Culture is a key factor in Berlin’s appeal as a location. This is the conclusion of a new study by the Institute for Research on Cultural Participation (IKTf). The study focuses on economic aspects, but also examines the impact of culture on social cohesion in the city, the well-being of Berliners, and the urban development of neighbourhoods.

The study’s authors not only emphasise how important public cultural funding is for the city, but also support this with a broad and well-founded evidence base. One key finding is that this funding has an impact in Berlin far beyond cultural offerings. “Every euro invested in funding generates, on average, more than three and a half times that amount in financial returns to the city.” According to the study, Berlin and its urban society profit considerably from culture and cultural funding in a very literal sense.

First systematic assessment: What effects does culture have?

Until now, the effects of culture in Berlin, especially its economic effects, have never been systematically recorded. Nor has there been a model that brings together the different levels of culture’s impact. The IKTf now aims to close this gap with its current study, which was funded by the Senate Department for Culture. For the first time, it jointly measures the economic, social, health-related and tourism-related effects of Berlin’s cultural sector in quantifiable terms.

To do this, the institute uses data that it collected itself through representative surveys on cultural participation and the use of cultural offerings, known as culture monitoring, as well as through a supplementary survey of businesses. In addition, numerous other data sources are incorporated into the analyses, including Senate departments, Visit Berlin, the Federal Statistical Office, the Berlin-Brandenburg Statistical Office and the Artists’ Social Insurance Fund. The Institute for Research on Cultural Participation is an independent, non-university research and advisory institution. It is part of the Foundation for Cultural Education and Cultural Consulting.

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65 publicly funded cultural institutions examined

The study on culture as a location factor begins with a calculation of the so-called indirect profitability across the city, rather than only for individual cultural institutions. Indirect profitability refers to the measurable positive effects of publicly funded cultural offerings on various value chains as well as on employment.

The analysis examined a broad spectrum of cultural offerings — from museums and memorial sites to spoken theatre, concert halls, opera and dance ensembles. In total, it looked at 65 cultural institutions and independent groups that received a total of 541.8 million euros in public funding in 2024. Several levels of impact were analysed: first, the direct economic effects resulting from personnel costs and the institutions’ ongoing expenditures. In addition, there are economic effects such as contracts awarded to local craft businesses or technology companies, purchases of materials, and audience spending on site. These expenditures benefit sectors such as restaurants, hospitality, retail and other services.

Berlin gets 3.56 euros back for every euro of funding

Taxes and social security contributions resulting from all of these effects were also taken into account. The study also takes into account that the incomes of cultural workers are spent within the region, generating additional demand. Around 63 percent of the returns result from spending by cultural visitors. For the first time, audience expenditure was differentiated between Berlin residents and visitors to the city on the basis of culture monitoring data. This aspect also demonstrates that the economic importance of culture cannot be reduced solely to tourism. However, more than 73 percent of audience spending is attributable to tourists.

All of the listed economic effects of public cultural funding add up to what the study calls the “total returns for Berlin.” These amount to almost 1.9 billion euros. Compared with the funding invested, cultural funding therefore generates a surplus of more than 1.3 billion euros and an indirect profitability ratio of 3.56. In other words, for every euro of public funding, 3.56 euros flow back to the State of Berlin.

Museums and memorial sites are particularly profitable

The economic effects of the different cultural institutions vary considerably. While museums and memorial sites generate a surplus of 471 million euros and an indirect profitability ratio (UWR) of 6.7, spoken theatres achieve a similar surplus with a UWR of 3.48. Opera houses reach a ratio of 2.7, with a surplus of 206 million euros.

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Publicly funded culture is often viewed as a cost factor. For the authors of the study, however, the analysis shows that “cultural funding should explicitly also be understood and justified as an investment in economic policy and location strategy. With regard to political decisions, it makes sense to consider the interaction between the overall effects for Berlin, the surpluses and indirect profitability.”

Study emphasises the importance of the independent scene

The study also shows that the gross value added of the cultural and creative industries in Berlin—that is, their contribution to the city‘s overall economic performance—amounts to between 12 and 15 billion euros per year, exceeding the figures for the industrial sector. The cultural and creative industries also lead in terms of turnover and the number of employees (195,000 compared to 108,000 in industry). They also shape the city‘s image.

The independent scene plays a particularly important role, according to the study‘s authors. Despite generally low incomes, the many solo self-employed workers make a substantial contribution to the gross value added of Berlin‘s cultural and creative industries. “The independent scene should be understood more clearly as an important part of Berlin’s urban economy. Funding and remuneration systems should be aligned more closely with its actual economic significance in order to better safeguard the production and economic stability of the independent scene,” the IKTf recommends.

“Attending cultural events increases well-being”

Further findings of the study: Cultural participation has a positive influence on health and quality of life, and attending cultural events measurably increases the individual well-being of Berliners. In addition, culture makes Berlin an attractive location for businesses and helps attract and retain skilled workers. As a common reason for travel, it is also the main driver of tourism.

The study also calls for cultural offerings to be promoted more deliberately as a source of personal satisfaction and recognised more clearly as places where social integration can happen. In tourism, a contemporary narrative tailored to Berlin as a cultural and creative hub is needed in order to appeal to visitors who are no longer — or never were — simply attracted by the city’s history. The City Tax should be used specifically for culture, for example through a permanent investment fund for cultural offerings.

The analysis and the resulting recommendations by Vera Allmanritter, Tibor Kliment and Thomas Renz are significant for cultural policy. The authors say the study’s findings “provide a sound basis for political debates and strengthen negotiations between different policy areas.” The cultural sector is likely to see its demands for adequate funding confirmed. Whether the study will also influence decisions by the Senate and the House of Representatives remains to be seen. No representative of the Senate Department for Culture attended the presentation of the study on Monday.

This article was originally written and published on the 29th of juin in German. It was translated in English  with the use of Artificial Intelligence.