Arts & Culture: Can We Sustain It?

by RaeAnne Marsh

PAM_ECDT2983$581 million. That’s the amount of revenue generated by nonprofit arts and cultural organizations in Arizona in 2010 — a time when the economy was still reeling from the recession — according to the Americans for the Arts’ Economic Prosperity Study released last year. In Phoenix alone, the arts and culture sector contributed more than $300 million to the economy, and Brendan Mahoney, senior policy advisor to the Phoenix mayor’s office, observes that number is likely a conservative one. “It was based only on the organizations that self-reported,” he explains, noting that Denver, an analogous city, which did a more exhaustive study, found the economic impact of that sector to be around $2 billion.

• Attendance in fiscal year 2012: 129,687
• Attendance in fiscal year 2011: 127,546
• Grants revenue, fiscal year 2012: $3,025,296
• Program services revenue, fiscal year 2012: $1,974,108
• Investment income, fiscal year 2012: $54,592
• Total income, fiscal year 2012: $6,970,387
• Grants revenue, fiscal year 2011: $2,761,013
• Program services revenue, fiscal year 2011: $1,838,180
• Investment income, fiscal year 2011: $212,564
• Total income, fiscal year 2011: $7,102,894
• Number of exhibits in fiscalyear 2012: 9

Jim Ward, president and CEO of The Phoenix Symphony, provides perspective for the $300 million figure: “That’s similar to the Superbowl, more than Spring Training and more than the Bowl games,” he says.

“It’s not a ‘taker,’” says Rusty Foley of the arts and culture sector. Foley is executive director of Arizona Citizens for the Arts, a nonprofit organization committed to raising awareness of the importance of the arts whose efforts include presenting the annual Governor’s Arts Awards. She explains that arts and cultural events generate spending for parking, dinner, souvenirs and even hotel stays for people attending from out of the area. The Economic Prosperity Study found that, on average, arts and culture-related spending over and above the price of the ticket is $26.53 per person in Phoenix and nearly $31 per person in communities with a tourism-based economy, such as Flagstaff.

But attendance-related spending is not the whole picture. Cyndi Ornstein, executive director of the Mesa Arts Center and director of arts and culture for the City of Mesa, notes that, in addition to drawing people to the area who spend money, all arts organizations buy supplies and have employees. “Therefore, they are part of the economy.” Mesa’s economy showed, on the recent Economic Prosperity Study, an impact of $25 million from its arts and culture sector.

The Arts in Economic and Workforce Development

Arts and culture also drive economic development. It’s a quality of life issue at its core, but Foley notes, “In any study about why businesses locate or expand in a community, arts and cultural amenities are always in the top five.” She adds, “Arizona may have advantages in recruiting businesses from California, but we’re competing with states and communities that invest more in arts and culture, like Denver and Austin.”

Indeed, Phoenix Mayor Greg Stanton found the vitality of the area’s arts and culture sector to be a critical issue to employers, according to Mahoney. He relates that, in Mayor Stanton’s meetings with CEOs and upper management of the area’s largest employers, the common refrain was “arts and culture is a key component to attract and keep qualified employees.”

Whereas, in earlier generations, employees would go where business was — where the jobs were — that has shifted in today’s world to business locating where it can access or attract the work force it wants. “It’s not all about tax breaks,” Mahoney says. “Businesses say, ‘Where will we grow and prosper? Because employees are the most important part of any company in terms of ability to grow and prosper, where are the employees we want?’” He notes that Phoenix was a contender when Google was looking for a new location for its corporate headquarters, but lost out to Austin. More recently, however, quality of life here was viewed more positively by global distribution powerhouse APL, which moved its U.S. headquarters from San Francisco to a north Phoenix site in Kierland Commons.

• Attendance: 30,000 – 40,000 per season
• Ticket revenue, 2012/2013 season: $413,758
• Total revenue, 2012/2013 season: $1,209,671
• Ticket revenue, 2011/2012 season: $381,275
• Total revenue, 2011/2012 season: $1,098,030
• Shows per season: 6

Ward believes organizations such as chambers of commerce, economic development agencies and the Arizona Commerce Authority are missing an opportunity by not regionally coordinating efforts around the great arts organizations here. “The infrastructure needs to be smart about leveraging what these art forms do for the economic development of the state,” he says.

Salt River Project makes support for arts and culture part of its community philanthropy in recognition of its value in “increasing the reputation and attraction of the Valley to businesses that want to grow and develop their work force here,” says Rosemary Gannon, manager of SRP’s community outreach. SRP sees arts and culture as important in building a creative economy.

The education system is also important in developing a work force to attract business. STEM (science, technology, engineering and mathematics) is beginning to roll into STEAM as the role of arts is gaining recognition. “Kids need a larger view of the world, to see how it all works in a creative society, to bring and attract the knowledge worker,” says Jim Ballinger, director of the Phoenix Art Museum.

In that regard, The Phoenix Symphony launched a program last year to work directly with the K-12 schools. “We have the metrics to say, ‘We just did a pilot program using music to teach STEM,’” says Ward of the success it can now report to funders.

“Arts … teach kids how to think independently, comparatively, and teach a certain level of entrepreneurship that those basic skills don’t teach but can be enhanced — by, for instance, adding literature, playwriting and theater into reading,” says Bob Booker, executive director of the Arizona Commission on the Arts. Even more basic than the arts’ ability to foster creativity, ingenuity, imagination, problem solving and teamwork is their impact on school drop-outs, as numerous studies have found that youth who are involved in the arts stay in school.

• Attendance, 2011/2012 season: 69,647
• Attendance, 2010/2011 season: 60,328
• Ticket sales, 2011/2012 season: $3,362,550
• Ticket sales, 2010/2011 season: $2,498,290
• Number of performances, 2011/2012 season: 63
• Number of performances, 2010/2011 season: 45
• Newly moved into its own 50,000-square-foot facility (up from 14,000 square feet), Ballet Arizona will be presenting 60 performances in the 2013/2014 season, 10 onsite.

Arts Support Community

“It’s a mistake to think about arts only as an investment made for other purposes,” says Matt Lehrman, president of arts consulting firm Audience Avenue and former executive director of arts collaborative Alliance for Audience. “Our willingness to see, hear and experience the ideas of others is important to what it means to actually be in a community.” And arts help define a community as an expression of its identity.

The fact that Mesa Arts Center’s attendance has climbed 19 percent annually in recent years seems to support Ornstein’s observation that “people are starting to yearn for [a way] to feel part of something bigger than themselves” and arts and cultural organizations are helping create that sense of community.

Amy Washburn, spokesperson for Southwest Gas, notes the company strives to build ties with the communities it serves and recognizes arts as a platform to strengthen the community. “Therefore, it’s a natural fit that Southwest Gas would want to be part of that,” she says, pointing to its decades of support for arts organizations.

Funding Challenges and Strategies

However strong ticket sales are, they typically do not cover an arts organization’s operating costs. The funding model today for the nonprofit arts and culture sector comprises income from public funding and private sector funding as well as earned revenue. “Without these multiple funding streams, arts and cultural experiences would not be accessible to broad sectors of our community,” Foley says, crediting the Ford Foundation with conceiving the model at the national level at the time the National Endowment for the Arts was being formed.

All three income streams have been under stress in the economic downturn. “The number of season subscribers dropped dramatically since 2008,” says Bobb Cooper, producing artistic director of Valley Youth Theatre, explaining that season subscribers are important because those are guaranteed funds. Although the organization has responded by increasing its efforts on single ticket sales, that’s a less stable revenue source as well as requiring more effort. VYT struggles with an additional challenge, in spite of 25 years of proven fiscal responsibility while earning national recognition for its high-caliber, professional productions. Says Cooper, “Some funders won’t fund us because they think we’re not big enough – we’re not the Symphony or the Opera.”

• Attendance, fiscal year 2013: 197,242
• Attendance, fiscal year 2012: 225,612
• Summer exhibit during FY 2013 was created of museum holdings in the permanent collection, with minimal advertising dollars allocated due to the recession; exhibit drew fewer people than projected.
• Total revenue, fiscal year 2013 (estimated): $14,400,000
• Total revenue, fiscal year 2012: $14,248,908
• Number of exhibitions annually: 3 national and international, in the Steele Gallery; 3 in other gallery areas in each of the museum’s 7 curatorial areas.

Earned income at the Heard Museum of Native Cultures and Art includes its retail operation — highly respected among collectors and a solid foundation for net income, according to Mark Bonsall, CEO of Salt River Project who serves as chairman of the Heard’s board of trustees. But it has had to adjust its inventory because, although the actual number of items sold has remained the same, the average ticket price of the merchandise sold has declined since 2008.

Efforts are now focused on a campaign to endow the operation of the facility, which Bonsall notes will be not for the museum’s collection but for items like air conditioning, security and roofing — mundane but important, and usually large expenditures.

Ballinger also addresses the need to build a sustainable endowment funding, and relates the experience of Denver, which, supported by a multi-county vote, created a cultural tax. “It transformed them,” he says. The approximately $3 million it raised per year for arts and culture was being matched, within a year, with corporate and private dollars. “If you can put yourself on sustainability with respect to salaries, et cetera, then you can put your fundraising efforts where people want to see and do and are more desirous of supporting.”

Of the local municipalities, Phoenix has the largest grants budget for arts and cultural organizations. While the $805,346 it has available for arts grants is up from the $150,000 per year it had been cut to in recent years, Phoenix’s director of the Grant Services and Community Initiatives Department, Dwight D. Walth, Ph.D., observes, “$800,000 is small for the size of our community, compared to other benchmark cities.” San Diego and Houston, for example, have multi-million-dollar grants budgets. Phoenix, Dr. Walth points out, funds arts grants through the general fund, which also supports a wide spectrum of critical city services. “The cities we compare ourselves to have other revenue streams supporting their grants programs; typically, a bed tax.”

Arizona also suffers from a dearth of corporate headquarters to contribute their corporate philanthropy.

But some changes are going on. William J. Jabjiniak, economic development director for the City of Mesa, sees public/private partnerships being created to accomplish “quality-of-life things.” He cites as example a pending proposal by Senator Bob Worsley (R, Dist. 25), a Mesa businessman whose successes include founding SkyMall, to partner with the city to fund construction of a concert hall next to the Mesa Arts Center.

• Attendance, 2012/2013 season (estimated): 165,000
• Attendance, 2011/2012 season: 130,000
• Total revenue, 2012/2013 season (estimated): $13,111,678
• Total revenue, 2011/2012 season: $9,357,485
• Number of performances: more than 100

Audience Matters

Attracting audience and building the future are also serious issues. And public K-12 education has become a factor. Although the general public views the arts as a valuable asset to the community, and has expressed this at the ballot by voting to pass bond measures to support the arts, Booker notes, “One of the things we’re facing in terms of participation and public value is, we have a couple of generations who have had no formal arts education in the classroom and never attended a live performance.” And he adds, “State policies require arts education, but that’s not being upheld by the state superintendant and school boards.”

Engaging young people in the arts is part of the mission of Valley Youth Theatre. While the reach of its programming ranges from babies to grandparents, the organization’s target is young people and it has a two-fold approach. VYT brings 750 children from social service agencies each year to see its productions, giving them “a theatrical experience they may never have had,” Cooper says. And it turns to the youth involved in the productions to support the effort through fundraising, Cooper explains. “So they learn about giving back and sustaining the arts.” Although VYT alumni include stars such as Emma Stone, Chelsea Kane and Jordin Sparks, Cooper notes, “The young people we’re serving are the audiences and philanthropists of the future as well as those performing on the professional stage.”

The Now and Future Arts

“It’s our responsibility to create entry points for people to experience new things,” says Ornstein, expressing the importance of program diversity in creating relevance for differing demographics.

A reassessment of its relevance and role in the community lies behind the turnaround Ward has accomplished for The Phoenix Symphony. Developing a new vision, three congruent goals emerged: to aesthetically feed the soul so there is hope and aspiration, to bolster a cultural economy “because it can be an attractor and retainer of economic development diversity that is so sorely needed,” and to help educate the next generation of creative work force “so we would have the human capital to build, attract and retain the kind of business and economic development we need in the state.”

In two-and-a-half years, Ward turned around the symphony’s financial situation from debt to surplus. “I was able to have a dialog with key stakeholders in the community in a meaningful way because our needs were aligned with theirs,” he says. Contributed revenue has increased by 91 percent in the past two to three years in spite of the recession, he says, also crediting the musicians (a union work force, he points out) who “took the sacrifice to forgive the restoration of a [previously implemented] salary cut to give us time to turn things around.”

The Phoenix Symphony has also joined with Ballet Arizona and Arizona Opera over some fundraising and some areas of back-office expense, recognizing they had similar silos. Working together in such areas as health insurance has helped reduce costs, as has the Tessitura Consortium they created to share the cost of licensing Tessitura’s software platform that integrates ticketing, fundraising, marketing and more. Says Ward, “When you go out to seek money and they understand that you’re being smarter about how you run your business, they’re going to feel safer about making an investment in that particular business.”

The need to develop new revenue streams lies behind changes now in process for Actors Theatre of Phoenix, according to its artistic director Matthew Wiener. “The venue we were in did not allow us to pursue different revenue streams.” Encouraged by strong and continuing grassroots support, Actors Theatre plans to combine a capital campaign with neighborhood revitalization — an approach that has worked in communities across the country — and is actively looking for a building it can turn into a theater through adaptive reuse. “We’ll have more control of the venue and can manage and generate earned income,” Wiener says.

Phoenix Art Museum has confronted head-on the issue of Phoenix transplants or part-time residents having ties to the communities where they grew up and tending to support “back home” first. “Every year, we get better at capturing that [support],” Ballinger says. This includes additions to the collection as well as monetary donations. If a potential donor has a picture the Phoenix Art Museum would like to have and the museum they’re involved with in Chicago, for instance, has four of that same artist, Ballinger says he points out it would be a more valuable donation here and asks directly, “Why don’t you make that commitment here?” Another strategy to gain support among part-time residents has long been to accept them as members of the museum’s board of trustees. It is common for organizations to require board members attend a certain minimum number of meetings, but this hinders participation by potential supporters who live here only part of the year, Ballinger notes.

“Every year, we have to raise or earn about 85 percent of our operating budget,” Ballinger says, explaining that the larger the organization, the harder it is to transform to the next level. Smaller organizations with a budget of $250,000 would need only $75,000 to get to the next level; Phoenix Art Museum, with a budget of $9.5 million, would need $2-3 million.

Our “Cultural” Desert

The phrase was coined by Robert Knight, now the executive director of the Tucson Museum of Art, when he was the founding director of Scottsdale Museum of Contemporary Art, to convey that there is an under-recognized wealth of arts in the Valley.

“We have a robust arts and cultural sector but not good communication about it, so we have the impression that there’s nothing going on,” Mahoney says. The idea that we’re a cultural wasteland could not be further from the truth. Last year, Mahoney invited documentary filmmaker Nic Cha Kim — who was creating a video series on L.A. art — to visit Phoenix and shoot some video on local murals. Mahoney recalls Kim’s reaction to his tour of Phoenix was, “Who knew you have so much going on?” Kim returned with a full film crew and shot a two-hour documentary on Phoenix art.

One of the area’s higher-profile arts and cultural institutions is the Heard Museum. Bonsall notes it is a major tourist attraction nationally and internationally as a “singular and unique art form and cultural history of this region” but is less appreciated by residents. To promote itself more locally, the museum will be increasing its special exhibitions from two or three per year to 12 or 14.

Ballinger has spent his entire tenure at the Phoenix Art Museum working to put the institution on the world arts map “so, as our community developed, we could be bringing great art from all over the world, to make that accessible to citizens here,” he says. Staffed with curators who have gained respect nationally, the museum has created exhibitions it could share with other institutions across the country and internationally, building a reputation to bring outside exhibits here.

A recent experience, however, underscores how the cultural, economic and political realms intersect. Ballinger relates that the Phoenix Art Museum was being considered by a group in Montreal for a significant exhibit. “They backed away because of national articles about education and tolerance here,” he says, explaining they worried that ticket sales would be too low to support the exhibit because they perceived Phoenix as having a low level of educated work force — a perception based on the state’s ranking in the low 40s in education and an economy under pressure because it was one-dimensional. “They felt the population would not have the intelligence or the curiosity.”

Ballinger firmly believes the Montreal group’s impression of metropolitan Phoenix is wrong, and asserts, “The arts [sector] can help with respect to the area’s reputation.”

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