More Commentary

August Issue 2002
Commentary
by Tom Starland

Why not go to Arthur Anderson?

Most should know by now that any reference to Arthur Anderson means - cooking the books, fraudulent accounting, and fuzzy math. In the future, historians will equate Arthur Anderson - the former number one auditing firm - as a company who could be hired to issue a report to suit the payers needs - not the facts. In the BIG BIZ world of things - this is nothing new. Hiring so called "professionals" to do a study to support a plan of action is nothing more than a king keeping well wishers on at court. Who wants to pay people to say you've screwed up or are about to?

But BIG BIZ is not the only sector to subscribe to this practice of hiring "professionals" to issue favorable reports. Politicians do it, Cities do it, and so do organized religions. The non-profit sector is now a big biz (small letters) in its own right and they have been hiring out studies to show the community how the money we all give them, in the form of tax dollars and private donations is well spent and perhaps - why we should give them more. Anyone touting one of these economic surveys is usually looking for more funding. At least that's my experience in South Carolina. And, it seems to be the season for such economic surveys.

Now, I'm not saying that all the information found in them is "fuzzy" or unrealistic. But they do call for close inspection of the "entire" report - not just the catch phrases issued in press releases.

The SC Arts Commission has just issued the "mother" of all economic surveys offering up numbers of how SC benefits from the "cultural" industry.

But before we get into this latest survey, I hate to bring up a former economic impact study as any mention of it could set off another media mantra. When the Spoleto Festival USA was fishing for a loan from the SC State Legislature, in the early 1990s - they hired the University of South Carolina's research people to do an economic survey of Spoleto's impact on SC.

The mantra back then was, "The Spoleto Festival attracts 100,000 people to SC generating a $70 million impact annually." For several years every time the Festival was mentioned the mantra was repeated. It wasn't true, but since USC had done a survey and issued a report and Spoleto made sure every media outlet had the highlights - repetition made it fact. Sort of like an urban legend.

At least it was until I decided to call Spoleto's ticket office and learned that during the year that the survey covered, Spoleto only sold 68,000 tickets - total. We all know that noone goes to just one Spoleto event and in fact, most people indulge in many Spoleto events.

Back then, I gave Spoleto credit for 30,000 people and today 20,000 is the number used more often. All and all, that is still a great number of people and the economic impact which Spoleto provides is appreciated and welcomed by Charleston and the state of SC. As Martha Stewart would say - it's a good thing. Funny we should mention Martha Stewart in a commentary about fuzzy math.

The end results - Spoleto got the report they needed from USC and Spoleto got the loan they needed from the legislature.

Spoleto eventually got rid of all its poor managers, paid back the loan, and now operates in the black. Alls well that ends well. Really?

So, where is the rub today?

Everybody who swallowed the Spoleto report back then knows that the figures reported were "fuzzy", but they didn't learn anything from their experience. They're still willing to swallow the facts offered in a press release issued "about" a report done at a state university as fact. They surely are not looking at the full report and they are forgetting to factor in their past experiences and look at the bigger picture. Some just don't have the "smarts" to deal with numbers. You'd think their editors had learned by now, but then let's not forget to consider that some of these media people touting these new figures are biased toward reporting only a positive image of the arts. I also would like nothing better than for the general public, civic leaders, and holders of the purse strings to acknowledge the impact of the arts on the State's economy. But I don't want another Arthur Anderson on our hands. Fuzzy figures that are not realistic will only give the public an opportunity to lose confidence in the non-profit sector (including the arts) - an area they have already been given enough reasons to be leery of - Red Cross officials riding around in Limos, fundraisers held to support worthy causes giving less than 5% of donations to the cause - spending the rest on expenses (including lavish parties) and administration costs. The public's suspicions are heightened.

My suspicions were heightened the moment I learned that the Arts Commission's new study was also conducted by USC's crack research department - no disrespect to Darla Moore, whose name is now on USC's School of Business, but those folks didn't do such a good job on the Spoleto survey. And, the fact that other recent reports seemed to offer different figures on some of the same entities found in the report.

Here's one example. On Aug. 9, 2002, the Post & Courier in Charleston, SC, offers an article about the economic impact of the Southeastern Wildlife Expo. The study was done by the Center for Business Research, affiliated with the Charleston Metro Chamber of Commerce. The article stated that the Expo pumps $63.8 million into the local economy, draws 30,000 people (including media mogul Ted Turner) and that 70% of the people come from areas outside of Charleston.

Eight days later (Aug. 17, 2002), the same Post & Courier runs an article about the SC Arts Commission's survey which also includes figures about the Wildlife Expo's impact. This article says the Expo attracts 40,000 visitors who spend $36.4 million on lodging, food and beverage, while the Expo spends another $1.8 million on various expenses. (Not included in the P&C article on the economic impact of the arts is the fact that when you add in the amount spent on artwork at the Expo, the overall impact of the festival is in excess of $50 million.) That's in the survey report, but probably not in the press release - a little slip by the reporter. Not reading the real report that is. But still, "excess of $50 million" isn't the same as the $63.8 million impact the Metro Chamber's report says the Expo makes on Charleston's economy.

What we have here is two reports issued and reported on within eight days of each other and they offer vastly different figures on the same event. I can only assume they are getting the same facts from the Southeastern Wildlife Expo on attendance and from the restaurants, hotels and bars on dollars spent by Expo visitors. The Expo charges admission so the numbers should be the same on attendance. Of course the Chamber may have only been concerned with out-of-town ticket buyers. How they get that info from people buying tickets at the door - I don't know. But both surveys reported that 70% & 71% of the people come from outside of Charleston. An important figure for attracting SC Tourism funding. So they agree on one point.

So what do we have here? Well, I think several things can be said. First off, the people doing these impact studies use "formulas" to "estimate" dollar impact, but not the actual amount of dollars taken in or spent. They are looking for the magical mystical figure which represents the expanded impact figures.

The idea is that for every dollar spent on the arts represents more dollars impacting the greater community. Sometimes the factor or what they like to call "multiplier effect" is 1:5, 1:7, and as high as 1:11. The Arts Commission report doesn't state which factor they use. They are just plugging numbers into software programs which run formulas to "estimate" the economic impact. And, they are looking for impressive numbers. Numbers which will get more funding or put off further cuts.

This is the same way consultants figure how many visitors with go to a facility before it is built so the builders looking for funding can say what kind of impact they are going to have on the community and tourism when they are looking for public funding. But somehow once those facilities are opened - that estimated amount of people never show up - but one things for sure - that facility will need more public funding to keep the doors open for fewer visitors. (If the SC Aquarium in Charleston and EdVenture in Columbia, SC didn't come to mind at the mention of over-estimated visitation - it should have.)

We also have a case where reporters treat these press releases like they were the Gospel - at least from non-profit groups - especially arts groups. Most of the time they don't even see the whole reports much less read them. And, some reporters just don't have what it takes to understand numbers. But, they repeat the mantra over and over again. And, that's what is important to the people who contract these surveys. I'm not going to mention those figures here - they didn't send me a press release - I wonder why?

Now, I think direct impact numbers (on their own) are impressive enough with out adding on all the estimates. If the Southeastern Wildlife Expo brings in 30,000 or 40,000 people to Charleston for a weekend who spend $13.6 million on artwork - that's another good thing. Not to mention the $63-$50 million spent on other things.

Frankly, I have a hard time thinking of the Expo as a cultural event - one big party - maybe, but it's not really about art. It's about having a great time in Charleston and maybe taking home some art, but it's not about art. Also, I have a hard time believing that their ticket holders spend $13.6 million on artwork in one weekend, maybe on the bar bill, but I have no way of disputing those statements. SC's Sales Tax people should be able to tell us something about that. They should have the real figures.

Just like the old Spoleto report - why try and estimate how many people the festival attracts when you can just present the ticket sales and break down how many people buy more than one ticket.

As far as buying into the indirect impact of arts spending, I can accept some of that, but I hate to think that these people would start counting every time someone buys some crayons at the local Wal Mart as cultural spending.

Here's what the SC Arts Commission's report includes in its cultural industry - museums, historical sites, parks, libraries, K-12 art education in SC schools, performance and exhibition activities, performers, performing groups, galleries, filmmaking, individual arts - including craftspersons who are using his/her art only for personal satisfaction to the artists performing in an international arena. And, businesses providing services and selling goods to meet the needs of each component.

The problem with this kind of thinking is where do you stop, where do you draw the line on cultural spending and how far it reaches into the economy. Under "performance activities" are they adding in dollars from rock concerts, and wrestling events at statewide arenas? Are they counting the lighting supplies purchased for strip clubs? Are they counting the film supplies and cost for actors to produce commercials seen on TV?

When you're including parks, historical sites and libraries - what dollars are being generated on cultural spending? It makes you wonder what the SC Arts Commission's definition of "culture" is. And, then, what can't be seen as "culture" in some people's eyes - if you're fishing for a big impact number?

Tracking down dollars directly and indirectly attributed to spending in the arts and for true cultural activities is hard to do and I don't think anyone has done it yet. We're being presented with soundbites from reports that are only designed to give "estimates" of that impact. Isn't this what corporate America has been doing to its stockholders - giving them estimates of the worth of their stock? Arthur Anderson was being hired to tell the stockholders the truth, but they were being paid by someone else. The stockholders, or you could say taxpayers, weren't being give the facts. But they were reacting to an inflated picture to how well things were going.

I'm not buying it. Of course the Arts Commission did - $25,000 worth. And, I'm sure they are hoping to get much more back in further funding by having this report to use as a sales pitch - it's all about them since several parts of the report are highlighted relating to their individual programs.

I'd hate to try and tell you that for every issue of"Carolina Arts we print there is a reader or that if I leave one copy in a laundrymat and 100 bored people look it over that they are part of our reader base. Or better yet, if I leave a copy in 100 laundrymats and 100 people each look it over and go home and tell all their friends about what they read and then they tell everyone at their work about it and so on and so on... Why doesn't everyone just send me a dollar this month and have a real impact on the arts. I promise to spend it on some cultural activity just to keep the ball rolling.

More if you want it.

The best thing you can do is read this report for yourself. Unfortunately, you can't use any part of the report without buying it all. And, that's the basic problem with these reports - they want you to buy into any favorable part so they can justify it all. But, you can be assured that the Arts Commission will only highlight those parts which are favorable to their goals.

I found some problem areas that should make anyone who knows anything about SC's art community a little suspicious of this report's validity.

First there is the Artists Survey. The report says that 8,000 surveys were sent out to artists during the summer of 2001. Why send them in the summer when many people are on vacation? Where did the mailing list come from? The report says the SC Arts Commission. It also said the list included people who may only be interested in artists activities and programs (perhaps 10%), which lead me to believe this was the mailing list for "Artifacts - a publication of the SC Arts Commission. (More about this at a later date).

OK, 8,000 surveys sent - how many were filled out and returned? Why can't we be given that figure? From my own experience, mailed surveys are a poor way of getting information from artists. But the report offers some "estimates" about artists in SC.

Here are some numbers offered in the report. The report breaks down the artists into several categories. With each group it "estimates" that there are X number of artists in each category. Here are the numbers:
Visual Arts (except painting) 1,750
Paint Artists 450
Music Artists 425
Theatre Artists 250
Literary Artists 3,500
Other Artists 700

This total comes to 7,075. That's interesting. If you add in the 10% who got the survey but were not artists, the total would come to 7,875 - almost 8,000 - the total number of surveys mailed out.

If you think this means 7,075 artists returned the survey you would be mistaken. No surveys get that kind of people responding. At best these numbers or "estimates" the report offers for each category represents a percentage of the actual responses received. Which means the Arts Commission's mailing list is flooded with literary artists. These people depend the most on handouts from the Arts Commission. There is no market for their talents in SC.

Do you really think there are only 425 musicians in SC? I would have to think that there are that many symphony musicians in SC alone.

So let me ask the University of SC - What happens to all those music graduates you turn out every year? And all the ones turned out of all of our state's colleges and universities? I guess they leave the state right away. But why would they do that with the enormous impact the cultural industry is having in SC?

This survey also says we have 450 Paint Artists in SC. Oh really! I would guess Charleston has that many if not more, not to mention the rest of the state. I think the SC Watercolor Society alone has more than that in their membership. How accurate can this report be?

And, I have to ask myself, "Why didn't the SC Arts Commission question the results of this artists' survey - shouldn't they have known the numbers were down right whacky?" Or did it just not matter? All they were interested in was the final press release's catchy mantra. Something they knew would be repeated over and over again by most of the media without them even checking into the report's validity. That's how dumb the media is about the non-profit sector and the arts. After all - it's all for the good of the community. But, they're learning. As major media outlets investigate the non-profit sector and find that it's not all about charity - yes the people give, but what happens to the money once it's in the hands of the "organizations" - that's something else. As they learn the public learns and hopefully one day people will ask more questions and demand a better look at the bigger picture of what they are buying into.

Not all in the non-profit sector are bad and not all surveys and economic impact studies are flawed, but you have to take a close look at them all to find the ones that are. I'm just telling you to take a closer look. You might be surprised to see what you'll find. More on this subject later.

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