Finance

Audiences Generally Cut Back On Drinks Before Admission Tickets

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As always, Colleen Dilenschneider and the folks at IMPACTS provided some attention worthy data in July regarding perceptions of the value of paying for museum and performing arts tickets. Basically, are the tickets worth it?

One of the things they found is that people expect to pay less for exhibit based and performing arts experiences in 2024 than they did in 2019, There is a lot nuance to this result according the Dilenschneider on her colleagues. First of all, this response is based on what people remember paying for their experience in pre-pandemic 2019. As you might imagine, they note that memory is imprecise and so comparing what they expect to pay this year compared to what they remember paying five years ago isn’t going to provide the most accurate results. In fact, data about what was spent in the first two quarters of 2024 tends to be higher than what they said they planned to spend.

The other thing to know is that people aren’t planning to cut back on admission tickets, but rather the other activities surrounding the central event. What IMPACTS terms off-site spending:

As of Q2 2024, the top area where folks recall spending money in relation to their visit is admission. Still, we do not see that admission costs are a top barrier to attendance to cultural organizations. So, to continue our work as data detectives, we’ll want to observe where other changes have taken place.

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Folks are spending more on parking, admission, and onsite retail, and they are spending less on the other aspects surrounding the cultural experience.

Nowadays, despite rising food costs and restaurant prices, cultural participants plan to spend less (and actually do) on food and beverage. In 2019, performing arts patrons were more likely to grab a dinner before the show and perhaps drinks afterwards. Now, however, the data suggest that patrons may be more likely to only do pre-theater drinks, or perhaps skip the fancy bottle of wine for a single glass or choose a more affordable fast casual option than a Michelin-starred meal. These choices reflect consumers’ decisions to “trade off” or “trade down” when it comes to making their cultural-related spending choices. Fortunately for many cultural organizations, these “trades” thus far seem to primarily affect offsite spending (and indicate less sensitivity to onsite consumer behaviors).

Of course, these results are associated with people who actually made the choice to participate in an experience. A fair part of the article is devoted to a conversation about the general pessimism people in the US especially feel about the economy. Ticket prices are fairly low on the list of cost related barriers to visitation compared to concerns about the economy, prices, inflation, investment, personal finances, etc.

Small City Or Small Arts Org, Getting Grants Is Tough

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According to a recent piece on CityLab, smaller cities and towns have much in common with smaller non-profits when it comes to applying for grants.  They both have great need but lack the staff and resources to effectively compete for grants.

Citing the case of Jackson, MS which has been in a state of distress since 2022 when their water infrastructure failed due to flooding, the article quotes the former chief administrative officer, Robert Blaine about their lack of capacity to secure grants:

Robert Blaine, now at the National League of Cities, said one of many issues that impeded the city’s efforts to fix its water crisis was its inability to compete for and win grants due to a lack of staff to complete applications. “We really, really needed the funds, but we didn’t have the competency, we didn’t have the capacity to be able to apply for it,” he told Streetsblog in 2023.

The article mentions there is a lot of funding available from the federal government that isn’t getting spent due to this lack of capacity. Many non-profits are stepping up to help by offering training to cities about how to go about securing grants, most of which require a lot more data than most non-profit arts and cultural organizations are required to gather. Some non-profits have assembled former employees of different federal agencies or former municipal grant writers to provide advice and read drafts of grant proposals.

Additionally, the Inflation Reduction Act provided funds for technical assistance to help states and municipalities complete grants including funds to gather the required data in addition to writing the grant proposal. Since it benefits states to have their cities secure funding for projects, some states also provide technical assistance.

Though it sort of sounds like the “you need experience to get a job, but you can’t get experience without a job,” paradox to be required to write a grant to get the funding to hire people who are good at writing grants. I did appreciate the flow chart on the Colorado grant writing assistance program that shows that if your application is denied, you can modify and resubmit. Also, they appear to commit to reviewing applications within 14 days so cities will be able to maintain some momentum. I think a lot of non-profit cultural entities wish that sort of do-over opportunity was available to them with their own grants.

According to a staff member of one of the non-profits helping cities write grants, there is a similar situation to arts and culture non-profits where those with the most direct interaction with communities in need of assistance are often those without the capacity to secure the grant funding they need:

“I always look at the grant world like a spectrum,” said Relf. “At one extreme, you have organizations that know how to write grants, and they win grants, but they’re not really in the community doing the work. And then you have these organizations that have a heart for the community. They’re there every day. They just don’t have the capacity to write the grants.”

Guaranteed Basic Income Programs Seem To Benefit Those With Concrete Goals

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Long time readers know I tend to pay attention to news about guaranteed basic income programs, particularly those that have artists as a target group. Thanks to a CityLab link to a story on Los Angeles’ recent foray into providing guaranteed basic income, there is more data about what approaches are most effective. This program didn’t target artists as a group, but it has some good insights.

Like most stories on the subject, there were many heartening stories about the successes people had and continued to experience after the program ended. However, this article also mentioned those who were doing well while they were receiving the $1,000 month funds, but once the program ended found themselves faced with living in their cars. Anecdotally, at least those who had problems after the funding ended weren’t spending that much differently than those who continued to thrive. (i.e. the biggest spurge spending was on rather modest once a week meals)

What seems to be the differentiating factor is whether people had concrete goals they wanted to achieve prior to receiving the monthly payment:

Participants that do achieve a measure of economic mobility, she said, are those who already had concrete goals or plans.

“What happens with guaranteed income is that it smooths that income volatility … and it creates predictability,” Castro said. “When you have that floor, that scarcity starts to go away. And we know that it calms the mind, it calms the spirit, and it creates space for people to re-imagine an alternative future, or to maybe take steps toward a goal that they’ve always had but have not been able to actualize.”

Abigail Marquez, general manager of L.A.’s Community Investment for Families Department, which ran BIG:LEAP, called guaranteed income “one effective strategy” for ending generational poverty in L.A. Such programs must be paired with workforce development, economic development and housing strategies, she said.

Knowing this, one concern I would have is that guaranteed basic income programs not gradually evolve guidelines similar to foundation grant programs where candidates for receiving the money have to provide evidence of having goals they are pursuing and just need a little bit of help gaining stability. Unfortunately, it is easy to imagine this happening because the folks putting up the money want to hear success stories and know their funds are being used effectively. Little by little, the unrestricted use nature of guaranteed basic income can become a little more restricted.

On the other hand, I feel like guaranteed basic income for artists becomes an even better idea since artists generally always have projects in mind they want to pursue. Though I am sure there are some who would say some of those projects aren’t as practical as the goals people in the L.A. Times story were working on.

Competition Among Donor Advised Funds Is Constricting Charitable Giving

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I am always interested in news about how donor advised funds (DAF) are operating. On the whole, their use hasn’t gone as intended and they have reduced, rather than increased or incentivized charitable giving.   A few weeks ago Vu Le linked to an article that examined how the differences in the way DAFs are promoted is an indicator of whether they are distributing or sequestering funds. (emphasis original)

National sponsors that spend more time talking about donor benefits on their websites have more assets, take in a much higher proportion of noncash contributions, and pay out grants at much lower rates than sponsors that spend more time talking about charitable giving.

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But our analysis predicts that a hypothetical national sponsor with a strong emphasis on charitable grantmaking on their website would pay out at 53 percent, while a hypothetical national sponsor with a strong emphasis on donor benefits would pay out at just 2 percent. And those lower payout rates have ripple effects when it comes to the buildup of assets: Our model predicts that the highly charity-focused sponsor would have assets of just $34 million, whereas the highly donor-focused sponsor would have assets of $2.7 billion.

Something to note is that the analysis focuses on national sponsors of DAFs rather than regional and local sponsors. The author of the piece, Helen Flannery, notes that since national sponsors tend not to have the specific focus, whether it be geographic region or cause, they often need to work harder to make a case for people to arrange their giving through them. Flannery seems to suggest that the those that tout financial benefits to the donor are able to make a more compelling case than a more charitably focused sponsor without a specific focus.

Flannery calls for a more specific evaluation and regulation of DAFs on an individual basis rather than looking at the aggregate giving of sponsors since the really generous ones tend to make the parsimonious ones look better due to averaging.

The analysis we present in our paper quantifies this phenomenon. It measures the degree to which sponsors have financialized what was originally intended to be a nonprofit instrument, and it measures just how intense the competition has become among the very largest DAF sponsors in this country.