The Role of the Arts in Economic Development

As it pertains to funding for local arts projects, the past few years have not been too kind to the arts community. Budget cuts, austerity measures and changing priorities have meant less funding, and with it less jobs for artists and fewer arts opportunities and events for communities all across the country. As the economy starts to grow (slowly) and optimism about future growth increases, state and local budgets are facing smaller budget deficits and the increasing likelihood of budget surpluses in future years. With these new resources comes the decision over how to spend resources in the best possible way to stimulate growth.

In recent years, the National Endowment for the Arts (NEA) and other groups have given out millions of dollars in grants to local arts groups to help foster economic growth and assist arts communities in struggling areas of the country. As the money available to these groups continues to grow, and cities and states pondering the decision to invest again in the arts, the question is: what role do the arts play in economic development, and how vital is it to future growth?

I have written before about the tough budget constraints that governments are dealing with at the local level and the pressure this is putting on existing arts programs. Unlike the federal government, cities, counties and states are often required to balance their budgets on an annual basis; if sales tax receipts or other forms of revenue are down from the year before, as has often been the case during this economic downturn, governments have to turn to existing programs for cuts or outright abolition. With tax increases politically unfeasible, it’s often the most vulnerable programs that face the chopping block, and this includes the arts community.

Those of us who study public policy and urban planning are cognizant of the effect the arts can have on a city or neighborhood. As much as art enriches our lives and provides a sense of culture, the economic impact is minimal; this is not to take away from the arts community, but is rather meant to illustrate the larger forces that are required for long term economic growth, like housing, higher education, health care and free trade.

The Next American City recently looked at an example of a rust belt city facing tough economic times, Detroit, and how the arts community is helping bring the city back. Through the help of groups like the NEA and ArtPlace America, Wayne State University launched the Detroit FAB Lab, a hub that provides artists with access to equipment and tools for their artwork, like metalworking and woodworking, as well as mentoring services like business coaching and networking. In essence, it provides a community for artists to come together and share their work, their advice and their love for the arts, all with the backing of community grants and support.

Few cities are in need of support like this more than Detroit. Designed to help support the struggling manufacturing base in the Motor City, the grants provide a small step in the overall push to diversify and grow Detroit’s economy as it starts to come back from the recession that took such a toll on the city’s population and well being.

The millions of dollars in funding that are being given out by groups like NEA and ArtPlace also present a series of questions: is this money well spent? If the goal of the money is to spur economic development and growth, is it better spent elsewhere?

We can all agree that funding the arts is crucial to fostering community and culture in cities all across the country. But is absolutely crucial to long term economic growth? That’s where it gets tricky: the list of public policy measures that rank above the arts community is quite long. If given the choice between an artistic redevelopment project and a new hospital or transit station, the physical and transportation needs of the city will win out.

But, as cities and municipalities invest in infrastructure, public services and needed resources, it’s always important to remember how the arts can add to the benefits being accrued. A city with no culture, no life, and no sense of vitality is vulnerable to losing out on the same kind of economic benefits that were desired when public officials decided how to spend resources in the first place. Investing in roads, schools and infrastructure is absolutely essential to an area’s long term economic growth; however, without a vibrant and committed arts scene, the desire of residents and tourists to experience the best of what the area has to offer will be diminished.

There are numerous examples of cities and local governments taking the time to invest in areas of their community and developing art districts. In my home town of Phoenix, the burgeoning Roosevelt Row district is home to First Friday art walk events and galleries showcasing the vibrant culture alive in the city. Other districts in Miami, Pittsburgh, and New York have also popped up in recent years to add vibrancy to formerly struggling areas of their respective cities.

As a policy priority, you will get no argument from me that the arts community ranks behind the essential public services that so many people rely upon on a daily basis. However, good public policy recognizes that the right balance, which involves providing those services and setting aside funding for arts programs that encourage innovation and creativity, along with providing a sense of culture for a given community, is preferable.

As ArtPlace America states, “art creates vibrancy and increases economic opportunity. It is all about the local.” We could not agree more.

Kickstarter Reaches Major Milestone

Depending on your perspective, the following news is either a cause for celebration, or a sobering reminder of the state of federal funding for the arts in America. Or perhaps both. Kickstarter, the funding platform for thousands of arts and other creative projects, announced last week that it is projected, through its website and thanks to thousands of contributors, to be on track to receive over $150 million in pledges in 2012, by far its biggest and most successful year to date.

This is wonderful news for the arts community, and will help thousands of artists get their projects off the ground. However, the amount does represent a milestone of sorts: while substantial in its own right, the $150 million figure also surpasses the entire 2012 annual budget of the National Endowment for the Arts (NEA), a federally funded program with the might of the United States government behind it.

So it begs the question: as sites like Kickstarter grow in popularity, and help steer more funds to specific arts projects, does federal funding for the arts carry less significance going forward?

We’re big fans of Kickstarter here at Tech in the Arts, and have written about the site’s innovative funding platform and some of the better projects that it has featured. For those who are unfamiliar with Kickstarter, a quick primer: people can post projects online, ranging from art to fashion, film to music, photography to theater, and request donations to get the projects running. The people responsible for the projects outline what they hope to accomplish, how much money they need, and can offer incentives for people to donate money, like free tickets or exclusive merchandise, depending on the amount donated. In the end, if the project fails to reach its fundraising goal (usually within a couple of weeks), no money is exchanged, and the project fails.

As it relates to the juxtaposition of the two entities, first a few caveats. Projects from outside the United States are featured, so the money in question is not confined just within our borders. Second, the site is on track to secure $150 million in PLEDGES in 2012, which does not guarantee funding. According to the site, a little over half of projects fail to meet their fundraising goals, meaning funds for those projects do not change hands. However, with people around the world willing to contribute that much money, it does represent a significant milestone in the arts community.

I wrote last week about the 2013 funding request for the NEA in President Obama’s budget, and welcomed the news about the funding being increased for the new year. However, even with the increase, the budget has failed to increase with the rate of inflation, and is actually a decrease from the early 1990’s, when the budget was in the range of $180-185 million per year.

However, as budget deficits climb and the debt reaches new heights each year, the axe seems to fall on what’s referred to as “discretionary” spending, or spending that’s not mandated by existing laws, first, and that includes programs like the arts, education programs, and public service organizations. This has especially been true in recent years, with calls by some in Washington to drastically cut discretionary programs and cap them from future increases.

As I talked about last week, the NEA is an essential resource for arts organizations, after school programs, schools and community groups who depend on federal programs to survive. Few of these groups generate the amount of internet excitement as the projects on Kickstarter, and cannot rely on social media or online funding mechanisms to continue. Their continued existence rests largely with the help of their local communities, state and local organizations, and most importantly, the federal government.

My concern is that with sites like Kickstarter providing a mechanism for taxpayers to select the individual projects they would like to see funded, the desire to continue to fund the NEA and other arts programs will diminish. Why, after all, have taxpayers pay for a central agency like NEA when individuals can contribute to the projects in their community, or the projects they share an interest with, instead of some program or group they have never heard of?

The NEA has been targeted for elimination in recent sessions of Congress, but thankfully it has survived. Even though the advent of online fundraising tools has provided a steady source of pledges and funding for arts projects, the backbone of arts funding continues to be at the federal and local levels, and any decrease or entire elimination of funding would have a catastrophic impact on artists, the arts community, and arts lovers everywhere.

Another way to look at it this: with the advent of sites like Kickstarter, funding for the arts is increasing, and is becoming a wildly successful endeavor. Last year, Kickstarter received over $90 million in pledges, with several projects hitting the $1 million mark. This is NEW money coming into the arts community, and it deserves to be celebrated.

The ideal, however, is a world where both funding mechanisms continue to move forward, and serve the unique niches they cater to: Kickstarter to the up-and-coming and innovative film/music/theater/art projects and NEA for the community-based groups and local arts organizations.

Congratulations are in order for our friends at Kickstarter, with many more years of continued pledges and success moving forward. It is my hope that the same kind of success and impact continues with NEA, as it faces significant hurdles in Congress to secure future funding.

NEA Sees Increase in President's 2013 Budget Request

Budget season is upon us. There may be no more exciting time of the year, if you are like me and revel in the workings of our federal government and how policy gets made. Even though Congress is perhaps not the most popular body of work these days (and that may be an understatement), the budgetary season is important because it tends to set the tone for the policy and political arguments for the rest of the year, and in an election year like this one, it becomes even more so. President Obama’s 2013 budget request, released last Monday, contained spending cuts across dozens of federal agencies, including the armed services, health care, and energy. But one area, accustomed to cuts in recent years, received a welcome surprise this year, seeing their funding request increase from 2012: the arts community.

The president’s budget, which clocked in at about $3.7 trillion dollars, included a request of $154.255 million for the National Endowment for the Arts (NEA), which is a slight increase of about $8 million from the funding that the NEA received this year. While still lower than the funding NEA received in 2010 ($167.5 million), it is a step in the right direction.

As the New York Times reported, included in the increase is about $4 million that would go directly to non-profit arts organizations and another $2.7 million for state and regional arts organizations.

As many in the arts community are well aware, the NEA serves a critical role in supporting artists and arts programs around the country. The vast majority of its annual budget goes towards grants that support artists in the communities of music, art, photography, theater, literature, and more. Just as important are the group’s efforts in art education, educating and introducing children to the wonders of the arts.

Not only are the group’s efforts vital to the artistic community; they also help create jobs and boost the economy in a tough economic climate. As NEA Chairman Rocco Landesman said last week, “A dollar invested directly through the NEA is matched by $8 in additional investment and generates $26 of economic activity in the community. In short, art works.”

Now when I say “budget request,” it is specifically that: the President is required by law every year to submit his budget request to Congress. This document is not law, but merely the budget that the president would like to see. It’s more of a wish list, or set of funding appropriation requests, that the president would like to see fulfilled. It is up to Congress to pass appropriations bills for each federal department and send them to the president for approval.

(If you’re interested in hearing me talk about the budget more in-depth, I appeared on the Carnegie Mellon radio program “Policy that Matters” last week to talk about the president’s proposal, and it is now available online.)

The important thing to remember about budgets is they set forth priorities. They help set the president’s agenda and represent a list of what he believes is worthy of investment. The commitment to the NEA, even though the funding increase is minor, represents a commitment to improving the lives of artists everywhere. In a tough economic climate, this commitment has never been more important for the arts community.

I last wrote about protecting federal funding for the arts this past October, and while the president’s budget is an encouraging sign, the calls for budget cuts and austerity measures continue in Washington. There is certainly still a chance that funding for the NEA may decrease when the budgetary bills are passed by Congress later this year.

There are certainly more pressing budgetary topics in the news, and the amount dedicated to NEA is a very small percentage of the overall budget. But for the artistic community, and for those who depend on the programs NEA supports, they remain a vital part of our American psyche and play a huge role in advancing the joys and benefits of the arts. In tough economic times however, and calls for budget austerity by some, there will be an incentive to decrease the budget in as many areas as possible.

The arts are as deserving as ever of our continued commitment to support the NEA and the causes it advances. Seeing the increased budgetary request for the endowment is a welcome sign. Even though it seems like Congress can agree on nothing these days, it is surely our hope that the continued support of NEA and arts programs everywhere will be one area where all sides can agree.

Audience 2.0, Part II: Thoughts for the Future

Check out Part I for an overview of the NEA’s recent report Audience 2.0: How Technology Influences Arts Participation While Audience 2.0 gives some useful statistics on technology and media participation in the arts, the report does not provide the answers or the data that I am looking for regarding arts participation and technology.

• How does arts participation through one technology affect participation in other technologies?  For example, how does participating through television affect web participation?
• What impact has social media had on arts participation?
• How do people participate in the arts digitally and online?  What are they doing on the web when they are participating?
• Has participation in the arts via technology affected online giving to arts organizations?

Audience 2.0 draws into question the timeliness of national arts research, the vehicle being used to conduct this research, and the understanding of where arts audiences are heading in the future. This report was a useful audience analysis for 2008, but the survey upon which Audience 2.0 bases its analysis lacked a sense of forward motion as well as the ability to predict future arts participation through rapidly changing technologies.

The data used in Audience 2.0 was gathered three years ago before many current technologies were available and before many new technology users had invaded the digital market.  In his blog post Back To The Future, on Danceusa.org, Marc Kirshner states that:

Since the beginning of the 2007 survey period [for the 2008 report]:

• Four generations of iPhones have been released [and the Android network has been launched]
• Facebook’s user base has grown from 20 million to 400 million users
• The entire book publishing industry has been turned upside down by e-readers, such as the Kindle, Nook and iPad
• Millions of set-top boxes, Blu-ray DVD and home theater PCs have connected televisions to broadband Internet
• Hulu launched its online video service to the public
• More than 300,000 people viewed simulcasts and encores of the Metropolitan Opera’s Carmen
• The first 3-D network began broadcasting

The three year time gap between data collection and report publication created a lack of focus on many forms of new media and social networking platforms currently leading many technology discussions in the nonprofit arts industry today. Correspondingly, the relevance of the report in our current environment is brought into question, and we must remember that the report represents a snapshot in time more than a study of current habits. Due to the speed with which technology advances and its usage changes, traditional forms of data collection and publication no longer appear as useful for tracking these trends.

The survey asks about participation in the arts through technology, but Audience 2.0 does not provide answers about specific actions and their effects. The survey does not ask participants if electronic and digital media makes them more or less likely to attend a live event, but the report draws based upon a perceived correlation in the participation data. Without causality data, this correlation leaves us with a “chicken or the egg” dilemma.  Does electronic/digital/online participation in the arts lead to an increase in live participation, or are participants in live arts events simply more likely to participate in electronic/digital/online arts events?

I would like to see more direct questions being asked of people who responded that they participated in the arts through electronic and digital media. Obtaining this next level of understanding will provide us with a deeper understanding of the effects of electronic and digital media on arts participation.

Audience 2.0 raises more questions than it provides answers, but it does show a commitment on the federal level to assess the impact of technology on the arts. I am hopeful that future reports will delve deeper into the seemingly symbiotic relationship between technology and arts participation by focusing more specifically on the  digital/online arts participant.

Audience 2.0 - Condensed, Part I

In part I of this two-part post,  I summarize the findings of Audience 2.0, while tackling the problems, questions and lack of answers in part II. Audience 2.0: How Technology Influences Arts Participation, the newest study released by the National Endowment of the Arts gives empirical quantitative data to support how technological trends affect arts participation, the health of the arts in the US, and the ways that arts patrons use electronic media to engage in the arts.

Audience 2.0 takes data from the NEA’s 2008 Survey of Public Participation in the Arts and the three other SPPA studies from 1982, 1992, & 2002 and “examines how Americans participate in the arts via electronic and digital media.” The media platforms: Radio, Audio recordings, Television, Video Recordings, Internet, & Portable Media Devices were tracked, but there is not consistant data available from every study.

The study cited three main conclusions:

• Technology is not going to be the downfall of live performances, the arts or culture in our society,
• Technology provides a new outlet for people to experience the arts who may not otherwise have participated at all.
• Participation in the arts through electronic and digital media actually spurs participation in live arts performances and exhibitions.

The study found that “people who engage with art through media technologies attend live performances or arts exhibits at two to three times the rate of non-media arts participants.” This statistic should quell many of the concerns arts organizations have about digital media replacing them and help arts institutions embrace technology as a way to reach enrich their patrons. The study shows that technology provides a way for people to interact with arts and culture outside of the traditional venue, but it does not replace attending the physical arts or event space.

“53% of US adults used TV, radio, CDs/DVDs, computers or portable media devices to view or listen to arts performances, programs about artists, art works, museums or programs about literature.” Far more people participate in the arts as a whole than those who physically attended arts events.  This shows a greater interest in arts and culture from Americans than many people had previously thought.

“For every arts performance outlet besides theater, adults were more likely to view or listen through electronic media than to attend live events.”  This statistic has many people concerned about the impact of technology on the arts, however; the data shows this to be a good thing because a majority of the participants who make up the media only category represent people who would never have attended an arts event in the first place. The NEA then draws the correlation that these people would not participate in the arts at all without media and electronic technology outlets. Technology helps to widen the breadth of reach for the arts and allows people to participate in the through new portals.

Adults who used electronic media and technology only to participate in the arts had a higher likelihood of lower-than-average household incomes, residing in rural residents, belong to racial and ethnic minorities, belonging to that age group 75+, and/or having achieved no more than some college in their life. This profile directly mirrors the profile of people who do not participate in benchmark arts events at all.

The big picture of this survey is that it really just repeated many of the SPPA findings from the past three decades through the lens of technology. Overall, Education still has the greatest weight in determining arts participation, racial and ethnic minorities participate less than non-Hispanic whites, and racial and ethnic minorities tend to participate more frequently in arts event that are associated with their heritage.

This study leaves more questions than answers and those will be tackled in part II of this series.