National Endowment for the Arts NEA Research Note #102 April 2011 ART WORKS. artsgov Time and Money: Using Federal Data to Measure the Value ofPerforming Arts Activities Abstract This Note examines large datasets from Part Three takes a different approach. It multiple federal sources including the U.S. represents the NEA’s first-ever analysis of Economic Census, the Bureau ofEconomic Americans’ daily time spent doing arts and Analysis (BEA), and the Bureau ofLabor cultural activities, including performing arts Statistics (BLS), to arrive at monetary and attendance. This section relies on previously non-monetary value measurements ofthe unpublished data from the BLS’ American nation's performing arts sector. The first Time Use Survey. The Note concludes by section reports the total number, staff, and reviewing several possible measures ofarts budget size ofperforming arts organizations. and cultural value that extend beyond mining The second part addresses U.S. consumer federal databases. spending on performing arts admissions and other cultural events. Key Findings 1. The U.S. performing arts industry is generate nearly $13.6 billion in supported by nearly 8,840 annual revenues, according to the organizations with a total of 127,648 most recent estimates. paid workers. These organizations Time andMoney: Using Federal Data to Measure the Value ofPerformingArtsActivities 1 • The not-for-profit sector alone establishments with paid workers, accounted for 45 percent ofthese yields a count ofnearly 7,000 not- organizations (about 4,000) and 58 for-profit performing arts groups percent oftheir paid workers. Total with annual budgets of$75,000 or annual revenue and expenses of greater. These organizations not-for-profit performing arts generated $8.9 billion in annual groups were $5.6 billion and $5.2 revenue and $8.2 billion in billion, respectively. expenses. {Sources: U.S. Census Bureau’s • “Theater and opera” companies Economic Censusfor 2007; U.S. accounted forjust over halfofthe Internal Revenue Service Form total revenue and total expenses of 990filingsfor 2007, via the Urban all not-for-profit performing arts Institute ’s National Centerfor groups. They also provided over Charitable Statistics) half(38,130) ofthis sector’s paid employees. • Contributed income, including individual donations, made up 41 percent ($2.3 billion) ofthe total revenue ofnot-for-profit performing arts groups. Admission fees made up 35 percent ($2 billion) oftotal revenue. • These estimates draw on results from the 2007 Economic Census, which enumerates establishments with payrolls.1 An alternative data source, one not restricted to Time andMoney: Using Federal Data to Measure the Value of PerformingArts Activities i 2. Americans recently spent an annual likely than museum- or movie- total ofS14.5 billion on performing goers to bring a friend along. arts admissions. • Most museum-goers spend 2.4 hours on this particular activity. • In comparison, Americans recently Visits peak during lunch hour. spent $20.7 billion on sports admissions and $10.4 billion on • 2.6 million Americans do arts and movie box-office tickets. crafts activities on any given day. « The average U.S. household spent Thirty percent do these activities $139 annually on arts and crafts, a with other family members—and category that includes toys and 19 percent, with children. (non-video) games. This amount was roughly comparable to that • On an average day, more than spent on sports and exercise 500,000 people write for personal equipment ($130). interest, generally for 1.5 hours. {Sources: U.S. Departmentof {Source: U.S. Department of Commerce’s Bureau ofEconomic Labor’s Bureau ofLabor Analysis, National Income and Statistics, American Time Use ProductAccounts datafor 2009; Survey annualaveragesfor 2003- U.S. Department ofLabor’s 2009 and2005-2009) Bureau ofLabor Statistics, Consumer Expenditure Surveyfor 2009) 3. On any given day, 1.5 million Americans attend arts performances, usually with family or friends. • In common with sports-goers, performing arts attendees are more Time andMoney: Using Federal Data to Measure the Value ofPerformingArtsActivities 3 Part I. Value Expressed by Numbers and Budgets ofPerforming Arts Organizations A good place to begin estimating the value of Ofthe 8.838 performing arts establishments the performing arts sector is through data in 2007, for example, nearly 5,000 were collected by the Economic Census, which the taxable. The for-profit performing arts U.S. Census Bureau conducts every five employed roughly 54,000 workers and years. The most recent census enumerated generated $8 billion in revenue.4 8,838 performing arts establishments in As the table below shows, most taxable 2007.2 These establishments employed performing arts organizations are “other 127,659 workers and generated $13.6 billion music groups” (such asjazz, rock, and in revenue.3 country bands) and theaters. Together, other For the performing arts industry, the music groups and theaters make up 86 Economic Census reports tallies ofboth for- percent ofthe taxable performing arts. profit (taxable) and not-for-profit (tax- exempt) organizations. For-Profit Performing Arts Groups, 2007 Performing arts companies 4,899 Theaters 1,205 Dinnertheaters 166 Opera companies 10 Dance companies 118 Symphony orchestras 46 and chamber groups Other music groups 3,007 Other performing arts companies 347 Source: Economic Census, U.S. Census Bureau, U.S. Department of Commerce Theaters, combined with dinner theaters and revenue ($3.8 billion). Other music groups, opera companies, employ the majority of alternatively, employed fewer than halfthat workers in the for-profit performing arts number (just under 14,000), but reported — industry more than 31,000 in 2007." These annual revenues totaling $3.2 billion. establishments also generated the most Time cmdMoney: Using Federal Data to Measure the Value ofPerformingArts Activities 4 For-Profit Performing Arts Groups, 2007 Revenue Annual Number of ($1,000) payroll paid ($1,000) employees Performing arts companies 8,001,509 1,971,822 53,728 Theater companies, dinnertheaters, 3,840,676 961,903 31,044 and opera companies Dance companies 64,510 19,230 844 Symphony orchestras and chamber groups 30,945 9,593 464 Other music groups 3,165,966 740,541 13,562 Other performing arts companies 930,357 250,148 8,278 Source: 2007 Economic Census, U.S. Census Bureau, U.S. Department of Commerce Nearly all revenue generated by for-profit (51 percent), while popular music concerts performing arts establishments flows from (e.g.,jazz, rock, country) commanded the “operating” sources, mainly admissions and largest percentage ofcontract fees (68 contract fees. Musical theater and opera percent). accounted for the largest share ofticket sales For-Profit Performing Arts Companies: Share of Admissions by Source, 2007 Non-musical theater 7.8% % 21 0 . Musical theater and opera Otherperforming arts1 Symphony and classical music concerts Popularmusic concerts Popularmusic concerts 19.3% Dance performances Other performing arts 1 Includescircuses,magicshows,andice-skatingperformances. Source:2007EconomicCensus,U.S.CensusBureau Time cmdMoney: Using Federal Data to Measure the Value ofPerformingArtsActivities — Not-For-Profit Performing Arts companies 52 percent in 2007. With nearly 800 establishments, symphony orchestras and The 2007 Economic Census counted 3,939 chamber groups made up 20 percent ofthe tax-exempt performing arts establishments. not-for-profit performing arts industry. As with the for-profit performing arts, theaters accounted for the largest share oftax-exempt Not-For-Profit Performing Arts Groups, 2007 Performing arts companies 3,939 Theaters 2,042 Opera companies 154 Dance companies 407 Symphony orchestras 799 and chamber groups Other music groups 646 Other performing arts companies 45 Source: Economic Census, U.S. Census Bureau, U.S. Department of Commerce Budgets ofNot-For-Profit PerformingArts More than halfofall not-for-profit establish- Companies ments reported budgets ranging from $100,000 tojust under $1 million.6 As the chart below shows, the majority oftax- exempt performing arts groups fall into a budget category of$100,000 to $249,999. Time andMoney: Using Federal Data to Measure the Value ofPerformingArtsActivities 6 — Tax Forms as an Alternative Data Source Data obtained from tilings ofthe U.S. Internal Revenue Service Form 990 offer an alternative measure ofthe number oftax-exempt performing arts organizations and their budgets. For the time period examined in this Note, the IRS required tax-exempt organizations with annual gross receipts ofat least $25,000 to file the Form 990 (or Form 990EZ).'The IRS collects these forms regardless ofwhether the entity has employees on payroll. Thus, Form 990 filings can and do capture organizations run solely by volunteers. The U.S. Economic Census, on the other hand, requires census forms only of“business establishments” with paid employees. This difference between the IRS’ and Economic Census’ data-collection methodologies is largely responsible for varying counts oftax-exempt organizations. — In an attempt to reconcile the estimates or, at any rate, to bring them closer together researchers often set a budgetary threshold for examining IRS data on not-for-profit organizations. With the threshold set at $75,000, for example, the Form 990 data show more than 6,900 tax-exempt performing arts organizations in filing year 2008. Together, they brought in total revenues of$8.9 billion, and they spent a total of$8.2 billion that year." 'In 2010, the filing threshold requirement was increased to tax-exempt entities with at least $50,000 in gross receipts. ii The IRS Form 990 estimates reported here were obtained from data provided by theNational Center for Charitable Statistics atthe Urban Institute. Time andMoney: UsingFederal Data to Measure the Value ofPerformingArtsActivities 7 Not-For-Profit Performing Arts Organizations: Percentage ofAll Organizations by Budget Size, 2007 $10,000,000ormore $5,000,000to$9,999,999 $2,500,000to$4,999,999 $1,000,000to$2,499,999 $500,000to $999,999 $250,000to$499,999 $100,000to $249,999 23.6% $50,000to $99,999 $25,000to $49,999 $10,000to$24,999 Lessthan $10,000 Source:2007EconomicCensus,U S.CensusBureau In total, tax-exempt performing arts groups Theaters and opera companies (combined) garnered revenues of$5.6 billion and spent generated $3 billion in revenue, a figure that $5.2 billion in 2007. The not-for-profit amounts to 55 percent ofall not-for-profit performing arts industry generated $2 billion performing arts revenue in 2007. Theaters in annual payroll, and employed nearly 74,000 and opera companies also employed the — workers. largest share ofworkers 38,000, or 52 percent ofall workers in the tax-exempt performing arts industry. Time andMoney: Using Federal Data to Measure the Value ofPerformingArts Activities 8 Not-For-Profit Performing Arts Groups, 2007 Revenue Expenses Annual Number of ($1,000) ($1,000) payroll paid ($1,000) employees Performing arts companies $5,572,271 $5,201,187 $2,007,965 73,920 Theater and opera companies $3,049,317 $2,879,697 $1,033,333 38,130 Dance companies $532,396 $479,473 $196,006 7,770 Symphony orchestras $1,715,102 $1,585,481 $695,345 23,848 and chamber groups Other music groups $237,142 $220,584 $69,996 3,623 Other performing arts companies $38,314 $35,952 $13,285 549 Source: 2007 Economic Census, U.S. Census Bureau, U S. Department of Commerce Not-For-Profit Performing Arts Companies: Share of Revenue by Source, 2007 Admissions Contractfees Other operating receipts NEA contributions Other government contributions Individual contributions Foundation contributions Business contributions Other contributions Other income Source:2007EconomicCensus,U.S.CensusBureau Time andMoney: UsingFederal Data to Measure the Value ofPerformingArtsActivities 0 Revenue by Source “other” contributions, such as those stemming from guilds or unions, make up the smallest The Economic Census shows that earned — shares ofrevenue 4.3 percent and 2.3 income, such as admissions, contract fees, and percent, respectively. membership services, accounted for 46 percent oftotal revenue. Contributed income This section has focused on understanding the (i.e., giving from individuals, businesses, total direct value ofthe performing arts sector foundations, and government agencies) make as represented by organizational counts and up 41 percent ofall revenues.7 budgets. Measurements ofearned and contributed income in particular can be used The largest component ofearned revenue is as proxies ofthe perceived value ofthis sector admissions (34.7 percent ofall revenue), to individuals, businesses, foundations, and while the largest share ofcontributed income public agencies. In the next two sections of flows from individuals (20.7 percent ofall this Note, we will take direct measurements of revenue). the value ofthe performing arts to U.S. Government contributions (including grants consumers. from the NEA, other federal agencies, and state and local government sources) and Part Two: Value Expressed by Consumer Spending on Performing Arts Admissions and Other Cultural Events The most direct economic measure ofthe Economic Analysis (BEA) measures, as part perfonning arts’ value to individuals is ofits National Income and Product Accounts, provided by examining amounts spent on detailed consumer spending on arts and tickets to art performances. The U.S. entertainment admissions and a variety of Department ofCommerce’s Bureau of recreational items. Time andMoney: Using Federal Data to Measure the Value ofPerformingArtsActivities 1