Do Arts Make a Measurable Contribution to the Local Economy?

Local communities accrue financial as well as cultural benefits from healthy arts scene

In today’s struggling economy, one would expect funding for the arts to have taken a big hit and, in many cases, it has. However, a recent study gives arts advocates the ammunition they need to show local and state leaders that the visual and cultural arts provide an unparalleled opportunity to deliver real benefits to the local economy — and with an impressive return on investment.

The study, conducted by the national nonprofit Americans for the Arts, revealed that nonprofit arts and culture in Leon County generates $7.5 million a year in revenue, which supports about 2,700 full-time equivalent jobs. The report, “Arts & Economic Prosperity III,” also concluded that the nonprofit arts and culture organizations spend about $42.1 million a year and generate $32.4 million in additional spending by audiences who partake at local restaurants, hotels, retail stores, parking garages and, for local residents, may even pay a babysitter.

“The arts is an unusual industry in that it has a double opportunity to generate economic impact, not only with the product, such as a musical event, but it is a double whammy because it produces an audience, and that audience generates further economic impact,” said Peggy Brady, executive director of the Council on Culture and Arts for Tallahassee and Leon County (COCA).

Americans for the Arts, with offices in Washington, D.C., and New York City, celebrates its 50th anniversary this year. In conducting the economic impact study, the organization put a call out for participating regions to identify their complete universe of nonprofit arts and culture organizations. In Leon County, 70 of the 121 total eligible nonprofit arts and culture organizations responded to the detailed survey, which asked for information on budgets and spending.

Audiences were also surveyed, a unique aspect of the report that helps paint a clearer picture of the spending habits of attendees. In Leon County, 836 audience members from various nonprofit events were surveyed. The study is unusual in this way, Brady noted, because it captured data from the audience.

“We’ve always known the arts impact tourism, but it is very telling to see how much economic impact is generated from local citizens in the arts,” she said.

Non-local attendees of arts events help bolster cultural tourism, which harnesses even greater economic rewards. Non-local audiences spend twice as much as their local counterparts, the report concluded.

“The arts help the economy in a number of ways,” said Lee Daniel, executive director of Visit Tallahassee. “First, with my tourism hat on, the arts are a very important reason people travel and visit a destination. The cultural arts are a segment that has held up very well in this economy. Having a vibrant visual and performing arts product really helps me to encourage travel to Tallahassee.”

In Florida, the connection between tourism and jobs is compelling. Every 85 visitors into the state equals one job, according to Daniel. In addition, from 20–25 percent of all sales-tax dollars are related to tourism, he added.

“These are local businesses that create jobs,” Daniel said. “I think they also foster well-educated work forces, enhance our quality of life and, as part of that, they make Tallahassee a much more attractive place to relocate or visit.”

Brady further pointed out that this study only examined the nonprofit arts sector, noting that if the commercial arts sector had also been included the impact would have been even greater.

“We don’t usually hear the words ‘small business’ or ‘entrepreneur’ in relation to the arts, but that is what many are,” she said. “An artist is a small-business owner whose product is their own work. We overlook that sometimes. Private artists were not included in the study or commercial art, music or dance studios. They are all kinds of businesses related to the arts in a private, commercial way.”

The Leon County arts and cultural organizations that participated in the study ranged from the larger, better-known events and venues, such as the Tallahassee Film Festival, Seven Days of Opening Nights and the Mary Brogan Museum of Art and Science, to a variety of art galleries, museums, choirs, writers and poetry clubs, and even a belly-dancing group. The Council on Culture and Arts for Tallahassee and Leon County has created the “More Than You Thought” website (MoreThanYouThought.com), which lives up to its name with a multitude of listings of arts and cultural events in Tallahassee, categorized by month or event type.

“When a business is looking to relocate, they often are surprised at the breadth of arts we have here,” Brady said. “They will often comment on how we have a Bach parley. These things send a message about the community as well. The different types of arts-related activities are also important — the kinds of things for kids, for example, such as Young Actors Theatre and the Tallahassee Youth Orchestra. You evaluate the arts from many, many different perspectives.”

The study did not use a multiplier, which estimates the number of times a dollar changes hands within a community and makes “gross estimates of the industries within the local economy,” Americans for the Arts pointed out. For example, the report states that if the arts are a $10 million industry and a multiplier of three is used, then it is estimated that the total economic impact is $30 million. The problem with this assumption is its reliability.

“It was a pure economic survey,” Brady said. “We got a 65-percent respondent rate, which is very good, but there is still another 40 percent that did not respond. The report is not telling the whole story.”

The arms-length review adds validity to the findings.

“It has opened a lot of eyes,” Brady said. “COCA did not do this study ourselves. It was analyzed by engineers at Georgia Tech, not us. The report had an excellent random sample and didn’t use a multiplier, which makes it more impressive.”

Despite the statistical good news, there is no denying that the struggling economy has taken a toll on the area’s arts community. Daniel said it has affected every nonprofit arts organization he knows.

“A number of nonprofits are undergoing difficult times right now,” he said. “I know it has been extremely challenging for an awful lot of visual and performing arts organizations. Hopefully, we are starting to see an uptick and will see the market start more in earnest in 2011. I’m optimistic. I think the worst is behind us, but it will be a slow recovery.”

Brady said that much is driven by the public’s perception of the state of the economy — not necessarily reality.

“The arts and culture in this area are booming while they are suffering at the same time,” she said. “Some audiences have increased and, in some cases, they’ve decreased. From a giving perspective, the arts have been significantly affected. The bad market has trickled down, and many of the philanthropists who donate large amounts have seen their sources hit by the market. And their sources have significantly dried up, so they are able to do less.”

For leaders of art-related nonprofits, efforts to secure funding can mean make-or-break for their organization’s future.

“The government does not provide the largest amounts of money to the arts, but their funding is leverage for other funding,” Brady said. “There are many who misunderstand how the money is allocated. The arts entities compete in a very competitive application process for local funding, and those applications are reviewed by a citizen panel. It is not just handed out.

“We’ve seen disastrous effects from the state that are legislatively driven,” she added. “Clearly everyone has to make these incredible cuts and the priorities have to be set, and it is a very difficult thing. We have to educate leaders that the arts aren’t a frill. Our local governments, city and county, have seen that the return on their investment is gigantic. I’m not sure there is any other industry that can say that.”

Many people, Brady said, consider arts as the icing on the cake, overlooking them as a source of economic stability for local economies. She pointed to the Depression years, when “people turned to music and other forms of art as a way to get together in a social setting. The arts bring people together which, in turn, creates an economic impact.”

In his overall assessment of the findings, Robert L. Lynch, the president and CEO of Americans for the Arts, may have said it best: “Understanding and acknowledging the incredible economic impact of the nonprofit arts and culture, we must always remember their fundamental value. They foster beauty, creativity, originality and vitality. The arts inspire us, soothe us, provoke us, involve us and connect us. But they also create jobs and contribute to the economy.”