MARKET FOCUS ARTS & CULTURE: Painting a prosperous picture - Facinghefty cuts in public funding, the arts has used creative PR to showcaseits economic worth, and canvass government support

Government arts funding is a critical leveraging tool that helps organizations secure necessary additional dollars from foundations, corporations, and individual donors. Lean foundation portfolios and tight corporate budgets magnify the need for government support this year. But far from supporting the arts, state budget shortfalls have prompted lawmakers to propose drastic funding reductions for fiscal years beginning July 1 and October 1.

Government arts funding is a critical leveraging tool that helps organizations secure necessary additional dollars from foundations, corporations, and individual donors. Lean foundation portfolios and tight corporate budgets magnify the need for government support this year. But far from supporting the arts, state budget shortfalls have prompted lawmakers to propose drastic funding reductions for fiscal years beginning July 1 and October 1.

"State arts agency budgets average .011% of state revenue, so balancing budgets by cutting arts funding is ridiculous, says Kimber Craine, communications manager for the National Assembly of State Arts Agencies.

"PR needs to educate people about the impact of these cuts."

Arts and cultural councils and advocacy groups have responded to the proposed cuts by initiating widespread communications efforts to unite arts organizations, rally public support, and persuade lawmakers of the arts' economic and social value.

On June 10, national advocacy group Americans for the Arts released an eight-year-long study of the economic impact of nonprofit art industry spending. According to the research, the industry generates $134 billion a year in economic activity, representing $24.4 billion in tax revenue.

It also provides 4.85 million full-time equivalent jobs, while its patrons spend $80.8 billion beyond ticket sales. The survey is heavy artillery in the battle for funding.

"Every other industry that government supports measures itself with economic impact, so it was important (that we followed that model) for the equitable treatment of art, says Nina Ozlu, VP of public and private sector affairs for Americans for the Arts. "We don't underestimate support for the arts based on the major social benefits - this study just adds to the economic rationale."

Investment return is a compelling argument for arts funding. Arts organizations generate $10.5 billion in federal income tax dollars. The National Endowment for the Arts' (NEA) program budget last year was just under $100 million.

"The survey is a very important tool to demonstrate the value of arts to legislators and opinion leaders, says Adam Gottlieb, communications director for the California Arts Council. California organizations alone contribute $2.5 billion annually to the state's economy - that's more than $100 million in tax revenue. Last year, the state provided about $30 million in funding.

Getting the media on its side

AP ran a story on the Americans for the Arts survey on June 10, and more than 25 other media outlets covered it in the days following. "Media response has helped educate the public, Ozlu says. The numbers paint a national picture, but were also customized for 91 participating communities. "As a result, there are 91 community media outlets interested in the story."

The advocacy group has extended its involvement beyond the study by devising an online calculator, which can estimate economic impact for given populations and program expenditures, making cases for individual organizations and communities that did not take part. "From a PR standpoint, if someone wants funding for a new facility, they can use our calculator to determine the economic impact the facility will generate, Ozlu explains. "It brings the numbers into focus."

At a June 12 congressional briefing, a 140-member caucus told Americans for the Arts that the numbers were so compelling that it planned to introduce an amendment in July to increase NEA funding. "That is a good causal effect, says Ozlu. Mayors were targeted next, followed by county and community leaders.

Craine is quick to point out that the message is not about the arts looking for handouts. "It's not about subsidy, he says. "It's about making the marketplace work. The public arts funding structure is designed to use capitalism to the advantage of the public sector. Cutting the dollar amount from the state is also cutting the ability of that dollar to leverage another $10 on average from the private sector."

It's unclear how much of the proposed cuts are political posturing and attempts to soften the public to tax-increase dialogue by pointing to programs in jeopardy. Craine says state agencies will suffer cuts, but the overall picture will not be clear until the end of the year. "Right now, it's a moving target, he says.

Last month, a Republican faction in California moved to eliminate the California Arts Council entirely, says Elizabeth Connell Nielsen, board chair of communications for California Arts Advocates and PR director at the San Francisco Opera. "Our lobbyist was there and talked to them, and it went away pretty quickly."

"The governor proposed cutting our budget by 57% in May, and this was not posturing, she continues. "We reminded everyone that it is good business to support the arts, and it's not just tax revenue, but economic development.

We are responsible for 150,000 jobs, and cultural tourism dollars are returned 11 to one. California now looks to face about a 30% overall budget cut.

Government gets the message

In February, Gov. Jane Swift (R-MA) recommended level funding for her state, but the House recommended a 48% cut (nearly $10 million) one month later. "It was frightening, says Michael John Kennedy, communications director, Massachusetts Cultural Council. "We launched a major communications push with Massachusetts Advocates for the Arts to alert and organize all arts groups, and get them moving to tell elected officials that this was not OK."

Thirty-three legislators signed an amendment to get funding restored.

Other budget amendments carried as few as five signatures. "The arts and cultural community coordinated a campaign that got our attention and made a very good case, says Daniel Bosley (D-MA), House chair of government relations. "They always make the esoteric argument, but now they came with a dollar-and-cents argument about what the arts can do for our state."

The Massachusetts House ultimately restored half of the cut, and the Senate recommends flat funding. But it's not over yet, as the Massachusetts fiscal year ended June 30 with no budget resolution. "We're in a better negotiating position now, Kennedy says. "If we wind up with a small cut, we're going to feel like it's a major victory."

Kansas lawmakers put forth a budget that negated arts funding, and public outcry got some money restored. "The arts community reared up and acted as an organization, says David Wilson, executive director of the Kansas State Art Commission. "It wasn't a structured PR program - it's a rural legislature, and it responds to constituents, not PR agencies. Grassroots efforts work best, and they begin with our communicating through the internet to arts groups."

City funding is critical for many New York City institutions. This year's process proved tedious in the wake of September 11, with a new mayor and largely new city council. Mayor Bloomberg proposed a 15%-20% funding reduction for the arts. "The indication was that the funding dance would not be the same as in years past, says Judith Daykin, president and executive director of City Center, a venue for many performing arts groups, including the American Ballet Theatre. "If the mayor was saying these cuts were non-negotiable, we would have been in dire straits."

City Center retains Rubenstein Associates for its individual PR, but it's one of 33 members of the city's Cultural Institutions Group (CIG), which also includes Carnegie Hall and the Metropolitan Museum. CIG hired lobbyist firm Getto & DeMilly to make its case to the public, the council, and the administration. "We got the funds restored to a 5% cut, which was the most successful restoration to any segment of the city's budget, and PR played a critical role, says Ethan Getto.

Business media responded well to the economic rationale. "Even Crain's New York Business gave us some friendly coverage because we made the argument that the institutions pour back vastly more into the city than the city contributes, he says.

News conferences were also held in each borough because Getto says council members are sensitive to local media. "Education is a priority to this council, so we pointed out that these institutions run an enormous number of educational programs, and they are economic anchors in various neighborhoods, he says.

The CIG campaign will continue for about a year. "The city's fiscal situation is still very fragile, and we want to get the education message out in a more concerted way, and build on the economic argument" Getto says.

Not everyone agrees about the economic impact survey as a tool to capture arts funding, however. "It paints this rosy picture because it was conducted in the longest economic boom time in US history, says Ogla Garay, arts program director at Doris Duke Charitable Foundation (whose grant budget fell from $20 million last year to $13 million this year). "It's potentially dangerous without contextualization. It can make people think, 'Why should we give to the arts when they're doing fine?'"

Randy Cohen, Americans for the Arts VP of research and information, says that people should not assume that the industry is flush because it generates a lot of spending. "The 45% growth in the industry from 1992 to 2000 means that demand has driven expansion, and expansion costs money, he says.

Earned income typically represents more than 50% of individual budgets, and continued cohesion can help marketing and audience development. "Our colleagues are coming together on everything from cross-promoting events to sharing ideas for increasing revenues, Nielsen says. "It opens new opportunities for us all."

The economic impact of nonprofit arts organizations and their audiences
(funded by American Express, NEA, and community arts partners)
Survey Perimeters: 1992-2000 (patron spending includes 2001 data)
3,000 nonprofit arts organizations; 40,000 patrons; 91 communities; 33
states Total yearly economic activity $134 billion
- $89.4 billion household income generated
- $80.8 billion related patron spending
- $53.2 billion organization spending (45% increase since 1992)
- 4.85 million full-time equivalent industry jobs
- $38 average non-resident spending per person in addition to
ticket cost
- $22 average resident spending per person in addition to ticket
Total yearly tax revenues $24.4 billion
- $10.5 billion federal income tax
- $7.3 billion state income tax
- $6.6 billion local income tax
Source: Americans for the Arts

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