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Commentary: Engaging Individuals May Be Paying Dividends for Arts & Cultural Groups in Philadelphia

October 08, 2011

(Tom Kaiden is president of the Greater Philadelphia Cultural Alliance.)

Tom Kaiden It's no secret that the recession has been hard on the nation's cultural sector. Studies such as the National Endowment for the Arts' Survey of Public Participation in the Arts, Americans for the Arts' National Arts Index, and the James Irvine Foundation's California's Arts and Cultural Ecology report have all documented downward trends in attendance. So when we conducted our latest analysis of data for the Philadelphia region, we expected a similar outcome showing cultural consumers staying home as times got tough. But that's not what we found. In fact, in the midst of one of the worst and most prolonged recessions since the Great Depression, Philadelphia's attendance actually rose by 5 percent and individual giving increased 20 percent. What's going on? It's a story of adversity, but also adaptation to adversity. And, at its heart, it's a story about the core importance of arts and culture in people's lives.

These figures come from the Greater Philadelphia Cultural Alliance's recently published 2011 Portfolio -- a comprehensive survey of Philadelphia's cultural sector. For this third edition of Portfolio, we collected financial and organizational data from more than four hundred of the region's cultural nonprofits, as well as trend data on 276 groups that allows us to take a detailed look at the effects of the recession for the first time.

What we found was a rich cultural environment but a sector struggling to contend with macroeconomic forces frequently beyond its control. The bad news was that although cultural organizations were largely successful at controlling expenses and maintaining the quality of their work, revenues dropped precipitously. Overall contributed income fell by 19 percent, largely due to reductions on the part of corporate and foundation donors and cuts to government programs. Earned income was where most of the damage occurred and is almost exclusively explained by dramatic reductions in income derived from organizations' investment portfolios and endowments. Between 2007 and 2009, the aggregate investment holdings of Philadelphia's cultural organizations fell from $2.3 billion to $1.9 billion. Although these losses tracked closely with other benchmark market indices -- and may eventually be recouped with a market recovery -- it translates to a 128 percent drop in investments and interest earnings.

Philadelphia's cultural organizations responded to these financial setbacks by taking steps to reduce labor costs while maintaining the quality of their productions and increasing the number of events. To keep patrons coming through the door, cultural organizations continued to invest in marketing, and they maximized those dollars by shifting more of their marketing budgets online. Costs for printing and postage both fell by 5 percent, while Internet and Web marketing expenses increased by 49 percent. When jobs were eliminated, organizations put the mission first and made cuts to administrative staff before artistic and programmatic staff were let go. Like many households during the recession, cultural organizations also delayed major repairs and cut facilities-related costs to keep the doors open. It's a short-term gamble, in that if the economy falters again and recovery is delayed, the costs of repairs could be compounded by neglect.

While most of the revenue side of the income statement was clobbered during the recession, one area where we made up ground was in individual engagement. In addition to the 5 percent increase in attendance, individuals also showed their support in other ways. Memberships and subscriptions rose 8 percent and personal giving jumped 20 percent. While the gains were not enough to offset the damage done by the downturn, they do help point a way forward.

For years, Philadelphia's civic leaders, funder community, and cultural groups have made arts and culture a civic priority and central part of our region's development strategy. Our aim has been not just to make Philadelphia a world-class destination, but also to use our rich cultural assets to help address longstanding civic issues and make Philadelphia a better place to live, work, and raise a family.

The result has been a profound and widespread effort to engage new audiences and serve our communities. Cultural organizations have worked to keep the performances and exhibitions affordable by maintaining the average cost of admission at $15, less than a third of the cost of production. At a time when creativity in schools was at a premium but funds were at a minimum, the region's cultural sector committed to educational programming. Cultural groups around the region are using arts and culture as a way to improve scholastic performance, foster creativity and innovation, help kids cope with bullying, train a new generation of artists and performers, and revitalize neighborhoods. Last year, there were nearly two million visits by school-aged children to regional cultural organizations, and cultural organizations conducted nearly three thousand programs on site at area schools.

These community engagement efforts may have been the sector's smartest investment for long-term sustainability. The theory is that by deepening the engagement of the individual, improving the patron's experience, lowering barriers to participation, and building strong partnerships with community organizations, we are attracting new audiences. The connections that we build by serving our neighbors are paid back in the form of patron loyalty and public support.

The early signs about community engagement are positive. But ultimately, it will be important to measure impact over time. Fortunately, we now have a tool for these longitudinal and geographic comparisons — the Cultural Data Project (CDP), a collaborative partnership of public and private funders and advocacy agencies. The CDP has grown to include eleven states with another twenty-one in the evaluation phase. And CDP is also an important analytical tool for organizations, used by both management and boards.

With prominent economists debating the likelihood of a double-dip recession, arts and cultural nonprofit leaders will need to weigh what has worked, what hasn't, and which practices are most likely to yield success in a tough economy. This requires a lot of really good data. We hope that the just released Portfolio report is an example of what we can learn and change with the right information and interpretation.


2011 Portfolio was made possible by the Pew Charitable Trusts, PNC, the William Penn Foundation, and the Dolfinger-McMahon Foundation. The publication is available online at www.philaculture.org.

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