This month, NFF released its
fifth annual State of the
Nonprofit Sector Survey. Of the nearly 6000 respondents, more than 900 hailed from
the arts and culture sector, representing 47 states.
The data provide a wealth of
information about how arts and culture organizations are managing through an
unprecedented time of economic and artistic flux. Current trends point to
lasting changes in the way the sector operates and is funded. The arts specific
survey results are available in
their entirety here. I also encourage you to check out our online Survey Analyzer, where you can further filter the data by state, sector,
operating expense and other dimensions.
These are the headlines.
Arts & culture organizations continue to operate with
thin margins and low liquidity:
“As the economy declined, we chose to sustain programs as
much as possible to help maintain our local economic impact and community
service. Consequently, we depleted our cash reserves that were normally used
for capital maintenance and expansion projects. Today, these reserves are
completely wiped out and our capital needs are mounting up.”
--Arts, Culture & Humanities NPO, FL
42% of survey respondents reported an operating surplus in
2012, compared to 44% in the previous year.
The outlook for 2013 is more uncertain: just 28% predict
ending the year with a surplus. 50% say 2013 will be the same as or harder than
The sector remains divided between the 'haves' and 'have
nots': 60% of arts organizations reported three months or less of cash on hand.
While 20% added to reserve funds in 2012, an equal number drew down already
Arts groups that receive government funding face particular
“We found out in the 7th month of our fiscal year that our
State funding was reduced by 40%, and that contracts would be delayed another
six weeks. This news is just another blow to our already taxed budget and means
more fundraising and less time to advance our mission. Our board has completely
lost confidence in public funding, and we are proceeding as if that funding
will be gone within 5 years. Advocacy is at an all-time low in the arts field
—Arts, Culture & Humanities, NY
Only 13% of survey respondents that receive state and local
funding are paid for the full cost of government funded programs; 21% of recipients
of federal funds receive full reimbursement.
Government is late to pay: among those organizations with
state or local funding, over 50% reported overdue payments; 40% reported late
payments from the federal government.
Arts respondents report greater comfort discussing their capitalization
needs with funders than organizations in other nonprofit sectors, but the
sector still struggles:
“Funders are not open to conversations about capital funds
or general operating funds… funding cuts affect projections and planned growth.”
—Arts, Culture & Humanities, IL
40% say they are comfortable talking with their funders
about the need for reserves. This compares favorably to just 28% in the broader
39% of arts groups can discuss their facilities challenges
with funders, compared to 33% for all nonprofits.
Still, a small minority of organizations can talk to
supporters about working capital, cash flow and debt. This remains a worrisome
trend given current liquidity challenges.
Arts organizations are changing the way they do business to
adapt to the new reality:
“Most funding for our field is based on an outdated model. We
are trying to shift the culture of our field and it takes a tremendous amount of
community/funder education. We eliminated our high interest debt in 2011-12 and
are presently trying to build a reserve. Cash flow is our second biggest
—Arts, Culture & Humanities, CA
46% have added or expanded programs or services; 15% reduced
or eliminated programs or services.
37% increased the number of people served; 53% expect to do
so this year.
35% hired new staff and 38% made replacement hires.
38% engaged more closely with their board.
34% collaborated with another organization; 46% anticipate
partnering in 2013.
38% have upgraded technology to improve organizational
efficiency; 28% have done so to improve programs.
Thank you to all of you who found the time to help us
assemble this picture by responding to our survey. These results provide an
opportunity for the field to start difficult but productive conversations about
the funding and finances arts and culture organizations require to survive and
thrive in an uncertain environment.