Do Cultural Tax Districts Buttress Revenue Growth for Budding Arts Organizations?

Lauren Schmitz
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Lauren Schmitz: Schwartz Center for Economic Policy Analysis (SCEPA), https://www.economicpolicyresearch.org

No 2012-1, SCEPA working paper series. from Schwartz Center for Economic Policy Analysis (SCEPA), The New School

Abstract: What role should the government play in financing the arts in America? A wealth of research has been dedicated to whether lump sum government transfers to nonprofit organizations “crowd-out†private giving. However, little attention has been paid to the incidence of voter-approved cultural sales tax districts in the US and the effect they have on the future success and sustainability of participating organizations. This study uses a natural experiment approach to evaluate the effect that the Scientific and Cultural Facilities District (SCFD)—the largest cultural tax district in the US—has on private and program-related revenues for the over 300 organizations that receive annual support from its proceeds. Results show that after controlling for other countervailing factors, being a small arts organization in the district increases total revenue by $3.66 million compared to other regional organizations inside and outside of the district. Most importantly, these same organizations also crowd in $2.17 million in earned revenue and $1.6 million in private giving. This suggests that SCFD funding may have a positive influence on the future growth and sustainability of nascent cultural institutions.

Keywords: Taxation; Subsidies; Revenue (search for similar items in EconPapers)
JEL-codes: H2 (search for similar items in EconPapers)
Pages: 33 pages
Date: 2012-01
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