The impact of the recent economic crisis on the arts

March 18, 201518 March 2015

Issue

Arts organizations (heritage, visual arts, orchestras)

Article Link

https://editorialexpress.com/cgi-bin/conference/download.cgi?db_name=ACEI2014&paper_id=110

Based on data on 942 arts organizations from CADAC (Canadian Arts Database / Données sur les arts au Canada), this report highlights changes in the revenue streams, expenses, and net assets of arts organizations between 2007-08 and 2011-12. In the first year of this timeframe (i.e., 2007-08 to 2008-09), Canada’s Gross Domestic Product decreased by 2.8%. In subsequent years, the economy posted gains of 3.2%, 2.5%, and 1.7%.

The report indicates that private sector revenues were the first to decrease following the recession, declining by 1.9% between 2008-09 and 2009-10 (i.e., the year after the GDP decrease). Private sector revenues increased very slightly in 2010-11 (0.6%), before rebounding with a 6.7% increase in 2011-12. Over the whole period (2007-08 to 2011-12), private sector revenues increased by 8%.

Earned revenues initially showed strong increases (4.5% in both 2008-09 and 2009-10) but decreased by 2.0% in 2010-11 and another 2.1% in 2011-12. Over the whole period, earned revenues increased by 5%.

Government funding showed the smallest overall change, decreasing by 1%. Government funding decreased very slightly in 2008-09 (-0.5%), followed by a 3.4% increase in 2009-10, a 3.8% decrease in 2010-11, and a very small 0.1% increase in 2011-12.

Total revenues increased by 3% over the whole period. Revenues initially increased by 2.1% in 2008-09 and 2.6% in 2009-10 before decreasing by 2.1% in 2010-11 and recording a small increase of 0.7% in 2011-12.

There are three other key findings in the report:

• Organizations with the highest proportion of private sector revenues experienced the smallest overall increase in private sector revenues. Organizations with lower proportions of private sector revenues experienced more positive results.
• Organizations with the largest unrestricted net assets experienced the most significant impact on those assets as a result of the economic downturn.
• The 237 “arts organizations with large capital assets did not experience a similar downfall, but their facility expenses grew significantly” (by $7.5 million), which the authors link to a change from a collective surplus of $9.7 million for these organizations to a collective deficit of $0.3 million.

As a limited, first empirical study of the economic crisis, the report recognizes that “many questions regarding how the economic crisis impacted different disciplines, regions, [and] size of arts organizations remain unanswered”.