In November, ArtsFund (a non-profit that supports the arts in the Puget Sound region) released an economic impact study of the arts on the central Puget Sound region (King, Kitsap, Pierce and Snohomish counties). The study considers 313 “non-profit arts, cultural, and scientific organizations. They are categorized as:

• arts service organizations (e.g., the City of Kent Arts Commission and the Seattle Office of Arts & Culture),
• dance organizations (e.g., the Pacific Northwest Ballet),
• festival and interdisciplinary organizations (e.g., EMP Museum and the Seattle Cherry Blossom Festival),
• heritage organizations (e.g., the Burke Museum of Natural History and Culture and the Washington State Historical Society),
• music organizations (e.g., Tacoma Symphony Orchestra),
• science organizations (e.g., Woodland Park Zoo and Pacific Science Center),
• theater organizations (e.g., 5th Ave Theatre Association), and
• visual arts organizations (e.g., Seattle Art Museum).

According to the study, in 2014, the spending of these organizations and their patrons generated $2.4 billion in business activity. That activity “supported 35,376 jobs, $996 million in labor income, and resulted in $105 million in sales, business and occupation, and hotel-motel room taxes. Interestingly, the study also shows how much income each category earned from admissions and received from government funding and donations.

A Seattle Times editorial recently pointed to this study to support a future performing arts and events center in Federal Way. The study doesn’t report the economic benefits by arts organization or city, but ArtsFund did release a version specific to King County. Comparing it to the regional report, it’s clear that King County is disproportionately represented. Of the organizations included in the regional study, 77.0 percent are in King County. Meanwhile, the incomes and expenditures of the organizations in King account for 88.4 percent of those in the region as a whole, and attendance of King County organizations was 85.0 percent of the regional total. Additionally, organizations in King generated $2.0 billion in business activity—83.3 percent of the regional total. And a glance at the list of organizations included suggests that much of that activity occurs within Seattle. That cultural organizations have a positive economic impact on the region does not mean that every city in the region (much less the state) can support performing arts centers.

ArtsFund says, “Over 90% of current patrons of cultural organizations identified cultural activity as highly important to the Central Puget Sound region’s identity.” Of course current patrons support the arts—what about the rest of the population?

In a May episode of EconTalk, Russ Roberts talked with Michael O’Hare (a public policy professor at UC Berkeley) about art museums and how to make them more accessible. Both the podcast episode and O’Hare’s article on the topic in Democracy are worth listening to and reading for anyone interested in art, museum management, and accounting.

O’Hare argues that the purpose of art museums should be “more, better engagement with art.” He notes that art museums are not user friendly: They’re often expensive, which makes people try to rush through them in one sitting, which is exhausting. And then there’s nowhere to sit. The museums are huge, yet they don’t even show many of the pieces in their collections. (“For every object on view, another 20 are in storage; almost none will ever be displayed.”) These problems would be expensive to change, but the solution is right there on the wall:

No museum known to me recognizes its art collection on its balance sheet. When it buys a painting, there’s an expense, and then it just disappears, as though they bought lunch for everyone and ate it. This might not matter if the amounts were small, but they are actually quite breathtaking. I have estimated the value of the collection of the Art Institute of Chicago (AIC) by triangulating in various ways from a couple of the rare cases in which museum collections were actually appraised (Detroit and the Berkeley Art Museum). The 280,000 objects in its collection turn out to be worth between $26 billion and $43 billion.

O’Hare recommends that the Financial Accounting Standards Board require museums “to value their collections and report them as assets.” Alternatively, “state attorneys general, who oversee nonprofits, should do it, not to mention museum trustees, who cannot responsibly oversee their institutions without this information.”

If art is properly (financially, not just sentimentally) valued, it could be used to enhance engagement.

Selling just 1 percent of the collection by value—much more than 1 percent by object count—would enable the AIC to endow free admission forever. . . . Free is the right price for a nonrival good (you’re not displacing anyone else) like attending a museum that isn’t congested, and makes it much easier for people to engage with art in a sane way, a couple of hours at a time (better engagement!).

Additionally, by selling a piece that had been languishing in storage, more people will have an opportunity to enjoy it. But it turns out that deaccessioning is a fraught topic.

Deaccessioning is fancy art language for selling, and the first thing the director you have provoked will tell you about is the museum directors’ code of ethics, which forbids him to ever sell art except to buy more art. If he did, he could never lend anything to other museums or borrow any art from them.

This explains why art museums on the east coast of the U.S. are, by and large, vastly superior to those in the west.

Museums like those in San Francisco, which were late to start seriously collecting while those in Eastern cities already had a half-century head start, can never catch up under current rules, while lots of art that smaller markets would kill for is locked up in the vaults of the Met and the AIC and their ilk.

I think I mostly agree with O’Hare. I love art museums, but many of them are a slog. It costs $19.95 to visit the Seattle Museum of Art—is it worth it? (Certainly if there’s a good visiting exhibit, as there is currently.) But in general, at those prices, I wonder how museums draw anyone who isn’t already interested in art. By selling off art that would be better valued elsewhere, museums could make it easier for the public to access art. I don’t know if the Seattle Art Museum could do so, because they don’t include their collection in their financial reports.

Meanwhile, in May, the WSU Museum of Art created a $1 million endowment by selling two pieces:

[Museum director Chris Bruce] noted that the museum went through a thorough “deaccessioning”—the process used by museums to remove works from permanent collections—that honored the guidelines of the American Association of Museums. The deaccessioning and sale were vetted by the state attorney general’s office, WSU leadership, two museum advisory committees and the board of the Washington Art Consortium.

A staffer at the museum told me that they do not have a valuation of their collection. (In fact, art museum insurance is typically based on the value of the most expensive item in the collection, she said.) The state funds about 25 percent of the museum’s $750,000 budget.

Finally, here’s an interesting post from the Federal Reserve Bank of Atlanta: Economics Have Long Driven Shifts in Art World.