Highlights from the Inaugural NCAR Report
To create the inaugural report, NCAR researchers integrated and analyzed data from the CDP and other national and government sources such as the Theatre Communications Group, the National Endowment for the Arts, the Census Bureau, and the National Center for Charitable Statistics. In doing so they created a spatial model of the arts and culture ecosystem of the U.S. The report measures performance on eight different indices: contributed revenue, earned revenue, expenses, marketing impact, bottom line, balance sheet, community engagement, and program activity. For each index, overall averages were calculated, as well as averages by sector, by organizational size, and by geographic area. These were broken down into nine different market clusters, including five cities identified as stand-alone markets (New York City, Washington, D.C., San Francisco, Los Angeles, and Chicago).
Beyond simply reporting on performance, the NCAR study evaluated specific drivers of performance and then, controlling for these drivers, NCAR was able to create a level playing field for all organizations in order to compare performance across organizations. From this, NCAR estimated how much of the remaining performance variation is attributable to intangible, difficult-to-observe-and-measure characteristics such as good decision-making and managerial or artistic expertise and how much is simply random variation.
NCAR draws on the academic expertise of Meadows and Cox faculty in the fields of arts management, marketing, and statistics. Dr. Zannie Voss, chair and professor of arts management and arts entrepreneurship in the Meadows and Cox schools, serves as NCAR’s director and Dr. Glenn Voss, the Marilyn R. and Leo F. Corrigan, Jr. Endowed Professor of Marketing at Cox, serves as research director.
“In this first report we took a deep dive into eight of the areas of performance identified, and by studying these averages, tried to answer the question ‘all else being equal, what makes one arts organization more successful than another?’ Some of the findings were as one would expect, but we did find some surprises,” said NCAR director Dr. Zannie Voss. “Perhaps more than any other industry, arts organizations are driven by managerial and artistic expertise. Being able to estimate the value of this expertise in an organization’s performance is the single most valuable result of our first study.”
In 2014, NCAR will launch an interactive dashboard, created in partnership with IBM, which will be accessible to arts organizations nationwide. Arts leaders will be able to enter information about their organizations and see how they compare to the highest performance standards in each of the eight indices for similar organizations. The website will also foster public discussion of best practices and solutions and offer a dedicated YouTube channel for video responses, as well as an online resource library with helpful tools and templates.
More than a dozen visionary foundations and individual arts patrons have supported the new center with financial investments, including the Communities Foundation of Texas, M. R. & Evelyn Hudson Foundation, Carl B. & Florence E. King Foundation, Jennifer and Peter Altabef, Marilyn Augur, Molly Byrne, Bess and Ted Enloe, Melissa and Trevor Fetter, Carol and Don Glendenning, Jeanne R. Johnson, Nancy Nasher, Nancy Perot, Bonnie Pitman, Caren Prothro, and Donna Wilhelm.
NCAR 2013 Report - Highlights
A sampling of highlights from the study:
- Arts and cultural organizations earned an average of $22.26 per person who participated in the organization’s program offerings, with a wide spectrum when broken down by sector: from a low of $4.10 for community organizations to a high of $53.72 for opera companies, reflecting the differences in operating models.
- The larger the organization, the higher the percentage of its operating revenue that goes to pay for artistic and program personnel compensation, and the greater the tendency to run a deficit.
- The smaller the organization, the higher the level of expenses it covers with contributed revenue.
- San Francisco had the highest arts and culture dollar activity per capita—$895—followed by New York City and Washington, D.C., at roughly $610 each.
- Organizations in the Los Angeles area have the highest levels of unrestricted contributed revenue covering total expenses, the highest program revenue per attendee, and spend more in marketing expenses to bring in each attendee than other clusters, while Chicago organizations spend the lowest amount to bring in every attendee, followed by New York.
Based on the averages for each index, NCAR researchers were able to identify some factors that drive performance, including:
- Organizational age and size (total expenses) boost performance in every case.
- More local, national, or world premieres all lead to higher attendance and higher levels of total engagement.
- Organizations that target children (pre-K – 12) tend to have a larger footprint, offering more programs on larger budgets and attracting more attendance and more total engagement.
- Organizations that spend more on fundraising (including personnel) have higher contributed and total operating revenue, but also more offerings, more total engagement, and higher current assets.
- Population has a positive effect on operating revenue, expenses, and total offerings, but a negative relationship with attendance and total engagement.
- Households with annual income above $200,000 tend to provide more contributed revenue to local arts and cultural organizations and they drive up expenses, but they have no effect on either attendance or program revenue and they drive down total engagement.
- Longer commute times in a community bring down performance on nearly every outcome.
- Attendance is lower as median age in the market increases. It appears that attendance is driven more by those in the lower end of the 25-64 range.
- Having more hotels in the market led to higher performance on nearly every measure.
- More per capita operating revenue in an arts sector translates to higher performance on every measure for organizations in that sector. When there are more competitors per sector, contributions are spread thinner, budgets tend to be smaller, and each organization supplies fewer offerings. However, more competition does not lead to lower attendance or engagement.
- Higher concentrations of larger corporations in the community boost marketing expenses, physical attendance, total expenses, and program salaries. There is a “big company” effect that impacts arts and culture.
- The number of NEA and/or IMLS grants an organization receives has a positive effect on every performance outcome.
Although the performance drivers explain some level of variation in performance measures, there are intangibles, like managerial and artistic experience, that also affect performance. These Key Intangible Performance Indicators (KIPIs) can be measured only after taking into account an organization’s sector, size, location, community characteristics, local cultural policy, etc., and creating a level playing field. There is still some random variation that can’t be accounted for, but NCAR gets as close as possible to measuring how much of an impact KIPIs have on performance. The KIPIs are most valuable as a tool in examining an individual organization’s performance on different outcomes relative to the rest of the field, all else being equal.