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University of Wisconsin Center for Cooperatives
Research on the Economic Impact of Cooperatives
Arts and crafts cooperatives are used by artists and craftspeople to market their product to maximize sales income. Cooperatives also can be a cost-effective means to obtain studio space, gallery space, or other specialized supplies or services needed by artists and craftspeople to carry out their work. These cooperatives account for a very small portion of the economic activity generated by the arts and culture sector.
Typically, visual artists and craftspeople use gallery owners, dealers, wholesalers or other retailers to market, authenticate, and show their work on a commission basis. They may also direct market their work through such vehicles as their own studio, the internet, or art fairs.
Arts or crafts cooperatives provide artists with an alternative access to marketing their work, and provide them with greater control over how their work is presented. Cooperatives can also present a solution for inventory management, insurance, shipping logistics, and other risk management issues, ultimately returning a larger share of gross revenues to the artist.
Few markets can sustain arts and cultural activities on a for-profit basis alone, and nonprofit arts and cultural organizations play a large role in this sector. In recognition of the benefits, both social and economic, that arts and cultural activities bring to a community, public and private grants fund these organizations, and subsidize arts activities in various ways. Arts and crafts initiatives also have been developed to address rural economic development issues, and include use of the cooperative model. Nonprofit arts and culture organizations spend >$63.1B annually, (Americans for the Arts, National Report), and direct expenditures accounted for 1.3M jobs in 2005 (Americans for the Arts, Summary).
Arts and crafts cooperatives are typically organized under the business statutes in the state where the cooperative is located. In many states, cooperative statutes are designed for agricultural purposes only, and many cooperatives use the LLC statutes which provide organizational flexibility.
A significant segment of arts and crafts cooperatives are in some way affiliated with a nonprofit arts and cultural organization, or receive funding from a grant-making organization. In these cases, cooperatives may choose to incorporate as a nonprofit and apply for nonprofit tax status.
Typical arts and crafts cooperatives are small, with 25-30 members. While some are managed collectively, often at least one staff person is hired to manage a gallery space, and to bring a sales orientation to the organization. Most cooperatives work on a consignment basis; a typical arrangement would be for 70-80% of the selling price to be returned to the individual producer member and 20-30% retained by the cooperative organization. Often a jury system is used to evaluate new work before membership is offered to a new artist. Membership criteria may also include specialty product requirements, or be location-based.
The business list of 284 Arts and Crafts cooperatives comes from the Cooperative Development Foundation (CDF), Ann Hoytand primary research. All economic data comes from survey work undertaken by the UWCC. The survey response rate for the Arts and Craft cooperatives was 36% and all reporting cooperatives provided us with 2007 fiscal year-end data. The data collection and survey methodology is discussed in detail in the Data Collection section in the Appendix.
Table 4-2 shows that we obtained data from 80 arts and crafts cooperatives for which we have data, and these firms collectively account for >$34M in assets, $32M in sales revenue, and pay $5M in wages and benefits. There are approximately 830 employees and 16,000 memberships. From Table 4-2.4, by extrapolating to the entire population (305 firms) and adding indirect and induced impacts to this activity, arts and crafts cooperatives account for $237M in sales revenue, close to 4,000 jobs, $53M in wages paid, and $148M in valued-added income.