The Arts Mean Business

New report shows the economic impact of the nonprofit arts and culture industry across the country and in six Massachusetts communities.

In June, Americans for the Arts released the findings from its latest study, Arts & Economic Prosperity 5 (AEP5). AEP5 takes a comprehensive look at the economic impact of the nonprofit arts and culture industry. Barr provided support for Massachusetts to participate in the study, as well as for a detailed analysis of six cities: Boston, Cambridge, Lowell, Medfield, Springfield, and Worcester.

We invited Robert Lynch, president and CEO of Americans for the Arts, to share his thoughts on AEP5, highlight some of the key findings, and explain what it means for the arts and culture industry in communities across the nation.

At Americans for the Arts, we believe the arts are an investment that delivers both community well-being and economic vitality. While many businesses and government leaders believe in the value the arts brings to their communities, they are also honest about the challenges faced when trying to balance arts funding with the demands to support jobs and grow their economies. That is why I’m proud to share our latest study, Arts & Economic Prosperity 5 (AEP5), American’s for the Arts’ fifth economic impact study of the nation’s nonprofit arts and cultural organizations and their audiences, and the most comprehensive study of its kind ever conducted.

By every measure, the results of AEP5 are impressive. Nationally the nonprofit arts industry generated $166.3 billion of economic activity in 2015—$63.8 billion in spending by arts and cultural organizations and an additional $102.5 billion in event-related expenditures by their audiences. This activity supported 4.6 million jobs and generated $27.5 billion in revenue to local, state, and federal governments (a yield well beyond their collective $5 billion in arts allocations).

Spending by arts audiences sends $102.5 billion to local businesses. Tweet This

I’m also thrilled that the study demonstrates just how important the arts are to Boston—the city I consider my hometown and one of the most historic and innovative in America. The total economic activity generated by the nonprofit arts industry was $1.35 billion in Boston in 2015. Tweet This That’s $764 million in spending by arts organizations combined with $590 million in expenditures by audiences. And in Boston alone, a whopping nearly 46,000 full-time equivalent jobs are supported by the nonprofit arts.

When we published our first economic impact study in 1994, it engaged just 33 local communities. The study has grown since then—AEP5 provides economic impact findings on 341 study regions representing all 50 states and the District of Columbia. Data were gathered from 14,439 organizations and 212,691 arts event attendees.

We have witnessed a corresponding growth in the understanding of the economic value of the arts. The U.S. Bureau of Economic Analysis, for example, now publishes an annual Arts & Cultural Production Satellite Account, which extends beyond the nonprofit sector to include the full breadth of commercial and for-profit arts, education, and individual artists, and lists the sector as a $730-billion industry (4.2% of the nation’s GDP—a larger share of the economy than transportation, tourism, agriculture, and construction). Many state and local governments have established agencies to track and grow their creative economies.

AEP5 uses localized research that not only focuses on arts organizations, but also incorporates the event-related spending by their audiences. When patrons attend an arts event, they may pay for parking, eat dinner at a restaurant, enjoy dessert after the show, and return home to pay the babysitter. The study found that the typical attendee spends $31.47 per person, per event beyond the cost of admission.

AEP5 also shows that one-third of attendees (34%) traveled from outside the county in which the arts event took place. Their event-related spending was more than twice that of their local counterparts ($47.57 vs. $23.44). What brought those visitors to town? Two-thirds (69%) indicated that the primary purpose for their visit was to attend that arts event. The message is clear: a vibrant arts community not only keeps residents and their discretionary spending close to home, it also attracts visitors who spend money and help local businesses thrive.

AEP5 demonstrates that the arts provide both cultural and economic benefits. No longer do community leaders need to feel that a choice must be made between arts funding and economic development. Arts & Economic Prosperity 5 proves that they can choose both. Nationally as well as locally, the arts mean business.

Learn more about the study

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Robert Lynch

Guest Author President and CEO Americans for the Arts