TABLE OF CONTENTS

INTRODUCTION

STATE OF THE ARTSPatricia C. Jones, Alliance for the Arts

WHO PAYS FOR THE ARTS?—2010Michael Hickey, The Municipal Art Society of New York

THE ECONOMICS OF THE NONPROFIT ARTS SECTOR IN NYC—A LOOK AT THE ECONOMIC IMPACTAnne Coates, The Municipal Art Society of New York

FINANCIAL CONDITION OF NEW YORK CITY NONPROFIT ARTS AND CULTURE ORGANIZATIONSHilda Polanco and John Summers, Fiscal Management Associates

FUTURE OF NYC ARTS RESEARCH: A POSTSCRIPTLane Harwell, Dance/NYC

Anne Coates, The Municipal Art Society of New York

METHODOLOGIES

APPENDIX

ACKNOWLEDGMENTS

2

4

12

19

20

24

25

28

29

ARTSDIGEST2012

Arts Digest 2012

2

When we look at the conversation about resilience and livability across the

globe, the highest-ranking cities boast a rich, vibrant and diverse cultural

life. New York City is no exception. Arts and culture have been central to The

Municipal Art Society of New York’s (MAS) mission since its founding in 1893

by architects, painters, sculptors and civic leaders to create murals and

monuments for New York’s public spaces. This thread of cultural activity has

been carried through the Adopt-a-Mural and Adopt-a-Monument programs,

our tours, our collaboration in Place Matters with City Lore, advocating for

good design over the years, and perhaps most recently through Tribute in

Light, a spectacular public art project done with Creative Time.

In 2011 MAS forged a new collaboration with the Alliance for the Arts that

would continue the strong legacy of research, advocacy and convenings

stewarded by that organization. From 1977 the Alliance was our city’s

leading researcher of arts and cultural activity.

As MAS is no stranger to the arts, neither is it a stranger to research. With

deep roots in evidence-based work to support its advocacy, in 2010 MAS

embarked on a new longitudinal measurement: the MAS Livability Survey.

In 2011, the Survey identified that New Yorkers in many parts of the city—

especially outside Manhattan—are not satisfied or do not connect with

their local arts and culture offerings. With our deepened arts advocacy

and research capacity, it is now possible for MAS to further examine this

challenge to livability in New York. And, in assuming this agenda at a time

when tools for data collection and analyses are shifting and strategic

policymaking and fund development are critical, MAS has the opportunity to

be of great service to the cultural field and our city.

MAS is pleased to publish this collection of research, which taken together

tell a story about the nonprofit arts community during the challenging

Introduction

1

1 The CDP enables arts organizations to enter financial, programmatic and operational data into a standardized online format. A number of funders in New York, among them New York City’s Department of Cultural Affairs and the New York State Council on the Arts, now require their applicants to complete CDP profiles as part of their funding applications. Organizations can then use the CDP to produce a variety of reports designed to help increase management capacity, identify strengths and challenges and inform decision making. The CDP licenses data for research purposes; MAS and the Alliance both obtained licenses to do the research contained in this publication.

economic downturn, which began in 2008 and cut deeply into the arts

community. They also tell a story that illustrates that despite challenges,

we now see signs of recovery and hopefulness.

There are many indicators of resilience and sustainability discussed

here—among them financial health, attendance, number of programs and

workforce. Overall, what we see is that despite the recent long economic

downturn, the nonprofit arts community is scrappy and nimble. Art making

and audience building have continued at the highest levels of creativity and

excellence, and New York City’s cultural community has been doing a terrific

high-wire act in keeping their doors open during these difficult past few years.

Each of the four articles in this collection reports on analysis that uses as its

sole data source the Cultural Data Project (CDP). The CDP is a longitudinal and

granular data set maintained by the Pew Charitable Trusts and is emerging

as the national standard for data collection in the arts and cultural sector.1

The analyses presented in this collection are varied, demonstrating not only

the depth of information available but also the different ways of interpreting

the data to weave a narrative of the resilience of the nonprofit arts sector.

This collection looks at the economics of the arts, the sources of income, the

general state of affairs, and some new ways of measuring the financial health

of the nonprofit cultural organizations that make this city so very livable.

What is impact and how do you measure it? New measures of impact are

in the works all around us—whether it be the vibrancy indicators being

developed by ArtPlace to measure its investments in creative placemaking

and therefore the impacts of these efforts on communities (which is at the

heart of MAS’s livability agenda), or the intrinsic impact model developed by

WolfBrown for Theatre Bay Area, looking at this heretofore elusive impact,

now quantifiable. It’s tantalizing to think about how this would be employed

for every discipline, and we look forward to it.

Arts Digest 2012

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The impacts of arts and cultural activity are many, and not all explored

here. We at MAS felt that a state of the arts could not be offered without

an economic impact piece but say wholeheartedly that it is not the only

impact to be considered.

Who Pays for the Arts? underscores what we all know: the face of

funding cultural activity has changed. More and more, especially for the

largest groups, earned income has outpaced contributions; but even for

the smallest organizations (as studied in the aggregate) it is a significant

piece of the funding pie.

The Alliance’s State of the Arts looks at a broader swath of cultural activity

than do the others, embracing the full potential of the data offered by the

CDP. Its report includes organizations whose offerings include cultural

activity, but not exclusively. These groups applied for support to one of the

funders requiring use of the CDP and therefore appear in the data for the

study years. It is a great reminder that cultural activity in this city happens

in many places beyond performance spaces, museums and historic

houses—including libraries, parks, media organizations (nonprofit television,

radio and online media) or higher education institutions that see arts and

culture as a key piece of their offerings.

We believe that the livability of this city—of any city—relies heavily on

a vibrant cultural life. In addition to publishing updates to the traditional

portfolio of Alliance research, all of which we believe are important to

understanding the nonprofit arts sector and its contributions, impacts,

opportunities and challenges, we asked Fiscal Management Associates

to help us think about what new indicators could be developed to help

us understand the health of the nonprofit arts field, which would, in turn,

help inform our work to support the arts in MAS’s livability agenda. We

are pleased to include those here.

We encourage our readers to take in the whole picture presented here,

through four different lenses. Each tells an important part of the story

about this field’s activity, impact and sustainability. There are a few

cautionary moments, to be sure; we hope that they will be viewed as

tools for nuanced understanding of some of the particular challenges

that the cultural community faces.

While this collection focuses on nonprofit cultural groups, we recognize

the finely woven network of goods, services and workers connected to this

sector. We also know that the nonprofit arts sector is closely connected to

the commercial one, often serving as a pipeline of work or talent.

At the same time that there has been a proliferation of new arts groups

entering the market and joining the ranks of 501(c)(3)s, there has been a

profound philanthropic shift since 2008 in a host of different ways—giving

levels, giving priorities, business models for grantmaking, among them.

There is a great story of opportunity to be told here—to leverage the

extraordinary public/private partnership in support of the arts (combined

with an ability to earn revenue) and to stimulate and nurture creativity and

engagement with one of New York City’s greatest assets: its cultural life.

There is a growing opportunity for short-, medium- and long-term

collaboration, partnership, merger and adoption of programs of one

organization to another, as MAS has done with the Alliance for the Arts.

And, there is an opportunity for new, or renewed, support for the arts—in

the form of philanthropic investments to ensure the cultural field’s resilience

through support for general operations, cash reserves and capacity building.

As MAS addresses our city’s resilience in all of its work, we have put the

arts—and their vibrancy, resilience and sustainability—at the core of our

work. This collection of research informs our work going forward, and we

hope it is of equal use to the cultural community and its supporters.

We hope you see in the data not only the challenges our arts and cultural

institutions face, but opportunity to strengthen the field. At MAS, we are

committed to advancing arts and culture to improve the livability of our

city, and to engaging policymakers, funders, sister advocates and the

wider cultural community in this effort. This digest establishes important

benchmarks and is only a starting point for discussion about where we are

now as a field and for where we are going.

Vin Cipolla, President

The Municipal Art Society of New York

INTRODUCTION

Arts Digest 2012

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The Alliance for the Arts is pleased to be able to present this first

comprehensive look at the State of the Arts, a review of the economics,

services and well-being of more than 1,300 nonprofit arts organizations

based in New York City. The Alliance has been producing reports on the arts

in NYC, New York State and the metropolitan region since 1977, including

the influential 1983 The Arts as an Industry. This is the first time, however,

that we have been able to provide a comprehensive portrait of the city’s

arts organizations over a multiyear period, thanks to the data collected by

the Cultural Data Project.

It is particularly fortuitous that these data are available now, starting with

FY2008, for this has been a tumultuous period for the city as a whole,

including the nonprofit sector.

This report could not have been completed without the unstinting help of the

staff of the Cultural Data Project for reports and data analysis; it was made

possible by funding from the New York Community Trust and the Booth

Ferris Foundation and the New York City Department of Cultural Affairs.

The State of the Arts will be the final report by the Alliance for the Arts

which is shutting its doors by the end of this year. After 35 years serving

New York City’s cultural community, the board of trustees has decided that

the Alliance’s services to the field can best be fulfilled by the adoption of

key programs by two other critical NYC institutions—WNET for our online

cultural information services through NYC-ARTS and the Municipal Art

Society for our advocacy, research and convenings. We know that they will

both continue as strong stewards of our programs.

Summary

New York City, home to more than 1,300 nonprofit arts organizations, is

arguably the cultural capital of the United States. And these nonprofits—and

State of the ArtsPatricia C. Jones, Alliance for the Arts

the commercial theater, film, visual arts and music companies they have

spawned or influenced—play a critical role in the city’s economy. The 1,325

organizations that have contributed to this study have a combined annual

revenue of nearly $5.5 billion; while the majority are based in Manhattan,

they are located in all five boroughs and in every City Council district.

Source: Alliance for the Arts, Cultural Data Project

Arts Organizations by Discipline and Borough

Organization Type BRONX KINGS NEW YORK QUEENS RICHMOND TOTAL

Community Arts 4 19 39 14 4 80

Education & Instruction 7 21 71 3 4 106

History 4 7 19 7 5 42

Media Arts 3 28 82 3 1 117

Science & Nature 4 5 8 3 2 22

Museums & Visual Arts 6 15 77 12 3 113

Dance 2 30 93 4 1 130

Music 9 32 135 15 8 199

Other Performing Arts 5 23 59 6 2 95

Theater 6 39 184 17 5 251

Councils, Services & Support 2 15 100 9 0 126

Other 0 12 30 2 0 44

Total 52 246 897 95 35 1325

But this situation is relatively recent—before 1960 only 153 (11.5%) of the

current nonprofits were in business. In the next 20 years, coinciding with the

formation of the National Endowment for the Arts and the New York State

Council on the Arts, twice as many organizations (323) were formed, and

another 535 came into existence between 1980 and 1999, at a time when

Arts Digest 2012

5

the NYC Department of Cultural Affairs, recently formed as an independent

agency, expanded City funding to include organizations not located on

City-owned property. Even with the economic ups and downs of the past

decade, another 309 groups were started just in the 11 years since 2000.

The arts (including universities with a strong arts focus; zoos, parks and

botanic gardens; public television and radio; historic houses and history

museums; and community arts programs) now permeate every facet of our

lives, and small organizations abound. In New York City, 406 groups (31%

of the total) have budgets of less than $100,000, and another 421 have

budgets between $100,000 and $500,000. At the other end of the scale, the

113 organizations with budgets of more than $5 million a year comprise

just 8.6% of the total number of groups, and another 238 have budgets

between $1 and $5 million.

In spite of this diversity, the largest groups receive the lion’s share of both

earned and contributed income. In the latest fiscal year reported, the

113 largest groups earned 89% of the total earned revenue for all 1,325

organizations and 80% of the total contributed income. They also received

88% of all NYC government support and 85% of government support at

all levels. The 974 groups with budgets of less than $1 million a year

brought in just 3% of the total earned revenue and 6.2% of all contributed

income, even though together they represent 73.5% of the total number

of groups in the city.

This study looks at the total impact of all 1,325 groups, but also breaks out

the data by budget size and discipline category. For those 535 groups which

reported fiscal data for 2008, 2009 and 2010, we look at the impact the current

recession has had on their finances and the services.

The Economics of the Arts

REVENUE

For the 1,325 NYC arts organizations in this study revenue was nearly

evenly divided between earned income of $2.707 billion and contributed

income of $2.727 billion the same year, for a total of $5.435 billion. The

vast majority of this income went to the 113 largest organizations—$4.604

billion. The remaining 1,212 organizations received some $831 million, with

$546 million contributed and $285 million earned in their latest fiscal year.

EXPENSES

Total expenses for all groups totaled $5.150 billion. Again, the majority of

this total was spent by the 115 largest groups (total expenses of $4.381

billion). So 8.6% of the organizations were responsible for 85% of total

expenditures and 86.7% of total income.

The largest expense category for all organizations is personnel, ranging

from a low of 43.6% of total costs for groups under $100,000 to a high of

59.6% for large organizations with budgets between $1 and $5 million. The

smallest groups spend just under 11% on salaried employees, and the most

on outside artists/performers, 24.5%. The two largest budget categories

spend the most on salaried employees—48% and 47.3% respectively—and

the least on outside artists/performers (3.3%) and professionals (3.8%), as

they were able to bring most of these functions in-house. This pattern held

true across all disciplines, in varying degrees. The smallest organizations

also spent the largest percentage on administrative and programming costs.

But with total expenses of just $19.2 million for 406 groups, none of these

categories represent a substantial expenditure per organization, where the

average budget size is just under $50,000.

New York City’s arts groups as a whole weathered the recent financial

storm in reasonably good shape. Income surpassed expenses by nearly

$285 million overall last fiscal year, and while most of this surplus was

earned by the largest groups ($224.5 million) groups in every other budget

category had surpluses ranging from 2% to 26% of income over expenses,

with the smallest groups faring the best.

EMPLOYMENT

Personnel costs are the largest single expense for all arts organizations

in NYC—artists and independent contractors for the small organizations

(under $500,000), salaried employees for the largest ones. In total, cultural

STATE OF THE ARTS

Arts Digest 2012

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organizations employed 120,283 people in their latest fiscal year—23,310 full-

time and 32,905 part-time employees, and 64,068 independent contractors.

These numbers translate to 40,410 full-time equivalent employees and

represent just over 54% of total expenses. In addition, arts groups depend on

another 82,855 full- and part-time volunteers and 16,684 board members.

Only 12.6% of the smallest organizations reported any full-time employees;

14% reported employing 308 part-time employees; 85.5% reported hiring

10,234 independent contractors, most of whom were artists or program-

related (9,880). Many of these smallest groups also reported full- or part-time

volunteers, with 112 groups (27%) using 283 full-time volunteers and 308

organizations (74%) using nearly 8,000 part-time volunteers. At the other end

of the spectrum, the largest organizations reported employing nearly 19,000

individuals full-time and almost 20,000 part-time, most either artists or

program-related. Just over 100 of the organizations with budgets more than

$5 million reported also hiring more than 16,000 independent contractors,

including nearly 15,000 artists or program-related individuals.Almost half

(47%) of all groups now offer health insurance and make a contribution

toward the cost; 21% offer some form of pension or retirement plan.

Combined with the large number of part-time and independent workers, this

means that most individuals working for most arts groups are adequately

compensated, either salaried or with full-time employment or benefits.

The Arts and the Community

ATTENDANCE

More than 35.5 million people paid to attend arts events offered by New

York City arts groups, and groups reported a total audience of 155 million

for free events—including public radio and TV. Most were offered by

Manhattan-based groups, but more than 2.5 million people attended paid

events in Staten Island, 4.2 million in the Bronx, 6.7 million in Queens and

7.7 million in Brooklyn. The largest number of attendees visited museums,

science centers, and zoos and botanic gardens (nearly 9.6 million paid

visitors to museums and 7.3 million+ to science or nature centers.

PRODUCTIONS

In their latest fiscal year, New York City’s 1,300+ arts and culture

organizations presented:

�� 20,119 live productions

�� 56,446 performances

�� 4,242 exhibitions

�� 89,879 classes and lectures

�� 3,058 tours

�� 6,973 world or national premieres

�� 10,821 workshops or readings of new works

ADMISSION PRICES

The median ticket price across all arts groups and for all types of events

(excluding workshops) is $18.40, ranging from a low of $5 for history groups

to a high of $20 for performing arts organizations and a $10 average for

museums. For children, seniors and students median prices are lower,

averaging $10 a ticket. The spread of prices can be extreme—from a low of

$1 a ticket to highs over $1,000.

MEMBERSHIPS AND SUBSCRIPTIONS

Memberships and subscriptions remain the primary way many individuals

support the arts groups of their choice. The arts community has just under

2 million members and subscribers. Museums have the largest number

of committed supporters in the form of members—more than 420,000.

Media organizations, including libraries, public television and public radio,

have a strong membership base of over 408,000, and science and nature

organizations follow with 243,446 members. The performing arts, which

used to depend heavily on a strong subscriber base for much of their

financial stability, appear to be less dependent on subscribers today. Music

organizations, ranging in size from the Metropolitan Opera and the New

York Philharmonic to 64 groups with budgets under $100,000, have a total

subscription base of just 108,344, while dance groups have only 11,451

subscribers. Theater companies fell in between, with 92,418.

STATE OF THE ARTS

Arts Digest 2012

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VOLUNTEER SUPPORT

Volunteers are critical to all arts groups, but especially to those with

budgets under $500,000. Six hundred groups—308 with budgets less than

$100,000 and 291 with budgets between $100,000 and $500,000—reported

having nearly 39,000 full- and part-time volunteers, as compared to only

3,500 employees. In addition, the smallest groups had nearly 3,000 board

members, or almost 10 times as many board members as staff, making

most of these groups largely volunteer directed and led. Again, the largest

organizations had the greatest number of volunteers per organization, with

67 groups reporting a total of 18,192 volunteers, and all 113 reporting a total

of 3,748 board members, for an average of 33 members per organization.

PROGRAMS FOR CHILDREN

Arts education and other programs for children continue to be an important

function of many groups. Some 10.25 million children and youth attended

events or visited arts groups in the study year, with 3 million attending

theater performances and another 1.5 million visiting science centers, zoos

and botanic gardens. Besides encouraging children to visit their institutions

individually, with family or friends, many organizations offer education

programs for school groups or take programs to the schools. A total of

122,634 school groups visited organizations in their latest fiscal year, and

organizations offered 7,505 off-site programs in the schools. A majority of

these programs were offered by visual arts groups, particularly science and

nature centers and museums and galleries. Education organizations and

museums offered the largest number of in-school programs, 2,078

and 1,057 respectively.

Recession Trends: 2008–2010

Five hundred fifty-four groups reported data for each of the past three years,

2008, 2009 and 2010. Thus, we can track the impact of the recession on a

significant number of arts groups and extrapolate to the field as a whole.

INCOME

In general, 2009 was a very difficult year for all groups, no matter their budget

size. Groups experienced substantial decreases in earned and contributed

income from 2008 to 2009. Contributed income dropped in nearly all

categories—especially in individual and foundation support—but the biggest

impact was in investment income where groups of all sizes experienced

substantial losses in both 2008 and 2009. Investment losses in 2008 totaled

more than $77 million, a loss that grew to more than $1.171 billion by 2009.

While all types and sizes of organizations experienced investment losses,

most smaller groups had less to lose; the largest losses were sustained

by the largest visual and performing arts organizations, which together

accounted for $62.6 million in losses in 2008 and $1.146 billion in 2009.

Luckily, most groups did not have to sell their investments in order to

meet their expenses, so the total realized investment losses in 2009 only

amounted to $93 million, as compared to more than $1 billion in unrealized

losses. By 2010 many of these investments had begun to turn around,

giving groups a positive return in 2010, for a total of $454.5 million in

investment and interest income, both realized and unrealized. Removing

all investment and interest income from total earned income in each of

the three years would have given these 554 groups $962 million in earned

income in 2008, $966 million in 2009 and $954 million in 2010. Admission

income grew over these three years, but this increase was offset by

decreases in most other categories.

Contributed income also fell in most categories over the past three years;

the one bright spot was government support, particularly NYC government,

which increased its support to these arts organizations by more than

$50 million from 2008 to 2009 to a total of $295 million. City support to

the largest organizations increased even more—$78 million or 44%—

increases that were offset by decreases to smaller organizations. While

the total fell back somewhat in 2010 as the City faced its own economic

problems, it still represented a 12.6% increase over 2008 and did much to

offset losses in other categories. State government support fell across all

budget categories, to $40.8 million in 2009 from $52.2 million in 2008, but

recovered partially to $45.3 million in 2010. Federal government support

increased in 2009 and 2010, from $33.4 million in 2008 to $43.7 million in

2009 to $58.4 million in 2010.

STATE OF THE ARTS

Arts Digest 2012

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At the beginning of the recession in 2008 these 554 organizations as a

whole were still operating in the black—income exceeded expenses by

$169 million. By the following year, income had dropped by more than

half, but arts groups had not, as a whole, been able to reduce expenses.

Expenses actually increased by $75 million, resulting in a net loss of over

$1.3 billion—most of which, of course, was due to unrealized investment

losses. The biggest losers were museums and galleries, science and nature

centers and presenting organizations.

By 2010, as investments began to turn around, total income had once

again reversed and even increased over 2008 to $2.7 billion. At the same

time, organizations were able to reduce some expenses, so that their total

expenses totaled under $2.4 billion—a decrease of just under $64 million—

resulting in a net surplus of $332 million.

EXPENSES

One of the problems facing many arts groups is their high percentage of

fixed costs. As Professors Baumol and Bowen famously wrote in their study

of the performing arts in 1965, you can’t cut the number of players in a

symphony to make an orchestra more efficient. But groups did cut some

full-time employees—mostly in administration and fundraising—and hired

part-time employees instead. While they hired more artists/performers

and other program contractors, they gave them fewer hours, resulting

in a 7% decrease in spending on outside artists/performers and an 18%

decrease in program personnel funding over the three years. But facility

and administrative costs are harder to cut. Nearly all disciplines and budget

sizes saw an increase in facility expenses.

PERSONNEL

Although total salary costs increased slightly from 2008 to 2010, the

number of full-time employees fell by more than 10%, partially offset by

a 5% increase in part-time employees, particularly artists and program

employees. Groups also turned increasingly to independent contractors—

both artists/performers and program personnel—in order to continue

their programming at stable levels. The number of these artists/performers

STATE OF THE ARTS

increased by 27% over the three years and the number of program

personnel increased by 20%, though the full-time equivalents in these two

categories dropped by 15.5% and 13% respectively. Total volunteers grew

from 29,000 to 40,000, most to help with programs; measured as full-time

equivalents, the number of total volunteers also increased from 3,500 to

6,700, an increase of 92%.

ATTENDANCE

Even while these groups were struggling to raise funds and keep costs

under control, they were managing to increase their programming and

reach significantly larger audiences: between 2008 and 2010 the number of

attendees at all events, paid and unpaid, increased from more than 43 million

to nearly 81 million, and the percentage of the audience who attended for free

increased from 51% to 74%. (It should be noted, however, that nearly half of

the increase in the audience for free events came from media organizations,

including public TV and radio.) The number of attendees at paid events actually

dropped slightly over the three years, from 21.3 million to 20.9 million. This was

especially true for Manhattan-based organizations, where paid attendance

fell from 8.97 million in 2008 to just over 7.89 million in 2010. Subscribers also

decreased, particularly for dance, music and theater companies. The number

of performances, exhibitions, lectures and commissioned works all increased

slightly over the three years, although touring—which is particularly expensive

and often sponsor-dependent—fell by 80%.

Community Arts & Education Visual Arts (History, Science, Nature, Museums, Galleries) Performing Arts Service, Support and Other

Community Arts Education Total History Media Arts Science &

NatureMuseums &

Galleries Total Dance MusicOther

Performing Arts

Theater Total Service/Support Other Total

Total Number of Orgs 80 106 186 42 117 22 113 294 130 199 95 251 675 126 44 170

Smallest 31 18 49 6 34 1 8 49 42 97 28 96 263 27 18 45

Small 20 28 48 17 50 1 35 103 52 63 18 85 218 43 9 52

Medium 10 11 21 4 10 1 18 33 16 13 10 30 69 21 3 24

Large 14 38 52 9 15 7 26 57 15 19 28 31 93 25 11 36

Very Large 5 11 16 6 8 12 26 52 5 7 11 9 32 10 3 13

Borough Location

Brooklyn 19 21 40 7 28 5 15 55 30 32 23 39 124 15 12 27

Bronx 4 7 11 4 3 4 6 17 2 9 5 6 22 2 0 2

Manhattan 39 71 110 19 82 8 77 186 93 135 59 184 471 100 30 130

Queens 14 3 17 7 3 3 12 25 4 15 6 17 42 9 2 11

Staten Island 4 4 8 5 1 2 3 11 1 8 2 5 16 0 0 0

Average Expense ($) 1,561,714 6,592,825 4,428,906 2,227,310 5,297,173 29,858,710 9,906,145 8,468,035 1,298,309 2,902,894 5,406,233 1,249,834 2,331,491 1,536,018 1,581,172 1,547,705

Total Expense ($) 124,937,101 698,839,403 823,776,504 93,547,026 619,769,199 656,891,625 1,119,394,406 2,489,602,406 168,780,184 577,675,935 513,592,121 313,708,402 1,573,756,642 193,538,288 69,571,580 263,109,868

Total Revenue ($) 151,576,444 771,156,990 992,733,434 126,232,739 641,124,384 561,272,370 1,344,738,144 2,673,367,637 179,067,508 442,727,063 567,158,844 360,143,450 1,549,096,865 192,905,228 96,905,820 289,811,048

Earned/Contributed 36%/64% 76%/24% 69%/31% 21%/ 79% 24%/ 76% 38%/62% 64%/36% 47%/53% 62%/38% 43%/57% 38%/62% 54%/46% 46%/54% 38%/62% 38%/69% 36%/64%

Subscribers/ Members

46,260/47,786

19,236/7,721

65,496/55,507

1,200/33,436

67,023/408,235

0 /243,446

22,130/420,349

90,343 /1,105,466

11,451/3,624

108,344 /102,391

26,643 /48,278

92,418 /41,450

238,856 /195,743

28,482/158,464

658/16,621

29,140 /175,085

Paid Attendance 462,924 559,604 1,022,528 1,615,079 1,422,021 7,331,129 9,590,792 19,959,021 1,987,918 1,924,604 3,035,250 6,054,569 13,002,341 882,083 640,555 1,522,638

Children Attendance 135,801 294,892 430,693 669,472 624,916 1,545,568 863,002 3,702,958 358,004 274,415 680,941 3,029,263 4,343,623 1,486,121 291,175 1,777,296

Number of School Groups

939 8,356 9,295 15,010 10,750 29,725 27,997 83,482 1,246 5,214 4,496 4,186 15,142 13,313 1,402 14,715

Off-Site School Programs

131 2,178 2,309 407 398 242 1,507 2,104 427 504 348 742 2,021 906 165 1,071

Characteristics of CDP New York City Arts Organizations

Average Expense ($) 1,561,714 6,592,825 4,428,906 2,227,310 5,297,173 29,858,710 9,906,145 8,468,035 1,298,309 2,902,894 5,406,233 1,249,834 2,331,491 1,536,018 1,581,172 1,547,705

Total Expense ($) 124,937,101 698,839,403 823,776,504 93,547,026 619,769,199 656,891,625 1,119,394,406 2,489,602,406 168,780,184 577,675,935 513,592,121 313,708,402 1,573,756,642 193,538,288 69,571,580 263,109,868

Subscribers/Members

46,260/47,786

19,236/7,721

65,496/55,507

1,200/33,436

67,023/408,235

0 /243,446

22,130/420,349

90,343 /1,105,466

11,451/3,624

108,344 /102,391

26,643 /48,278

92,418 /41,450

238,856 /195,743

28,482/158,464

658/16,621

29,140 /175,085

Paid Attendance 462,924 559,604 1,022,528 1,615,079 1,422,021 7,331,129 9,590,792 19,959,021 1,987,918 1,924,604 3,035,250 6,054,569 13,002,341 882,083 640,555 1,522,638

Arts Digest 2012STATE OF THE ARTS

9

Community Arts & Education Visual Arts (History, Science, Nature, Museums, Galleries) Performing Arts Service, Support and Other

Community Arts Education Total History Media Arts Science &

NatureMuseums &

Galleries Total Dance MusicOther

Performing Arts

Theater Total Service/Support Other Total

Total Personnel Expenses ($)

69,424,917 459,314,469 528,739,386 46,412,306 341,451,424 375,406,663 488,799,850 1,252,070,243 107,990,875 358,303,587 225,533,026 173,138,345 864,965,833 102,459,877 38,396,893 140,856,770

% of Expenses 55.6% 65.7% 64.2% 49.6% 55.1% 57.1% 43.7% 50.3% 64.0% 62.0% 43.9% 55.2% 55.0% 52.9% 55.2% 53.5%

Facilities Expenses ($)

27,325,048 103,543,240 130,868,288 20,442,038 81,982,986 86,771,604 210,664,882 399,861,510 20,516,257 45,791,472 175,125,322 43,336,928 284,769,979 21,946,605 8,637,609 30,584,214

% of Expenses 22.0% 15.0% 16.0% 22.0% 13.0% 13.0% 19.0% 16.0% 12.0% 8.0% 34.0% 14.0% 18.0% 11.0% 12.0% 12.0%

Programming Expenses ($)

6,837,261 37,823,430 44,660,691 7,958,832 111,755,840 35,625,322 134,986,829 290,326,823 24,019,783 45,277,221 52,371,179 73,229,151 194,897,334 19,603,257 3,365,919 22,969,176

% of Expenses 5.5% 5.4% 5.4% 8.5% 18.0% 5.4% 12.1% 11.7% 14.2% 7.8% 10.2% 23.3% 12.4% 10.1% 4.8% 8.7%

Administrative Expenses ($)

21,349,875 98,158,264 119,508,139 18,733,850 84,578,949 159,088,036 284,942,995 547,343,830 16,253,269 128,303,655 60,562,594 24,003,978 229,123,496 49,528,549 19,171,159 68,699,708

% of Expenses 17.1% 14.1% 14.5% 20.0% 13.7% 24.2% 25.5% 22.0% 9.6% 22.2% 11.8% 7.7% 14.6% 25.6% 27.6% 26.1%

Total Employees 4,140 13,106 17,246 1,941 6,480 8,801 12,006 29,228 5,995 15,303 25,158 19,778 66,234 1,615 5,9961 7,576

Artists/Performers 1,966 6,676 8,642 876 1,349 459 1,838 4,522 3,586 10,370 17,124 11,394 42,473 3,657 664 4,322

Program 1,598 4,853 6,451 792 4,026 5,523 7,560 17,901 1,728 3,362 6,212 6,642 17,943 1,601 614 2,215

Fundraising 57 286 343 70 258 359 567 1,254 151 342 284 323 1,100 184 29 213

General Admin 519 1,291 1,809 203 846 2,460 2,042 5,551 531 1,230 1,538 1,419 4,717 518 308 827

%FT-%PT-%IC 26-22-52 24-32-44 24-29-46 27-28-45 50-16-33 42-26-32 42-18-40 43-21-36 11-38-51 11-35-53 6-17-77 6-43-51 8-31-62 16-19-65 34-19-47 20-19-61

Board/ Volunteers

1,037/1,676

1,500/12,951

2,537/14,627

738/2,015

1,343/3,694

627/4,517

1,939/4,827

4,647/15,053

1,164/2,031

2,149/20,436

1,241/5,138

2,429/13,193

6,983/40,798

1,848/7,605

669/4,772

2,517/12,377

Total Events 5,818 19,575 25,393 3,104 62,240 5,007 18,226 88,577 9,151 12,067 16,726 36,125 74,069 21,200 2,399 23,599

FY 2008 - FY 2010Trend Dataset

Expenses % Change 11.8% -4.0% -2.1% -13.2% 15.7% 0.3% -1.7% -0.6% -1.2% -10.7% 15.7% 6.3% 5.2% 0.0% -63.1% -17.2%

Expenses % Change Total

75.5% 6.4% 13.7% 8.0% 11.1% -5.6% 4.8% 2.6% 1.6% 0.6% 18.6% 25.1% 14.4% 3.2% -51.0% -9.8%

Revenue % Change (excluding unrealized investment income)

36.3% -4.1% 0.7% 8.4% 27.3% -44.4% -43.4% -39.7% -17.2% -25.8% 4.4% 8.5% -3.0% -3.0% -58.1% -17.5%

Paid Attendance % Change

-24.0% -3.0% -6.8% 0.4% 168.2% -0.9% 10.7% 5.3% 3.0% -37.0% -16.6% -1.7% -9.4% 18.3% -24.8% 8.8%

Characteristics of CDP New York City Arts Organizations, continued

Source: Alliance for the Arts, Cultural Data Project

Total Employees 4,140 13,106 17,246 1,941 6,480 8,801 12,006 29,228 5,995 15,303 25,158 19,778 66,234 1,615 5,9961 7,576

Artists/Performers 1,966 6,676 8,642 876 1,349 459 1,838 4,522 3,586 10,370 17,124 11,394 42,473 3,657 664 4,322

Program 1,598 4,853 6,451 792 4,026 5,523 7,560 17,901 1,728 3,362 6,212 6,642 17,943 1,601 614 2,215

Fundraising 57 286 343 70 258 359 567 1,254 151 342 284 323 1,100 184 29 213

General Admin 519 1,291 1,809 203 846 2,460 2,042 5,551 531 1,230 1,538 1,419 4,717 518 308 827

%FT-%PT-%IC 26-22-52 24-32-44 24-29-46 27-28-45 50-16-33 42-26-32 42-18-40 43-21-36 11-38-51 11-35-53 6-17-77 6-43-51 8-31-62 16-19-65 34-19-47 20-19-61

Total Events 5,818 19,575 25,393 3,104 62,240 5,007 18,226 88,577 9,151 12,067 16,726 36,125 74,069 21,200 2,399 23,599

Arts Digest 2012STATE OF THE ARTS

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Arts Digest 2012

11

CONCLUSIONS

It is clear from the information presented here that the nonprofit arts

in New York City are both a robust economic generator and a source of

services used by New Yorkers citywide. Thanks to support from all sectors—

government, foundations, corporations and especially individuals—the arts

have survived the economic recession and are continuing to offer a wide

range of free and low-cost programs.

However, there are some issues that should be kept in mind. First, an

unprecedented number of nonprofit arts organizations have come into

existence over the past 20 years. A total of 578 of the current 1,325

organizations (44%) were founded between 1992 and 2011. Groups with

budgets under $5 million are already competing for a comparatively small

portion of total arts revenue. If groups continue to form at the pace they

have over the past few decades, it is hard to see where the increased

funding necessary to support them will come from.

Those groups with budgets under $100,000 survive thanks primarily to

individual support (from board members and volunteers as well as audience

and contributors) and government support. While few have paid staff,

they spend an average of 29% of their expenses on administrative costs.

Given the increasing competition for limited resources, this may be an

opportune time for funders and policymakers to consider innovative ways

to encourage the sharing of administrative costs and management staff,

including strategic mergers and other forms of collaborative behavior.

Although the field has bounced back from the enormous deficits of 2009,

it will take time for many of groups to recover from investment losses.

Luckily, while most groups had substantial realized losses from investments

and interest ($93 million total), this sum was dwarfed by unrealized losses

of more than $1 billion. But the extent to which the largest organizations

depend on investment income is something to be concerned about in the

future, as is the management and investment of those funds.

New York City’s nonprofit arts are a critical component of its role as an

international creative center. The large institutions, which account for

most of the public and private support, are major tourist attractions and

serve millions of visitors; the small- and mid-size organizations are critical

to their communities and are often the innovative engines that drive new

work and open new artistic possibilities. Yet, the majority of workers in the

field are underemployed, with most working part-time or as independent

contractors, and rarely receiving adequate benefits.

If NYC is to retain its preeminence as the nation’s cultural capital it will

need to find better ways to retain the artists and other employees who are

critical to that role.

Everyone concerned about the continued health of the cultural sector—

government, funders, corporate leaders, policymakers and individual

supporters—need to think carefully about new approaches to strengthen

the entire sector. We hope that this report has offered some insight into the

strengths and weaknesses of the sector, and that it will help all of us ensure

its future health.

Patricia C. Jones is an independent consultant who is currently serving as the Interim Executive

Director of Eyebeam Art + Technology Center. She led the Alliance for the Arts as Executive

Vice President from 1977-1990 and served as a trustee from 1990-2011. She is currently the

Alliance’s Acting Executive Director.

© 2012, Alliance for the Arts/The Municipal Art Society of New York. All Rights Reserved

STATE OF THE ARTS

Arts Digest 2012

12

Historically, Who Pays for the Arts?1 has attempted to answer the

fundamental question of how nonprofit cultural organizations in New York

City earn their daily bread. New York City is host to a tremendous variety

of cultural partners. They range from very small organizations run on a

shoestring budget by a single dedicated artist, to major cultural institutions

with hundreds of millions of dollars in total annual income and hundreds

of specialized staff. They also vary tremendously by geography, creative

aesthetic, operational structure and purpose. Naturally, making comparisons

among such a wide array of organizations is challenging. Nonetheless, Who

Pays for the Arts? offers a valuable framework for observing trends, and

raises important questions for future researchers to consider.

Summary Findings

Similar to previous iterations of Who Pays for the Arts?, this analysis

focuses on a single year of activity—from January 1 to December 31, 2010.

This creates a useful snapshot, and provides a basis to compare trends

within the sector year over year.

For the first time, this analysis makes use of data provided through the

Cultural Data Project (CDP), analyzing 723 organizations2 that reported

total income of nearly $2.5 billion in 2010. As in prior versions of this

report, the majority of total income went to a small group of very large

organizations. Just five organizations (all with annual incomes of more than

$100 million) accounted for nearly $1 billion of the total (or 40%), and just

40 organizations (all with budgets more than $10 million) accounted for $1.9

billion of the total (or 76%). Indeed, average income for all organizations in

2010 was $3.4 million, while the median income was less than $250,000,

indicating that all revenue categories were strongly skewed by these very

few large organizations. This is important because it poses challenges for

analysis (see the Methodologies section on page 25 for greater detail), but it

also illustrates an important reality: the overwhelming majority of New York

City cultural organizations are relatively small and locally based.

Overall, income from all sources was as follows:

�� Earned income represented 53% (or $1.3 billion) of total income for

New York City nonprofit cultural organizations in 2010

�� Private contributions were 30% (or $750 million)

�� Government contributions were 17% (or $420 million). Of this

amount, New York City funding represented $292 million in income, or

12% of all revenues reported.

These percentages are all consistent with the 2010 Who Pays for the Arts?

report (which looked at 2009 data), with private support being down slightly

(2%) from the prior year, and government support increasing slightly (3%)

from the same period. Note: the inclusion of capital commitments in the

2010 data for this report may impact comparisons to prior years’ studies

when capital commitments were not included as income.3

Average Income by Type and Size—2010

Source: The Municipal Art Society of New York, Cultural Data Project

< $100K $100K - $500K $500K - $1M $1M - $5M > $5M

Public Funding 9,444 53,060 125,458 392,877 5,305,559

Private Support 18,229 94,891 244,073 762,507 9,345,129

Earned Revenues 16,995 107,276 342,152 1,048,046 17,241,662

1

1 Who Pays for the Arts? was previously published by the Alliance for the Arts, now adopted and published by MAS.

2 Please see the Methodologies section beginning on page 25 for important details about this data set.

3 Please see the notes regarding the impact of capital contributions in Methodologies.

Who Pays for the Arts?—2010Michael Hickey, The Municipal Art Society of New York

Arts Digest 2012

13

While there are important similarities among organizations of all sizes

(for instance, all categories rely heavily on earned revenue as their primary

source of income), there is still significant variation between the ranges (for

small organizations, 38% of total income came through earned revenues,

while this number was more than 50% for the very largest organizations).

On the other hand, private contributions from individuals, foundations

and corporations make up a more substantial portion of income for the

very smallest organizations ($18,000 on average). This may simply indicate

that smaller organizations have fewer opportunities to maximize earned

revenues in comparison to larger groups, and must therefore rely more on

private support to help sustain their operations.

For smaller organizations, public support appears to play a slightly more

important role in comparison to their larger peers. A more detailed analysis

below shows that sources of public support (city, state and federal) can vary

greatly by organizational size.

The map in the Appendix shows that the great majority of organizations

captured by CDP are located in Manhattan, including the subset in this

report. Note that there are important exceptions not captured in this report,

as many cultural organizations and entities are not part of the CDP data

set (including for-profit cultural entities, individual artists and many small

cultural nonprofits that choose not to participate in CDP).

The detailed income analysis below looks more deeply at variations among

organizations by size, and also begins to examine how geography affects

the distribution of income streams.

Earned Revenues

As noted above, earned revenues are the primary source of income for

the nonprofit cultural sector. A more detailed breakdown of subcategories

within earned revenues offers some useful insights. As in prior years,

Admissions, Support from Individuals, and Other Earned Revenues are

the three leading revenue categories. The major impact of Other Earned

Revenues (comprising space rentals, merchandising, food services, parking,

touring, royalties, publications, interest on investments and miscellaneous

income) on overall income appears to indicate that many groups have

developed strategies to support their operations through alternative (and

frequently entrepreneurial) means.

Source: The Municipal Art Society of New York, Cultural Data Project

Total Income by Percentage—2010

Even within the category of Earned Income, there is significant variation by

organizational size.

Average Earned Income by Type and Size—2010

Source: The Municipal Art Society of New York, Cultural Data Project

For the very largest organizations Admissions and Other sources of income

account for nearly 75% of total earned revenues, while for the very smallest

organizations they account for barely 50%. For all organizations Tuition

WHO PAYS FOR THE ARTS?—2010

Arts Digest 2012

14

and Workshops and Contracted Services made up 25%–33% of all earned

income, with the exception of the very largest groups, where these two

categories combined shrink to just over 5%. Intuitively, one expects that

organizations vary their revenue strategies based on their size and capacity.

It is striking, however, that those organizations with more than $5 million in

annual income appear to have a very different strategy in comparison to

their smaller peers—relying much more heavily on both Admissions and

Other income rather than classes, workshops and contracted services.

As in other aspects of this analysis it’s important to view the scale of this

variation. The chart below provides average income in each of the earned

revenue categories by organizational size. This is telling for several reasons.

For smaller organizations, earned revenue streams are fairly consistent

across all five categories, while for larger organizations there is substantial

variation between categories. Importantly, for very large organizations

admissions and other income are dramatically larger on average than

for their peers. Indeed, even as income in all categories grows larger,

Admissions and Other income appear disproportionately higher for those

organizations with more than $5 million in annual income.

Source: The Municipal Art Society of New York, Cultural Data Project

Average Earned Revenues by Size and Category—2010

<$100K$100K-

$500K

$500K-

$1M$1M-$5M >$5M

Grand

Total

Admissions 5,269 22,852 63,222 252,769 6,104,121 604,986

Fundraising & Events 2,354 14,570 85,820 228,728 2,239,066 257,009

Contracted Services 3.721 20,060 57,005 147,293 519,003 87,440

Tuition & Workshops 2,008 18,650 54,862 158,084 730,160 107,127

Other 3,642 31,145 81,243 261,171 7,649,312 746,612

Avg Total Earned 16,995 107,276 342,152 1,048,046 17,241,662 1,803,264

The category of Other income remains a significant source of revenue for

organizations of all sizes, and indeed ranks as the largest earned revenue

category for 4 of the 5 income ranges. Larger groups collect nearly one-third

of their income from Other earned revenue sources ($7.6 million annually

on average for the very largest groups). The chart below further breaks out

Other income into a number of subcategories by organizational size, and

the top three subcategories are highlighted.

<$100K$100K-

$500K

$500K-

$1M$1M-$5M >$5M Total

Miscellenaeous Earned 21% 14% 9% 17% 32% 31%

Gift Shop & Merchandising 6% 10% 7% 3% 28% 25%

Rentals 20% 25% 24% 31% 14% 15%

Touring 21% 28% 13% 18% 7% 8%

Dividends & Interest 1% 4% 3% 11% 7% 7%

Concessions 4% 1% 1% 1% 7% 6%

Parking 0% 0% 0% 0% 2% 2%

Gallery Sales 12% 6% 34% 3% 1% 2%

Special Sponsorships 4% 6% 3% 3% 1% 1%

Advertising 6% 3% 3% 5% 0% 1%

Royalties 2% 3% 0% 2% 0% 0%

Media Subscriptions 2% 0% 1% 0% 0% 0%

Gains on Investment 1% 0% 2% 4% 0% 0%

Source: The Municipal Art Society of New York, Cultural Data Project

Percentage of “Other Income” by Size and Category—2010

On average, Miscellaneous Earned income totaled 31%, Gift Shop sales

totaled 25%, and Space Rentals totaled 15%. Overall (with the exception

of Miscellaneous Income), Space Rentals and Touring generated the

most other income for smaller organizations; with gallery sales providing

an important supplement (a remarkable 34% for mid-size organizations

between $500,000 and $1,000,000 in annual income). For the very largest

organizations, after miscellaneous income, gift shops and merchandising

were the most lucrative (accounting for more than 40% of all revenues

in this subcategory).

Note that in 2010, the very largest organizations showed losses on Realized

Gains on Net Assets (totaling more than $2 million in losses). Under better

WHO PAYS FOR THE ARTS?—2010

Arts Digest 2012

15

market conditions, it’s conceivable this source would have ranked higher in

Other Income for entities with more than $5 million in total annual revenues.

One would expect wide differences in the earned revenue strategies

between small and large organizations, but these dramatic differences

are worthy of further analysis.

Private Contributions

Support from individuals, corporations and foundations remains a crucial

element to overall organizational income. In 2010, organizations in the

data set collected nearly $750 million in private support, which comprised,

on average, 30% of all revenue. Smaller organizations surpassed other

categories by generating some 40% of their total income through private

sources, while the very largest organizations relied on private support for

less than 25% of their revenues. Indeed, in the analysis there is a clear

trend between the size of the organization and its reliance upon private

support (the clearest of all three major revenue categories: earned,

private and public).

Source: The Municipal Art Society of New York, Cultural Data Project

< $100K $100K - $500K $500K - $1M $1M - $5M > $5M

Foundations 6,388 48,361 141,812 395,731 2,193,895

Corporations 1,541 12,288 23,598 89,636 1,093,652

Individuals 10,370 34,243 78,663 277,140 6,066,582

Foundations

Corporations

Individuals

Average Private Support by Size—2010

The chart above breaks out average private support according to budget

size. Note that that the very smallest organizational category and the

very largest were particularly impacted by support from individuals. One

speculates that those organizations with more than $250,000 in annual

revenues more easily qualify for foundation and corporate support (in part

because many require a formal audit, an important accountability measure),

while the very largest organizations appear better able to secure large

contributions from high-net-worth supporters.

Income by Borough

The chart below indicates the percentage of each income source by New

York City borough. Manhattan appears to have stronger earned revenues

in comparison to other parts of the city. Possible reasons for this could

include that Manhattan-based organizations command higher ticket

prices, or attract more rentals, or are better able to maintain significant

relationships with corporate partners and foundations via proximity. While

such answers are beyond the scope of this report, they could be fruitful

areas for further analysis.

Source: The Municipal Art Society of New York, Cultural Data Project

Income by Borough—2010

Government Support

Private Support

Earned Revenue

Manhattan cultural organizations represent the overwhelming majority of

groups included in this study (68% of all those captured). It appears that

Manhattan does have a higher concentration of these groups than the

WHO PAYS FOR THE ARTS?—2010

Arts Digest 2012

16

other boroughs of New York City, although it is also possible that many

groups located outside Manhattan do not submit profiles to the CDP for

various reasons. Nonetheless, this study shows 87% of all income reported

being earned by Manhattan-based organizations.

Similar to overall income trends, the analysis shows that Manhattan-based

organizations also receive the majority of public support dollars.

Government Support

Total Government Support by Borough—2010

Source: The Municipal Art Society of New York, Cultural Data Project

# Groups / Borough

All Public Support

Total Federal Support

Total State Support

Total City Support

Bronx 32 21,146,650 3,456,090 3,759,400 13,806,660

Brooklyn 128 67,660,056 5,363,801 9,356,142 52,839,510

Manhattan 491 303,691,545 54,823,252 43,057,915 205,543,463

Queens 50 18,088,450 1,932,152 2,252,064 13,878,054

Staten Island 22 6,927,840 206,303 584,895 6,123,708

Total 723 417,514,541 65,781,598 59,010,416 292,191,395

# Groups / Borough

Avg Public Support

Avg Federal Support

Avg State Support

Average City Support

Bronx 32 5% 35% 34% 24%

Brooklyn 128 16% 14% 21% 23%

Manhattan 491 73% 36% 25% 23%

Queens 50 4% 12% 13% 15%

Staten Island 22 2% 3% 8% 15%

Average Government Support by Borough—2010

Source: The Municipal Art Society of New York, Cultural Data Project

While the majority of public support still flows to Manhattan, this appears

to occur because Manhattan-based groups receive more federal dollars

on average than their peers, while Bronx groups appear to receive more

funding on average from state sources. City support appears comparatively

well distributed among Bronx-, Brooklyn- and Manhattan-based groups,

with organizations in Queens and Staten Island receiving less than

organizations in the other three boroughs. These differences may be

affected by variations in average organizational size, among other issues,

and would benefit from further analysis.

While it’s difficult to tell how representative this data set may be of all

cultural activity, it clearly indicates that revenue concentrations

vary considerably geographically alongside the concentration of

cultural groups themselves.

Trends in Income: 1995–2010

Historically this report has examined income trends by comparing only

organizations for which data is available each year studied from 1995 to the

present. Surprisingly, over the years this comparison group has dwindled in

size from 374 originally to 114 organizations at present. This bears a closer

look in subsequent analyses.

Because fewer organizations are being counted, less income is being

recorded and analysis may therefore significantly underreport actual

revenue trends. Furthermore, this 114-member subgroup appears to

comprise larger organizations (as measured by overall income), which may

skew analysis and cause findings to inaccurately represent income trends

among all types of organizations, especially those that are smaller.

The trend analysis also attempts to compare organizations that have

reported their income over the years through several different sets of

data. As noted above (and as detailed in the Methodologies section), in the

current study capital contributions may be counted as income (whereas in

prior years capital contributions were not). It is expected that this would

cause income trends for the 2010 study group to be somewhat inflated

(especially from public sector sources, which tend to be larger

contributors to capital projects).

WHO PAYS FOR THE ARTS?—2010

Arts Digest 2012

17

Overall the study group shows a modest increase in total income from 2009

to 2010 (up 4.8% to $1.38 billion); the trend is quite mixed, with Earned

Income dropping by almost 13% in the same period, while Government

contributions were up nearly 130% from the prior year. As noted above,

the reduction in Earned Income may reflect the smaller population of the

survey, while the increase in Government support could reflect the inclusion

of capital dollars as income.

While this analysis provides some useful indication of changes within the

nonprofit cultural sector, further study would appear necessary. Overcoming

the challenges of comparing groups across multiple years presents certain

difficulties, yet it seems an important aspect of understanding how the

nonprofit cultural sector is responding to changing economic conditions, or

adapting new income generating strategies.

Summary Comments

The overwhelming majority (71%) of cultural organizations captured by CDP

in 2010 have budgets under $1 million in annual income. If we add those

organizations under $5 million in annual income, this includes fully 91% of

all organizations in this study. While there is substantial variation among

this population of small to mid-size cultural organizations in all income

categories, there are even greater variations between this 91% and the

remaining 9% of very large nonprofit culturals.

There are a number of areas where these differences are particularly

pronounced, and where further study could provide some compelling

insights into observed differences:

�� Large cultural nonprofits have developed endowments that provide

significant sources of ongoing operational support and stability, even

WHO PAYS FOR THE ARTS?—2010

Income Sources for Trend Sample for Specified Years from 1995 to 2010(in 2010 Dollars)

1995 1997 1999 2004 2005 2006 2007 2008 2009 2010

Government $146 134 142 118 115 117 125 127 126 288

Private Contributions $314 354 380 320 312 335 355 352 333 345

Earned Income $349 425 497 610 653 703 757 800 858 747

Source: The Municipal Art Society of New York, Cultural Data Project

Arts Digest 2012

18

despite downturns in the market during this period. Smaller nonprofits

most likely do not have the same opportunities to amass these

resources, leaving them less well situated to weather downturns.

�� Large organizations rely more on Admissions and Other Income

categories such as merchandising and gift shop sales. This ability

to merchandise based on a prominent brand is itself an asset that

smaller culturals are less likely to possess. This is perhaps why smaller

organizations tend to rely more on touring and space rentals as key

elements to their earned revenue strategies, attempting to maximize the

value of their artists and facilities.

�� Very small organizations seem to have substantial challenges accessing

private and corporate support, and must thus rely on a network of

individual funders to provide much of their private contributions. Very

large organizations appear to be successful at leveraging the support of

high-net-worth individuals so that contributions from this category are

dramatically larger than from corporations and foundations.

In terms of public support, it is worth noting that while Manhattan appears

to have more cultural nonprofits and therefore greater total income on

average New York City public support per organization is similar to that

of Brooklyn and the Bronx. This finding would benefit from greater analysis

to see how this might be affected by variables such as organizational size

and creative discipline.

Michael Hickey is a former community development banker and nonprofit executive. In

addition to his current work as an arts and economic development research fellow for the

Municipal Art Society, he also serves as an independent consultant to the nonprofit and

philanthropic sectors.

WHO PAYS FOR THE ARTS?—2010

Arts Digest 2012

19

The Alliance for the Arts pioneered this research with the Port Authority

of New York & New Jersey with the first academically correct study of

the economic impact of the arts and demonstrated to us all over two

decades how important the arts are as an industry. It is, indeed, a vibrant

industry, filled with creativity by its nature, tenacity and optimism (if

evidenced only by the number of new nonprofit arts groups founded since

2000, numbering more than 300). The diversity, creativity and breadth

of arts activity in New York City, as well as its dynamism, are important

contributors to our city’s economy.

This analysis estimates the impact that the nonprofit arts sector has on

the city’s economy, through expenditures made by those organizations,

and through the employment of thousands of New Yorkers. The multiplier

for this industry is approximately 2, which means for that every dollar of

direct spending, another $1 of economic activity is generated for New

York City. This is a strong multiplier for an economy such as New York City,

which is both large and mature. The multiplier is well grounded in that a

high proportion of workers and suppliers of services to the nonprofit arts

sector are actually located here in New York City, as well as recognizing that

there is still, as cited by the Alliance for the Arts, “some amount of leakage

to areas outside the city from the wages of commuters and from the

payments to suppliers based elsewhere.”1

There’s a finely woven network of services in this industry—jobs created, taxes

paid, and goods and services of other New York City businesses and workers.

This analysis estimates the impact of the nonprofit arts sector2, including

in it direct expenditures of nonprofit arts groups, and of their audiences

and visitors, as well as the indirect and induced “ripple effect” of these

expenditures. This is an estimate of how the arts contribute to our economy.

The Economics of the Nonprofit Arts Sector in New York City— A Look at the Economic ImpactAnne Coates, The Municipal Art Society of New York

The direct impact of the arts in the study year is estimated at $3.9 billion.

The total impact, direct and indirect, of the nonprofit arts sector in New York

City for the study year is estimated to be $8.1 billion. When compared to

the total impact from the 2006 Arts as an Industry study, and adjusted for

inflation, we can estimate modest growth in the industry since that study,

despite the economic downturn of 2008. This is not surprising, given the

growth in the pipeline just prior to the beginning of the recession.

Still, we need to be cautious here, since we are not comparing “apples

to apples.” We cannot make a direct comparison to previous studies and

decisively conclude growth or a rate of growth due to the nature of the data

sets studied, the questions asked that generated the collection of data,

and the groups represented in each study. (While having a great degree of

overlap, there is not a 1:1 correlation between the study groups). Still, there

is sufficient overlap to infer modest growth here. And, there is a need to

pursue regular checks, using this new data source—which will make a year-

to-year comparison possible.

The nonprofit arts community has a more than $8 billion economic impact

on New York City each year. That is a substantial driver of economic activity,

something that takes place in neighborhoods all over the city and involves

thousands of cultural workers and millions of visitors and attendees.

And while social and intrinsic impacts are not the focus of this analysis, we

cannot forget them. We cannot ignore the intrinsic impacts of this activity—

the substantial impact to education, social fabric, the quality of life, the

creativity itself and the output of a volume of cultural vibrancy that some

argue is unequaled around the globe.

Anne Coates is Vice President, Arts and Cultural Development at The Municipal Art Society

of New York.

1

1 Alliance for the Arts, The Arts as an Industry: Their Economic Impact on New York City and New York State, 2006. 2 This analysis used a CDP data set from 2008, 2009, 2010 as with the State of the Arts analysis, which also appears in this publication, using the most recent year reported for each organization. However, large outliers were excluded from this estimate, as they heavily skewed the impact numbers. A more detailed explanation appears in the Methodologies section on page 25.

Arts Digest 2012

20

Recent years have been a financially challenging period for nonprofit arts

and cultural organizations in New York City. While nonprofit arts groups

are frequently used to making do in financially constrained circumstances,

evidence from a sample of more than 500 organizations shows that

organizations’ financial challenges have, on average, worsened since

2008’s global (and local) financial crisis and ensuing recession. The sections

below detail several measures of both operating activities and financial

position (in terms of resource accumulation, as well as the liquidity of these

resources), showing that the median nonprofit arts organization, already

in a challenging situation, was measurably (and negatively) affected by the

broader financial challenges.

Operating Results

The key metric we at FMA focus on for a single year’s financial performance

is operating results, or the extent to which an organization produces a

surplus (or deficit) from its operations.1 By this measure, their most recent

fiscal year was a challenging one for many nonprofit arts organizations,

as slightly more than half (53%) of New York City arts organizations ran an

operating deficit. The median operating margin2 for all organizations in this

sample was a negative 0.5%.

As may be expected, the recent recession resulted in a worsening of

operating results among these organizations. In fiscal 2008 (which for most

organizations in the sample ended prior to the economic crisis that fall),

47% of organizations ran an operating deficit (median margin of positive

0.1%), already indicating widespread financial challenges within the sector.

By fiscal 2009, that number had increased to 54% of organizations, with an

operating deficit and the median operating margin turned negative at -0.7%.

The 2010 numbers were practically identical to 2009.

Financial Condition of New York City Nonprofit Arts and Culture OrganizationsHilda Polanco and John Summers, Fiscal Management Associates

A majority of organizations in the New York City nonprofit arts sector,

then, are operating at a financial deficit, negating their ability to accumulate

reserves for future operations or to weather additional economic challenges.

Percentage of Organizations with Operating Deficits

Source: Fiscal Management Associates, Cultural Data Project

Median Operating Margin, All Organizations

Source: Fiscal Management Associates, Cultural Data Project1

1 In analyzing the financial statements of not-for-profit organizations, one should consider only unrestricted revenues in determining operating results. Also note that, for purposes of our analysis, operating

results do not include gains or losses from investments, whether realized or unrealized.

2 Operating margin is net income as a percentage of total income, here again excluding investment gains or losses.

Arts Digest 2012

21

Balance Sheet Metrics

Operating margins, of course, focus on a single year’s activities, so it is

important to also consider balance sheet–based metrics that show the

financial position of organizations as accumulated over time. (To editorialize

for a moment, if there is one lesson we would convey to stakeholders in

the nonprofit arts sector, including managers and boards, funders and

interested observers, it would be to give at least as much attention to the

balance sheet as to operating results in assessing the financial condition

of an organization. In our experience, balance sheet metrics are far too

often underemphasized or overlooked in this sector, resulting in a lack of

awareness of organizations’ true financial position and sustainability.) The

key question to be answered here is, what financial resources does an

organization have for purposes of carrying out its mission? An organization

with limited resources has a correspondingly limited ability to invest in

new programs, productions or collections; to guard against future financial

challenges or risks; or in extreme circumstances even to manage routine

cash flow and pay staff and creditors on a timely basis.

Some measure of an organization’s “net worth” is the key metric to

consider in assessing overall financial position and health. We at FMA pay

close attention to an organization’s liquid unrestricted net asset balance

(LUNA), which consists of that portion of an organization’s unrestricted

net assets that could be converted to cash relatively easily if necessary—

in essence, (unrestricted) current assets such as cash, receivables and

inventory along with investments in marketable securities.3 A challenge

for many organizations is that, while their balance sheet may show a

comfortable unrestricted net asset balance, some portion of that balance

may consist of a building, equipment, sets and props or other assets

that cannot realistically be “liquidated” to actually cover organizational

expenses. Our LUNA measure isolates that portion of an organization’s net

assets that can actually be used to cover expenses, maintain properties,

guard against downturns and pursue new opportunities.

Here again, we see a significant proportion of the city’s arts and culture

nonprofits in a financially precarious situation. For their most recent

reported fiscal year, the median organization had 1.5 months of operating

expenses available as liquid unrestricted net assets. This is well below a

commonly cited (if not often achieved) benchmark of 3 months of available

operating reserves; in fact only 38% of organizations in this sample reached

that level. Even more disconcertingly, 31% of organizations in the sample

actually had a negative LUNA balance, indicating that funds are in essence

being “borrowed” from restricted asset categories (or other sources) to

address the lack of liquid unrestricted net assets. Organizations with a

negative or only narrowly positive LUNA metric have very little financial

“cushion” with which to pursue opportunities or mitigate risks.

Percentage of Organizations with Negative Liquid Unrestricted Net Assets

Source: Fiscal Management Associates, Cultural Data Project

The three-year trend shows that many organizations in the city’s nonprofit

arts sector have been negatively affected by the economic downturn. In

fiscal 2008, the median organization had liquid unrestricted net assets equal

to 1.8 months of expenses; in 2009 that declined to a median of 1.5 months

of expenses. (2010 showed some rebound, to 1.7 months.) Similarly, the

percentage of organizations with a negative LUNA balance jumped from

25% in 2008 to 30% in 2009 (29% in 2010). 1

3 In nonprofit accounting, net assets are classified as unrestricted, temporarily restricted or permanently restricted based on the absence or presence of donor-imposed restrictions as to the use of the assets.

Unrestricted net assets carry no restriction as to their use and are therefore available at the discretion of an organization’s management and board. A positive unrestricted net asset balance does not

necessarily imply the liquidity of those assets, however.

FINANCIAL CONDITION OF NEW YORK CITY NONPROFIT ARTS AND CULTURE ORGANIZATIONS

Arts Digest 2012

22

If a negative LUNA balance is at the very least a warning sign to organizations

about the sustainability of their financial situation, a negative total net asset

balance is a true red flag. A negative total net asset balance means that an

organization’s liabilities exceed its total assets (technical insolvency), and

while not equivalent to default or bankruptcy, is clearly an unsustainable

position over the long term. Here again we see that recent years have

exacerbated the financial struggles of many nonprofit arts organizations.

Percentage of Organizations with Negative Total Net Assets

Source: Fiscal Management Associates, Cultural Data Project

In fiscal 2008, 8% of organizations in the sample were in a negative total

net asset position. In 2009, that number increased to 10%, and further

increased to 12% in 2010. For their most recently reported fiscal year,

nearly one out of every eight nonprofit arts organizations in New York City

was technically insolvent.

Segmentation Analysis

In analyzing financial data it is often appropriate to segment the data

according to organizations’ budget size, particularly when (as with New York

arts nonprofits) the range of budgets is so wide. We therefore segmented

for further analysis the 550 organizations included in the trend analysis by

their reported annual expenses and found that the overall trends discussed

above do mask some internal variation among organizations.

Budget RangeNumber of

Organizations(varies by year)

Percent of Sample(varies by year)

“Small” Less than $500,000 280-288 51%-52%

“Medium” $500,000 to $2.5 million 158-159 29%

“Large” $2.5 million to $20 million 82-90 15%-16%

“Institutional” Greater than $20 million 21-22 4%

Source: Fiscal Management Associates, Cultural Data Project

Looking at the data segmented by organization size provides a more

contextualized—and complicated—picture of the financial situation of

the city’s arts nonprofits. While in recent years larger organizations have

struggled more than smaller ones with maintaining profitable operations,

serious financial vulnerability remains more likely for smaller organizations

than for larger ones.

The table below shows median operating margins over the three-year

period for organizations in each budget category.

2008 2009 2010

Small 1.1% -1.2% 0.0%

Medium -0.4% 0.0% -0.1%

Large -0.7% -1.8% -2.6%

Institutional -3.8% -5.3% -10.8%

Operating Margin

Source: Fiscal Management Associates, Cultural Data Project

Small- and medium-size organizations have been, on average, able to

roughly break even operating results over the course of a year. On the other

hand, large- and institutional-size organizations have been more likely to

run substantial operating deficits, and to experience an increase in those

deficits over the course of the period.4 In general, we suspect that smaller

1

4 Note that operating results in this analysis do not include investment gains or losses, or (because of limitations in the data) spending rate draws from an endowment, which are more common among larger organizations

than smaller ones. Investment related income may, therefore, be able to subsidize some organizations’ operating losses, which may (or may not) be sustainable given the size of and returns on those endowments.

FINANCIAL CONDITION OF NEW YORK CITY NONPROFIT ARTS AND CULTURE ORGANIZATIONS

Arts Digest 2012

23

organizations have lower fixed costs and fewer long-term commitments,

therefore allowing them more flexibility to scale back programs or

operations when faced with limited revenues. Larger organizations, on the

other hand, often have very high fixed costs and commitments to programs

months or even years in advance, which limits their ability to scale back in

the short-term in order to avoid deficits (putting a premium on access to

financial reserves in such situations).

Breaking down the analysis by budget size also provides important context

for the observation above that, among the sample as a whole, roughly one

in eight organizations is technically insolvent (total liabilities exceeding total

assets). As the table below shows, this condition is much more likely among

smaller organizations in the sample.

2008 2009 2010

Small 11.6% 15.3% 15.8%

Medium 7.7% 11.0% 13.2%

Large 4.7% 2.5% 3.9%

Institutional 0.0% 0.0% 0.0%

Percentage of Organizations with Negative Total Net Assets

Source: Fiscal Management Associates, Cultural Data Project

Note that the bulk of organizations in a negative total net asset position are

in the small- and medium-size categories, and that that percentage grew

across each of the three years in the analysis. Organizations in this situation

require close attention from management and boards (as well as donors

and other stakeholders) to ensure that financial challenges are resolved in

such a way as to maintain organizational sustainability.

Conclusion

While the analysis here only includes three (very eventful) years’ worth of

data, it points to trends that should continue to be monitored at both the

sector-wide and organizational levels. Whether the trends seen since 2008

will reverse as the broader economic recovery progresses, or represent a

longer-term adjustment of the financial reality of the nonprofit arts sector, is

an issue that will require more time and data to evaluate. In the meantime,

however, we hope that the analysis presented here highlights some

important trends and themes for the sector’s leaders to consider.

Foremost among those trends is the decline in (already small) operating

margins across the sector, so much so that more than half of the

organizations in our sample are experiencing operating deficits. operating

deficits. While smaller organizations appear to have been less affected by

this trend than larger ones, perhaps because of greater operating flexibility,

very few organizations appear to have the ability to consistently generate

the surpluses necessary to build reserves for future operations (or to

mitigate against further economic challenges).

Additionally, while the trend of increasing levels of insolvency (negative

total net assets) is mostly concentrated among smaller organizations, the

lack of a financial “cushion” in the form of liquid unrestricted reserves is

a concern across the board. Median reserve levels for organizations at all

budget categories hover around the two-month mark, meaning that many

organizations lack the resources to invest substantially in new programs or

infrastructure or to guard against future financial challenges or risks.

Given the factors unique to any particular organization, there is no one-

size-fits-all solution to the challenges facing the sector. But the importance

of liquid unrestricted reserves to organizations’ long term financial health

and sustainability, and the difficulty of generating such reserves in the

current environment, should be a top consideration for the sector’s leaders,

funders and stakeholders.

Hilda Polanco is Managing Director and John Summers is Manager of Research and

Development at FMA (Fiscal Management Associates). FMA is a management consulting

firm to nonprofit organizations focused on helping its clients in the arts and culture and

other sectors with financial and business planning, fiscal infrastructure development, and

outsourced accounting services.

FINANCIAL CONDITION OF NEW YORK CITY NONPROFIT ARTS AND CULTURE ORGANIZATIONS

Arts Digest 2012

24

This digest both extends the Municipal Art Society of New York (MAS) and

the Alliance for the Arts’ legacies of research and breaks new ground.

It offers not one point of view on sector health or impact, but multiple

perspectives on how our arts institutions are working and creating value

in a difficult economic climate. The patterns of activity and the financial

dynamics discussed in State of the Arts, Who Pays for the Arts?—2010, and

The Economics of the Nonprofit Arts Sector in NYC demonstrate, at least

in part, resilience and growth. The Financial Condition of New York City

Nonprofit Arts and Culture Organizations, which closes the digest, offers a

much starker view, calling into question the long-term sustainability of the

arts and culture in our city.

If, as the Financial Condition of New York City Nonprofit Arts and Culture

Organizations found, nearly one out of every eight arts groups is technically

insolvent (negative total net assets), this does not mean that doomsday

bells are tolling. Rather, it means that we—all of us working together—

have the responsibility to gauge solvency over time, create policy and

invest the appropriate resources to ensure organizational adaptability to

socioeconomic and environmental shifts.

Arts research is only as strong as the data it is based on. The Cultural Data

Project (CDP) provides far more regular and accurate data than has been

previously available to researchers. In publishing this digest, which tracks

data over time, MAS goes beyond the first-ever reports driven by the CDP,

which offer time-specific snapshots: the State of the Arts and Dance/NYC’s

discipline-specific State of NYC Dance. It also suggests new directions

for using the CDP to measure the arts’ economic impact and financial

condition, and possibilities for future NYC arts research.

As a foundation for advocacy, arts research is a critical driver for policy

and fund development, awareness building and improved management

Future of NYC Arts Research: A PostscriptLane Harwell, Dance/NYCAnne Coates, The Municipal Art Society of New York

practices. The need for arts research is heightened in climates—right

now, in our city—where responsiveness and strategy are required to face

challenge and change. MAS is committed to help meeting this need in the

context of its livability agenda—to understanding the arts and culture as

catalysts for making New York a more livable city.

As MAS builds its research agenda, it will look to this digest and beyond

to explore what information is most useful to arts organizations and their

supporters. There is untapped opportunity in the CDP for comparative arts

studies between cities to recognize competitiveness, unity and geographic

dynamism. As with the State of NYC Dance, there is opportunity to

illuminate disciplinary distinctions, blurred boundaries and synergies. There

are individual success stories—institutions bucking financial trends—which

may offer clues for good, scalable practice. But understanding the arts as

a catalyst for livability, integral to urban planning, design and preservation,

also requires looking beyond institutions both to artists and the commercial

arts, and across service and business sectors. There is value in looking

citywide and at specific neighborhoods, to better understand the

opportunities and challenges for the arts to be leaders in the sustainability

and resilience of our diverse communities.

Again, this digest may provoke not one conversation, but many. Ultimately,

it is an invitation to arts organizations and their supporters—policymakers,

investors and sister service organizations alike—to join MAS in realizing the

future of NYC arts research. Working together, we can imagine and create

new research exploration that will strengthen the arts and change New

Yorkers lives for the better.

Lane Harwell is Director of Dance/NYC and serves as the chair of the new MAS Arts Advisory

Committee. Anne Coates is Vice President, Arts and Cultural Development, at The Municipal

Art Society of New York.

Arts Digest 2012

25

MethodologiesThis digest was informed by a long history of knowledge and data published in multiple

reports by the Alliance for the Arts. That organization’s studies drew upon data from a

number of sources over time—including the City’s Department of Cultural Affairs, the New

York State Council on the Arts, 990 annual federal filings, individual surveys and personal

follow-up. This collection of research, however, relies solely on data provided through the

Cultural Data Project (CDP). This rich resource offers highly detailed information regarding

the economic activity of individual arts and culture organizations.

Except where noted below, the following notes apply to all analyses in this digest.

The data set used in each of the analyses in this publication is limited to nonprofit cultural

organizations located in New York City that use the CDP to create the financial documents

needed to apply for support from their funders, including the New York State Council on

the Arts and the New York City Department of Cultural Affairs.

Data used is from the most recent fiscal year of those available for each organization.

Availability is based on two main factors: a data profile was submitted by a cultural

organization for a particular year (2008, 2009 and 2010), and that data profile was verified

and categorized as “review complete.” Those organizations whose profiles had not

achieved review complete status cannot be included in any licensed analysis. Each analysis

identifies the year(s) of data studied. All data are self-reported by the organizations, and

the organizations alone are responsible for their accuracy.

For-profit cultural institutions, individual artists, and nonprofit cultural organizations

that do not apply for funding from New York City, New York State or other CDP

participating funders are not included in this analysis. Thus, very large for-profit cultural

enterprises (like major Broadway theaters) and very small creative leaders (such as an

unincorporated dance company or theater troupe) are not included in any of the analyses

in this publication.

While there are important advantages to working with CDP data, there are challenges in

comparing these results with those from prior Alliance reports. There are also inherent

challenges within the CDP where reporting may not be consistent in certain categories.

The main challenges encountered by the analysts included:

�� Organizations using the CDP have a certain amount of discretion in how they report

capital contributions and capital expenses along with other types of income and

expense. Some organizations did not include this data in the income and expense

sections, but instead reflected them in their balance sheets in their CDP data profile;

but others did include capital income and expense in their income and expense

statement reporting. This is particularly troublesome as capital contributions and

expenses tend to be large in comparison to other categories of income and expense,

and can dramatically skew findings. Ideally, capital contributions and expenses would

be clearly segregated from other types of income and expense reporting to allow for

clearer analysis, but that is beyond the scope of this report. Unrealized net gains on

investments were excluded from income analysis.

DEFINITION OF TERMSThe following terms and categories are used throughout all articles in this publication:

EARNED REVENUES are broken into five categories:

��� ADMISSIONS and box office income derived from events, exhibitions and

performances, as well as subscriptions and memberships paid for these same services

over the course of the season or year

��� FUNDRAISING AND EVENTS includes sponsorships and funds raised through special

events hosted by the organization

��� CONTRACTED SERVICES captures revenues from programs offered for education,

special populations, and direct services

��� TUITIONS AND WORKSHOPS comprises revenues from group contracted activities,

classes and tours

�� OTHER INCOME consists of revenues from space rentals, merchandising, food

services, parking, touring, royalties, publications, interest on investments (for those

organizations large enough to hold endowments or other invested assets), and

miscellaneous earned income.

PRIVATE CONTRIBUTIONS are generated from the following:

��� INDIVIDUALS including contributions from board members

��� FOUNDATIONS not including sponsorships, but focused instead on grants and gifts

��� CORPORATIONS also not including sponsorships—only grants and gifts.

GOVERNMENT FUNDING is broken into three groupings:

��� CITY OF NEW YORK including funds received from the Department of Cultural Affairs

(DCA), and City agencies including the Department of Education, Department for the

Aging, the Department of Community Development, and the borough presidents

��� STATE OF NEW YORK consisting of support provided by the New York State Council

on the Arts (NYSCA) and other New York State agencies including the Department of

Education and the Natural Heritage Trust

Arts Digest 2012

26

��� FEDERAL comprising the National Endowment for the Arts (NEA) and other agencies

such as the National Endowment for the Humanities, Institute for Museum and

Library Services, the National Science Foundation and the National Aeronautics

and Space Administration.

STATE OF THE ARTSTwo datasets were used: Fiscal Year Data from 1,325 organizations that reported data for

their most recent fiscal year from 2008, 2009 and 2010 (however, in most cases FY2009 or

FY2010); and Trend Data from 554 organizations that reported their data for each of the

three years. All organizations represented in the Trend Data are also included in the

Fiscal Year Data.

For those organizations reporting returns for all three years whose income fluctuations

resulted in a changing income category, their final category in FY2010 determined their

category position for the entire three-year period in this analysis.

The following were used to group organizations based on their self-selected type and

primary activities:

�� COMMUNITY ARTS & CULTURE—providing arts and cultural programs to a specific

community, including geographic, ethnic, linguistic or religious

�� EDUCATION AND INSTRUCTION—providing music, visual and performing arts

instruction, including schools and colleges

�� MUSEUMS, GALLERIES AND VISUAL ARTS—creating or displaying visual media

�� MEDIA ARTS—working in print, sound or visual media, including nonprofit radio and

television, publishers, libraries, film and video producers, and film theaters

�� HISTORY—preserving and presenting history, historical collections or artifacts,

including history museums, historic sites, and archives

�� SCIENCE AND NATURE—including science museums, horticultural organizations, zoos,

planetariums and parks.

�� DANCE—performing all types of dance

�� THEATER—performing play and other theatrical productions, including theater

companies and related organizations

�� MUSIC—performing vocal or instrumental music, including opera companies,

orchestras, bands and ensembles

�� OTHER PERFORMING ARTS—performing or presenting multi-disciplinary work, including

performance venues and festivals

�� COUNCILS, SERVICES AND SUPPORT—providing support services to the sector as a

whole, to organizations in a specific discipline category, or to individual artists. These

groups generally do not engage directly in the production or presentation of artistic work

�� OTHER—organizations that do not fit in any of the above category.

WHO PAYS FOR THE ARTS?—2010 Of the organizations that had “review complete” data for 2010 there were 723

organizations with data available for study. Within this dataset, seven organizations

were excluded from analysis because they had only partial information (i.e., less than 12

months of information reported). An additional 10 organizations that dedicate a significant

part of their operations to cultural practices (such as the city parks, public libraries and

universities), but for which it was not possible to segment non-arts-related activity or

personnel were also excluded from this analysis. While such organizations should be

viewed as being in the cultural orbit, they were omitted here in an effort to focus on

organizations for which cultural activity is their primary mission. There is interesting data

in the CDP about these omitted organizations, and an examination of them at some future

point could be useful and compelling.

Organizations are divided according to several factors to help better observe differences

between groups of different sizes and missions. This analysis uses the following size

categories (determined by an organization’s total annual income):

Less than $100,000 268 organizations

$100,000 to $500,000 175 organizations

$500,000 to $1,000,000 70 organizations

$1,000,000 to $5,000,000 146 organizations

Greater than $5,000,000 64 organizations1

DISCIPLINESAlthough the CDP relies on the National Assembly of State Arts Agencies to define its

discipline categories, the categories outlined below compare to those previously used in

the last Alliance for the Arts’ Who Pays for the Arts? report:

��� VISUAL ARTS include art, history and science museums, historical societies,

organizations dedicated to drawing, painting and sculpture, film and video,

architecture and design, and photography

��� PERFORMING ARTS are comprised of dance, theater, music and presenting

organizations such as concert halls and performing arts centers

��� LIVING COLLECTIONS are limited to botanical gardens, zoos and aquariums;

��� OTHER contains arts councils, multidisciplinary, service and

arts education organizations.

Average income for all organizations in 2010 was $3.4 million, while the median income

was less than $250,000. This means that a few very large organizations (more than $100

million in annual income) strongly affect (or skew) the results of this analysis, affecting how

trends and comparisons within and between categories are observed. While the analyses

1

1 Note that for analysis actual categories comprise revenues up to but not including the maximum value in that category (e.g., $100,000–$999,999.99, rather than $1 million).

METHODOLOGIES

Arts Digest 2012

27

attempt to compensate for this by creating categories for organizations of various sizes,

some categories (such as organizations with more than $5 million in annual income)

contain generalizations of widely divergent organizations that may not well summarize the

breadth of their economic experiences.

Unrealized net gains on assets were not counted in this analysis as revenues. While these

do not have a cash impact on an organization, they are an important indicator of an

organization’s overall fiscal strength, particularly for the very largest organizations with

substantial endowments or invested holdings. In 2010, total unrealized gains on net assets

were $510 million, of which 77% ($393 million) was held by the 10 largest organizations.

In many cases this analysis uses the average value of an income category. An average

can provide a clearer measure than an aggregate value (common to Alliance reports, and

which simply provides the aggregate value of all groups in a given category). For example,

while the 268 organizations with less than $100,000 in annual income had aggregate

total income of $12 million, the average total income per group was just $45,000. Using

averaged values provides a more precise picture of how individual organizations in a given

category compare to organizations in another category.

Some Other Income categories were not included in this analysis (such as contributions

from corporate affiliates, in-kind support, and net assets released from restrictions). The

total amount excluded from the analysis was less than $3 million of the total $2.5 billion.

THE ECONOMICS OF THE NONPROFIT ARTS SECTOR IN NEW YORK CITY—A LOOK AT THE ECONOMIC IMPACT The data used in this impact analysis was derived from the blended CDP data set from

2008, 2009 and 2010 of 1,325 organizations. MAS attempted to model more closely the

list of organizations—and types of organizations—used in economic impact analysis

conducted by the Alliance for the Arts in 2006. As a result, organizations whose primary

purpose was not arts and culture (e.g., higher education institutions) were excluded from

the impact analysis. Thus, their large total expenditures, including salaries, were excluded

from the direct and consequently indirect impact figures. We cannot make a 1:1 correlation

between this study set and that used in 2006 due to the nature of data sets studied, the

questions asked that generated the collection of data and the groups represented in each

study. Because the data spanned three years, 2009 was used as the measure year.

An important aspect of the economic impact analysis of a business or industry is the

accurate estimation of its indirect impact on a region’s output and jobs, sometimes

referred to as the “ripple effect.” All business spending initiates a ripple effect, which can

be captured by a multiplier—essentially the number of times an initial round of spending

is multiplied as it ripples through the economy. To produce a given output, a business will

make local purchases (inputs) from utilities, wholesalers and providers of professional

services, among many others. In addition, they pay their workers, who in turn spend a large

part of their paycheck locally, thereby producing even more spending in the region. Finally,

the spending initiated in this second round generates a third and then successive rounds

as the impacted firms make purchases in the region. This spending process does not go

on indefinitely, because each round adds less to spending than the previous round, with

spending additions eventually reaching zero. As determined by the multiplier, the sum of

these rounds reaches a limit, which can be quite significant compared with the first round

of spending, although it will rarely equal it.

Industry multipliers are difficult to estimate, especially for a region. When used correctly,

input-output (I-O) models are widely regarded as giving the best estimates of industry

multipliers. A widely used I-O model, and the one used in this study, is RIMS II (Regional

Input-Output Modeling System), developed by the U.S. Department of Commerce. Impacts

are usually calculated on an annual basis.

FINANCIAL CONDITION OF NEW YORK CITY NONPROFIT ARTS AND CULTURE ORGANIZATIONSThe analysis by Fiscal Management Associates is based on a sample of New York City arts

and culture organizations that reported data to the CDP, an online system that captures

financial, programmatic and operational data from arts and cultural organizations. Analysis

referring to the “most recent fiscal year” is an aggregation of data from the most recent

fiscal year reported by each organization in the sample. Analysis of trends from 2008

through 2010 is based only on data from those organizations that have data profiles for

each of the three years (a total of 550 organizations).

The organizations in the sample represent the full breadth of New York City nonprofit

arts organizations, with expense budgets ranging from less than $1,000 to more than

$400 million. The median annual expense budget of all organizations in the sample is

approximately $650,000.

A small number of clearly erroneous data profiles were removed from the sample.

APPENDIXA total of 1,228 groups from the study sample of 1,325 for the State of the Arts analysis are

plotted here. Groups with P.O. boxes or unplottable addresses in their profiles are excluded.

METHODOLOGIES

Appendix

State of the Arts Organizations by

City Council District

NotesPopulation Size: 1,228Source: Alliance for the Arts, Cultural Data ProjectFrom most recent fiscal year reported to CDP, 2008-2010See Methodologies for details

Queens

Bronx

Manhattan

Brooklyn

Staten Island

Arts Digest 2012

29

AcknowledgmentsTHE MUNICIPAL ART SOCIETY OF NEW YORK

BOARD OFFICERS

Eugenie L. Birch, Chair

Vin Cipolla, President

Susan K. Freedman, Vice Chair

James M. Clark, Jr., Treasurer

Frances A. Resheske, Secretary

Earl D. Weiner, Esq., General Counsel

Arts Digest 2012 is an initiative of The Municipal Art Society of New York.

This work grows out of a newly formed collaboration with the Alliance for

the Arts, a pioneer in arts research.

MAS would like to thank the following individuals and organizations; without

their support and participation this report would not be possible.

Editor

Anne Coates, Vice President, Arts and Cultural Development

The Municipal Art Society of New York

State of the Arts

Patricia C. Jones

Who Pays for the Arts?—2010

Michael J. Hickey

Daniel Arnow

Kimberly Rubin

The Economics of the Nonprofit Arts Sector in NYC—A Look

at the Economic Impact

Anne Coates, The Municipal Art Society of New York

Thomas J. Spitnzas

Catherine Lanier

Financial Condition of New York City Nonprofit Arts

and Culture Organizations

Fiscal Management Associates

Hilda Polanco

John Summers

Future of NYC Arts Research: a Postscript

Lane Harwell, Dance/NYC

Anne Coates, The Municipal Art Society of New York

CULTURAL DATA PROJECT

Arin Sullivan

Neville Vakharia

Christopher Caltagirone

CULTURAL DATA PROJECT—NEW YORK TASK FORCE

Alliance of Resident Theatres / New York

Arts & Cultural Council for Greater Rochester

Asian American Arts Alliance

Doris Duke Charitable Foundation

The Field

Harlem Arts Alliance

New York City Department of Cultural Affairs

The New York Community Trust

New York State Council on the Arts

The John R. Oishei Foundation

Time Warner Inc.

MAS ARTS ADVISORY COMMITTEE

Alberta Arthurs

Patricia Cruz

Lane Harwell

Mary Miss

Special thanks to Rita Carrier, Lane Harwell, Catherine Lanier, and Earl Weiner.

Arts Digest 2012

30

ALLIANCE FOR THE ARTS TRUSTEES: J.P. Versace, Chairman, Ashton Hawkins,

Chairman Emeritus, Laurie Beckelman, Stephanie French, Karen Gifford,

Paul Gunther, Martha Newton, Susan Ralston, András Szántó, Larry Warsh,

Joanne Stern, Life Trustee

The Trustees of the Alliance thank the following for their support of the

Alliance’s research agenda: Bloomberg Philanthropies, Booth Ferris

Foundation, Leona and Harry B. Helmsley Charitable Trust, and New York

Community Trust, as well as public support from the New York State Council

on the Arts and the New York City Department of Cultural Affairs.

The data used for this report was provided by the Cultural Data Project

(CDP), a collaborative project of the Greater Philadelphia Cultural Alliance,

The Greater Pittsburgh Arts Council, Pennsylvania Council on the Arts,

The Pew Charitable Trusts, The William Penn Foundation and The Heinz

Endowments, created to strengthen arts and culture by documenting and

disseminating information on the arts and culture sector. Any interpretation

of the data is the view of The Municipal Art Society of New York, the Alliance

for the Arts, and Fiscal Management Associates and does not reflect the

views of the Cultural Data Project. For more information on the Cultural

Data Project, visit www.culturaldata.org.

ACKNOWLEDGMENTS

This report is a sponsored project of the New York Foundation for the

Arts, with funding from the New York City of Cultural Affairs, Kate D. Levin,

Commissioner.

MAS would like to thank Fiscal Management Associates for its in-kind

support for this project.

The Municipal Art Society of New York

111 West 57th Street

New York, NY 10019

© 2012, The Municipal Art Society of New York. All Rights Reserved

DESIGN

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