Dr Stephen Connolly Jonathan Durnin

Assessing economic value: Economic impacts generated by the independent museum sector and wider considerations about theeconomic case for culture Dr Stephen Connolly Jonathan Durnin

Structure of Seminar Background – Our Experience/Perspective • Setting the Scene – The Wider Context • Issues around Economic Impact/Economic Value of Culture Economic Value of Independent Museums • Approach and Method • The survey, sub groups and case studies • Results • Toolkit Summary and General Considerations

Background – Our Experience/Perspective DC Research – economists that have assessed the contribution of various aspects of ‘culture’ to other agendas, especially the economic/regeneration contribution • Carried out a range of studies – using economic approaches to assess culture’s impact: • Economic Impact Studies – AIM, LTM, Hawick, Leicester • (Cultural) Impact Frameworks – Knowsley, Living Places • Evaluations – Living Places, LTDP, Empty Shops, Liverpool Thrive! • Policy Research / Evidence Reviews – Culture/LAA links, Local Government Evidence Toolkit, MLA tourism scoping, SAC Lottery Legacy

Setting the Scene – Context Common thread of culture’s value being assessed in terms of its contribution to other agendas (incl. economic) Range of factors seem to have influenced this – further reinforced more recently with current economic/public funding climate A desire to express impact in a way that is convincing to both the cultural sector(s) and stakeholders/funders Issues for consideration: • Defining the cultural sector (and its sub groups) • Defining what is meant by economic impact/value • Acceptable approaches to assessing economic impact/value

Considering the Issues (i) Defining the sector • Can be difficult for ‘cultural’ sector impact studies • Relatively straightforward for the AIM research study (ii) Defining economic impact & (iii) Approaches and methods for assessing economic value/economic impact • Desire to express impact in a way that is convincing to sector and stakeholders/funders - results used for advocacy • Need to satisfy/convince the ‘audience’ and conform to audience expectations about robustness of evidence /method • Range of methods considered – much debate about methods and approaches across the sector (multipliers, input-output, ROI, SROI, contingent valuation (WTP/WTA), GLO/GSO etc.)

Importance of assessing economic value of culture/museums Increasing need to clearly articulate and demonstrate the contribution of cultural/museums sectors, in a tourism/economic context Needs to be articulated in such a way that key audiences outside the sector appreciate and are convinced by evidence and related advocacy Evidence that cultural/museums sectors recognise the importance of tourism and the visitor economy in making the case to support their impact

Heritage/tourism/culture evidence Eight of the top ten visitor attractions in 2008 were museums and galleries Major study commissioned by Heritage Lottery Fund: • Heritage is a major motivation behind the tourism expenditure of both overseas and domestic visitors • Heritage tourism sector supports an estimated 195,000 full-time equivalent (FTE) jobs, and is a £12.4bn per year industry (including spending that can be reasonably said is ‘motivated’ by the desire to visit heritage attractions) • £7.3billion based on visits to built heritage attractions and museums, with 60% derived from UK residents on day trips and UK holidays

Purpose of the research Research objectives: • Understand how and to what degree independent museums contribute value to local, regional and national economies • Produce benchmarks to gauge the economic value generated by different categories of independent museums and draw conclusions from them • To produce data that can provide the basis for further research work Need for the research to convince both museums within the independent sector and a range of key external stakeholders Independent sector defined as AIM Membership Museums

Overview of approach Review of existing research and evidence, and consultations with sample of ‘audience’ stakeholders Membership survey distributed to AIM membership (over 100 responses, 95 ‘usable’ replies) Development of AIM ‘sub groups’ for analysis, and selection of case studies Development of bespoke model to assess impact of responding museums, and application of the model to rest of AIM membership Development of a economic value ‘toolkit’ for museums to use themselves

The member survey Collecting key information held by museums: • Information about number of visitors (per annum) to museums, as well as type of visitor (‘type of visitor’ being a critical element in terms of assessing economic value) • Summary information about the employment (including volunteers) and purchasing patterns of the museum • Summary information about the facilities available at the museum (cafe, restaurant, meeting room, etc) • Information about the locality in which the museum is located Survey evidence used as basis to create model to estimating the value of the whole sector

Findings from responding museums Turnover of £105 million Over 8 million visitors 2,164 people employed (equating to 1,646 full time equivalent jobs) Volunteer numbers totalling 4,724, with 15% of these volunteers volunteering for two or more days per week on average, and 3.5% volunteering for four days a week or more ‘In kind’ contributions of goods and services of £621,000, and ‘in kind’ capital works (such as building work, repairs, development, refurbishment) of £11.5m

Sub groups and case studies Sub groups developed to categorise the AIM membership based on: • Visitor numbers • The significance of the museum to the local visitor economy • Whether the museum has paid employees Case studies provided coverage of these sub groups, balancing AIM representativeness, and size of impact Findings from case studies supported and underpinned approach to developing the economic value model Also provided vital perspectives on the challenges and opportunities currently facing independent museums

Developing the model Approach rooted in HM Treasury ‘Green Book’ methodology, using mix of relevant technical guidance, and assumptions for key economic factors Estimates additional economic impacts in terms of jobs and value: • Direct, indirect and induced employment effects • Supply chain linkages (“indirect”) and income multiplier (“induced”) effects on local incomes and employment In addition, gross visitor impacts are estimated based upon actual visitor numbers and regional tourism spending data

Developing the model Approach driven by survey responses, and creation of ‘sub groups’ to categorise AIM membership Assumptions based on guidance, survey data and on judgement based on case study discussions with museums representing sub groups First stage analysis of the economic value of those museums who responded to the survey: • Estimating the direct, indirect and induced employment and spending effects of responding museums on a case by case basis • Gross day and overnight visitor impacts of responding museums on a case by case basis, using (where possible) regional average spend data

Employment value of responding museums 1,646 full time equivalent staff, with most living near to their museum These jobs support additional employment through indirect and induced effects • Using the model, these jobs are estimated to create 728 indirect and induced jobs in localities • Total of 2,374 estimated direct, indirect and induced jobs • Equivalent value of £15.2 million

Spend value of responding museums £59.3 million spent by responding museums on good and services Spending creates additional impacts through indirect and induced effects • Using the model, spending by responding museums on goods and services creates additional indirect and induced additional spend of £11.7 million • Total of £71 million as a result of responding museum spending on goods and services

Visitor impacts of responding museums: Issues Approach uses similar assumptions to those used in other key studies, but use ‘control’ for local visitors, and for adult child visitor split • Adjustment/judgement needed to account for local visitors in immediate vicinity of a museum in absence of local level tourism data • Adjustment/judgement also needed to account for adult/child split. Assumption that spend is mainly linked to adult visitors This approach avoids overestimation of visitor impacts

Visitor impacts of responding museums: Issues Approach uses similar assumptions to those used in other key studies, but use ‘control’ for local visitors, and for adult child visitor split • Adjustment/judgement needed to account for local visitors in immediate vicinity of a museum in absence of local level tourism data • Adjustment/judgement also needed to account for adult/child split. Assumption that spend is mainly linked to adult visitors This approach avoids overestimation of visitor impacts • Workshops led to adoption of half (50%) of a day visit for local visitors, and a two third/one third adult/child split

Visitor impacts of responding museums Assumption that two third of visitors are adults, and that local visits have the value of 50% of a day trip • 1,110,245 local visitors • 2,554,038 day visitors • 1,701,980 overnight visitors This leads to gross visitor impacts of £24.8 million for local visitors, £112.7 million for day visits, and £119.9 million for staying visitors Total gross visitor impacts of £257 million

Extending analysis to the sector Extending the analysis to impact on local economies to estimate aggregate value of independent sector as a whole Factors taken into account: • Range of size of member museums, and survey bias towards medium to large museums • Assumptions adjusted to take account of averages, median and range for employment, spend and visitor numbers Median and mean values produced to show likely minimum and potential range of impact

Extending analysis to the sector

Economic value of the independent museum sector Independent museums sector is likely to account for at least 5,800 direct, indirect and induced jobs in the UK economy (although impact might be as high as 10,500 jobs) Independent museums sector is likely to account for at least £124 million in direct, indirect and induced impacts from spending on goods and services (although impact might be as high as £349 million)

Economic value of the independent museum sector Independent museums sector could account for around £363 million in gross visitor impact,taking into account local visitors and a reasonable adult/child split This is based on a sector wide estimate of visitor numbers of between 9 million and 9.5 million

The AIM Toolkit Three levels to support a variety of museum types: Tourism Impacts: This stage is for all museums who want to express the impact of visits to their museum in terms of economic value Employment Impacts: This stage is for those museums who want to express the impact of their employees (if they have them) in terms of economic value to their local and regional economies Impacts of Spend on Goods and Services: This stage is for those museums who want to express the impact of their spending on goods and services in terms of economic value to their local and regional economies

Summary and General Considerations Economic impact of independent museum sector • Adopted standard HMT approach to assessing economic impact • Added value of primary research (survey of AIM museums) provided bespoke evidence to inform assumptions and values/ratios used in model • Deliberately cautious approach (‘as a minimum...’) • Some assumptions necessary for model (representativeness of survey respondents, representativeness of AIM for sector) Advocacy • Aided by development of Toolkit • Study well received by sector and ‘audience’ – oft quoted/used

Summary and General Considerations Importance of evidencing economic impact of culture – especially in current climate: • Public spending cuts – national (e.g. MLA, ACE) • Public spending cuts – local (e.g. Somerset) Ongoing considerations/challenges about the issues • Method/approach challenges – potential ‘conflict’ between what economic/regeneration funders expect/accept and what best captures cultural sector impacts (...happiness may help!) • Costs/resources needed for alternative methods can vary • Better linkages between information collected by sector and information required for robust, well evidenced impact studies

Assessing economic value: Economic impacts generated by the independent museum sector and wider considerations about theeconomic case for culture http://www.aim-museums.co.uk/pages/pg-18-aim-economic-impact-paper/

Dr Stephen Connolly Jonathan Durnin