Arts, culture organizations take hard hit

The city of San Diego invests in the arts as a key driver for tourism and for the quality of life for its more than 1.4 million residents. Among their many services, arts and culture nonprofits provide classroombased arts instruction, neighborhood-based creative youth development initiatives and programming for incarcerated adults and seniors. In fiscal year 2019, ending June 30, 2019, these city-funded organizations provided arts and culture programming and activities at 959 locations, making 1,611 points of connection citywide.

To better understand the impact of the COVID-19 pandemic on city-funded arts and culture nonprofits and their workforce, the University of San Diego’s Nonprofit Institute, on behalf of the San Diego Commission for Arts and Culture, conducted a survey of local arts and culture organizations that were funded by the city in fiscal year 2020.

In that year, the city invested $11.4 million in arts and culture organizations. However, the city’s 2021 budget included only approximately $5.7 million in annual funding to due to drastically reduced tax revenues. Eight months into the pandemic, many city-funded arts and culture organizations are experiencing unprecedented financial losses.

Key findings from the survey illustrate the devastating economic impact of closures, job losses, and lost revenue on arts and culture nonprofits as follows.

• Ninety percent of arts and culture-related organizations were still closed or partially closed as of August 2020.

• Total revenue loss is estimated at $96.6 million.

• Ninety-five percent of organizations report reduction in program-related revenue totaling $79.4 million.

• More than 65 percent report a decline in individual donations.

• An unprecedented four in 10 employees have been furloughed or laid off. It is generally anticipated that furloughs will become layoffs before the pandemic ends.

• The cost of recovery to reopen to the public is reported to be nearly $65 million.

• The effects of the pandemic are anticipated to be long-lasting, with smaller local audiences and lower levels of tourism, reductions in funding and loss of workforce talent to other cities.

• Emergency relief funding for the arts and culture sector was relatively small compared to other sectors, both for-profit and nonprofit.

Arts and culture nonprofits have lost an estimated $96.6 million in revenue due to COVID-19. This grim sum can be broken down into earned revenue and contributed revenue losses. Earned revenue is generated through in-person events and other fee-for-service activities and typically tied to a particular venue, like a museum building or theater. However, mandated health protocols have curtailed or completely shut off that source of revenue for many arts organizations. Since March 2020, nearly 98 percent of respondents reported canceling in-person programs. Nearly 78 percent reported a loss of earned revenue from ticket sales or admission, 55 percent from classes or workshop fees and 46 percent from concessions/sales.

Sources of contributed revenue such as individual donations, corporate sponsorships and foundation grants have also fallen off sharply. More than two-thirds of organizations reported experiencing a loss of contributed revenue due to the cancellation of fundraising events.

The pandemic has also had an economic impact with lost jobs in the arts and culture sector. In response to COVID-19, 38 percent of responding organizations indicated that they had to lay off or furlough at least one employee. These decisions impacted a reported total of 841 employees and their jobs. Furthermore, it is estimated that nearly 2,200 independent contractors had their contracts canceled.

“COVID-19 mandated closures and social distancing have not just negatively impacted arts and culture nonprofits from providing the communities across San Diego with education, social cohesion, entertainment and expression, they also have a devastating economic impact for the organizations’ workforce, including artists, performers, designers, and musicians,” said Jonathon Glus, executive director for the San Diego Commission for Arts and Culture.

The report points out that a shrinking arts and culture sector will impact San Diego’s larger economy, particularly in tourism. The USS Midway, Comic-con International and the many arts and culture institutions in Balboa Park are all nonprofits that draw tourists to the region.

The full report is available at digital.sandiego.edu/npi-arts/1/.