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Broader Economic Indicators Show Industry is Poised for Growth

Americans for the Arts, the nation’s leading nonprofit organization for advancing the arts and arts education, today announced the results of the National Arts Index , the annual measure of the health and vitality of the arts industries in the United States. The 2013 Index reveals that the arts industry effectively leveled off in 2011 with a score of 97.0, down just a fraction from the revised 2010 score of 97.2.

"America’s arts industry firmly demonstrated its resilience, having survived and maintained societal relevance during the worst economic downturn in generations," said Robert L. Lynch, president and CEO of Americans for the Arts. "To ensure continued relevancy and to sustain its role as a venue of creativity and innovation, the arts sector must continue to keep its finger on the pulse of the rapidly changing communities that it serves and evolve with them toward future prosperity."

Arts Engagement Increases Post-Recession

According to the Index, Americans by and large increased their engagement and participation in the arts. Live performances of popular music, symphony, opera, theatre and dance were seen more than 132 million times in 2011, up from 122 million in 2010. Broadway shows in New York played to record audiences of 12.5 million people. Larger shares of the population saw theatre and symphony, as their audiences increased at a faster rate than the population, returning to pre-recession levels.

In addition, the number of Americans volunteering at arts organizations jumped 11 percent, from 1.8 million in 2010 to 2 million in 2011, and an additional 6.2 million Americans volunteered their artistic talents to a non-arts organization.  What’s more, the number of college-bound high school seniors planning to major in the arts rose by 33 percent—from about 79,000 in 2000 to 105,000 in 2011. Further, the number of visual and performing arts degrees conferred by U.S. colleges and universities grew steadily from 88,000 in 2000 to 133,000 in 2011—a 52 percent jump.

The Index also reveals that technology is changing the way Americans consume the arts. Digital downloads of music, for example, now account for 41 percent of total music industry sales; “access models” from providers like Pandora and Spotify represent an additional 15 percent of recording revenues. E-book sales increased at an annual rate of 55.7 percent between 2002 and 2007, and in 2010, they spiked by 176 percent from the prior year and remained steady through 2011.

"As the Great Recession grows ever smaller in the economy’s rear-view mirror, Americans are increasingly finding their way to the arts," said Lynch. "What’s more, advances in technology now provide Americans with more options for arts engagement. In fact, technological advances are driving a seismic shift in audience involvement and participation across all art forms. Arts organizations that fully understand how to properly use these tools have a much better chance of sustaining their current audience while simultaneously attracting new patrons."

Public Funding for the Arts Decreases

Despite increased public engagement, support of the arts by all levels of government reached new lows when taking inflation into account. Local government spending on the arts dropped 21 percent from 2008 to 2011. State arts agency budgets made up just 0.04 percent of state general fund legislative appropriations. As a share of the federal domestic discretionary (non-military) budget, total arts funding dropped from 0.40 percent to 0.28 percent, between 2002 and 2011. The federal government’s funding of 11 key arts and culture agencies and programs was $5.90 per person in 2011, just 0.30 percent of domestic discretionary spending, down from 0.42 percent in 2004. Specifically, funding of the National Endowment for the Arts (NEA) decreased to $155 million in 2011, the first cut in a decade.  And threats to further reduce funding for the agency continue; in July of this year, the appropriations subcommittee that oversees funding for the NEA proposed cutting its funding down to $75 million, a level not seen since 1974.

The decrease in public funds contributed to an increase in the percentage of nonprofit arts organizations closing the year with an operating deficit . In fact, 43.3 percent ended 2011with a deficit compared to 44.2 percent in 2010 and 45 percent in 2009. The percentage of organizations with an operating deficit has ranged from 36 percent in the strong economic climate of 2007 to 45 percent during the deepest part of the Great Recession in 2009. Larger-budget organizations were more likely to run a deficit than smaller ones; there was no predictable pattern based on specific arts discipline.

"While just a small piece of the arts funding model, government dollars are vital to the arts sector," said Lynch. "Public arts funding provides a necessary buffer for arts organizations as they ride the ups and downs of the economy. Therefore, even when audience demand rises—as it did in 2011—decreases in public funding can stifle an organization’s ability to fully reach and engage their community. Further, government dollars leverage much of the additional fiscal support arts organizations receive. As such, even small fluctuations in government arts appropriations can result in deficits for many arts organizations."

Other Key Findings

• U.S. cultural destinations help grow the U.S. economy by attracting foreign visitor spending. Cultural tourism by foreign visitors is, effectively, a form of export by domestic arts and culture industries.  The U.S. Department of Commerce reports that the percentage of international travelers including “art gallery and museum visits” on their trip has grown since 2003 (17 to 24 percent), while the share attending “concerts, plays, and musicals” increased from 13 to 17 percent since 2003.
• Number of nonprofit arts organizations grows. The number of registered  arts organizations in the United States has steadily grown during the past decade from 76,000 in 2000 to 95,000 in 2011—a 25 percent increase
• Arts employment remains steady. The Index also revealed that arts sector employment has remained steady over the past 15 years. There was an increase of 8 percent in the number of working artists from 1996 to 2011 (1.99 to 2.15 million), and an ever-growing number of Americans—730,000 in 2011— are self-employed arts entrepreneurs. Overall, artists have remained a steady 1.5 percent of the total civilian workforce since 2000.
• The U.S. keeps strengthening its international trade surplus. Between 2010 and 2011, U.S. exports of arts goods (e.g., movies, paintings, jewelry) increased from $64 to $72 billion—an 11 percent jump.  With U.S. imports at just $25 billion, the arts achieved a $47 billion trade surplus in 2011.
• Arts organizations foster creativity and innovation through new work. Between 2005 and 2011, audiences were treated to more than 9,000 new works—over 100 new operas, 342 orchestral works, 2,531 plays, and more than 5,000 movies.  Even in a down economy, America’s arts industries continued to produce new and exciting work for their audiences.

Economist and report co-author Dr. Roland J. Kushner of Muhlenberg College noted that "Over the years, the National Arts Index score has been tightly correlated to overall charitable giving and total employment.  We’ve seen broad improvements in the economy, employment and philanthropy since 2011, all of which suggest that the arts are poised for higher Index scores in the years to come."

Randy Cohen, co-author of the Index and vice president of research and policy at Americans for the Arts said, “Because the National Arts Index spans all of the arts industries, it serves as an arts atlas, showcasing where the industry has been, but more importantly where it can go.  As such, it’s a powerful a tool that can and should be used to stimulate public dialogue about how the arts can stay vital in a society that needs a healthy arts sector for its own overall vitality.”

The Kresge Foundation and Ruth Lilly Trust provided support for the development of the Index. The National Arts Index was written by Dr. Roland J. Kushner, an economist and associate professor of business at Muhlenberg College in Allentown, PA, and Randy Cohen, vice president of research and policy at Americans for the Arts.

Americans for the Arts is the leading nonprofit organization for advancing the arts and arts education in America. With offices in Washington, D.C. and New York City, it has a record of more than 50 years of service. Americans for the Arts is dedicated to representing and serving local communities and creating opportunities for every American to participate in and appreciate all forms of the arts. Additional information is available at www.AmericansForTheArts.org.