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Key
Implications
- Arts and Culture is Accessible and Universally Appealing
Ticket
prices are reasonable. While the old stereotype of tuxedoes and evening
gowns may persist in some minds, the reality is that today's arts
and culture patron is far more likely to be a school-age child whose
ticket was extremely affordable if not free.
There
is tremendous variety and choice. The 218 participating organizations
present 56,000 events in a single year, making Philadelphia one of
the most culturally rich communities in the world. Locals take advantage
of this cultural bounty. There were 12 million cultural visits in
2005—the equivalent of 3 visits for every man, woman and child
in the region.
- Arts
& Culture is a Significant Employer—But Compensation Lags
Arts
and Culture delivers a competitive advantage for Philadelphia in attracting
and retaining jobs. The industry itself directly provides 14,000 jobs.
However, the unusual nature of these jobs has significant implications
for the sustainability of the sector and the people who work within
it.
Almost
half of the jobs are part-time or contract positions. Many positions
lack health insurance, pensions, and income predictability.
While
labor is the largest single expense for most cultural organizations,
the sector is not keeping pace with comparable service sector employers.
Advertising agencies, architects, attorneys, banks, film companies,
financial services, hotels, restaurants, and sports teams all spend
more of their budgets on employees.
Corporate
& Government Support Lags—Competition for Private Funding is
Intense
With
notably less corporate and local government support compared to other
major cities, how have cultural organizations in the Greater Philadelphia
region made ends meet?
First,
they've generated enough earned income (i.e., ticket/admission sales)
to cover half of all expenses. Second, they've relied on widespread
individual donor support and contributions from private foundations.
Finally, to keep costs down, they have relied heavily on individuals
to volunteer their time.
It
is unclear whether the intense competition for private funding is
healthy or sustainable. As we look at concurrent fundraising campaigns,
it appears that today's individual donor base may be overtaxed. Smaller
organizations seem particularly vulnerable.
The
industry must either expand its base of contributed support or reduce
expectations.
For
the near term, local public support and corporate sponsorship appear
to be most underutilized. For the long term, the sector must continue
to engage more of Southeastern Pennsylvania's total population of
3.8 million people, so that the number of donations expands beyond
its current level of 270,000 per year. - Many
Cultural Organizations are Operating on the Brink
From
a financial perspective, our cultural fabric is fraying. Fully one
quarter of cultural organizations operated with deficits in excess
of 10% during the last fiscal year. If this situation continues, they
will be operating in a constant state of crisis management.
Only
a third of cultural organizations, primarily Large and Very Large
organizations, have had the ability to build endowments—a financial
bulwark against operating deficits. Medium and Small organizations,
with little or no endowment, are more financially vulnerable. A high
percentage of organizational assets, including buildings, equipment,
and restricted endowments, are illiquid—which limits the organizations'
flexibility to respond quickly to financial threats or opportunities.
In
a marketplace where a multitude of options compete for consumers'
leisure time, money, and attention, one must market to build brand
and sales. Ironically, it appears that tight budgets may be squeezing
out the very marketing investments that would attract more audiences
and earned income for cultural organizations. It is a vicious cycle
where lack of marketing perpetuates lack of sustainability.
Looking
Ahead. . .
It
is our hope that in reviewing the wealth of information in this report,
policy makers, civic leaders and arts managers will elicit insightful
data that informs decision-making, leads to candid conversation about
the future of the sector, and provokes new questions that the Cultural
Alliance can address.
Recognizing
that economic impact is a critical measure by which all industries
are evaluated, we will continue to work with local and national partners
to advance this important element.
As
we go forward, we will track trend data, monitor changes in the sector,
and report them in our next Portfolio. Part of our responsibility
as an active partner in the long-range planning for Greater Philadelphia
is providing a clear picture of this sector that helps make Philadelphia
unique. Ultimately this picture will allow us to capitalize on our
competitive advantages and invest scarce resources strategically to
ensure our future.
Like
you, we are committed to a vision of Philadelphia as a place where
people are passionately involved in and supportive of arts and culture—a
place admired throughout the world for its quality of life made
possible by diverse cultural experiences and creativity. We believe
that this first publication of Portfolio, and those that follow,
will be an important contribution to our shared long-term success.
The Portfolio was made possible by
The
Pew Charitable Trusts and
William
Penn Foundation
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