The Back Story: How NCAR Found Its Model
Story by Jeff Bounds Photos by Kim Leeson
Portions of this story have been edited. Original story can be found at http://www.smu.edu/Meadows/NewsAndEvents/MPrint/Winter2013/NCAR
Since the launch of our inaugural NCAR report shedding light into the health of the arts nationwide, many have asked us how we found our model and what differentiates NCAR from other data efforts currently being undertaken in the field. What follows is an article which was initiallly written for MPrint, a publication by Meadows School of the Arts, that answers this exact question.
Over the course of the year, we will be using this blog to share some of the insights that NCAR researchers have gleaned from the number and data crunching we've done so far. More work will be under way soon to delve deeper into the reasons behind much of what has been discovered to date.
Readers are invited to stay up-to-date by visiting this blog, by following NCAR on Twitter at @artsresearch or on Facebook. As always, we'd love to hear from you, our colleagues in the field.
STATE OF THE ARTS
How the Inaugural National Center for Arts Research Report found its model, and used it to diagnose the health of the arts in the U.S.
Despite the wide range of engaging arts events offered in large and small communities across the country, trouble is afoot in the world of arts and culture. Fewer adults attend arts activities now than they did just 10 years ago, and many arts organizations are operating in the red as donations have fallen.
A key reason for this decline is that the arts community has been slow to respond to the changing demands of its audiences, who are using new technologies to watch and experience arts differently than previous generations.
Last February, researchers at Meadows School of the Arts and Cox School of Business at SMU publicly launched a massive research initiative that seeks to help turn around the declining fortunes of America’s arts and culture sector. Working with more than a dozen partners and analyzing hundreds of thousands of bits of data at the organizational and market level, SMU’s National Center for Arts Research (NCAR) is building an analytical model that will help show how more than 50,000 arts and cultural organizations in 44,000 zip codes are performing in everything from their finances to their engagement with their communities. NCAR’s model also estimates how intangible factors, such as leadership decision-making, are influencing a given organization’s fortunes.
The goal is to help arts and cultural nonprofits learn what they’re doing well, what isn’t working, and how they can fix problem areas. In addition to providing this service for free to nonprofits, NCAR researchers will publish case
studies on how top arts organizations are bucking the down- ward trends.
In the following pages, you will learn the story of the complex challenges facing the arts world, how NCAR is helping, and some of the fascinating results of what it has already gleaned after conducting research for more than a year.
How it Started
Zannie Giraud Voss, director of NCAR and chair and professor of arts management and arts entrepreneurship at Meadows and Cox, can remember the “aha!” moment when she decided to push forward with the project that has consumed her and her fellow NCAR researchers
over the past year.
She and husband Glenn Voss, NCAR research director and the Marilyn and Leo Corrigan Endowed Professor of Marketing at Cox, were meeting with colleagues from the Cultural Data Project, a Philadelphia-based data collector that helps arts and cultural organizations generate reports on their finances, programming and operations.
Their discussion centered on the dearth of national research about the performance of arts and cultural organizations. Local and state-by-state studies had been done, but nothing on a broader scope.
After the meeting, the Vosses, who each have over 20 years of arts research experience, considered the need for a national study and decided, “Let’s do this!”
National & Local challenges
In their discussions, NCAR and Cultural Data Project officials also explored problems that have been building for decades in America’s arts community. Arts and cultural organizations lost an estimated $45 billion in personal spending over the last 10 years. Annually, roughly 40 per-cent of organizations operate in the red.
Consider the following:
• For the past few decades, adult attendance has been declining at performing and visual arts activities in the United States. As recently as 1992, 41 percent of U.S. adults reported going to a jazz or classical music concert, opera, musical or non-musical play, ballet or art museum. By 2012, that percentage had shrunk to 33.3 percent,
according to the National Endowment for the Arts.
• Americans now spend less on the arts than they once did. On an inflation-adjusted basis, arts and cultural expen-
ditures fell between 2000 and 2010, leveling off in 2011, according to Bureau of Economic Analysis data cited in
a 2013 study by Americans for the Arts.
• Between 2007 and 2011, the American arts and culture scene saw a shrinking in its receipt of charitable giving, according to data from the Giving USA Foundation at the Indiana University Center on Philanthropy. All told, donations have shrunk by about $3 billion over the last 20 years.
Audience Sovereignty
The reasons for this shift lie partly in the ease and speed with which consumers can view most anything online.
As members of a new generation embrace technology’s ability to deliver what they want here and now, they’re less inclined to, say, be in a theater for a 7:30 p.m. curtain.
Just as important, people increasingly want to be part of the arts experience. “Some refer to it as ‘audience sovereignty,’” says Zannie Voss. The arts community, she added, is “late catching this wave. At the same time, there are important demographic shifts that many arts organizations have been slow to accept and understand. NCAR data can help alert arts leadership to changing trends.”
Measuring performance in nine key areas
The analytical model NCAR is building has delved into the performance of nearly 50,000 arts and cultural organizations nationwide. With input from about a dozen researchers in the field, NCAR experts have identified 184 performance yardsticks to measure over time on each arts and cultural organization. They have enough data to examine 128 of those yardsticks, and have determined what information they need to gather to glean the rest. NCAR is categorizing these 184 indices into nine performance areas for study: contributed revenue, earned revenue, expenses, balance sheet, bottom line, marketing impact, community engagement, program activity and staffing.
Estimating what can’t be measured
No matter how many factors NCAR includes, though, a key question will remain: What about the intangibles, such as the decision-making prowess of a given organization’s leadership?
NCAR has taken that into consideration by doing an estimate, dubbed the Key Intangible Performance Indicator (KIPI), of managerial and artistic expertise and solid decision-making. Voss says this is the most valuable contribution that NCAR’s research has produced.
To arrive at the point of estimating the KIPI value that sets apart high-performing organizations, NCAR begins by establishing a level playing field among all organizations. It starts with the idea that it’s not enough to examine a given arts or cultural organization’s performance in a vacuum.
Other things being equal, a hypothetical opera company in New York City, for instance, will likely perform differently than an imaginary counterpart in Lubbock, Texas. That is primarily because of four factors:
• The social and demographic characteristics of their respective hometowns;
• The existence (or lack) of various other organizations and businesses in their communities;
• Different levels of local, state and federal funding available to stimulate both the supply and demand for the arts;
• The independent artists who make their home in the same community.
In each area of study, the NCAR report examines and compares averages of arts and cultural organizations overall and grouped by sector, size and geography. The graphic above illustrates which cultural and arts sectors are represented across the analyses. This representation changes remarkably little from year-to-year. NCAR also analyzes data from arts and cultural activity beyond the traditional sectors.
NCAR takes those external factors into account when evaluating how a given arts and cultural organization performs.
NCAR researchers have linked every arts and cultural organization in the country to its local community’s characteristics and created a spatial model that accounts for each organization’s relevant trade area. That makes it possible to tease out how its performance is impacted not just by its own actions but also by its community and by government funding.
As NCAR’s work progresses, the insights it provides to the arts and cultural community will only get better, Voss says. For instance, NCAR researchers will be interviewing the heads of high-performing nonprofits to help distill best practices that arts and cultural organizations can use to improve their fortunes.
In addition to the Cultural Data Project and the National Center for Charitable Statistics, other partners in NCAR’s work include the National Assembly for State Art Agencies, the National Endowment for the Arts, Theatre Communications Group, Boston Consulting Group, TRG Arts, IBM and the Nonprofit Finance Fund.
What’s Next
As a service to arts and culture leaders, NCAR is working with IBM to create a free, online dashboard that will allow any arts and cultural organization to access or generate its own KIPIs across the range of indices. NCAR will be releasing new data each quarter and its dash-board will go live in mid-2014.