The arts are widely known as a contributor to our quality of life and a source of community pride; however, the economic impact of the arts and entertainment industry is lesser-known, but critically important. The nonprofit arts sector is vastly different than nearly every other nonprofit industry because the arts require audiences and audiences spend MONEY! They dine in our restaurants, shop in our stores, and generate jobs in neighboring businesses.
But how do we measure that impact and help our communities understand that an investment in the arts is an investment in our economy? Back in 1995, Americans for the Arts, our national arts advocacy organization, started using its national network of partners to survey the nonprofit arts sector for this very reason. Fast forward to 2016, when we embarked on the Arts & Economic Prosperity Survey 5, which examined the financial impact of the nonprofit arts sector during the 2015 calendar year. AEP5 was the most comprehensive study of the nonprofit arts industry to date and documented the economic contributions of the arts in 341 diverse communities and regions across the country, representing all 50 states and the District of Columbia.
Before you dig in to the data, here’s some answers to some important frequently asked questions.
What is included in the arts and cultural industry?
Here’s just some of the professions that fall within the arts and cultural industry. Keep in mind that some of these professions fall within several industries but are creative in nature or require an education in art or design.
Advertising and promotions managers
Agents and business managers of artists, performers, and athletes
Anthropologists and archeologists
Architects (except landscape and naval)
Audio and video equipment technicians
Camera operators, television, video, and motion picture
Commercial and industrial designers
Entertainment attendants and related workers
Film and video editors
Fine artists, including painters, sculptors, and illustrators
Jewelers and precious stone and metal workers
Librarians, Library assistants, Library technicians
Media and communication workers
Merchandise displayers and window trimmers
Multimedia artists and animators
Museum technicians and conservators
Music directors and composers
Musical instrument repairers and tuners
Musicians and singers
Producers and directors
Public relations and fundraising managers
Public relations specialists
Radio and television announcers
Set and exhibit designers
Sound engineering technicians
Ushers, lobby attendants, and ticket takers
Writers and authors
Can I trust this data?
The study is led by Americans for the Arts but endorsed by respected national partners representing the public and private sectors. They are partners because, (1) they too believe the arts are a fundamental component of a healthy community, and (2) they approve of the methodology and findings. These partners include:
- Chief Executives for Corporate Purpose
- Committee Encouraging Corporate Philanthropy
- The Conference Board
- Council on Foundations
- Destinations International
- Grantmakers in the Arts
- Independent Sector
- International City/County Management Association
- National Alliance of Community Economic Development Associations
- National Association of Counties
- National Conference of State Legislatures
- National League of Cities
- National Lieutenant Governors Association
- U.S. Conference of Mayors
How is the data gathered?
The data gathered during AEP5 comes from two sources:
- Surveys filled out by local nonprofit arts and cultural organizations. These surveys gauge organizational spending in a calendar year on items such as payroll, taxes, utilities, rent, insurance – basically, all the costs to keep the doors open and programming happening.
- Surveys filled out by arts audience members. For one year, we canvas concerts, festivals, art openings, and arts events of all types to ask attendees to fill out a survey. This survey asks how much they spent that specific evening on dining out, gas, lodging, childcare, souvenirs, etc. Essentially, all the “extras” you spend when participating in the arts – other than the actual cost of the ticket, because that is already counted in the organizational survey, above.
These two sets of data help us determine how much the nonprofit arts sector spends in our local economy annually ($93.6M) and how much additional spending they generate through their audiences ($36.7M).
How is the data processed?
A team of economists at Georgia Tech process the data using Input/Output Analysis:
“To derive the most reliable economic impact data, input-output analysis was used to measure the impact of expenditures by nonprofit arts and cultural organizations and their audiences. This highly-regarded type of economic analysis has been the basis for two Nobel Prizes in economics. The models are systems of mathematical equations that combine statistical methods and economic theory in an area of study called econometrics. The analysis traces how many times a dollar is respent within the local economy before it leaves the community, and it quantifies the economic impact of each of those rounds of spending. Project economists customized an input-output model for each of the 341 participating study regions based on the local dollar flow among 533 finely detailed industries within its economy. This was accomplished by using detailed data on employment, incomes, and government revenues provided by the U.S. Department of Commerce (County Business Patterns, the Regional Economic Information System, and the Survey of State and Local Finance), state and local tax data (e.g., sales taxes, lodging tax, property taxes, income tax, and miscellaneous local option taxes), and the survey data collected from the responding arts and cultural organizations and their audiences.”
Why do we study only the nonprofit arts sector?
There are three key reasons that the Arts & Economic Prosperity Study focuses solely on the nonprofit arts and culture sector:
- The findings dispel the myth that the nonprofit arts and culture sector is an economic “black hole” and provide proof that when people, corporations, foundations, and governments support the nonprofit arts, they are also supporting economic and community development.
- Because nonprofit arts associations are often the recipient of public funding, the availability of valid and accurate economic impact data about the sector is critical.
- The information necessary to complete an economic impact study is more easily obtained from the nonprofit sector than from the for-profit sector since nonprofit sector data is treated as public information and available through IRS Form 990 filings.
What is included in Local and State Government Revenue?
This includes local and state taxes (e.g., income, sales, admissions, lodging, real estate, personal property, and other local option taxes) as well as funds from license fees, utility fees, filing fees, and other similar sources. Local government revenue includes funds to governmental units such as city, county, township, and school districts, and other special districts.
How are the employment numbers calculated?
The AEP5 study looks at jobs generated by the arts sector. Using the Input/Output Analysis above, the study looks not just at arts professions, but other jobs that are impacted by the arts. For example, if you go to a concert at UNC’s Memorial Hall, there’s many arts-specific workers employed that evening such as performers, sound and lighting crew, production staff, and staff members of the facility or presenting organization. But before you went to the show, you probably went out to dinner, hired a babysitter, put gas in your car, and maybe bought a souvenir at a shop on Franklin Street. AEP5 looks at the complete circle of workers the average arts attendee makes contact with while attending an arts event. Based on this model, the AEP5 study states there are 5,001 full-time equivalent jobs supported by the arts industry in Orange County.
While we support this method, we also like to know the actual number of creative workers in our community. To gather this data, we look at the Standard Occupation Classification (SOC), a federal statistical standard used by federal agencies to classify workers into occupational categories for the purpose of collecting, calculating, or disseminating data.
There is a SOC code for every occupation in the country and these codes are broken into broad, major, and minor groups. There are many occupations whose codes fall into several categories. For example, a graphic designer for a bank is going to fall within both the banking and creative professions. Using SOC data allows us to look at the number of creative workers (including nonprofit and for-profit) in our community compared to other industries. SOC codes tell us we had 4,499 creative workers in Orange County in 2016.
How does UNC-Chapel Hill impact our local data?
UNC-Chapel Hill is a major contributor to the arts industry of Orange County. All arts-specific UNC entities, as well as entities that provide arts-related programming, were invited to participate in the AEP5 survey. The UNC-affiliated groups that participated included the following:
- Ackland Art Museum
- Carolina Performing Arts
- The Carolina Quarterly
- The Forest Theater
- Morehead Planetarium and Science Center
- North Carolina Botanical Garden
- North Carolina Collection Gallery at Wilson Library
- The North Caroliniana Society at Wilson Library
- Playmakers Repertory Company
- UNC Art Department
- UNC Arts & Sciences Foundation
- UNC Carolina Women’s Center
- UNC Clef Hangers
- UNC Press
About 77% of our nonprofit arts spending happens through UNC, or $71.9M of the total $93.6M spent in our local economy each year. As for attendance, UNC represents about 47% of Orange County’s annual 1.9M arts patrons. This is still a major chunk, but it also represents the ability of our smaller, non-UNC arts organizations to draw big audiences to our community each year.
Why is our local arts attendee average spending amount ($18.29 per person) so much lower than the national average ($31.47 per person)?
Our very unscientific theory for this is related to where Orange County is located. We are fortunate to live in the Triangle region and can participate in the arts experiences our own community offers, plus Durham, Raleigh, and all the communities in between. Most Triangle arts patrons are also Triangle residents; meaning, even though we have 1.9M arts patrons in Orange County each year, they don’t need to purchase overnight lodging. This is typically a pricey expense, and is the most logical explanation for our lower per person spending amount.
Check out our slideshow below with the local results of the Arts & Economic Prosperity Survey 5!EconImpactofArts-Kmurray2020