May 20, 2020

US Arts and Culture Sector Projected to Lose $6.8 Billion

The Metropolitan Museum of Art, New York Photo: Lauren Cavalli.

NEW YORK—A new report published by Southern Methodist University’s DataArts center and the data consulting firm TRG Arts estimates that the net effect of the Covid-19 pandemic on the United States’s nonprofit cultural sector will be a deficit of $6.8 billion, or the equivalent of 26 percent of the average operating expenses of the arts organization over the course of one year. The study draws from the activity of roughly 35,000 nonprofits with annual budgets surpassing $50,000 and incorporates information about closures, layoffs, and impact reports. The estimates also hinge upon organizations reopening by October 1, 2020.

The arts and culture industry, according to data from the National Endowment for the Arts, comprises 4.5 percent of the US’s GDP. In March, the American Alliance of Museums predicted the permanent closure of nearly a third of the nation’s museums if the lockdown continued for more than a couple months. On average—and in a healthy economy—arts organizations typically hold less than two months’ worth of capital to sustain their expenses without incoming revenue.

“The field of nonprofit arts and culture is unlikely to return to its pre-Covid state for the foreseeable future, if ever,” reads the paper, coauthored by Zannie Voss, SMU DataArts director, and Jill Robinson, CEO of TRG. “‘Business as usual’ will mean something different.”

It continues: “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 . . . On a practical level, myriad research studies regarding consumer confidence put travel at the bottom of the recovery, suggesting that local audiences, local talent, indeed, the local supply chain will reign supreme.”

The projected losses—compiled from member surveys of the 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, with assistance from the Andrew W. Mellon Foundation—are likely to be compounded by reduced public arts funding as austerity measures are adopted on both the federal and local levels of government.

“We haven’t even begun to see the ramifications on city or state budgets and the hard decisions that are going to have to be made as a result of that,” added Voss.

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