The Arts Mean Business

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. 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 a cornerstone of tourism.

Arts & Economic Prosperity III, the largest study of its kind ever conducted, shows that, nationally, the nonprofit arts and culture industry generates $166.2 billion in economic activity annually, a 24% increase over 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 locally based, employing locally, purchasing locally, and generating local spending, these are jobs that necessarily remain local and are unlikely 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 features findings from 156 study regions (116 cities and counties, 35 multicounty regions, and 5 statewide studies). Data was collected from 6,080 nonprofit arts and culture organizations and 94,478 of their attendees across all 50 states and the District of Columbia. The study uses four economic measures to define economic impact: employment, resident household income, and revenue generated to state and local governments. The study focuses solely on nonprofit organizations and their audiences. It does not include individual artists for the for-profit and entertainment sector. As a result, it is extremely conservative in how it measures the economic impact of the arts.

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.

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.

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 non-local attendees spend more than their local counterparts do. This study reflects those findings. Nationally, 39% of the respondents were non-local — evidence that arts and culture is a magnet that will draw people to your community.

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 what most of those in the know already understood — that the arts mean business.

Randy Cohen is vice president of Policy and Research for Americans for the Arts.