Performance Anxiety

Drop in support and stalled economy have many arts organizations scrambling to stay afloat

In January, the Utica Symphony Orchestra, in New York, raised $91,000 in an emergency telethon it held

to avoid forfeiting the remaining half of its season.

Now the orchestra wants to ensure it doesn’t run into that kind of trouble again, so officials trimmed its operating budget for next year by nearly a fifth, or $100,000.

Besides looking for ways to cut costs, such as holding half of its performances in a smaller, lower-cost hall, the symphony hopes to increase ticket sales by changing its programming to appeal to a broader audience. The number of classical concerts has been reduced from five to three, and three “pops” concerts, offering lighter fare such as Broadway love songs, have been added.

“We will squeak by financially, but we will be pretty fragile for the next year or two,” says Susan D. Smith, executive director.

Many arts officials nationwide are in the same position.

After three years of growth, giving to arts, culture, and humanities groups declined nearly 1 percent in 2002 from 2001, for a total of $12.2-billion, according to “Giving USA,” an annual survey on the state of philanthropy published by the American Association of Fundraising Counsel Trust for Philanthropy, in Indianapolis. The drop in arts giving was greater than the decline in donations to all causes, which dipped 0.5 percent. One percent of the 2002 donations was earmarked to help New York arts groups get back on their feet after the September 11, 2001, attacks.

The stalled economy has caused donations to shrink and revenue from ticket sales and admission fees to plummet at museums, symphonies, theaters, and other cultural institutions. What’s more, state governments — burdened by massive deficits — have been making big cuts in spending on the arts, and many charities are bracing for fiscal 2004, which will be the third year of reductions in state aid in many places. While some of the wealthiest arts groups have endowments that can help them weather the tough times, even that is not much comfort: Nonprofit theaters have seen the value of their endowments decline 50 percent since 1998, according to a study by the Theatre Communications Group of the country’s 1,146 nonprofit theaters.

Lackluster ticket sales have been a particular struggle. “We are just seeing that people are not spending the way they used to,” says Theodore S. Berger, executive director at the New York Foundation for the Arts, a charity that provides financial assistance to artists and arts groups in New York State. “There are few organizations with large endowments that can carry them through rainy-day situations.” He adds: “You stretch rubber bands too far and they begin to snap.”

Some charities have also had to struggle with defaults on big pledges made when the economy was roaring in the 1990s. The Metropolitan Opera, in New York, this month removed a large sign saying “Vilar Grand Tier” because Alberto Vilar, an investments adviser who has seen his fortunes fall with the decline in technology stocks, had not honored a donation pledge he made five years ago, according to a spokesman for the organization. Mr. Vilar had promised to pay $20-million over five years for the endowment campaign, as well as $5-million to match grants by others. Other opera groups, including the Lyric Opera of Chicago, also say that Mr. Vilar is late on payments. In a written statement to The Chronicle, Mr. Vilar said he plans to honor his pledges when times are better. “I’m hoping to go back and be generous again starting in 2004,” he said.

A sampling of woes at arts charities around the country:

• The Brooklyn Museum of Art, in New York, will close for two weeks in August and has canceled several exhibits planned for next year because of a downturn in donations, a decline in the money the endowment is able to generate, and a $2.4-million cut in grants from the city.
• The San Francisco Opera, after ending fiscal 2002 $7.6-million in debt, reduced its staff by 25 percent last year in an effort to cut costs. Even so, officials announced in March the possibility of a $9.2-million budget deficit when its current fiscal year ends July 31, says Lisa R. James, the opera’s acting development director. In May, the group sent a letter to 12,000 donors who give less than $10,000, informing them about the company’s fiscal reforms and asking for additional donations. Next year the group plans to cut one production to save money, and by 2005 the company expects to trim its entire budget by 25 percent, to $47-million.
• The Boston Lyric Opera is reducing its budget for the third year in a row, to $5.5-million in 2004. The group narrowly avoided a $1-million deficit this year by cutting $400,000 in administrative expenses, including asking staff members to pay more for health insurance and not contributing to their pension funds. The situation would be even worse if recent fund-raising efforts had not succeeded. The group has raised $600,000 since January, in part by tapping a local foundation for a $100,000 grant that must be matched with money from other donors. But plans it made in 2000 to solicit several large multiyear pledges to cushion annual fund raising have been put on hold indefinitely. “Now we are lucky if people can maintain at the level they were giving,” says Janice Mancini Del Sesto, the group’s general director.

Budgeting for Reality

Some arts groups have found it hard to adjust to the lean times after enjoying nearly a decade of a booming stock market, which fueled a steady flow of contributions.

The Columbus Museum of Art, in Ohio, missed meeting its $7.2-million budget by $1.4-million last year because museum officials misjudged how much the slow economy would affect donations.

“Like many organizations in good times, we had been budgeting to our dream,” says Nannette V. Maciejunes, acting executive director. “When we had a shortfall between the dream and the budget, we turned to our development department and said, Well, you just have to raise a few extra hundred thousand dollars.”

While that approach worked in the past few years with big donations covering the gap in the budget between expenses and income, Ms. Maciejunes says last year there was no “windfall.” So the museum has now cut its budget to $6-million this year, laid off 10 staff members, reduced five full-time positions to part time, and postponed one exhibit. The group now monitors its budget monthly, instead of quarterly, and recently completed an audit of its fund-raising office, to promote efficiency.

“It was a wake-up call that we need to pay attention to the development effort, but budget expenses against what we know we can raise, not what we could raise in another economy,” says Ms. Maciejunes.

Sharing Costs

The downward spiral of the economy has prompted some charities to share resources and expenses. Each year the Colorado Shakespeare Festival, in Boulder, produces four plays that run throughout the summer. This year marks the first time the theater company produced a play with another institution, the Chicago College of Performing Arts at Roosevelt University. The money saved by the co-production of Cymbeline, in addition to eliminating a week of performances this year, helped the Colorado Shakespeare Festival cut $100,000 out of its budget, to $1-million this year. The moves helped counterbalance slow ticket sales and lost foundation and state money. The play was performed earlier this year in Chicago, and now will be performed this summer in Boulder.

Even though Richard M. Devin, the group’s producing artistic director, would prefer to retain artistic control over all four plays, he is already talking to two other theaters about co-productions next year.

“We are in survival mode,” he says, adding that two other nonprofit arts organizations in Boulder have recently folded. “Anything that we can do to help us come out of this economy in two or three years and still be here is worth talking about.”

Colorado arts groups are particularly pinched this year because the Colorado Council on the Arts’ budget was reduced by state legislators from $1.2-million in fiscal 2003, to $200,000 next year, says Renée Bovée, the council’s acting executive director. However, with federal dollars from the National Endowment for the Arts, the council still expects to pass out grants to arts groups at 60 percent of last year’s amounts.

In about half of the 50 states, the agencies that distribute federal and state money to arts groups are expecting cuts next year. Among them, the Minnesota State Arts Board anticipates its budget to be reduced by 32 percent next year, to $8.6-million. In a worst-case scenario, the California Arts Council’s budget could be reduced by 75 percent, to $5-million, when the budget is hammered out later this month.

In Florida, arts advocates participated in three rallies around the state in a failed bid to halt budget cuts. Awaiting the governor’s signature is legislation that cuts the Florida Arts Council’s budget by 78 percent, to $6-million, next year.

Not all state governments are cutting back, however. The Pennsylvania Council on the Arts’ budget will remain steady next year and Philadelphia’s city council approved a $650,000 addition to the Philadelphia Cultural Fund, which supports local arts groups.

Foundation Grants

In the past two years, many foundations and corporations have cut back on giving to the arts and other causes because of declines in profits or the value of their endowments. Even so, some foundations have stepped up their giving.

The Ewing Marion Kauffman Foundation, in Kansas City, this month announced a $26-million grant to help build a new performing-arts center in its hometown, using proceeds from the May 2000 sale of the Kansas City Royals baseball team, which Mr. Kauffman, who died in 1993, had bequeathed to the foundation. And the Deutsche Bank Americas Foundation, together with the Rockefeller Brothers Fund, announced a contribution of just over $1-million to seven arts groups that promote community revitalization in New York City.

The majority of arts groups, however, are looking to individuals to prop up fund raising.

After noticing that many individuals had begun to shrink the size of their gifts, fund raisers at the Children’s Museum of Richmond sought to widen the pool of contributors by inviting potential new donors to have lunch at the museum and take a tour. About 100 people who responded to the lunch invitation, most of whom were suggested by board members, have given a total of $50,000 in the last two years, says Patricia S. Morris, director of development and marketing. Ms. Morris expects to meet her fund-raising goal of $675,000 this year, but it has taken a lot more work than in previous years.

“Before 9/11, before the economy, and before the war, fund raising was easier. Everyone was on a roll,” she says. “Now it’s more hours in the office, and making more visits to donors of $1,000 or more.”

Giving Credit

At the Arizona Theatre Company, in Tucson, ticket sales fell short of expectations, causing a $200,000 budget gap that fund raisers scrambled to fill last year.

The charity sent a letter to its 4,000 donors, asking them to increase their giving. Donors of $1,200 or more also received a phone call. The letter spurred the most positive response among the 400 donors who had contributed $250 to $1,250, with 60 percent increasing their gifts last year, says Charles H. Lund, one of the theater’s development directors.

In addition, the theater created a new way to acknowledge high-end contributors, promising that donors of $100,000 or more would get public credit as a sponsor of all the season’s plays. So far, one donor has increased his gift from $15,000 to $100,000. In addition to aggressive fund-raising tactics, the group also trimmed its budget by no longer reimbursing staff members for mileage expenses they incur driving for theater business and by housing some visiting actors at board members’ homes instead of hotels. Next year, the group will shave $500,000 off its annual budget, to $6.2-million, partly by producing plays with fewer actors.

In addition to concentrating on individuals, at least one group is trying to expand its moneymaking efforts. Since 1999, the touring exhibit “Kid Stuff: Great Toys From Our Childhood” has earned its parent institution, the Berkshire Museum, in Pittsfield, Mass., $100,000 each year from other museums that pay to rent the exhibit. Next year, the group plans to open a second traveling exhibit, “The Enchanted Museum: Exploring the Science of Art.” Officials expect to earn $115,000 a year from its touring fees.

The money, while only a fraction of the museum’s $1.9-million operating budget, is especially welcome as other revenue declines, says Ann Mintz, the museum’s director.

For example, a $30,000 state grant the group had received two years ago from the Massachusetts Cultural Council sank to $7,500 this year. Says Ms. Mintz: “It’s like eating a lobster: The shreds add up.”