June 2007

Randy Cohen (left) and Gary Steuer are, respectively, vice president of policy and research and vice president of private-sector affairs at Americans for the Arts, which draws on more than 5,000 organizational and individual members and stakeholders as it creates opportunities for every American to participate in and appreciate all forms of the arts. In this article they highlight findings from their new study about the economic benefits of arts organizations.

The Economic Impact of the Arts

Every day, the nearly 100,000 nonprofit arts and culture organizations that populate the nation’s cities and towns are making their communities more desirable places to live and work. They provide inspiration and enjoyment to residents, beautify shared public places, and strengthen the social fabric. Richard Florida’s The Rise of the Creative Class, followed by The Flight of the Creative Class, have focused attention on the role a thriving arts community can play in attracting creative workers who in turn fuel the local economy – not just the nonprofit arts, and not just creative industries like advertising and Web design, but ALL industries that now need the kind of workers who seek stimulating, creative places to live and work. New research by Americans for the Arts provides further evidence that the nonprofit arts and culture industry is an economic driver in those communities —a growth industry that supports jobs, generates government revenue, and is the cornerstone of tourism.

Arts & Economic Prosperity III shows that, nationally, the nonprofit arts and culture industry generates $166.2 billion in economic activity annually—a 24 percent increase in just the past five years. The economic benefits of this spending are significant. It supports 5.7 million full-time U.S. jobs—an increase of 850,000 jobs since the 2002 study. Furthermore, because arts and culture organizations are generally locally based, employing locally, purchasing locally and generating local spending, these are jobs that necessarily remain local and are much less likely to be outsourced.

The industry also generates nearly $30 billion in revenue to local, state, and federal governments every year. By comparison, the three levels of government collectively spend less than $4 billion annually to support arts and culture—a remarkable 7:1 return on investment.

Arts & Economic Prosperity III is the largest study of its kind ever conducted, featuring findings from 156 study regions (116 cities and counties, 35 multicounty regions, and 5 statewide studies). Data were collected from 6,080 nonprofit arts and culture organizations and 94,478 of their attendees across all 50 states and the District of Columbia. Project economists customized input-output analysis models for each study region to provide specific and reliable economic impact data. This study uses four economic measures to define economic impact: employment, resident household income, and revenue generated to state and local governments. It is important note that Arts & Economic Prosperity III does not even include the role the arts may play in attracting workers and industries to a community, or motivating those workers and businesses to remain in a community rather than relocate. As a result it is extremely conservative in how it measures the economic impact of the arts.

Arts & Culture Organizations
Nonprofit arts and culture organizations are active contributors to their business community. They are employers, producers, consumers, and members of the chamber of commerce as well as key partners in the marketing and promotion of their cities and regions. In 2005, their estimated total spending was $63.1 billion. This output supports 2.6 million U.S. jobs, provides $57.3 billion in household income, and generates $13.2 billion in total government revenue.

Audience Spending
Arts and culture, unlike most industries, leverages a significant amount of event-related spending by its audiences. For example, when patrons attend an arts event, they may pay to park their car in a garage, purchase dinner at a restaurant, eat dessert after the show, and return home to pay the babysitter. This generates related commerce for local businesses such as restaurants, parking garages, hotels, and retail stores. Total event-related spending by nonprofit arts and culture audiences was $103.1 billion in 2005. This spending supports 3.1 million full-time jobs in the U.S., provides $46.9 billion in household income, and generates $16.4 billion in government revenue.

Nationally, the typical attendee spends an average of $27.79 per person, per event, in addition to the cost of admission. Businesses that cater to cultural audiences reap the rewards of this economic activity.

Visitors Spend More
In addition to spending data, researchers asked each of the 94,478 survey respondents to provide their home zip codes. This enabled an analysis of event-related spending by local and nonlocal attendees. Previous economic and tourism research has shown that nonlocal attendees spend more than their local counterparts do. This study reflects those findings.

Local audiences, who live in the county in which the event occurred, spent an average of $19.53 per person per event in addition to the cost of admission. Nonlocal attendees, those who live outside the county, spent twice that amount, or $40.19 per person.

As would be expected, nonlocal attendees spent significantly more in the categories of lodging, meals, and transportation. These findings demonstrate that when a community attracts cultural tourists, it harnesses significant economic rewards. Clearly some cultural tourists, traveling from far away – even abroad – specifically to partake of cultural offerings, spend FAR more than this average.

Arts & Economic Prosperity III is great news for those whose daily task is to strengthen the economy and enrich quality of life. It lays to rest a common misconception: that communities support arts and culture at the expense of local economic development. In fact, they are investing in an industry that supports jobs, generates government revenue, and is a cornerstone of tourism, and our local and national economies. This report shows conclusively that, locally as well as nationally, the arts mean business.

To learn more about this study, see a complete list of the 156 participating study regions, and access free resources you can use to help make the economic case for arts funding and arts-friendly policies in your community, visit www.AmericansForTheArts.org/EconomicImpact.

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