HNW and UHNW philanthropists in the arts and culture sectors are likely to face big calls on their generosity. A study of the US sector highlights the hit to the bottom line of organizations and individuals in this space.

The pandemic-induced lockdowns and social distancing will erase $12.4 billion from US non-profit and cultural organizations’ revenues in the period of March this year through to February 2021, a net $6.8 billion hit to the bottom line, figures show. 

The data, produced in a white paper by SMU DataArts, the National Center for Arts Research at Southern Methodist University in Dallas, highlights how the world of fine art, and other cultural areas, has been hit hard by COVID-19, accelerating trends such as online art auctions and prompting innovations such as virtual “art tours”. High net worth and ultra-HNW individuals are also important benefactors to galleries, museums, theaters and learning centers. They are also major drivers of the global fine art and related auction markets. (See an analysis of the arts market and COVID-19 here.)

The arts and culture sector drives a significant chunk of the US economy. “The lives and livelihoods of people who create the artistry that drives 4.5 per cent of US GDP,” the study said, citing figures from the National Endowment for the Arts.

Explaining the figures, authors of the SMU report said: “These estimates relate to activity for roughly 35,000 non-profit organizations in the US with annual budgets over $50,000 whose primary mission is arts and culture. It under-represents the full universe of artistic and creative activity that Americans enjoy. The estimates incorporate what arts organizations have reported through surveys about closures, layoffs, and impact to date, reinforced by qualitative insights; [6] survey results on audience intention to attend…and trends during and after the Great Recession.”

The estimates are made on the basis that the institutions which have been tracked will reopen by October 1 this year.

The report looks at the trend of organizations putting more of their exhibits and material online, often without charge. The report said that how institutions re-open will “send a signal” about the roles they want to play in future. 

SMUData Arts compiles and analyzes data on arts organizations and their communities in the US. 

(Editor’s note: Family Wealth Report has been speaking to advisors about philanthropy and the impact of the coronavirus pandemic, such as its effect on distributions and changing payouts. The sobering events of recent weeks suggest that philanthropy actors will have plenty of calls on their wealth in the months ahead. An article examining the topic is forthcoming.)