One of the most important—though often under-publicized—roles of the executive director of an arts nonprofit is to "keep up with the Joneses." In other words, they need to constantly ask, "How do we stack up against our peers and competitors? Are we spending money wisely? Where are we under-spending compared to arts organization down the street?" And so on.
With the promise of big data infiltrating the nonprofit sector, more and more organizations now have the tools needed for this kind of performance benchmarking. The ever-expanding proliferation of the Cultural Data Project (CDP) has played a role as well. The project, which we have previously discussed, is a resource that enables arts and cultural organizations to enter financial, programmatic, and operational data into a standardized online form. Users can then benchmark their performance against organizations of similar sizes, sectors, and geographies. And we're seeing more and more foundations requiring grant recipients to participate in the CDP.
Widespread usage of the CDP is starting to pay dividends. Drawing from CDP data and other national and government sources, Southern Methodist University's National Center for Arts Research (NCAR) has released its new findings on the state of the U.S. arts and cultural sector. The findings, which incorporate new data from 2013 and includes insights on trends from 2010 onward, drills down into a number of key performance indicators that act as a cumulative barometer of the sector's health. These metrics include pprogram revenue per attendee, total earned revenue, earned relational revenue (revenue from subscriptions and memberships), return on and response to marketing, community engagement (in-person and virtual touch points), and people per program offering. (On a tangential note, the report seems to be arguing that if your nonprofit isn't tracking these metrics, it should.)
The director of NCAR, Dr. Zannie Voss, is quoted as saying, "This latest edition of findings demonstrates NCAR’s goal to share information with industry leaders on an ongoing basis, ensuring that our report is a living tool and one that sheds critical light on what is happening in the field over time."
The report includes data from nearly 5,000 arts and cultural organizations across the U.S. and includes an array of industry types and sizes. NCAR says that this edition marks the beginning of their new reporting structure and they will "release findings from new sets of data and analyses focused on particular content areas approximately every four months."
So we know what you're thinking. What's the prognosis? In short: not so bad. The NCAR highlighted three top-level findings.
Organizations are beginning to solve the digital riddle. In a case of "bad news/good news," the NCAR found that in-person engagement across all sectors remained unchanged from 2010 to 2013. That's actually far preferable to a significant drop in engagement, and it's actually rather impressive, considering the fact that many communities have yet to recover fully from the Great Recession. As for the new good news, the NCAR found a substantial growth in digital engagement. Opera companies, symphony orchestras, and art museums were particularly successful in this area.
The death of the subscription and membership model has been greatly exaggerated. Savvy executive directors know that a one-size-fits-all approach toward any element of nonprofit operational management won't work, and this logic applies to the traditional subscription and membership model. While this approach may seem slightly antiquated, it still works for certain sectors, such as medium-sized organizations (with the caveat that a "medium-sized" budget varies based on sector).
Supply frequently outstrips demand. NCAR found that the number of people engaged per program offering dropped slightly from 2010 to 2012 and then diminished significantly by close to 11 percent in 2013. The reason? Simple market economics. Increased program offerings sometimes exceeded the growth in visitor participation. Again, reasons for this drop will vary by organization. Some organizations, for example, may launch a new program for mission fulfillment purposes, fully realizing it may not be an audience engagement blockbuster. Others organizations may be blessed with vast audience pools, but take marketing approaches misaligned toward these audiences.
With that as a teaser, we encourage you to sit down, make yourself something to drink (preferably something caffeinated), and let the waves of actionable data wash over you by clicking here.