How Will the Arts Industry Overcome a $6.8 Billion Loss?

Save ArticleSave Article

Failed to save article

Please try again

 (Via All Arts)

As the framework for what the art world looks like post-pandemic takes shape, financial underpinnings threaten collapse, leaving those in the industry (and beyond) to brace for what comes next. With ticket sales stalled and many artists out of work, a new study reveals that the nonprofit arts and culture sector faces an estimated $6.8 billion loss — the equivalent to an average 26% deficit among organizations. But using these numbers as signposts, the report also lays down a roadmap to move forward.

Titled “In It for the Long Haul,” the study culls data from 35,000 United States nonprofit arts organizations with annual operating budgets over $50,000 to detail what issues cultural institutions are facing and what steps could lead to potential recovery. Presented by SMU DataArts and TRG Arts, the report draws from surveys conducted about closures, layoffs and impact to date, and operates under the estimate that a majority of the organizations included will be able to resume activity this October while taking into account that every “reopen” will hit differently.

The likelihood of a slow return to normalcy and social scarring are built into the study’s projections for recovery. Based on a combination of lost revenue and expense reductions (meaning cuts in staff and business expenses), the report lays out four questions for organizations to consider: What the next year might look like, what an organization’s strengths are, how it will manage people and revenue propositions, and who will gather when doors reopen.

“Cultural organizations’ strategy and structure will have to adapt to these environmental changes,” co-authors Zannie Giraud Voss, director of SMU DataArts, and Jill Robinson, CEO of TRG Arts, said. “The field of nonprofit arts and culture is unlikely to return to its pre-COVID state for the foreseeable future, if ever.”

They continue: “‘Business as usual’ will mean something different. Seeing ahead to what that ‘usual’ will look like is obscured by the current environment’s complexity, dynamism, resource scarcity and uncertainty.”


The Andrew W. Mellon Foundation, an ALL ARTS funder, facilitated the gathering of data for the report, culling findings from member surveys conducted by Theatre Communications Group, Association of Art Museum Directors, Association of Performing Arts Professionals, the League of American Orchestras, Chamber Music America, the International Association of Blacks in Dance and First Peoples Fund.

Drawing from this data and historical research, the report indicates that not all institutions will be able to weather these hardships — with those in precarious positions prior to the closures at most risk. This projection echoes other recent conclusions — such as Americans for the Arts’ findings that 10% of organizations surveyed are “not confident” they will reopen after the COVID-19 pandemic allows safe gathering.

“Not all of our beloved organizations will survive this crisis, irrespective of their size,” the report’s authors said. “Those with underlying issues heading into it, such as negative working capital and declining participation, are most susceptible to insolvency.”

On the flip side, the study also concludes that “those that headed into the crisis with relatively lower fixed costs, adaptive capabilities, cash reserves, strong community ties and a solid store of relational capital with a base of repeat customers and funders have greater odds of not only surviving, but reviving.”

As a major source of national income, the health of the arts community is vital to the overall recovery of the economy. According to the National Endowment for the Arts, the creative industry drives 4.5% of U.S. gross domestic product — equaling out to $877.8 billion in 2017. The Americans for the Arts survey concluded that the economic impact of losses among the arts community is $1.9 billion in government revenue, with 328,000 jobs “no longer being supported.”

Noting the role of arts as a community resource, the report repeatedly states that those organizations that are able to see not only the short-term effects of the crisis but also the longer-term picture stand a better chance of surviving.

“Change will happen, for better or for worse,” Voss and Robinson said. “Those who have the bandwidth to think beyond near-term survival have an opportunity to contemplate the organization’s core values, strengths, and purpose coming out of this crisis.”