Good morning Senators Kennedy, DiZoglio and Hinds. It is good to be here with you today. For the record, my name is Bethann Steiner, and I am the Public Affairs Director for Mass Cultural Council. Thank you for providing a platform for the Agency to share the findings of our COVID Recovery Survey.
Please keep in mind that the figures I am going to share with you today, detailing the devastating economic impact of COVID-19 on the cultural sector – and the anticipated recovery costs – are dire but not surprising. In mid-April we reported that cultural organizations had already lost more than a quarter billion in revenue due to COVID-related closures and cancellations. Today we can update that revenue loss figure and define the costs of COVID recovery for the cultural sector as well. We are coming to you for help.
Mass Cultural Council developed this COVID Recovery Survey in coordination and partnership with the Nonprofit Finance Fund, and I am joined by Farhin Zaman, from NFF today in case you have any detailed questions about our data. We collected data from cultural nonprofit organizations during the month of June. The survey was widely disseminated and open to all cultural nonprofits in Massachusetts, regardless of size, location, budget, and even whether they are currently grantees of the Agency. In all, 392 nonprofits completed the survey.
Of the 392 respondents, we saw organizational budgets ranging from $50K to $145M in annual spending. Nonprofit organizations from every county in the Commonwealth participated, as did organizations focusing on all cultural disciplines.
Before I outline the economic loss that we have uncovered and the costs associated with recovery, I wanted to first offer a word on the nonprofit cultural business model. This is core to understanding our sector’s loss and recovery needs. Cultural nonprofits are more at risk than many other industries because of our typical operation and programming models. Our COVID Recovery Survey found:
- 93% of responding organizations typically provide programming mostly in person – something that has not been able to happen since March
- 88% of responding organizations typically provide programming mostly indoors – again, this has been on hold for 18 weeks
- And almost 1/3 of responding organization’s programming are typically aligned with school activity or direct cultural programming in schools. Not only have schools been remote since March, but plans for this coming fall are unclear, and as such many of our organizations are expecting that their school-based programs will be impacted or unable to occur.
The Financial Impact of COVID-19 on the Cultural Sector
- Mass Cultural Council’s COVID Recovery Survey found that to date, Massachusetts’ cultural nonprofits have lost $425M ($424,866,284) in revenue due to COVID-19 cancellations and closures.
- This startling figure can be further broken down into earned revenue and contributed revenue:
- Lost Earned Revenue (ticket sales, programming, memberships): $365,377,809 ($365.4M)
- Lost Contributed Revenue (fundraising): $59,488,475 ($59.5M)
Although grim, this figure makes sense, as programming and fundraising were heavily impacted by COVID. Since March, at least 98% of respondents had to cancel-in person programmatic activity, and 79% had to cancel fundraising events/activities.
These revenue losses are affecting the cultural sector’s employees as well – around 68% of responding organizations indicated that they expect layoffs, furloughs, and reductions in pay and working hours. This will impact 17,020 people/jobs statewide.
Recovery Timeline and Needs
Cultural nonprofits estimate that it will take on average two years (and in some cases, up to 5 years) to recover their programming and financials back to pre-COVID levels. It will take time to implement recovery strategies. And it will take additional time for the public to feel that it is safe to come together in groups to participate in cultural programming.
And, regardless of the Commonwealth’s Reopening Advisory Board’s guidelines or what reopening phase the state economy is in, our survey found that practically speaking, most cultural nonprofits are not sure when they will reopen for public programming:
- 40% are unsure when to reopen
- 32% will reopen when permitted
- 28% will not reopen when permitted
To try to get a handle on why the sector is unclear or not ready to reengage with the public we also asked about recovery strategies and the costs to implement them. These strategies are operational changes that must be made simply to safely reopen and reengage with the public. Cultural nonprofits are prioritizing changes to core programming such as:
- Reducing occupancy for programming
- Shifting program delivery from in-person to virtual, or from indoor to outdoor
- Making capital investments like HVAC adjustments, to promote public health and safety
- Making changes to, or eliminating, concessions and other supporting earned income sources
- And implementing other changes like allowing employees to work remotely, providing the equipment necessary to do so, increasing cleaning services at the facility, and increasing sanitizing or hand washing stations
All told, cultural organizations expect implementing identified recovery strategies will cost $117 Million. That is $117M just to reopen their doors.
Reviewing the Numbers
To recap, Mass Cultural Council has found that the financial impact of COVID-19 on cultural nonprofits is $425 Million in lost revenue.
And the estimated cost to implement recovery strategies is $117 Million.
- And while there has been some good news to date – the sector has received $100.2 Million in COVID assistance from the federal government and, as Dave earlier outlined, Mass Cultural Council. And we are of course aware and grateful for other proposed investments – including standalone legislation in the House and a $2M appropriation in the COVID sup – currently under consideration on Beacon Hill.
However, this means that the total cost of recovery for Massachusetts’ cultural nonprofits is $441.8 Million. This figure represents the cost to implement recovery strategies and recoup the revenue lost due to COVID cancellations and closures.
Our organizations overwhelmingly reported a need for assistance in re-imagining the unique business model of a cultural nonprofit. They are seeking:
- Detailed guidelines from health officials
- Equipment/technology for virtual programming and the expertise to implement it
- Training related to virtual programming and production
- Expertise to help re-imagine programming and strategy
- Expertise to help with immediate financial/business needs
In the coming months Mass Cultural Council will strive to develop webinars and share best practices and guidance from experts in these area for the cultural sector, and, of course we’ll continue to invest in the sector – both cultural organizations and individual artists, teaching artists and scientists, to the extent we are able with through our FY21 operating budget and any recovery or mitigation assistance made available from the Legislature.
We are here today to urge you to take pains to ensure that any COVID mitigation packages deliberated on Beacon Hill include cultural nonprofits. Public policy and investments will be necessary to help the sector climb out of this deep hole.
We know it will take time – 2 to 5 years according to this survey – for cultural nonprofits to rebound and rebuild back to pre-COVID fiscal and programmatic realities – and additional time for the public to truly feel that it is safe to reconnect with cultural nonprofits. Yet, arts and culture are the very fabric of our Commonwealth. Prior to March the Commonwealth’s cultural sector supported 71,000 jobs statewide and made an economic impact of $2.3 Billion in Massachusetts. We now know 1 in 4 cultural sector jobs have been affected by COVID. Public investment is necessary to restore these jobs.
In conclusion, Mass Cultural Council knows the data shared today – $425M in lost revenues, more than 17,000 jobs affected, and $441.8M in total recovery costs is dire. However, we urge you to consider the negative and long-lasting economic impacts of NOT making a robust public investment into arts and culture now, and in the coming months, to support ongoing COVID recovery for cultural nonprofits.
Emily Ruddock, the Executive Director of MASSCreative, our statewide advocacy partner, is here to speak more about that concern.
Thank you for your time and consideration today.