Economic Impact

The COVID-19 pandemic has put American artists and arts organizations in the crosshairs of a severe economic contraction. Freelance arts workers and small arts businesses are among the most vulnerable. Especially now, it can be useful to quantify the role of self-employed workers and small businesses in the overall arts economy.

Aimed at helping arts and cultural organizations consider key questions and variables as they plan for reopening and a post-COVID-19 future, this report estimates the pandemic’s effect on the nonprofit arts sector and identifies three critical propositions and four prompting questions for consideration.

Our estimates draw on historical financial, operating, and attendance data, as well as reported near-term decisions and impact to date.[1] The estimated aggregate -$6.8 billion net effect of the COVID-19 crisis on the nonprofit arts and culture sector equates to a deficit equivalent to 26% of expenses for the average organization, over the course of a year.

This report underscores that COVID-19 has created unprecedented challenges and proposes specific steps that can be taken to address the crisis while orienting toward sustained action and resiliency. These steps reflect three propositions that any organization can develop and align in order to achieve success: its value proposition, revenue proposition, and people proposition. We argue that these steps have the potential to differentiate the organizations that not only weather the crisis but grow through it.

This report defines what constitutes gig work and provides an overview of the gig economy, in which many artists participate. Comparing the gig workforce’s size relative to the rest of the labor force, the policy brief found that 3 in 10 workers participated in gig work over the past month, and more than a third of the U.S. workforce freelances at least part time. The brief provides a useful benchmark for future research on gig workers and a baseline to see how the gig economy will change following the COVID-19 crisis.

Arts funders have always held sway over the sector at a disproportionately high level in relation to the amount of funding provided. Suddenly now the influence of philanthropy is arithmetically higher in that its decisions will determine who survives and who doesn’t.

Even with their collective resources foundations do not have anything close to the amount of capital needed to comprehensively meet the needs of the field at this time. Nonetheless, arts funders, working together, can be strategic in defining and deploying the kinds of capital that will provide equitable relief and opportunity to the sector as a whole.