Aided by a Rise in Gifts, Non-Profit Theaters Had a Healthy Financial Run, Study Shows

A new survey has found that a majority of non-profit theaters broke even or came out ahead in 1998.

Theaters saw an 11.6-per-cent rise in income last year, while expenses grew 9 per cent.

The Theatre Communications Group, a New York organization that represents non-profit theaters,

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conducted the survey. Results were drawn from data supplied by 189 theaters, but two-year trends were based on information from only 108 of those organizations.

Fueling the rise in income was a steep increase in donations from individuals. Such gifts rose 16.7 per cent from 1997 to 1998.

Joan Channick, the theater group’s deputy director, speculated that the rise in individual giving was due to two factors: A strong stock market meant individuals had more money to give, and an abundance of capital campaigns successfully encouraged people to increase their gifts.

Theaters also saw a big rise in city and county grants. Income from city and county governments grew 15 per cent, from an average of $59,157 to $68,030 per theater. (That figure excludes one unusually large case — a theater with a $2.1-million increase in local-government aid.)

By contrast, federal funds fell 6 per cent, from an average of $28,739 per theater to $27,019, while state grants remained essentially level at $88,021.

Foundation and corporate contributions were also on the rise. Corporate giving increased 5.4 per cent, while foundation grants increased 4.7 per cent.

The increase in private and government contributions comes as welcome news to non-profit theaters, which on average derive about 40 per cent of their annual operating income from such donations.

The remaining 60 per cent comes from ticket sales, royalties, concession sales, and educational-outreach programs, all of which produce so-called earned income.

Such income also grew, as single-ticket sales increased 7.6 per cent while season-ticket subscriptions rose 6.8 per cent. Ms. Channick of the theater group said the increase in ticket income could be due to higher ticket prices as well as larger audiences, but had no way of measuring the two effects separately.

Arts experts said they were encouraged by the number of theaters that were running in the black, but said they still were concerned about the long-term financial health of the organizations.

They noted that relatively few non-profit theaters maintain endowments to help pay for special projects or provide a financial cushion during tough times.

Of 136 theaters that answered questions about endowments, only 54.6 per cent said they had one.

Not surprisingly, those that did tended to be the largest theaters. Thirty-one of the theaters that had budgets of $5-million or more maintained an average endowment of $6.1-million.

Meanwhile, none of the smallest 15 theaters, those with budgets of $250,000 to $499,999, had any money set aside in an endowment.

Marian Godfrey, director of the Pew Charitable Trusts’ cultural-grants program, said the data show that even though theaters are doing better than they did a decade ago, they still face serious financial struggles.

“On the one hand, theaters are still vulnerable, given that they don’t have enough capital to take them through the tough times,” she said. “On the other hand, they are now faring better economically on a day-to-day basis, so for the first time in a while they are able to turn their attention to the long-term issue of endowments.”

Even the endowments held by many large theaters fell short of the goals recommended by National Arts Stabilization, a Baltimore group that helps arts organizations improve their fiscal health. That group recommends that cultural organizations put from 200 to 500 per cent of their annual operating budget into an endowment.

The Yale Repertory Theater, for example, has a $4.5-million endowment. But under the National Arts Stabilization goals, it should have much more, based on its $3-million annual budget.

Victoria Nolan, managing director of the Yale Rep, said lack of endowment revenue is “a huge issue.” Without such money, she said, theaters must rely more heavily on box-office revenue. The result, she said, is that they present commercial plays that can guarantee a large audience, rather than more innovative fare that may draw smaller crowds. To tighten their costs, Ms. Nolan added, “theaters are also choosing to do smaller plays with fewer characters, or to do long-dead playwrights because there are no royalties owed them.”

The survey findings backed up Ms. Nolan’s concerns about new works. The number of staged readings of new plays dropped 35 per cent from 1997 to 1998, the survey found.

Copies of the report, “Theater Facts: 1998,” which appears in the July-August issue of American Theatre magazine, are available from the Theatre Communications Group, 355 Lexington Avenue, New York 10017; (212) 697-5230; e-mail custserv@tcg.org. Copies cost $5 each, plus $2 shipping for the first copy and $1 for each additional copy.