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Nearly half of Phila. area cultural groups operate with deficits

September 22, 2008

Stephan Salisbury, Philadelphia Inquirer

 

A substantial number of the region's cultural organizations are operating with life-threatening deficits, according to a new study by the Greater Philadelphia Cultural Alliance.

 

But despite such specters, the alliance study shows that the 281 groups studied provided 19,000 jobs, attracted 15 million visitors, earned $657 million from tickets, rentals and other sources, and received $526 million in contributions.

 

The data are contained in Portfolio 2008, the second broad statistical analysis of cultural groups performed by the alliance and released today. The first Portfolio, which analyzed fiscal information from fewer organizations, was issued two years ago.

 

"Reports like this are really important because they focus on the importance of arts and culture to the growth and vibrance of the city and region," said Tom Kaiden, the alliance's chief operating officer. Arts and cultural groups have become increasingly important to communities throughout the region, he said.

 

Organizations providing information ranged in size from the very large, such as the Philadelphia Museum of Art, WHYY and the Franklin Institute, to the far smaller Tania Isaac Dance, Kennett Symphony of Chester County and Islamic Cultural Preservation and Information Council.

 

Specifically, the study showed that 40 percent of the organizations operate with deficits, and 22 percent are operating with deficits greater than 10 percent of total revenues - what the report deems "unsustainable territory."

 

As organizations decrease in size, the likelihood of deficits rises, the study shows.

 

At the same time, arts organizations operate with "lean" budgets, providing performances and programs to audiences and visitors far below actual cost. The median ticket price for a performance, exhibit or program is $14; the median cost to produce is $46.

 

Portfolio 2008 also makes use of a 1995 study by the Pennsylvania Economy League to track trends over the course of a decade.

 

From 1995 to 2005, analysis shows that revenue growth of the 108 organizations studied in the trend analysis exceeded the rate of inflation in both the city and the suburbs. Suburban organizations grew by 76 percent, while city groups grew by 47 percent over the decade.

 

At the same time, a decline in federal arts support was more than matched by a dramatic increase in state funding. In 1995, the ratio of state to federal arts support stood at about 1-1. By 2005, federal dollars had dropped about 72 percent and state funds increased by 144 percent. The ratio of state to federal support stood at 9-1.

 

Total income for the organizations increased from about $269 million to $409 million.

 

The report states that organizations have adapted to the changing funding landscape, but notes that outside of Philadelphia, local and county governments provide little or no arts support. Of particular note for cultural organizations, the study says, is the income generated by market investments.

 

The area's largest institutions have benefited over the last decade by bullish markets. Should that change, "the market will have an impact" on operations and endowments.

 

"Market forces could also impact the endowments of foundations, thus potentially having an adverse effect on many small and medium organizations, as well," the study notes.

 

Portfolio will be discussed publicly at the alliance's annual meeting at 5 p.m. today at the Masonic Temple, 1 N. Broad St.

 

 

 

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