Frequently Asked Questions (FAQ)

1. How did you arrive at the figure of $1.3 billion in spending by arts and cultural organizations and their audiences?
   
   The $1.3 billion is the total from $645 million in organization’s spending and $691 million in audience spending.
   
   The $645 million in organization spending is taken from the Pennsylvania Cultural Data Project (PACDP). The PACDP is an on-line data collection system that ensures consistent, accurate, and reliable data. The PACDP records are checked for submission errors and records are periodically audited.
   
   The $691 million figure in audience spending was derived through careful surveying of 2,324 audience members. This surveying was done in keeping with proper sampling and randomization techniques to ensure that the overall figure is an accurate calculation reflecting spending by all audience members.
   
   
2. Are these figures consistent with past findings?
   
   Yes. Last year, in the Greater Philadelphia Cultural Alliance 2006 Portfolio report, we calculated total spending by organizations of $544 million. The increase is due to several very large organizations joining the PACDP database. The figure of $37.32 per person in audience spending is consistent with spending in other, similar cities and regions. (For example, other per person averages: $39.34 Miami, $38.12 Chicago, $33.49 Houston)
   
   
3. Are all organizations in Southeastern Pennsylvania accounted for?
   
   This study accounts for spending by 177 organizations and their audiences; this represents approximately 70% of the spending of arts and cultural organizations in the region. There are over 1,000 arts and cultural organizations in Southeastern Pennsylvania, though the majority of these are very small (under $25,000 in expenses).
   
   
4. How do Philadelphia and Southeastern Pennsylvania compare to other cities and regions in the U.S.?
   
   Very favorably. Arts and culture in this region creates 10 jobs per 1000 residents of this region, compared to 4 jobs per 1000 residents that arts and culture creates in similar regions. Arts and culture returns an average $200 per capita in household income, compared to a median of $80 per capita for similar regions.
   
   Especially when compared to younger cities, such as Phoenix and Houston, Philadelphia’s arts and cultural institutions give the city and the region a competitive advantage in this area. 31,000 FTE Jobs are created in the City of Philadelphia, compared to 14,000 in Houston and 11,000 in Phoenix.
   
   
5. How did you determine that this spending results in 40,000 jobs, $158.8 million in taxes, and $778.3 million in household income?
   
   To determine economic impact, all of the data were entered into economic models customized to the economy of Southeastern Pennsylvania. These economic models account for transactions among 533 industries using data from the U.S. Department of Commerce. This type of “input/output modeling” is a highly regarded type of economic analysis that has been the basis for two Nobel Prizes in economics. The process provides a rigorous analysis of the complex impact of the arts and culture sector that goes beyond using simple “multipliers.”
   
   The models for this report were built by a team of economists, led by Prof. William A. Schaffer, School of Economics, Georgia Institute of Technology, to develop the models used for this report. The model used for this report is very similar to other widely-used economic models. The IMPLAN group in Minnesota, which markets data and a computer procedure for making models for counties and areas, is one of these similar models.
   
   
6. What does “Return on Investment” indicate in this report?
   
   In Arts, Culture, and Economic Prosperity in Greater Philadelphia, return on investment is calculated for local and state government contributions only. We calculate how much money is returned to local and state governments through taxes and fees as a result of the economic activity of arts and cultural organizations and their audiences, as compared to how much those governments contribute to the arts organizations in the report. Return on Investment for the Commonwealth of Pennsylvania is $2.50 for every dollar invested in arts and culture; Return on Investment for local governments is $5.00 for every dollar invested in arts and culture. The sector generates tax revenue that pays for essential services, including teachers, police, and transportation improvements.
   
   
7. Are you saying that 40,000 people work at arts and cultural organizations?
   
   40,000 is the number of FTE jobs generated by the $1.3 billion in total spending by arts organizations and their audiences, not the number of people employed by those organizations. This figure includes 6,495 FTE jobs at arts and cultural organizations themselves. The balance of the FTE jobs are created by payments from organizations and their audiences to restaurants, retail stores, accounting firms, janitorial services, parking garages, and all the other companies at which organizations and audiences purchase goods and services.
   
   
8. What’s an “FTE Job”?
   
   All jobs figures are reported in terms of “FTE Jobs”, or “Full-Time Equivalency Jobs.” This indicates how many jobs there are, in terms of full-time positions. Two part-time jobs of 20 hours per week would be equivalent to one full-time job, for example. Economists measure FTE jobs, not the total number of employees, because it is a more accurate measure that accounts for part-time employment in a consistent manner.
   
   
9. What’s the difference between “direct” and “indirect” spending and impacts?
   
   In this report, “direct” indicates “from the first round of spending,” whether it is by organizations or attendees. “Indirect” is the subsequent rounds of spending that result from the first round. An organization “directly” creates jobs through its expenditures. In many cases, these expenditures are in the form of paychecks to its own employees. In other cases, jobs are directly created by that organization’s payments to other businesses. An art museum creates security jobs through its payments to a security company, legal-services jobs by its payments to a law firm, etc. Audience members “directly” create jobs through their event-related spending. For example, audience members paying for meals at restaurants directly create jobs at those restaurants. “Indirect” impact deals with subsequent rounds of spending. The security guard or lawyer whose job is the direct result of payments from the museum then spends the wages that he or she earns on rent, food, clothing, etc. Jobs created in the housing, grocery, and clothing industries as a result of this spending are those that have been “indirectly” created.
   
   
10. Is it possible to estimate the impact of individual arts and cultural organization?
    
    Yes. Arts, Culture, and Economic Prosperity in Greater Philadelphia will allow an arts organization to estimate its economic impact. There is a worksheet in the report which an organization can use.
    

Arts, Culture, and Economic Prosperity in Greater Philadelphia was made possible by The Pew Charitable Trusts and William Penn Foundation