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Five Macro Trends That Arts Organizations Need to Watch

2016 is off and running, and guaranteed to be a dynamic presidential election year. Along with a new administration in Washington, five broad cultural and economic trends are sure to impact sectors across America–affecting our work in the arts in the coming years. Candidates at all levels of government will need to evolve positions on each of these trends so we can work more strategically to ensure that the arts continue to thrive and enrich the lives of every American.

1) Nonprofits Are Being Expected to Play by For-Profit Rules

Sixty percent of the revenue for nonprofit arts organizations comes from the sale of tickets, merchandise, and services. This means that they are operating more and more like small businesses. Current public and private funding trends are nudging arts nonprofits further toward more innovative ways of creating revenue while staying true to their mission, but too much focus on revenue generation can distract from the standing model of nonprofits as mission driven organizations for the benefit of society.

Competition for audiences and resources. There are more arts organizations in America than ever before, and competition is stiff for audiences and resources. Some cultural leaders have suggested thinning the herd, but is that option viable when you consider arts organizations have diverse levels of public, private, and earned revenues, and of course, different missions? Historical circumstances have influenced who is funded and who is not. However, decisions about which community treasures go or stay are not necessarily best left up to only the marketplace.

Public support is coming, but not enough. We are seeing an increase in city government funding plans for the arts, and increases in dedicated tax revenues such as hotel-motel taxes and sales taxes. In January, the U.S. Conference of Mayors declared the arts to be one of 18 key advancement planks that they will recommend to the next administration. But public funding still falls short given its role as an important leveraging tool for arts organizations to acquire funding from other sources. Elected leaders need to see that the arts are essential components of their community. But so do the people in the communities, the constituents, who vote on where the funding goes.

Private support for the arts is changing. Private funding for the arts today represents only about 30 percent of nonprofit arts revenue with two-thirds of that coming from individual giving. And the share of philanthropy that goes to the arts is decreasing as funders consolidate their issues. While the arts are valuable to society in and of themselves, it is also important to make the case that they are even better strategic, essential partners in solving many of the other areas of concern that private funders are targeting. This is especially critical as market volatility and economic uncertainty lead donors to be more strategic and conservative in their giving.

2) Target Markets Are Changing and Expanding
Audiences are using the power of the market and social media to challenge the status quo.

Attention to racial equity in the arts and arts organizations is growing nationwide. Arts organizations like The Sphinx Organization, The Association of American Cultures, and the National Association of Latino Arts and Cultures have been working toward more equitable practices in the field for decades now. Our own Arts and Business Council of New York has sponsored the Diversity in Arts Leadership Internship Program for 20 years with Con Edison. But even while the highly visible entities like the Oscars are drawing attention to issues of equity in the arts, nonprofit arts organizations of color are facing severe funding challenges, according to a recent DeVos Institute report, and addressed in a follow-up study at Southern Methodist University. In the meantime, our nation roars toward 50 percent population of color by 2050, with some regions already there.

Arts participation is evolving. Yes, studies show that there has been a declining…

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