Government Funding of Arts Organizations: Impact and Implications

Nonprofit organizations are told to diversify their revenue sources to avoid relying on any one source as a way to manage financial risk. However, arts organizations in the United States frequently do rely on government funding as part of their revenue mix. The purpose of this research is to determine to what extent arts organizations are dependent on government grants and the implications of government funding on other revenue such as individual and foundation support. The findings suggest that arts organizations that receive state-level public funding are more successful in gaining donations from other sources (e.g., board members, foundations, corporations, special event fundraising and in-kind support), but they receive less city and county funding.