Author: National Research Center of the Arts

Publication Year: 1977

Media Type: Report

Summary:

The present report [prepared for the New York Foundation for the Arts] is a second look at the same industry, five years later; again it is a first in the sense that it provides a set of comparisons of arts activities in a given part of the over a period of time. It is the first occasion on which we have possessed hard data on the changes which have been taking place in a uniquely variable and energetic area of national life during a crucial episode, from 1970-71 when the initial study was conducted, to 1975-76, the period covered by its successor.

Abstract:

In March 1972 the National Research Center of the Arts published A Study of the Non-Profit Arts and Cultural Industry of New York State, the first attempt to provide a comprehensive picture of the arts activity of an entire state perceived as an industry. In it, to quote Joseph Farrell's introduction to that report, arts and cultural organizations were viewed from the perspective of employers of capital and labor, purchasers of goods and services, and producers of a valuable service product benefiting many levels of society.

The present report [prepared for the New York Foundation for the Arts] is a second look at the same industry, five years later; again it is a first in the sense that it provides a set of comparisons of arts activities in a given part of the over a period of time. It is the first occasion on which we have possessed hard data on the changes which have been taking place in a uniquely variable and energetic area of national life during a crucial episode, from 1970-71 when the initial study was conducted, to 1975-76, the period covered by its successor. It is, again, an attempt to increase awareness of the arts as an integral part of society, by focusing attention on the services which they provide in such generous measure, and the needs which they experience in an economy organized around productivity and profit.

Between 1970-71 and 1975-76 the non-profit arts and cultural organizations of New York State experienced phenomenal growth. As measured by their total expenditures, they increased by more than 80% in size. By 1975-76, this had become a $320 million industry, whereas in 1970-71 it had been a $177 million industry. The apparent improvement, however, was based on sacrifices being made in an effort not only to maintain, but in many cases to increase, services provided to the public. Arts and cultural organizations were being internally subsidized by their own employees, who were working for comparatively low salaries and foregoing fringe benefits which would be considered normal in the profit sector.

The increase in services had taken place at the expense of the organizations themselves. More than three out of five performing arts organizations had increased their number of productions and performances between 1972-73 and 1975-76, and three out of four museums had experienced an increase in their total attendance. Yet almost half (48%) of the total arts and cultural organizations in the state reported a deficit at the end of 1975-76, and an overwhelming 97% reported a serious shortage of funds, with the result that expenditures for salaries had failed to keep pace with national averages and increased use was being made of volunteers to make up for staff shortages.

On the surface, income had increased even more than expenditures, by 86%, from $169 million in 1970-71 to $312 million in 1975-76. Thus the net operating income gap for the industry as a whole was narrowed, from $8.4 million to $8.1 million - a misleading measure, of course, since organizations which run a surplus do not transfer funds to those which incur a loss. There had also been a decline in the number of organizations individually having a net income gap, from 53% of the total number in 1970-71 to 48% in 1975-76. Fewer organizations had deficits, and deficits were less a factor than they had previously been in proportion to total expenditures. However, the total net income gap of those organizations which did have deficits rose moderately, from $13.1 million to $15 million.

Growth itself was not the cause of the deficits, since the increase in expenditures was accompanied by an even greater proportionate increase in income, especially earned income. But the existence of year-end income gaps in almost half the organizations was a signal that the basic economic disadvantage at which the arts operate was still rather extreme. The handicaps inherent in operating non-profit institutions in a profit-making society had not been removed.

Moreover, the bottom-line deficit itself is not an accurate measure of the effects which financial tightening can have. A majority of the organizations had to make internal cutbacks. Asked the extent to which a shortage of funds had affected their activities, 95% indicated that it had affected them materially. As we have indicated, 97% reported that their shortage of funds was serious, with 72% describing it as very serious. Virtually no arts and cultural organization in New York State was immune to the rigors of economic pressure.

A closer examination of the forms which growth had taken should be especially revealing for the period between 1970-71 and l975-76, when government funding for arts and cultural organizations generally was on the increase and the State of New York, in particular, took on a basic responsibility for operational support. Government support of all kinds for New York State organizations, which accounted for 18% of their total income in 1970-71, accounted for 26% of their total income in 1975-76 - an increment of 165% for government funding of all kinds, from $30.1 million to $82 million, and an impressive 233% rise in support from the New York State Council on the Arts, from $8 million to $29 million.

The effect of increased government support was not, as might have been feared, to act as a dampener on private initiative, but quite the opposite, as shown by increased non-government income, especially that income earned by increased services to the public. It is more than likely that without increased government support, especially that of the New York State Council on the Arts, non-government income would have declined, since some organizations would have suspended or sharply curtailed their operations.

Specifically, there is much to be learned from the strong growth in earned income. While private support from all sources increased by 70%, from $135 million to $230 million, and while contributed income increased by 36%, from $45 million to $61 million, earned income increased by a dramatically larger 86% from $91 million to $169 million. Where earned income had formerly covered 51% of total expenses, by 1975-76 it covered 53% of expenses. The striking fact of an increase in the prominence of earned income is a healthy aspect of growth.

In the course of increasing its overall capacity, the arts and cultural industry had also strengthened its economic base. But it is also the most effective sign that the entry of increased government funding had not had an inhibiting effect on private initiative. The government dollar continued to stimulate substantially more than twice and almost three times its number from private sources. An assumption of responsibility by government had not stifled enterprise, but instead had reinforced and encouraged it.

CONTENTS
Introduction.

1. Description.
2. Income and expenditure.
3. Management and manpower.
4. Facilities and programs.
5. Shortage of funds.

Appendix:
     A. Methodology.
     B. Map of New York State arts regions.

Arts & Intersections:

Categories: Economic Impact