Nougaty Goodness

by Dwight Newton

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The State of the Arts: Who Knows?

I reported in this magazine back in February (“Why are the arts important?”) about studies that were done indicating that the numbers used by arts organization to justify public spending were over-inflated. I mentioned that state arts organizations were given ammunition in their arguments for legislative funding with a 2002 report from Americans for the Arts (AFTA) called Arts & Economic Prosperity: The Economic Impact of Nonprofit Arts Organizations and Their Audiences. This report indicated that “America's nonprofit arts industry generates $134 billion in economic activity every year. Then in 2005 a report appeared from the RAND Corporation, a nonprofit research organization, called Reframing the Debate About the Value of the Arts (, turned the AFTA report on its head, suggesting that the economic impact was overstated and that the intrinsic value of the arts should be the subject of advocacy rather than the extrinsic impacts on social or economic development.

In May of this year yet another volley was served in this debate by AFTA. A new report titled Arts & Economic Prosperity III: The Economic Impact of Nonprofit Arts and Culture Organizations and Their Audiences  ( claims to be the most comprehensive study of this subject to date. The bottom line in this report indicates that:

The $166.2 billion in total economic activity has a significant national impact, generating the following:

  • 5.7 million full-time equivalent jobs
  • $104.2 billion in household income
  • $7.9 billion in local government tax revenues
  • $9.1 billion in state government tax revenues
  • $12.6 billion in federal income tax revenues"

That’s $166.2 billion. That these numbers are for nonprofit arts and culture – they do not include the for-profit music, cinema, Broadway, and television industries. The two largest arts cities, New York and Los Angeles, each with over $1 billion in arts spending, were excluded from the study “to avoid inflating the national estimates.” It must be noted that this is not all direct arts and culture activity, but includes all the costs of infrastructure from marketing to transportation to physical plant. And it includes related expenditure by audience, including event parking, dinners, childcare, etc. In fact, these arts-related audience expenditures are nearly twice the direct expenditures of the arts organizations. The study estimates that arts and culture attendees spend $27.79 per person above the cost of admission.

$63.1 – Spent by Arts Organizations
$103.1 – Spent by audiences

Caution should be exercised when touting these numbers on behalf of arts funding, however. The addition of the word “culture” to the “arts and culture” organizations surveyed inflates the numbers by including such organizations as science and technology museums, sports and hobby museums, historical societies, architectural organizations, public access television studios, marine and maritime museums, cultural and ethnic awareness organizations, etc., that would not, in most people’s minds, constitute arts, but are more broadly included within “culture.” Additionally, the numbers are passed through a fairly arcane economic algorithm (called input/output analysis) to measure “economic impact,” not just economic activity. So, in an example given in the report, when a theatre company buys a gallon of paint for $20, a portion of that goes to pay the store clerk, who then uses it to buy groceries, which the grocery store uses a part of to pay the cashier, etc. This kind of math is respected as being legitimately descriptive of economic impact, but it also has the effect of inflating the raw numbers, which is clearly what the advocates want.

This is an important study for many reasons. It’s primary goal is to provide economic motivation for legislators to vote in favor of government arts funding. Public funders like numbers. Really big numbers backed by research that is supported by reputable foundations can make an impression on a non-specialist legislator. But the previous RAND study also remains critical to the arts funding debate. In it the intrinsic value of the arts to the nation are emphasized. The necessary pursuit of dollars by arts organizations influences them to make creative decisions based on economics rather than creative vision, which is not a good thing. It is imperative that the art comes before the money, and in order to get funding for the are, it is imperative to be articulate in stating it’s importance and intrinsic value in ways that anyone can understand. Good artists are not always good speakers or good writers.

-Dwight Newton is a musicologist and is the Public Information Coordinator for the UK School of Music. His personal websites are at and