Hill Strategies Research on Arts Statistics and Management

In this issue of Hill Strategies' Arts Research Monitor: Four reports on the situation of the arts and not-for-profit management, including detailed benchmarks of the performance of U.S. arts organizations, a report on management standards for Canadian charities and not-for-profit organizations, an article on the knowledge needs of arts organizations, and a survey of digital marketing by U.S. performing arts organizations.

Click the URLs below to read the full version of each report. 

National Center for Arts Research: Volume II Report

National Center for Arts Research (NCAR) at Southern Methodist University, April 2015
Authors: Glenn Voss, Zannie Giraud Voss, Rich Briesch, with Marla Teyolia
http://mcs.smu.edu/artsresearch2014/about/report
 
This report provides “evidence-based insights into the health of U.S. arts and cultural organizations”, based on three main data sources: charitable organizations’ tax forms, the Cultural Data Project, and the Theatre Communications Group. These sources contain information on more than 55,000 arts and cultural organizations.
 
The report is very detailed, with data related to 128 indices and in-depth reporting on 26 indices. Some interesting facts and benchmarks regarding American arts and culture organizations in 2012 (the most recent data year) include:

  • Unrestricted contributed funds, which include private and public sector contributions, represent 53% of organizations’ cash expenses, with earned income account for 48%. (These percentages add up to more than 100% of expenses because of a slight operating surplus for the organizations, before depreciation.)
  • “The average organization brought in nearly $8 in [private and public] contributed support for every dollar spent on fundraising.”
  • Direct program-related expenses account for two-thirds of organizations’ expenditures.
  • Organizations earned an average of $21.35 in program-related revenues for each in-person attendee, while marketing expenses, including relevant personnel costs, were $4.20 for each attendee.
  • On average, organizations have 17 months of available cash, including short-term investments.
  • Organizations have an average of 2.8 months of working capital (the difference between unrestricted current assets and unrestricted current liabilities).
  • Organizations have an average of 11 full-time employees. Total in-person attendance represents 3,828 people per full-time employee.
  • For each organization, in-person attendance represents, on average, 2.9% of the local population. When virtual visits are included, the “total touch points” represent 10.3% of the local population. 

The above statistics are analyzed by budget size (small, medium, and large, with cut-off points that vary by sector) as well as for 11 cultural sectors. Some interesting findings for the largest groups of respondents follow:

  • Community-based, visual arts, and multi-purpose organizations (representing 22% of all organizations reporting data in 2012) have the highest contributed support (private and public sectors combined) as a percentage of total expenses. These organizations also have the highest return on fundraising and the most working capital.
  • Theatre groups (20% of all organizations) are in the mid-range of sectors for most indicators.
  • Music organizations (excluding orchestras and operas, representing 17% of all organizations) have the lowest return on fundraising and “the second lowest expenses per attendee”.
  • Dance groups (9% of all organizations) have “the second lowest number of months of available capital” but are in the mid-range of sectors for most other indicators.
  • Arts education organizations (8% of all organizations) have the highest earned revenues (relative to total expenses) as well as the highest return on marketing. 
     

Standards Program for Canada’s Charities & Nonprofits
Enhancing governance and effectiveness

Imagine Canada, October 2014
http://www.imaginecanada.ca/our-programs/standards-program/standards
 
This document from Imagine Canada, the national association of charities, is intended to support charitable organizations by providing a “Canada-wide set of shared standards for charities and nonprofits designed to strengthen their capacity in five fundamental areas:

  • board governance
  • financial accountability & transparency
  • fundraising
  • staff management
  • volunteer involvement"

Within each of these areas, the standards vary based on the size of the organization. Level 1 organizations have five or fewer full-time equivalent (FTE) employees and $2 million or less in annual expenses. Level 2 organizations have 50 or fewer FTE employees and $10 million or less in annual expenses. Level 3 organizations have either 51 or more FTE employees or more than $10 million in annual expenses.
 
Within board governance, there are standards related to board leadership, board oversight, and governance policies and processes. For example, all levels of organizations are expected to have “a mission statement that is approved and revisited by the board at least every five years to assess its continued relevance”. In addition, all organizations are expected to have a strategic plan in place. Boards of Level 2 and 3 organizations are also expected to take responsibility for approving the strategic plan and evaluating progress related to the plan’s priorities.
 
The standards of financial accountability and transparency include having up-to-date financial statements, completing “an accurate Registered Charity Information Return” for the Canada Revenue Agency, and making annual financial statements publicly available. There are further standards for transparency of Level 2 and 3 organizations, including information that should be provided on the organizations’ websites.
 
Fundraising standards relate to donor relations and fundraising practices. For example, “all fundraising activities conducted by or on behalf of the organization must: be truthful; accurately describe the organization’s activities; disclose the organization’s name; disclose the purpose for which funds are requested; disclose the organization’s policy with respect to issuing Official Income Tax receipts including any policy on minimum amounts for which a receipt will be issued; and disclose, upon request, whether the individual or entity seeking donations is a volunteer, employee or contracted third party”.
 
Within staff management, there are standards related to: policies and other documentation; recruitment, orientation, and training; and performance management and staff development. For example, Level 1 and 2 organizations are expected to review human resource management policies at least every two years, and revise them as needed. Level 3 organizations are expected to review such policies annually. Level 2 and 3 organizations should have “a compensation structure that fairly evaluates and compensates the value of each position”. All levels of organizations are expected to provide all employees with “a work plan or performance objectives that identify their tasks/activities and the expected result”.
 
Volunteer involvement standards include having volunteer assignments that “relate to the mission or purpose of the organization and involve volunteers in meaningful ways that reflect their abilities, needs, and backgrounds”. All organizations are also expected to have “appropriate screening processes for volunteers”. Level 2 and 3 organizations are further expected to regularly evaluate “the impact and contributions of volunteers and the volunteer program”.
 
For a fee, “organizations wishing to demonstrate publicly that they meet the standards can participate in a voluntary peer-review-based accreditation process”. The fee includes access to supports such as volunteer coaches, an online hub, gap analysis, sample policies and procedures, and a discussion forum.
 

The Knowledge-Centric Arts Organization
A Critical Role for Grantmakers

Grantmakers in the Arts Reader, Vol 24, No 3 (Fall 2013)
Author: Neville Vakharia
http://www.giarts.org/article/knowledge-centric-arts-organization
 
Based on a literature review, exploratory interviews with arts organization leaders, a review of grantmakers’ practices, and the author’s experience, this article argues that “arts organizations must become knowledge-centric, by using knowledge to advance their missions and goals, gathering and leveraging disparate data and information, and creating a culture where knowledge is a core value”.
 
The author argues that “many organizations are not able to gather, collect, or report on even the fundamental data needed to inform their decision making.” Barriers in this area “include a lack of internal capacity, leadership that does not embrace the use of technology and metrics, and a compartmentalized staffing structure that inhibits sharing and collaboration”.
 
Best practices in becoming a more knowledge-centric arts organization include “(1) taking an incremental, data-driven approach [to gather both internal and external data]; (2) beginning to leverage ‘Big Data’’ [from public agencies, social media, GIS-mapping tools, and other sources]; and (3) building knowledge by building capacity” related to systems and tools, resources and funding, as well as governance and leadership.
 
Grantmakers, which “have a symbiotic relationship with arts organizations …, must adapt their approaches and strategies to align with the need to build knowledge-centric arts organizations”. The author’s advice for grantmakers includes:

  • “Investing in solid business models, not organizational structures”.
  • Investing in “knowledge capital”, which is funding toward an organization’s ability to become more knowledge-centric.
  • Supporting sensible organizational scaling, whether that is upward or downward.
  • Accepting risk and failure.
  • Recognizing that technology is not the entire solution.
  • Supporting organizations’ efforts to engage personnel with critical analytical skills.
  • Collaborating and cooperating with other funders to help support knowledge-centric practices in organizations.
     

2014 Performing Arts Digital Marketing Benchmark Study

Capacity Interactive, May 2015
http://ideas.capacityinteractive.com/2014-performing-arts-digital-marketing-benchmark-study-0
 
This report highlights the result of a survey of the digital marketing practices of 125 performing arts organizations in the United States. Theatres (41%) and presenting organizations (27%) accounted for over two-thirds of the respondents. As noted in the report, “125+ organizations do not make this data statistically significant”. Nevertheless, there are some interesting findings regarding the digital marketing of performing arts organizations.
 
Regarding performing arts organizations’ websites, the survey found that 52% of tickets were sold online. Three-quarters of respondents had redesigned their website within the past three years, including one-quarter that are currently redesigning their sites. Despite strong web usage, less than one-half of responding organizations (44%) indicated that they have an adequate budget for website maintenance.
 
Social media marketing is very important for performing arts organizations. All survey respondents have a Facebook page, and 97% have paid for Facebook advertising. Further, 96% of respondents have a Twitter account, 91% have a YouTube account, and 81% are on Instagram. As a result of respondents’ social media efforts, their followers on Instagram, Facebook, and Twitter have substantially increased in number.
 
With an increasing proportion of their web traffic coming from mobile devices, almost two-thirds of responding organizations (61%) have mobile-enabled websites. About one-half of respondents (53%) purchased mobile advertising in 2014.
 
As in the two previous years of this survey, a lack of budget was the most common obstacle in the success of performing arts organizations’ digital marketing efforts in 2014. Other common obstacles include an inability to determine the return on their investment, insufficient internal knowledge, and the lack of a clear digital strategy.

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