derived from events, exhibitions and performances, as well as subscriptions and memberships paid for these same services over the course of the season or year FUNDRAISING AND EVENTS includes sponsorships and funds raised through special events hosted by the organization CONTRACTED SERVICES captures revenues from programs offered for education, special populations, and direct services TUITIONS AND WORKSHOPS comprises revenues from group contracted activities, classes and tours OTHER INCOME consists of revenues from space rentals, merchandising, food services, parking, touring, royalties, publications, interest on investments (for those organizations large enough to hold endowments or other invested assets), and miscellaneous earned income.

PRIVATE CONTRIBUTIONS are generated from the following:


   INDIVIDUALS including contributions from board members FOUNDATIONS not including sponsorships, but focused instead on grants and gifts CORPORATIONS also not including sponsorshipsonly grants and gifts.

GOVERNMENT FUNDING is broken into three groupings:


 CITY OF NEW YORK including funds received from the Department of Cultural Affairs (DCA), and City agencies including the Department of Education, Department for the Aging, the Department of Community Development, and the borough presidents STATE OF NEW YORK consisting of support provided by the New York State Council on the Arts (NYSCA) and other New York State agencies including the Department of Education and the Natural Heritage Trust

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FEDERAL comprising the National Endowment for the Arts (NEA) and other agencies such as the National Endowment for the Humanities, Institute for Museum and Library Services, the National Science Foundation and the National Aeronautics and Space Administration.

WHO PAYS FOR THE ARTS?2010


Of the organizations that had review complete data for 2010 there were 723 organizations with data available for study. Within this dataset, seven organizations were excluded from analysis because they had only partial information (i.e., less than 12 months of information reported). An additional 10 organizations that dedicate a signicant part of their operations to cultural practices (such as the city parks, public libraries and universities), but for which it was not possible to segment non-arts-related activity or personnel were also excluded from this analysis. While such organizations should be viewed as being in the cultural orbit, they were omitted here in an effort to focus on organizations for which cultural activity is their primary mission. There is interesting data in the CDP about these omitted organizations, and an examination of them at some future point could be useful and compelling.

Arts Digest 2012


METHODOLOGIES

STATE OF THE ARTS


Two datasets were used: Fiscal Year Data from 1,325 organizations that reported data for their most recent scal year from 2008, 2009 and 2010 (however, in most cases FY2009 or FY2010); and Trend Data from 554 organizations that reported their data for each of the three years. All organizations represented in the Trend Data are also included in the Fiscal Year Data. For those organizations reporting returns for all three years whose income uctuations resulted in a changing income category, their nal category in FY2010 determined their category position for the entire three-year period in this analysis. The following were used to group organizations based on their self-selected type and primary activities: COMMUNITY ARTS & CULTUREproviding arts and cultural programs to a specic community, including geographic, ethnic, linguistic or religious EDUCATION AND INSTRUCTIONproviding music, visual and performing arts instruction, including schools and colleges MUSEUMS, GALLERIES AND VISUAL ARTScreating or displaying visual media MEDIA ARTSworking in print, sound or visual media, including nonprot radio and television, publishers, libraries, lm and video producers, and lm theaters HISTORYpreserving and presenting history, historical collections or artifacts, including history museums, historic sites, and archives SCIENCE AND NATUREincluding science museums, horticultural organizations, zoos, planetariums and parks. DANCEperforming all types of dance THEATERperforming play and other theatrical productions, including theater companies and related organizations MUSICperforming vocal or instrumental music, including opera companies, orchestras, bands and ensembles OTHER PERFORMING ARTSperforming or presenting multi-disciplinary work, including performance venues and festivals
1

Organizations are divided according to several factors to help better observe differences between groups of different sizes and missions. This analysis uses the following size categories (determined by an organizations total annual income): Less than $100,000 $100,000 to $500,000 $500,000 to $1,000,000 $1,000,000 to $5,000,000 Greater than $5,000,000 268 organizations 175 organizations 70 organizations 146 organizations 64 organizations1

DISCIPLINES
Although the CDP relies on the National Assembly of State Arts Agencies to dene its discipline categories, the categories outlined below compare to those previously used in the last Alliance for the Arts Who Pays for the Arts? report: VISUAL ARTS include art, history and science museums, historical societies, organizations dedicated to drawing, painting and sculpture, lm and video, architecture and design, and photography  PERFORMING ARTS are comprised of dance, theater, music and presenting organizations such as concert halls and performing arts centers   LIVING COLLECTIONS are limited to botanical gardens, zoos and aquariums; OTHER contains arts councils, multidisciplinary, service and arts education organizations. Average income for all organizations in 2010 was $3.4 million, while the median income was less than $250,000. This means that a few very large organizations (more than $100 million in annual income) strongly affect (or skew) the results of this analysis, affecting how trends and comparisons within and between categories are observed. While the analyses



COUNCILS, SERVICES AND SUPPORTproviding support services to the sector as a whole, to organizations in a specic discipline category, or to individual artists. These groups generally do not engage directly in the production or presentation of artistic work OTHERorganizations that do not t in any of the above category.

26

Note that for analysis actual categories comprise revenues up to but not including the maximum value in that category (e.g., $100,000$999,999.99, rather than $1 million).

attempt to compensate for this by creating categories for organizations of various sizes, some categories (such as organizations with more than $5 million in annual income) contain generalizations of widely divergent organizations that may not well summarize the breadth of their economic experiences. Unrealized net gains on assets were not counted in this analysis as revenues. While these

services, among many others. In addition, they pay their workers, who in turn spend a large part of their paycheck locally, thereby producing even more spending in the region. Finally, the spending initiated in this second round generates a third and then successive rounds as the impacted rms make purchases in the region. This spending process does not go on indenitely, because each round adds less to spending than the previous round, with spending additions eventually reaching zero. As determined by the multiplier, the sum of these rounds reaches a limit, which can be quite signicant compared with the rst round of spending, although it will rarely equal it. Industry multipliers are difcult to estimate, especially for a region. When used correctly, input-output (I-O) models are widely regarded as giving the best estimates of industry multipliers. A widely used I-O model, and the one used in this study, is RIMS II (Regional Input-Output Modeling System), developed by the U.S. Department of Commerce. Impacts are usually calculated on an annual basis.

Arts Digest 2012


METHODOLOGIES

do not have a cash impact on an organization, they are an important indicator of an organizations overall scal strength, particularly for the very largest organizations with substantial endowments or invested holdings. In 2010, total unrealized gains on net assets were $510 million, of which 77% ($393 million) was held by the 10 largest organizations. In many cases this analysis uses the average value of an income category. An average can provide a clearer measure than an aggregate value (common to Alliance reports, and which simply provides the aggregate value of all groups in a given category). For example, while the 268 organizations with less than $100,000 in annual income had aggregate total income of $12 million, the average total income per group was just $45,000. Using averaged values provides a more precise picture of how individual organizations in a given category compare to organizations in another category. Some Other Income categories were not included in this analysis (such as contributions from corporate afliates, in-kind support, and net assets released from restrictions). The total amount excluded from the analysis was less than $3 million of the total $2.5 billion.

FINANCIAL CONDITION OF NEW YORK CITY NONPROFIT ARTS AND CULTURE ORGANIZATIONS
The analysis by Fiscal Management Associates is based on a sample of New York City arts and culture organizations that reported data to the CDP, an online system that captures nancial, programmatic and operational data from arts and cultural organizations. Analysis referring to the most recent scal year is an aggregation of data from the most recent scal year reported by each organization in the sample. Analysis of trends from 2008 through 2010 is based only on data from those organizations that have data proles for each of the three years (a total of 550 organizations). The organizations in the sample represent the full breadth of New York City nonprot arts organizations, with expense budgets ranging from less than $1,000 to more than $400 million. The median annual expense budget of all organizations in the sample is approximately $650,000. A small number of clearly erroneous data proles were removed from the sample.

THE ECONOMICS OF THE NONPROFIT ARTS SECTOR IN NEW YORK CITYA LOOK AT THE ECONOMIC IMPACT
The data used in this impact analysis was derived from the blended CDP data set from 2008, 2009 and 2010 of 1,325 organizations. MAS attempted to model more closely the list of organizationsand types of organizationsused in economic impact analysis conducted by the Alliance for the Arts in 2006. As a result, organizations whose primary purpose was not arts and culture (e.g., higher education institutions) were excluded from the impact analysis. Thus, their large total expenditures, including salaries, were excluded from the direct and consequently indirect impact gures. We cannot make a 1:1 correlation between this study set and that used in 2006 due to the nature of data sets studied, the questions asked that generated the collection of data and the groups represented in each study. Because the data spanned three years, 2009 was used as the measure year. An important aspect of the economic impact analysis of a business or industry is the accurate estimation of its indirect impact on a regions output and jobs, sometimes referred to as the ripple effect. All business spending initiates a ripple effect, which can be captured by a multiplieressentially the number of times an initial round of spending is multiplied as it ripples through the economy. To produce a given output, a business will make local purchases (inputs) from utilities, wholesalers and providers of professional

APPENDIX
A total of 1,228 groups from the study sample of 1,325 for the State of the Arts analysis are plotted here. Groups with P.O. boxes or unplottable addresses in their proles are excluded.

27

Appendix

Bronx
State of the Arts Organizations by City Council District

Manhattan Queens

Brooklyn

Staten Island
Notes
Population Size: 1,228 Source: Alliance for the Arts, Cultural Data Project From most recent scal year reported to CDP, 2008-2010 See Methodologies for details

Acknowledgments
Arts Digest 2012
THE MUNICIPAL ART SOCIETY OF NEW YORK BOARD OFFICERS
Eugenie L. Birch, Chair Vin Cipolla, President Susan K. Freedman, Vice Chair James M. Clark, Jr., Treasurer Frances A. Resheske, Secretary Earl D. Weiner, Esq., General Counsel Arts Digest 2012 is an initiative of The Municipal Art Society of New York. This work grows out of a newly formed collaboration with the Alliance for the Arts, a pioneer in arts research. MAS would like to thank the following individuals and organizations; without their support and participation this report would not be possible. Editor Anne Coates, Vice President, Arts and Cultural Development The Municipal Art Society of New York State of the Arts Patricia C. Jones Who Pays for the Arts?2010 Michael J. Hickey Daniel Arnow Kimberly Rubin The Economics of the Nonprot Arts Sector in NYCA Look at the Economic Impact Anne Coates, The Municipal Art Society of New York Thomas J. Spitnzas Catherine Lanier Future of NYC Arts Research: a Postscript Lane Harwell, Dance/NYC Anne Coates, The Municipal Art Society of New York Financial Condition of New York City Nonprot Arts and Culture Organizations Fiscal Management Associates Hilda Polanco John Summers

CULTURAL DATA PROJECT


Arin Sullivan Neville Vakharia Christopher Caltagirone

CULTURAL DATA PROJECTNEW YORK TASK FORCE


Alliance of Resident Theatres / New York Arts & Cultural Council for Greater Rochester Asian American Arts Alliance Doris Duke Charitable Foundation The Field Harlem Arts Alliance New York City Department of Cultural Affairs The New York Community Trust New York State Council on the Arts The John R. Oishei Foundation Time Warner Inc.

MAS ARTS ADVISORY COMMITTEE


Alberta Arthurs Patricia Cruz Lane Harwell Mary Miss Special thanks to Rita Carrier, Lane Harwell, Catherine Lanier, and Earl Weiner.

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ALLIANCE FOR THE ARTS TRUSTEES: J.P. Versace, Chairman, Ashton Hawkins,
Chairman Emeritus, Laurie Beckelman, Stephanie French, Karen Gifford,

This report is a sponsored project of the New York Foundation for the Arts, with funding from the New York City of Cultural Affairs, Kate D. Levin, Commissioner.

Arts Digest 2012


ACKNOWLEDGMENTS

Paul Gunther, Martha Newton, Susan Ralston, Andrs Sznt, Larry Warsh, Joanne Stern, Life Trustee

The Trustees of the Alliance thank the following for their support of the Alliances research agenda: Bloomberg Philanthropies, Booth Ferris Foundation, Leona and Harry B. Helmsley Charitable Trust, and New York Community Trust, as well as public support from the New York State Council on the Arts and the New York City Department of Cultural Affairs.

The data used for this report was provided by the Cultural Data Project (CDP), a collaborative project of the Greater Philadelphia Cultural Alliance, The Greater Pittsburgh Arts Council, Pennsylvania Council on the Arts, The Pew Charitable Trusts, The William Penn Foundation and The Heinz Endowments, created to strengthen arts and culture by documenting and disseminating information on the arts and culture sector. Any interpretation of the data is the view of The Municipal Art Society of New York, the Alliance for the Arts, and Fiscal Management Associates and does not reect the views of the Cultural Data Project. For more information on the Cultural Data Project, visit www.culturaldata.org. MAS would like to thank Fiscal Management Associates for its in-kind support for this project.

The Municipal Art Society of New York 111 West 57th Street New York, NY 10019

2012, The Municipal Art Society of New York. All Rights Reserved

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DESIGN
on design, new york city, www.ond.com