Arts & Economic Prosperity 5: How the Nonprofit Arts & Culture Industry Impacts the Economy in Your Community

Posted by Mr. Randy Cohen, Jun 17, 2017

Mr. Randy Cohen

When recently asked how best to advocate for the arts in the current environment, U.S. Senator Tom Udall (NM)—co-chair of the Senate Cultural Caucus and chief sponsor of the CREATE Act—was unequivocal: “Start by telling every one of your Senators about the economic benefits of the arts.” This familiar refrain is one we have heard for decades from city council chambers to governor mansions to the halls of Congress—and it works.

Arts & Economic Prosperity 5 (AEP5), Americans for the Arts’ fifth study of the nonprofit arts and culture industry’s impact on the economy, does just that. It changes the conversation about the arts from that of a “charity” to one about an “industry” that provides both cultural and economic benefits to the community.

In 2015, the nation’s nonprofit arts and culture industry generated $166.3 billion of economic activity—$63.8 billion in spending by arts and cultural organizations and an additional $102.5 billion in event-related expenditures by their audiences. The economic impact of this speaks for itself:

  • 4.6 million full-time equivalent jobs
  • $27.5 billion in federal, state, and local government revenue
  • $96.1 billion in household income

Just the Nonprofit Arts Sector

AEP5 is the largest and most comprehensive study of its kind ever conducted: 341 regions participated in the study representing all 50 states plus D.C., ranging from small rural to large urban areas with populations from 1,540 to 4 million. Even in our smallest communities, the arts have a measurable economic impact.

Research Associate Isaac Fitzsimons with 212,691 AEP5 audience surveys.

Only nonprofit and municipal arts and cultural organizations are included—no for-profit entertainment, like Broadway or motion picture businesses, and no individual artists. Why just nonprofits? Because government and philanthropic dollars are typically directed to these organizations. It is appropriate to ask, “In addition to improving quality of life, what is the economic ROI of that investment?”

With the help of study partners, we collected expenditure and attendance data from 14,439 arts and cultural organizations and 212,691 of their attendees to measure total industry spending. Project economists from the Georgia Institute of Technology customized an input-output analysis model for each study region to provide specific and localized economic impact data.

Because of the large and diverse number of local study regions, we were able to make national estimates of the economic impact of nonprofit and municipal arts and cultural organizations and their audiences.

Nonprofit Arts Organizations Pump $63.8 Billion into the Economy

Nonprofit arts and cultural organizations are good business citizens. They employ people locally, purchase goods and services in the community, are members of the Chamber of Commerce, and are involved in the marketing and promotion of their regions. Their expenditure data alone is a myth-buster for many people, including decision makers (remember to tell that story!). Arts organizations are good business citizens.

Spending by Arts Audiences Directs $102.5 Billion to Local Businesses

Like all industries, spending by arts organizations has a measurable economic impact. Unlike most industries, however, the arts generate a bounty of event-related spending for local businesses—dollars that land in the pockets of local establishments such as restaurants, retail stores, hotels, and even the local babysitters. 

These expenditures translate to an average spending of $31.47 per person, per event, beyond the cost of admission. A rock-solid figure we arrived at based on the 212,691 audience surveys conducted for this study. 

These surveys also tracked attendees’ home zip code, allowing further analysis:

  • Nationally, 34 percent of attendees traveled from outside the county in which the event took place (non-local), and 66 percent of attendees resided within the county (local).
  • Does their spending differ? Absolutely! Nonlocal attendees spent twice as much per person, per event as their local counterparts ($47.57 vs. $23.44).
  • Two-thirds (69 percent) of visitors indicated that the primary purpose for their visit was “specifically to attend this arts or cultural event.”
  • Among local attendees, 41 percent said that they would have traveled to a different community for a similar arts experience if that arts event was not taking place.

The message is clear: a vibrant arts community keeps residents and their discretionary spending close to home, AND attracts visitors who spend money and help local businesses thrive.

4.6 Million Jobs Supported by the Nonprofit Arts

Arts organizations employ builders, web designers, electricians, accountants, printers, and other workers spanning many industries, in addition to artists, curators, musicians, and other arts professionals. Moreover, the AEP5 economic analysis looks at employment beyond those who work for arts organizations. It also captures the jobs supported across the community because of spending by the organizations and their audiences (see the report to get a better understanding of the economic modeling).

$27.5 Billion in Government Revenue

Federal, state, and local governments receive an estimated $27.5 billion in revenue every year because of the economic activity of nonprofit arts organizations and their audiences. This is an outstanding yield given that their collective outlay is about $5 billion. (Small Investment. Big return.)

The revenue back to government generated by arts industry expenditures shows that government arts funding is not a one-way street. Rather, there is a benefit of substantial revenue back to government accompanying the public good that these organizations provide—a fact we should keep in mind when discussing current threats to nonprofit organizations, such as limiting the federal charitable tax deduction, with our elected officials. 

The Public Gets It

The American public is with you! In a national poll published last year, Americans Speak Out About the Arts, we found that 87 percent of the public believes the arts are important to quality of life, and an impressive 82 percent also believe the arts are important to local businesses and the economy.

Put the Study to Work for You

The effective arts advocate needs a full quiver of case-making arrows to articulate the value of the arts—from the passionately inherent to the functionally pragmatic. With AEP5, you are delivering a clear and welcome message that so many community leaders are looking to hear: the arts are an investment that delivers both community well-being and economic vitality.

Visit our website to access a suite of tools that will enable you to put AEP5 to work for you.

  • Download reports: Copies of the full national statistical report as well as the Summary Report and study highlights brochure are available for free.
  • Access tool kits: sample PowerPoint presentations, press releases, and much more
  • Use the AEP5 Calculator: Not one of the 341 study regions? No problem. You can estimate the economic impact of the nonprofit arts and cultural organizations and their audiences in your community.
  • Explore the findings: Browse a map of study regions and download 2-page summaries of their findings.