In new research, the University of San Diego's Nonprofit Institute and the city of San Diego's Commission for Art and Culture found a staggering economic impact throughout the arts and culture sector, more so than in any other nonprofit sector in the region.
"Arts and culture organizations are what we call high-contact or close proximity organizations — so they are interacting with people on a regular basis, so they have a more difficult time shifting their programs online," said researcher Laura Dietrick, associate director of the Nonprofit Institute and one of the study's authors.
$96.6 Million Lost
The study, which surveyed half of all arts and culture nonprofits and and included small, medium and large nonprofits all equally represented, found that an estimated $96.6 million in revenue was reported lost due to COVID-19 from its local onset in March through the end of August — this figure includes both earned revenue and contributed revenue.
Earned revenue is a direct result of canceled in-person activities, such as ticket sales, admission, classes/workshop tuition and fees, concession sales, and other types of program-type revenue like space rental income.
The impact was broad: 95 percent of regional arts and culture nonprofits reported a loss of program-based revenue, ranging from a few hundred dollars to millions.
For New Village Arts Theatre in Carlsbad, that revenue is significant. "Ticket income on a yearly basis, it fluctuates what percentage of our income it makes up, but it's roughly around 60 percent of our income, give or take. And yeah, without that it’s a tremendous hit to our ability to maintain and sustain throughout this," said AJ Knox, director of connectivity for New Village Arts.
"Our shows are our bread and butter. And so without those events we really don't have a way to generate that same level of income," Knox said.
As of Aug. 30, 2020, just 10 percent of organizations were able to fully reopen. The majority either partially reopened or remained closed but plan to reopen. But 6 percent remain closed with no plan to reopen, and of that 6 percent, all but one nonprofit is in the performing arts sector.
In addition to performing arts organizations in general, the pandemic has meant that larger organizations — those with budgets greater than $1 million — were more likely to remain closed. Smaller organizations were more likely to be partially or fully reopened in an attempt to generate revenue.
Did The Virtual Pivot Pay Off?
Local theater companies like Moxie Theatre and The Old Globe were among the first to offer some virtual programming like Zoom plays and workshops.
"We’ve been producing almost nonstop since the pandemic happened. We have had to be innovative in a way that I think theater hasn’t been forced to be in a long time. And the cycle of innovation for theater is speeding up," said Jennifer Eve Thorn, executive artistic director of Moxie Theatre. "And so what's really been cool is finding a way to continue to make art, to reach and educate audiences about how to access it, and realizing that this may be the solution to access to the arts that was really missing and making theater something that was only available for a minority of people who could afford it," Thorn said.
Workshops, classes and conferences were more likely to shift to an online format. However, just 19 percent of organizations shifted performances online, and fewer still shifted visual art exhibitions to virtual platforms.
Dietrick said that for smaller organizations, it was easier to transition to digital platforms. The skills of producing virtual events helped the bottom line in unexpected ways, too. In Moxie's case, they began working with outside groups — whether they're performing arts groups or like-minded nonprofits or community organizations — to help those groups produce online events, too.
However, overall, many organizations reported that audiences didn't entirely make the leap to digital platforms.
Thorn said that Moxie experienced that approximately 25 percent of a usual show audience would tune in for a virtual event, and that the amount they're willing to pay would be more akin to the cost of a movie ticket rather than a theater ticket.
Philanthropy And Funding In A Crisis
Another component of the revenue lost due to COVID is contributed revenue: individual donations, corporate sponsorships and government or foundation funding. Eighty-six percent of arts and culture nonprofits reported a loss of contributed revenue, with individual donations being the most common form of loss.
While some arts organizations experienced an initial surge of donations and support at the onset of the pandemic, giving behavior changed as time progressed.
"We see patterns of this both locally and in a national poll that we just conducted with Luth Research, where donors are reporting, about 50 percent of donors are saying their giving isn't changing, but the other 50 percent are saying, 'We are changing our giving, and we're changing the kinds of organizations that we're giving to,'" said Dietrick. "And in those cases, we are definitely seeing a fall off in giving to arts and culture organizations, and a preference for more immediate need types of organizations, like food banks and health services — things related to COVID."
The majority of organizations also reported a loss of revenue from having to cancel in-person fundraising events. The total reported loss of contributed revenue is estimated at $17.2 million.
Museum of Photographic Arts executive director Deborah Klochko pointed out that the funding landscape is changing, too.
"What has really changed has been a number of the foundations that — especially the second half of last year — a lot of them, even if they were funding the arts, were turning more and more towards social funding — housing, food, those kinds of things, which are perfectly understandable given the difficult straits that so many people are facing. So we've had to work hard to continue to look for support from more than just our usual sources," said Klochko.
4 Out Of 10 Furloughs Or Layoffs, Nearly Half Of Gig Workers
With loss of revenue, funding and programs comes the inability to sustain staff, and the many independent contractors employed each season. 4 in 10 employees sector-wide experienced a layoff or furlough. Larger organizations, with budgets greater than $1 million reported a higher percentage of their employees furloughed or laid off versus those groups with smaller budgets.
"Throughout the course of the season, we could employ around 250 different people for various jobs, from actors to designers to stage managers, and without these shows we don’t have that capability," said Knox of New Village Arts.
Dietrick said the survey respondents indicated that more than two thousand gig workers' contracts had been canceled, and that nearly half of the organizations that work with contractors are performing arts organizations. This extrapolates to 48 percent of the gig economy experiencing a loss of income — a situation recently complicated by AB-5, the California state law that took effect in January 2020.
"Arts organizations took a major hit right before the pandemic, especially small organizations like Moxie, having to take these people who work for us for eight weeks and consider them as employees and run them through our workers' comp system," said Thorn.
Women: 'Flooding Out Of The Arts Industry'
Moxie Theatre — whose mission is to further the work of women and women of color — reported that they're seeing a lot of women in the arts having to step away from their careers.
"Women are leaving the workforce right now — according to the U.S. Bureau of Labor Statistics — at 4 times the rate that men are. And women in the arts, if they are in a two-income household, are very likely not to be the person earning the most money in that household, are flooding out of the arts industry," said Thorn. "Because it's just, they don’t know how to, if they’re parents like I am, they don't know how to balance this new responsibility of distance learning, and still carry on a career that was already under-funded and struggling."
For Moxie, they're facing unfathomable steps backward in equality in the arts particularly in theater and playwriting. Throughout their 16-year history as an organization, they've seen a significant but still unequal rise in the voices of women.
"I don’t think we’re going to see a leap in this moment toward equality in that regard. And that's part of a big, heartbreaking loss for us as an organization," said Thorn.
Cost Of Recovery: $130 Million
The study balanced the reported loss of revenue, $96.6 million to date, against the cost of recovery and reopening which is estimated at $64.6 million, minus the $31.3 million received in COVID relief funds. The result is that it would cost the arts and culture sector in the region some $130 million to recover.
For these arts and culture organizations, the cost to reopen includes training staff, building infrastructure for COVID safety or purchasing protective gear. Concern for public safety tops the list of reopening worries. But for the majority of organizations in the sector, what they need most are relief loans and grants — followed by help managing stress and anxiety of employees.
In addition, the majority of organizations are worried that audiences will not return to their pre-COVID level — due to reductions in tourism as well as individual willingness to go out.
"Supporting arts and culture right now is about supporting the economy, not just artists. Arts and culture generates a billion dollars in economic activity in San Diego. It's one of the biggest attractions for tourism that sets us apart from other beach towns," said Thorn.
The prognosis seems bleak for the arts and culture sector in San Diego, but some organizations are taking the time to check priorities or work on institutional goals like equity or already in-progress transformations.
"What we’ve been doing is trying to figure out what a nonprofit museum looks like in these kinds of circumstances," said Deborah Klochko of MOPA. "We've had to learn to evolve and think differently not just about how we function now, but what we're going to be when we reopen, because any nonprofit that thinks that they’re going to be the same only just with a delay is fooling themselves."
