Culture (from Pew Prospectus 2010)

Source Organization: The Pew Charitable Trusts

Author: Marian A. Godfrey and Gregory T. Rowe

03/26/2010 - Very late in the long and tortured process of adopting a Pennsylvania state budget for the current fiscal year, legislative negotiators sought to close a $120-million gap through a sales tax on tickets to plays, concerts, museums and zoos.

Stunned cultural advocates were informed at the eleventh hour that this tax was a “done deal.” Nevertheless, with crucial leadership from the Greater Philadelphia Cultural Alliance, advocates mounted a potent statewide effort to convince legislators that the tax would significantly reduce admissions and revenue streams of the nonprofit organizations involved, resulting in great damage to the culture sector. After advocates produced data that showed that the tax would yield only about $13 million from the 4,900 cultural organizations statewide—a small fraction of legislators’ projections—the “arts tax” was dropped.

The revenue projections used to correct the legislature’s estimates were derived from the Cultural Data Project, which was developed several years ago by Pew and a coalition of six Pennsylvania funders and arts-service organizations as an online tool to collect financial and operating data from virtually every cultural organization in the state.

Its success in Pennsylvania has led to its adoption in California, Illinois, Maryland, Massachusetts, New York and Ohio, with interest rising rapidly in many other states, leading to the long-term possibility of a national database on the arts.

The Cultural Data Project is managed by Pew on behalf of 100 funders who cover the costs of the project in their respective states. Almost 6,000 organizations have submitted information to the project.

Because the facts and figures are collected in a standardized form, each institution supplies data only once a year and then is able to generate reports that can be sent to multiple funders at the click of a button, eliminating the need to re-organize the same information in varied formats. By consulting the data, states and localities for the first time can report accurately on the number of people attending arts events, the size of the cultural workforce and the economic impact of the sector.

The data submitted are subsequently given back to the organizations in easy-to-use reports that track trends and allow them to compare themselves to their peer institutions. Eventually, disciplines such as music and dance will be able to do customized research on their particular sector. For instance, last year the Philadelphia theater community issued the first report ever on the size of its audiences, number of employees and other key budgetary and operational figures.

The data are not used only to trumpet the arts sector’s impact or to dispute the claims of its critics; they also inform research about the field’s challenges.

A recent study of the balance sheets of cultural organizations throughout Southeastern Pennsylvania using Cultural Data Project data revealed disturbingly low levels of financial health from the lack of adequate working capital reserves and funds to cover the cost of building upkeep or to invest in new programs and marketing efforts. A particularly troubling finding was that most of the institutions in the study that were plan- ning new facilities were already financially fragile through such chronic “undercapitalization” and hardly able to cover current costs, much less the added expenses associated with a new building.

Pew continues to develop practical tools for the Cultural Data Project to help organizations more fully understand their own financial and operational challenges and thus be better positioned to take corrective action to remediate problems. In 2010, in collaboration with Philadelphia’s William Penn Foundation, Pew will roll out an online tool that will clarify for managers and boards of arts organizations how well their institutions are capitalized.

Another online tool under development would give organizations the capacity to test alternative financial scenarios, especially when building expansions or new programs are under consideration. After these instruments are piloted in the Philadelphia region, they will be made widely available to all project users and funders.

For a sector that has often made important decisions with limited data and had to rely on research not grounded in reliable numbers, the Cultural Data Project is a game-changer. While making art has always relied heavily on inspiration, intuition and hard work, for institutions that intend to sustain their missions over the long haul, the initiative adds a valuable new element: hard facts. Successful arts professionals know that rather than inhibiting creativity, data give them the ability to assess risk and build the resources they need to stay at their artistic best.

In an increasingly crowded marketplace for the arts and other forms of leisure activity and with technology rapidly increasing the choices for engaging with culture, only those institutions that make decisions rooted in a fact-based understanding of themselves and their environment will thrive. The Cultural Data Project and the research it makes possible will fill a large gap in their ability to do so.

Marian A. Godfrey 
Senior Director, Culture Initiatives

Gregory T. Rowe
Director, Culture Initiatives and Deputy Director, Philadelphia Program

Read more about Pew's work in Pew Prospectus 2010 (PDF).

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