Assessing economic value:

Economic impacts generated by the independent museum sector

and wider considerations about theeconomic case for culture

Dr Stephen Connolly Jonathan Durnin

Structure of Seminar

Background – Our Experience/Perspective

Setting the Scene – The Wider Context

Issues around Economic Impact/Economic Value of Culture

Economic Value of Independent Museums

Approach and Method

The survey, sub groups and case studies

Results

Toolkit

Summary and General Considerations

Background – Our Experience/Perspective

DC Research – economists that have assessed the contribution of various aspects of ‘culture’ to other agendas, especially the economic/regeneration contribution

Carried out a range of studies – using economic approaches to assess culture’s impact:

Economic Impact Studies – AIM, LTM, Hawick, Leicester

(Cultural) Impact Frameworks – Knowsley, Living Places

Evaluations – Living Places, LTDP, Empty Shops, Liverpool Thrive!

Policy Research / Evidence Reviews – Culture/LAA links, Local Government Evidence Toolkit, MLA tourism scoping, SAC Lottery Legacy

Setting the Scene – Context

Common thread of culture’s value being assessed in terms of its contribution to other agendas (incl. economic)

Range of factors seem to have influenced this – further reinforced more recently with current economic/public funding climate

A desire to express impact in a way that is convincing to both the cultural sector(s) and stakeholders/funders

Issues for consideration:

Defining the cultural sector (and its sub groups)

Defining what is meant by economic impact/value

Acceptable approaches to assessing economic impact/value

Considering the Issues

(i) Defining the sector

Can be difficult for ‘cultural’ sector impact studies

Relatively straightforward for the AIM research study

(ii) Defining economic impact & (iii) Approaches and methods for assessing economic value/economic impact

Desire to express impact in a way that is convincing to sector and stakeholders/funders - results used for advocacy

Need to satisfy/convince the ‘audience’ and conform to audience expectations about robustness of evidence /method

Range of methods considered – much debate about methods and approaches across the sector (multipliers, input-output, ROI, SROI, contingent valuation (WTP/WTA), GLO/GSO etc.)

Importance of assessing economic value of culture/museums

Increasing need to clearly articulate and demonstrate the contribution of cultural/museums sectors, in a tourism/economic context

Needs to be articulated in such a way that key audiences outside the sector appreciate and are convinced by evidence and related advocacy

Evidence that cultural/museums sectors recognise the importance of tourism and the visitor economy in making the case to support their impact

Heritage/tourism/culture evidence

Eight of the top ten visitor attractions in 2008 were museums and galleries

Major study commissioned by Heritage Lottery Fund: Heritage is a major motivation behind the tourism expenditure

of both overseas and domestic visitors Heritage tourism sector supports an estimated 195,000 full-

time equivalent (FTE) jobs, and is a £12.4bn per year industry (including spending that can be reasonably said is ‘motivated’ by the desire to visit heritage attractions)

£7.3billion based on visits to built heritage attractions and museums, with 60% derived from UK residents on day trips and UK holidays

Purpose of the research

Research objectives: Understand how and to what degree independent museums

contribute value to local, regional and national economies Produce benchmarks to gauge the economic value generated

by different categories of independent museums and draw conclusions from them

To produce data that can provide the basis for further research work

Need for the research to convince both museums within the independent sector and a range of key external stakeholders

Independent sector defined as AIM Membership Museums

Overview of approach

Review of existing research and evidence, and consultations with sample of ‘audience’ stakeholders

Membership survey distributed to AIM membership (over 100 responses, 95 ‘usable’ replies)

Development of AIM ‘sub groups’ for analysis, and selection of case studies

Development of bespoke model to assess impact of responding museums, and application of the model to rest of AIM membership

Development of a economic value ‘toolkit’ for museums to use themselves

The member survey

Collecting key information held by museums:

Information about number of visitors (per annum) to museums, as well as type of visitor (‘type of visitor’ being a critical element in terms of assessing economic value)

Summary information about the employment (including volunteers) and purchasing patterns of the museum

Summary information about the facilities available at the museum (cafe, restaurant, meeting room, etc)

Information about the locality in which the museum is located

Survey evidence used as basis to create model to estimating the value of the whole sector

Findings from responding museums

Turnover of £105 million

Over 8 million visitors

2,164 people employed (equating to 1,646 full time equivalent jobs)

Volunteer numbers totalling 4,724, with 15% of these volunteers volunteering for two or more days per week on average, and 3.5% volunteering for four days a week or more

‘In kind’ contributions of goods and services of £621,000, and ‘in kind’ capital works (such as building work, repairs, development, refurbishment) of £11.5m

Sub groups and case studies

Sub groups developed to categorise the AIM membership based on:

Visitor numbers

The significance of the museum to the local visitor economy

Whether the museum has paid employees

Case studies provided coverage of these sub groups, balancing AIM representativeness, and size of impact

Findings from case studies supported and underpinned approach to developing the economic value model

Also provided vital perspectives on the challenges and opportunities currently facing independent museums

Developing the model Approach rooted in HM Treasury ‘Green Book’

methodology, using mix of relevant technical guidance, and assumptions for key economic factors

Estimates additional economic impacts in terms of jobs and value: Direct, indirect and induced employment effects

Supply chain linkages (“indirect”) and income multiplier (“induced”) effects on local incomes and employment

In addition, gross visitor impacts are estimated based upon actual visitor numbers and regional tourism spending data

Developing the model Approach driven by survey responses, and creation of ‘sub

groups’ to categorise AIM membership Assumptions based on guidance, survey data and on

judgement based on case study discussions with museums representing sub groups

First stage analysis of the economic value of those museums who responded to the survey: Estimating the direct, indirect and induced employment and

spending effects of responding museums on a case by case basis

Gross day and overnight visitor impacts of responding museums on a case by case basis, using (where possible) regional average spend data

Employment value of responding museums

1,646 full time equivalent staff, with most living near to their museum

These jobs support additional employment through indirect and induced effects Using the model, these jobs are estimated to create 728

indirect and induced jobs in localities

Total of 2,374 estimated direct, indirect and induced jobs

Equivalent value of £15.2 million

Spend value of responding museums

£59.3 million spent by responding museums on good and services

Spending creates additional impacts through indirect and induced effects Using the model, spending by responding museums on

goods and services creates additional indirect and induced additional spend of £11.7 million

Total of £71 million as a result of responding museum spending on goods and services

Visitor impacts of responding museums: Issues

Approach uses similar assumptions to those used in other key studies, but use ‘control’ for local visitors, and for adult child visitor split

Adjustment/judgement needed to account for local visitors in immediate vicinity of a museum in absence of local level tourism data

Adjustment/judgement also needed to account for adult/child split. Assumption that spend is mainly linked to adult visitors

This approach avoids overestimation of visitor impacts

Visitor impacts of responding museums: Issues

Approach uses similar assumptions to those used in other key studies, but use ‘control’ for local visitors, and for adult child visitor split

Adjustment/judgement needed to account for local visitors in immediate vicinity of a museum in absence of local level tourism data

Adjustment/judgement also needed to account for adult/child split. Assumption that spend is mainly linked to adult visitors

This approach avoids overestimation of visitor impacts

Workshops led to adoption of half (50%) of a day visit for local visitors, and a two third/one third adult/child split

Visitor impacts of responding museums

Assumption that two third of visitors are adults, and that local visits have the value of 50% of a day trip 1,110,245 local visitors

2,554,038 day visitors

1,701,980 overnight visitors

This leads to gross visitor impacts of £24.8 million for local visitors, £112.7 million for day visits, and £119.9 million for staying visitors

Total gross visitor impacts of £257 million

Extending analysis to the sector

Extending the analysis to impact on local economies to estimate aggregate value of independent sector as a whole

Factors taken into account:

Range of size of member museums, and survey bias towards medium to large museums

Assumptions adjusted to take account of averages, median and range for employment, spend and visitor numbers

Median and mean values produced to show likely minimum and potential range of impact

Extending analysis to the sector

Comparison of AIM Membership and Survey

Size (visitors) Survey Membership Data

Small (0 to 9,999) 41 51.3% 532 77.6%

Medium (10,000 to 49,000) 24 30.0% 88 12.8%

Large (over 50,000) 15 18.8% 66 9.6%

TOTAL 81 100% 686 100.0%

Source: AIM Membership Data and DC Research Survey, 2010 Note: A further 14 museums completed the survey but did not provide data that could be used to calculate value

Economic value of the independent museum sector

Independent museums sector is likely to account for at least 5,800 direct, indirect and induced jobs in the UK economy (although impact might be as high as 10,500 jobs)

Independent museums sector is likely to account for at least £124 million in direct, indirect and induced impacts from spending on goods and services (although impact might be as high as £349 million)

Economic value of the independent museum sector

Independent museums sector could account for around £363 million in gross visitor impact, taking into account local visitors and a reasonable adult/child split

This is based on a sector wide estimate of visitor numbers of between 9 million and 9.5 million

The AIM Toolkit

Three levels to support a variety of museum types: Tourism Impacts: This stage is for all museums who want to

express the impact of visits to their museum in terms of economic value

Employment Impacts: This stage is for those museums who want to express the impact of their employees (if they have them) in terms of economic value to their local and regional economies

Impacts of Spend on Goods and Services: This stage is for those museums who want to express the impact of their spending on goods and services in terms of economic value to their local and regional economies

Summary and General Considerations

Economic impact of independent museum sector Adopted standard HMT approach to assessing economic impact

Added value of primary research (survey of AIM museums) provided bespoke evidence to inform assumptions and values/ratios used in model

Deliberately cautious approach (‘as a minimum...’)

Some assumptions necessary for model (representativeness of survey respondents, representativeness of AIM for sector)

Advocacy Aided by development of Toolkit

Study well received by sector and ‘audience’ – oft quoted/used

Summary and General Considerations

Importance of evidencing economic impact of culture – especially in current climate: Public spending cuts – national (e.g. MLA, ACE)

Public spending cuts – local (e.g. Somerset)

Ongoing considerations/challenges about the issues Method/approach challenges – potential ‘conflict’ between what

economic/regeneration funders expect/accept and what best captures cultural sector impacts (...happiness may help!)

Costs/resources needed for alternative methods can vary

Better linkages between information collected by sector and information required for robust, well evidenced impact studies

Assessing economic value:

Economic impacts generated by the independent museum sector

and wider considerations about theeconomic case for culture

http://www.aim-museums.co.uk/pages/pg-18-aim-economic-impact-paper/