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NEW STUDY
What’s Hurting Arts Organizations in California?
70 percent That Need to Hire Can’t Afford New Employees
Almost Half Who Rent Fear Losing Space to Rising Prices
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(San Francisco) – A survey of arts organizations in California shows that 70 percent which need to hire new employees say they can’t afford to hire them, and 50 percent of all organizations say labor costs are making it hard to keep the ones they already have.
In addition, almost half which rent their space feel at least some threat of losing it in the next year due to rising rents.
The study was conducted by the University of San Francisco’s Institute for Nonprofit Organizational Management. Surveys were mailed in the first quarter of 2001. The first return came back May 3rd, 2001, and the last on September 10th, after the economy had cooled.
"Many news reports have concentrated on the lack of affordable rental space, especially in the Bay Area," said Carol Silverman, the study’s author. "Rental costs are an important factor in the viability of any arts organization, but we found a more serious threat: the cost of labor. Ironically, that threat has received very much less little media attention."
The research suggests that although there is much fear within arts organizations that rents will become unaffordable, the fear is probably overstated. Only 8 percent had to give up space in the last year because of rent. Also, one third experienced no rent increase at all in the last year, a majority saw no large increase, and only 10.7 percent had an increase of more than 10 percent.
Still, 31.6 percent said it was somewhat likely that rising rents would force them out of their space in the next year, 10.8 percent that it was very likely and 4.8 percent that it was extremely likely.
Major Findings: Labor Costs
Half of the organizations that hired staff experienced difficulties retaining staff because of what they could afford to pay. Of organizations that needed to hire staff, approximately 70 percent had difficulties because of labor costs.
Hiring/retention problems affected arts organizations equally, large and small, nonprofit, for-profit and public.
Hiring/retention problems affected organizations equally in smaller areas and in major metropolitan areas.
There are dramatic differences between the Bay Area and elsewhere. Thirty percent of organizations outside the Bay Area had no difficulties in hiring because of pay, while only 12.4 percent of Bay Area organizations reported no difficulty.
Major Findings: Rent
The overwhelming majority of organizations that rented had not seen their rents increase by dramatic amounts in the past year. Only 10.7 percent of organizations that rented saw increase of 10 percent or more. Only about eight percent had had to give up space in the last year because of unaffordable rental increases.
Almost half of the organizations that rented felt themselves at least somewhat vulnerable to loss of space because of rent increases. Almost 16 percent thought that it was very or extremely likely that rent increases would make their space unaffordable in the next year. Organizations that felt this more likely were those with smaller budgets, and those that whose primary discipline was dance.
There was no difference in perceived vulnerability between organizations located in the larger metropolitan counties and those in the smaller. However, Bay Area organizations were more likely to see their rents increase compared to the rest of the state.
Rents had risen more than 25 percent for 18.5 percent of Bay Area organizations compared to 5.9 percent of those outside the Bay Area.
However, this survey provides no evidence that Bay Area arts organizations are having to relocate or suspend operations at greater rates than the state as a whole.
The Survey:
Using a survey conducted in 29 counties in California researchers asked whether arts organization as a whole — nonprofit, for-profit and public — have difficulties in securing and maintaining space for their operations and in hiring and keeping staff. Is the much-heralded problem strictly found in the very high cost areas of California or is it more widespread? What are the characteristics of the most vulnerable organizations?
The survey was sent to 1000 arts and cultural organizations by mail in 29 California counties. Approximately 68 percent of the organizations in the sample were nonprofits, 20 percent for-profits and seven percent public agencies. The remaining five percent selected "other." Organizations typically were small; 30.6 percent had budgets under $25,000 and only 23.6 percent had budgets over $500,000
The arts disciplines most often represented included music (24.1 percent), visual arts (21 percent), theater (16.3 percent) and dance (14.8 percent). Most often found primary purpose included performance group (34.2 percent), gallery/exhibit space (17.4 percent), arts service organization (15.9 percent), and performance facility (15.8 percent).
For more information, call Carol Silverman, director of research at the Institute of Nonprofit Organizational Management at the University of San Francisco, at (415) 422-2164, or Gary McDonald, director of USF media relations, (415) 422-2699 or mcdonald@usfca.edu
