Building the arts and culture ecosystem while leveraging art as an asset

Greater Phoenix’s arts and culture industry grows the economy and provides alternative options for wealth planning

It has been well-established that arts and culture are significant contributors to a region’s economy. The sector, which added $14.2 billion to the Arizona economy in 2022 — 3% of the state’s GDP — while employing nearly 85,000 people, is a driver of economic development, community engagement opportunities and lifestyle enhancements.

Each pillar contributes to the competitiveness of Greater Phoenix.

“Competitiveness is at the center of what we do,” said Greater Phoenix Economic Council Chief Operating Officer Maureen Howell. “That means thinking about good policy, thinking about the investments that we need to make as a community to make this a place where businesses and people can thrive.”

In tandem with the launch of GPEC’s newest hybrid art exhibit, Spirit of Greater Phoenix, the economic development organization hosted an exhibition opening with a panel of three locals involved in different capacities of the arts and culture ecosystem:

• Erin Krivanek, Director of Development, Scottsdale Arts
• Christian Ramírez, Cohn Assistant Curator of Contemporary and Community Art Initiatives, Phoenix Art Museum
• Chris Siegle, Managing Director Wealth Advisor, J.P. Morgan Private Bank
• Maureen Howell, Chief Operating Officer, Greater Phoenix Economic Council (Welcome remarks)
• Stefanie Carson, Art Director, Greater Phoenix Economic Council (Emcee)

Why the arts are important to a community’s growth

In addition to the impact this industry has on the market, both in terms of income and job opportunity, there’s a direct link to access to arts education and a person’s ability to problem solve through creativity and critical thinking. Creativity and innovation are consistently referenced as an essential leadership skill by business executives, with a 2010 IBM study finding that global CEOs consider creativity the most critical leadership trait, a 2017 PWC study showing CEOs struggle to find creativity and innovation in the workforce, and a 2020 World Economic Forum report listing analytical thinking and innovation, problem-solving, and creativity among its top five skills needed for a 2025 workforce.

Art has also been found to support mental health and boost morale, increase community engagement and encourage civic engagement, Krivanek said.

“Art has the ability to inspire, educate, unite and transcend boundaries, and it is our connection to each other,” Krivanek said. “Now more than ever, seeing ways that we can connect is important.”

Through these educational, community and individual benefits that align with the prevalence of arts and culture, it has been shown time and time again that communities who invest in the arts see dividends in a variety of facets.

“Art is key to creating a sense of community,” said Howell. “We hear a lot, from both businesses and people who come to the region — they want to be in a place where they feel that arts and culture scene.”

Wealth planning

Investing in and selling art is different than selling real estate or equipment. Siegle shared insights on the complex landscape of art taxes, including how tax rates on capital gains when selling art differ depending on if the seller is an artist, investor, dealer or collector. Income taxes on the seller’s gains can also vary depending on how long the art has been in their possession.

When art, like other assets, is owned for less than a year, the seller pays a capital gain tax of 37%. When it has been owned for over a year, the capital gains of the art for a collectors or investor is taxed at 28%, plus a 3.8% investment tax. Dealers and artists pay ordinary income tax levels.

Art has historically had low levels of volatility with consistent annualized growth. According to Ascent, the estimated annual return on artwork between 1985-2020 was 8.3%, a low-risk way for an investor to diversify their portfolio.

It is essential for an investor to keep good records when pursuing art as a form of asset and wealth building. Track the purchase price and date, the string of ownership, and details about ancillary costs including fees, commissions, shipping, insurance and repairs. Documentation of authenticity and a bill of sale or qualified appraisal should be maintained. In addition, any detail about the work itself should be recorded.

JPMorganChase offers appraisals, financing options, and other information for those interested in learning more.

“That is a very strong commitment that we have to the art community, so we’re standing with you,” Siegle said.

Supporting the arts through philanthropic giving

Arts is driven by community engagement, with organizational performance often linked to changes in consumer spending. Across the United States, private contributions account for about 40% of total revenue for nonprofit arts organizations, according to the National Assembly of State Arts Agencies. As such, many local performing arts organizations across Greater Phoenix have yet to recover to pre-pandemic levels, despite Arizona being one of the first states to recover all job losses related to COVID-19. For this, community leaders are empowered to contribute financially, and with other resources, to increase access and inclusivity for the arts.

Companies and individuals receive benefits of their own for philanthropy efforts. In addition to the personal fulfillment of seeing the impact of their donation, support of the arts can increase visibility and recognition for the philanthropist’s personal brand and company, create networking opportunities with other regional leaders, and enhance one’s reputation in the community. There are also tax benefits for donations, and Krivanek encouraged speaking to a financial advisor to learn how to best assess your financial position.

“This is your legacy, this is your reputation that you’re going to be leaving behind,” Krivanek said. “If you are attached to a program or an exhibition or a dance series, you’re going to be tied to that and the impact it’s making in the community.”

Scottsdale Arts uses the contributions it receives to offer low-cost and free opportunities for underserved communities, including student matinees for dance shows or free-of-charge Second Saturdays at the Scottsdale Museum for Contemporary Art, Krivanek said. In addition, the organization’s Learning & Innovation program weaves arts through workshops and classes, and helps teachers plan for art integration in subjects like science and math by using dance and music.

Creating opportunities for artists

The Phoenix Art Museum, which hired Ramírez as its first curator focused on local artists and community-art initiatives in 2022, has put a prioritization on increasing access to opportunities for Arizona artists. Ramírez has overseen programs like lecture series and the Arizona Artist Awards program, among which is the Lehmann Emerging Artists Awards, offering two prizes of $10,000 and an invitation for recipients to present their work in a two-person exhibition at the museum, Ramírez said.

Efforts to include more Arizona art expand to the website of the museum, which has incorporated a blog series called PhxArt Stories sharing unique work from artists in our backyard.

“We’re trying to nurture our emerging artists to stay in Phoenix, to stay in Arizona, instead of them feeling compelled that they need to go live on one of the coasts to have a successful arts career,” she said.

Spirit of Greater Phoenix

Since 2018, GPEC has hosted 16 rotating exhibitions featuring 392 artists and over 1,100 works while fostering connections between Greater Phoenix’s creative and business communities. Check out the latest exhibit, Spirit of Greater Phoenix, here.