Public Funding for the Arts 2023
Mohja Rhoads, Nakyung Rhee, and Ryan Stubbs, National Assembly of State Arts Agencies
Public funding for the arts in the US is sourced from federal, state, and local government channels. The National Endowment for the Arts (NEA) receives congressional allocations. State Arts Agencies (SAAs) receive legislative appropriations from respective states and jurisdictions and the federal government. Local Arts Agencies (LAAs) draw upon local, state, and federal resources. Collectively, the NEA, SAAs, and LAAs represent the network of public funding agencies entrusted with the distribution of grants and services to artists and cultural organizations nationwide.
After a downturn during the COVID-19 pandemic, public funding for the arts experienced a rebound in FY2022. Fueled by federal relief packages and recovering economies, this growth continued into FY2023 despite inflationary pressures. State arts agencies are set for an average 16.5% increase in total appropriations, with several states reaching record highs. The National Endowment for the Arts saw an increase of $27 million, exceeding the previous year’s budget by 15%. Local arts agencies anticipated a 32.7% surge in total revenue, buoyed by federal pandemic relief funds and local government support.
FY2022 and FY2023 offered an encouraging out-look for publicly funded arts agencies. However, sustainable arts funding momentum in the years ahead hinges on all levels of government managing potential fiscal challenges and growing demands for services of all types, including access to the arts.
Early projections for FY2024 indicate decreases in arts funding as pandemic relief funds wind down. However, the aggregate funding levels would still be higher than pre-pandemic times. The potential slowdown in FY2024 requires proactive initiatives for long-term sustainability, acknowledging inflation adjustments and strategizing for future challenges as the post-pandemic landscape evolves.
2023 Funding Levels
In fiscal year 2023, federal, state, and local funding for the arts totaled $2.28 billion for an aggregate per capita investment of $6.83. The FY2023 breakdowns are as follows:
The NEA received $207 million in appropriations representing an increase of 15% from FY2022.
SAAs received $971 million in legislative appropriations representing an increase of 16.5% from FY2022.
LAAs received $1.1 billion in funds in 2023 representing an increase of 32.7% from FY2022.
Trends over Time
The fiscal year 2023 witnessed a significant surge in overall arts funding. This increase can be attributed to better-than-expected economic conditions and continued pandemic relief spending —particularly the American Rescue Plan(ARP) Act. The NEA and state arts agencies were instrumental in distributing $135 million from the ARP Act, passed in March 2021. These funds, with 40% directed to state arts agencies and regional arts organizations, flowed to communities through state-level arts relief programs. Recipients have until December 31, 2024, to obligate the funds and until the end of 2026 to spend the allocated resources. Beyond the NEA, the ARP Act contributed $350 billion in aid to states and localities, with many directing these funds to arts organization and artist relief. Per NASAA’s FY2024 Legislative Appropriations Preview, 10 states allocated $173.6 million in FY2023 supplemental funding to state arts agencies, and six states earmarked $74 million for FY2024. [1]
While aggregate public funding for the arts had been steadily, albeit moderately, increasing before the pandemic, the sector experienced a downturn in FY2021. However, the resilience of state and local economies, coupled with continuous expenditure of federal relief funding, led to a record-high appropriation for SAAs in FY2022 at $833 million — a 106.8% increase from FY2021. Favorable fiscal conditions extended into FY2023, with an average 19.9% increase in appropriations for SAAs, even excluding additional line-item funding or other ARP allocations.
Allocations to the NEA have steadily increased due to consistent federal support. In FY2023, the NEA received $207 million, marking a 15% increase from the previous year. A $1.7 trillion government funding package cleared by Congress in December 2022 further boosted arts and humanities, public libraries, and museums, including the increase for the NEA.
According to Americans for the Arts (AFTA), their survey of the LAAs in 60 Largest U.S. Cities revealed that LAAs anticipated substantial revenue increases in FY2023 exceeding $1 billion for the first time due to a confluence of factors. Early federal pandemic relief programs such as Paycheck Protection Program (PPP), Shuttered Venue Operators Grant (SVOG), and Coronavirus Aid, Relief, and Economic Security Act (CARES) provided crucial financial support, with some ARP Act funds still contributing to 2023 budgets. Rising inflation and costs underscored the need for additional support to sustain operations for arts organizations and artists, especially in live performing arts.
When adjusting for inflation, total FY2023 public arts funding increased by 6% relative to 2001 dollars for the first time. Robust state arts support yielded a remarkable 24% increase in inflation—adjusted, aggregate appropriations. This is an encouraging development, marking the first increase, in terms of inflation-adjusted dollars for states, since 2001. Despite not reaching their record high level relative to inflation, the NEA appropriation rose 14% above the previous year.
LAAs, although achieving a record high level of total revenue, experienced a 7% decrease in funding relative to 2001 dollars.
Serving a Growing Population
Examining public arts funding on a per capita basis, which accounts for population growth, provides insight on whether investment is keeping pace with community needs. Since funding comes from all taxpayers, per capita metrics are an important evaluation tool. In 2023, combined federal, state, and local funding equaled $6.83 per person, a 23.1% increase from 2022. Broken down, the federal contribution was $0.62, the state portion $2.90, and local $3.32. Adjusting for inflation and population growth, the total investment per capita dropped to a modest $3.94 in 2023, a 43% decrease in real dollars. This reveals that, despite recent funding increases, the declining value of the dollar along with population growth has strained the ability of public arts appropriations to match the support to community demand.
Looking Forward
Overall economic growth in FY2024 is anticipated to be slower due to dwindling federal pandemic aid and projected to decline slightly by 1.8% from FY2023’s high baseline. [2] Despite the expected and realized slowdown in revenue growth during FY2024, many states maintain a positive outlook for their fiscal positions, attributing it to the prior gains achieved from 2021 to 2023. Favorable tax collections have led to revenue levels nearing historic highs, accompanied by sturdy rainy-day funds and reserves. Nevertheless, conditions vary across states, posing challenges for policymakers as they balance competing priorities and transition to normal budgeting processes with waning federal pandemic aid.
The exhaustion of federal relief aid appears to impact total appropriations for state arts agencies. Data collected from state arts agencies through NASAA’s annual revenue survey indicates that SAAs will be seeing a 24% decrease in appropriations for FY2024. This decline is primarily attributed to a 46% decline in line items, with larger-budget states like California and New York experiencing reductions of more than 33%. This reduction is influenced by the one-time appropriations from federal or state pandemic aids in the prior fiscal year. Twelve states report decreases in their FY2024 appropriations, with median percent decrease of 25%. On the other hand, 39 states reported increases in appropriations, with some states experiencing more than a 70% increase.
At the time of this publication, the funding level for the NEA in FY2024 remains unresolved as two funding proposals have emerged from Congress. In November 2023, Congress approved a short-term appropriations bill that extended current fund- ing for the National Endowment for the Arts until February 2, 2024. Passage of this legislation came just two days before funding for all federal agencies was set to expire. Congressional impasses remain. NASAA and other arts service organizations and advocates, including Grantmakers in the Arts (GIA) and AFTA, continue to advocate for NEA funding and monitor progress. NASAA Legislative Council Isaac Brown’s Federal Updates will provide information on the situation as it evolves. Data and resources such as this report can help educate the public and legislators about the factual and important connections between communities and federal funding for the arts.
This report provides a preliminary forecast until the latest data becomes available. Anticipating the NEA and LAA appropriation will closely align with those of the prior year, the arts sector is expected to experience a 10% decrease in the total funding. This decrease is mainly due to the exhaustion of federal pandemic aid, and the reporting methodology for appropriations in the year they are allocated also affecting the totals. Also, it is notable that this appropriation total is 57% higher than the pre-pandemic record high in FY2020 (without adjusting for inflation).
The Federal, State, and Local Landscape: A closer look
When it comes to arts and culture, the needs of underserved communities can often only be met through public sector funding. Because philanthropic and foundation giving to the arts has been found to be geographically disproportionate and concentrated in large awards, the public sector serves an important role in delivering funds and programs to rural and underfunded communities as well as smaller organizations. [3] Public sector funding can also ensure that public investment aligns with public interest and flexibly responds to communities in times of need.
Public funding of the arts requires all three levels of government: Federal, State, and Local. Just like how the road, rail, and airway systems across the US need coordination across all levels of government, the arts too require integration. Federal, state, and local governments form a symbiotic relationship in ensuring arts can be accessed in all communities.
Federal Funding Supporting State, Local, and Private Investments
The National Endowment for the Arts (NEA) makes federal investments that serve as catalysts for public and private support. The budget for the NEA constitutes .003% of the federal budget.[4] From this budget, the NEA devotes 40% of its program funds to state and regional arts agencies helping to fund state priorities, incentivizing state investments, and leveraging additional funds at the local level. 60% of the NEA’s program budget results in direct grants to nonprofit organizations. On average, the NEA awards 2,300 direct grants to small and medium-sized organizations (budgets up to 2 million) in every Congressional District in the country.[5] Reaching approximately 4,000 communities, these grants support projects that deliver to audiences who might not otherwise have access to arts programs (35% of grants go to high poverty communities; 11% to rural communities).
State Arts Agencies
FY2020 — the most recent year for which a full complement of data was available at time of publication — state arts agency revenue combined was near $600 million. NEA contributions accounted for 7% of the revenue while state appropriations accounted for 86%. State arts legislative appropriations represented, on average, 0.049% of state general fund expenditures. From FY2020 revenues, state arts agencies awarded 29,765 grants to organizations.
In FY2020, 41% percent of SAA grant dollars funded operating support for arts organizations.[6] Operating support grants provide flexible and unrestricted funding to grantees and SAAs are critical in delivering this support because it is not available through the NEA and many communities will not have philanthropic support or local arts agencies that can provide operational support. In FY2020, state arts agencies reached 3,688 communities through operating support grants with a median award of $7,013.
Operating support grants reach many small and rural organizations and communities. For FY2020, 85% percent of GOS grants were awarded to organizations with budgets under $1 million and 23% of these organizations were located in a rural setting.[7]
The National and State Granting Overlap
From FY2016–FY2020, 3,204 grantees benefited from both NEA and SAA/RAO funding receiving 32,979 awards amounting to $609 million from SAAs/RAOs and $335 from the NEA.[8] Seventy-four percent of NEA direct grantees also received awards from SAAs/RAOs and 11% of SAA/RAO grantees also received NEA direct grants. 3,306 communities were reached in 726 counties across 50 states and the District of Columbia, Puerto Rico, and the Virgin Islands.
Local Arts Agencies
Local Arts Agencies (LAAs) are an essential component of the public funding triad. LAAs use a blend of public and private funds to promote grassroots arts programs and deliver arts to communities across the US. For 2019, 30% of LAAs were branches of municipal or county governments while the remaining 70% were incorporated as private, nonprofits.[9] The largest source of LAA revenue comes from local governments (28%). The second largest source is contributed income in the form of corporate support, private donations, and grants (27%) followed by earned income (23%), and then state and federal funds (12%).[10] For context, 9.4% of state arts agency total revenues came from federal sources in FY2019, a figure which decreased to 4% in FY2023.
For FY2020, SAAs invested almost $40 million in local arts agencies for a total of 1,516 grants.[11] For FY2016–FY2020, 1,497 grantees received funds from both the NEA and SAAs for a total of $53 million. In FY2020, most local arts agency awards went towards regranting into local communities.
All Three Levels of Government Are Necessary
Local government support alone can’t fully support the arts. There are about 4,500 local arts agencies throughout the US,[12] yet there are nearly 91,000 local governments, including counties, municipalities, townships, special districts, and school districts.[13] Only a small percentage of LAAs serve multiple counties or cities[14] and many local arts agencies have very small budgets or are purely all-volunteer.[15] Public arts in many communities depend on investments from state arts agencies and the NEA serves as an investment catalyst for state arts agencies.
It takes three levels of government — federal, state, and local — to ensure that all communities can benefit from the arts. A symbiotic relation- ship exists amongst all three levels, each of which contributes critical funds, leadership, knowledge, and partnerships.
NOTES
NASAA FY2023 State Arts Agency Revenues Report https://nasaa-arts.org/nasaa_research/fy2023-state-arts-agency-revenues-report/
National Association of State Budget Officers Fiscal Survey of States Fall
2023 https://www.nasbo.org/reports-data/fiscal-survey-of-states
https://nasaa-arts.org/wp-content/uploads/2017/04/WhyGovSupport-1-1.pdf
https://www.arts.gov/sites/default/files/NEA-Quick-Facts-8.9.22-two-pager.pdf
https://www.arts.gov/sites/default/files/NEA-Quick-Facts-8.9.22-two-pager.pdf
https://nasaa-arts.org/nasaa_research/state-arts-agency-grant-making-facts-general-operating-support/
https://nasaa-arts.org/nasaa_research/state-arts-agency-grant-making-facts-grants-by-organizational-size/
https://nasaa-arts.org/nasaa_research/federal-state-and-regional-grant-making-facts-public-sector-grant-making/
https://www.americansforthearts.org/sites/default/files/pdf/2019/networks_and
_councils/local_arts_network/profile/2019_LocalArtsAgencyProfile_FullReport_FINAL.pdfhttps://www.americansforthearts.org/sites/default/files/pdf/2019/networks_and
_councils/local_arts_network/profile/2019_LocalArtsAgencyProfile_FullReport_FINAL.pdfhttps://nasaa-arts.org/nasaa_research/state-arts-agency-grant-making-facts-local-arts-agencies/
https://www.americansforthearts.org/sites/default/files/pdf/2019/networks_and
_councils/local_arts_network/profile/2019_LocalArtsAgencyProfile_FullReport_FINAL.pdfhttps://www.census.gov/data/tables/2022/econ/gus/2022-governments.html
https://www.americansforthearts.org/sites/default/files/pdf/2019/networks_and
_councils/local_arts_network/profile/2019_LocalArtsAgencyProfile_FullReport_FINAL.pdfhttps://nasaa-arts.org/wp-content/uploads/2017/04/WhyGovSupport-1-1.pdf
ABOUT THE AUTHORS
Mohja Rhoads is a research manager at the National Assembly of State Arts Agencies.
Nakyung Rhee is a research associate at the National Assembly of State Arts Agencies.
Ryan Stubbs is senior director of research at the National Assembly of State Arts Agencies.
