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Economic Policy - How Nonprofits Contribute to a Local Economy

Updated on March 18, 2013

A Vigorous Cultural Life Enriches a Community

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Economic Policy - Art and Cultural Organizations are Good Business

Local economy needs the arts. Economic policy should recognize this. Funding for the arts, especially funding from state and local governments, is shrinking as budgets are at a breaking point. Government officials often target arts funding as a relatively painless process. This is a mistake, an economic mistake. It's bad economic policy.

Municipalities across the nation are in deep economic trouble. Often dependent on property transfer taxes and annual tax levies, towns and cities are victims of the crash in the real estate market. As baby boomers retire in droves, unfunded pension liabilities often tip a problem into a crisis.

Some Municipalities Are at the End of Their Rope

According to an Associated Press report, The City of North Las Vegas, Nevada, the state's fourth largest city with a population of 224,000, has declared itself a disaster area under a statute that many see as intended for natural calamities such as earthquakes or fires. The disaster declaration, if upheld in court, will allow the city to suspend union contracts including pay increases. North Las Vegas was once the nation's fastest growing city, but it's revenues have plunged from $817 million in 2009 to $298 million in 2012. one in every 195 homes is in foreclosure, the highest rate in a state where foreclosures are common. The city has also lost over 3,000 business in the three years after the beginning of the recession in 2007. The story of North Las Vegas is repeated in various degrees across the country.

Stockton, California a city of just under 300,000 people and a debt of $700 million declared bankruptcy in June 2012. It is the largest city in the United States ever to declare bankruptcy.

It's easy to blame politicians because they are the ones who are, in large part, blameworthy. But those who are relatively new to public office will argue that the problems started before they were sworn in and they have an excellent point. Government officials in years past, who often received donations and doorbell ringing help from public service unions, rewarded their sponsors with rich benefits packages. But, as George Will famously said, "The future has a way of arriving unannounced." The future is now, the chickens have come to roost, and office holders are pulling their hair out trying to come up with solutions.

Your Opinion on Funding For the Arts

Would You Like To See Your Local Government Spending on the Arts Cut?

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Funding for the Arts—The Wrong Place to Cut

Because arts activities and cultural institutions seldom involve life or death issues, some government officials target funding for the arts when trying to balance a budget. This isn't only a mistake, it's bad budgeting. The arts give to, not take from, a local economy.

In a report titled "Arts, Culture and Economic Prosperity in Greater Philadelphia," the Greater Philadelphia Cultural Alliance noted that arts and cultural organizations in Philadelphia and four nearby suburban counties generate about $1.3 billion. The study looked at 177 arts and cultural organizations and a survey of 2,324 audiences.

Tellingly, the report found that local governments receive five dollars in revenue for every one dollar spent in supporting the organizations. Unfortunately, the Philadelphia Office of Arts and Culture was closed in a budget move in 2004, prior to this study. There is now a vigorous discussion of reopening the office.

The healthy monetary churn should be obvious. Employees of arts organizations live, spend and pay taxes in the local communities that are served by the arts and cultural organizations. Audiences, whether from nearby or from tourism, spend money on lodging and eat in local restaurants. Then there is the intangible commodity of quality of life. A poll isn't taken every time a real estate agent tells a prospective buyer: "Oh yes, and right nearby is a museum and a concert hall."

Non profit fundraising is not just a government concern but an ongoing responsibility for non profit boards who seek corporate sponsorships.

Economic policy should recognize that non profit organizations and the arts institutions they run are a critical part of the economic life of a community as well as its cultural life.

Copyright ©2012 by Russell F. Moran

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    • rfmoran profile imageAUTHOR

      Russ Moran - The Write Stuff 

      5 years ago from Long Island, New York

      In re the Fed, I totally agree. Why can't NPR privatize and sell advertising? The Sesame Street dolls and other paraphernalia are among the best selling stuff in the US.

    • Mitch Alan profile image

      Mitch Alan 

      5 years ago from South Jersey

      I would concede the need on a local level, with the local community in agreement with the spending through a vote or other public debate. I would not allow another federally confiscated dollar to fund the arts.

    • rfmoran profile imageAUTHOR

      Russ Moran - The Write Stuff 

      6 years ago from Long Island, New York

      Great minds think alike Bill.

    • billybuc profile image

      Bill Holland 

      6 years ago from Olympia, WA

      I just mentioned this in my latest hub....the cutting of funding for the Arts.....always one of the first cutbacks to be made in a bad economy...and it is silly and wrong. Great hub my friend!

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