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

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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.

Suggested Citation

  • Lauren Schmitz, 2012. "Do Cultural Tax Districts Buttress Revenue Growth for Budding Arts Organizations?," SCEPA working paper series. 2012-1, Schwartz Center for Economic Policy Analysis (SCEPA), The New School.
    • Handle: RePEc:epa:cepawp:2012-1
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    More about this item

    Keywords

    Taxation; Subsidies; Revenue;
    All these keywords.

    JEL classification:

    • H2 - Public Economics - - Taxation, Subsidies, and Revenue

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