It’s been a difficult summer for the nonprofit performing arts field. In mid-June, L.A.’s Center Theatre Group (CTG) announced that it was indefinitely pausing shows at the Mark Taper Forum. A week later, the Brooklyn Academy of Music (BAM) laid off 13% of its staff and reduced its programming in an effort to plug a “sizable structural deficit.”
Like countless other performing arts organizations, the CTG and BAM are attempting to balance the books at a time when in-person attendance hasn’t returned to pre-pandemic levels, and that’s just one of their many problems.
“What we’re dealing with now is not one economic shock but a series of compounding crises,” said Theatre Communications Group Executive Director Teresa Eyring in an email to IP. “The ongoing impacts of COVID-19 have intensified pre-existing challenges, including the decline of the subscription model and persistently negative working capital” and “inflation and rising labor costs have made everything more expensive.”
In previous downturns, leaders turned to donors to plug the gaps. Now, they’re up against two formidable obstacles. The first, according to an L.A. Times article on the forum’s struggles, is “hesitant, recession-wary donors.” Compounding matters is the fact that organizations are engaging a dwindling number of donors. In a statement to the New York Times, BAM President Gina Duncan said that changes were necessary to help the organization “address an outdated business model that heavily relies on a shrinking donor base.”
The traditional fundraising-during-a-downturn playbook calls on organizations to lean on mega-donors when everyday givers step back and the broader pool shrinks. But this isn’t your parents’ downturn. As far as the theater field specifically is concerned, TCG’s “Theatre Facts” report found that trustee giving dropped 26% during the first full year of the pandemic, and according to Eyring and Mid Atlantic Arts Director of Programs Robyn Busch, conditions on the ground haven’t substantially improved.
It’s not all bad news, however. Private support helped many organizations stave off closure over the past three years, and just as encouragingly, a post-pandemic playbook is emerging to help leaders navigate the rough waters ahead. “When theaters match rigorous relationship building across departments and a detailed analysis of patron behavior to mission-driven programming,” Eyring said, “they can succeed with recession-wary donors.”
Not your parents’ downturn
The pandemic accelerated trends that were already in motion across the performing arts space, such as the growing popularity of streaming entertainment, shrinking attendance, and a reliance on an outdated subscriber model. The crisis, Busch said via an email to IP, “was yet another setback to an industry and art form constantly adapting in the face of negligible public funding.”
Fundraisers instinctively seek guidance by comparing the situation at hand with previous downturns, but the pandemic rendered the existing playbook meaningless. TCG’s “Theatre Facts” shows that the one-year, field-wide average decline in total ticket income was 10.7% after 9/11 and 7.3% for the Great Recession. After the first year of pandemic-induced shuttered performances, the drop was 88%. The only bright spot is that TCG found that 22% of organizations that produced work through digital, outdoor or socially distanced means saw a smaller, 28.9% decline in total ticket income.
As for donors’ response to previous crises, trustee and non-trustee giving rose 41.5% and 68.2%, respectively, within the year after 9/11, while in the first year of the Great Recession’s impact, trustee giving dropped 8% and giving from other individuals rose 2.4%. In contrast, trustee giving, as noted, declined 26% in the first full year of the pandemic and contributed income from other individuals dropped 7%. “We can see that donors have tended to stay committed or even rally historic levels of donation in past crises, but not so during the worst of COVID-19,” Eyring said.
In 2021, Congress made matters worse by allowing the universal charitable deduction, which incentivized non-itemizing taxpayers to donate, to expire. “Given that the majority of tax filers do not itemize, it seems clear that this temporary program was successful,” said New England Foundation for the Arts Communications Director Ann Wicks in an email to IP. Both she and Eyring noted that their organizations are encouraging Congress to pass the Charitable Act, which would reinstate a universal charitable deduction for 2023 and 2024.
Add it all up, and TCG’s Theatre Facts found a 14.6% reduction in the total number of donors from 2017 to 2021. “Paired with the downward trends in subscribers, it does seem that our nonprofit theatre ecology is mirroring the shrinking donor base for charitable giving overall,” Eyring said.
Mark Taper Forum: A case study
Diminished aggregate giving and a shrinking donor base have traditionally accentuated the importance of mega-donor giving. But the pandemic showed that it doesn’t necessarily follow that “top-of-the-pyramid” givers will publicly rescue the organization from financial ruin.
We saw this dynamic play out with the Mark Taper Forum where, according to Gelt, “some theater leaders said confidentially that Center Theatre Group should have called on the financial heft of its well-connected board to fund the completion of an all-important season for female and BIPOC writers.” While we don’t know what board members were thinking in the run-up to the forum’s closure, I suspect some of them concluded that a heroic bailout wasn’t a pragmatic or financially viable option.
The L.A. Times reported that “corporate contributions and individual donations — which constitute 20% to 30% of the budget — are down about one-fifth compared with pre-pandemic giving.” Based on the group’s average annual budget of $63 million, back-of-the-envelope calculations show that the CTG was looking at a shortfall of incoming contributions of about $3 million — not an insurmountable number for deep-pocketed trustees.
But of course, organizations rely on other incoming revenue streams. Ticket sales, which account for about 70% of CTG’s budget, “are only about 70% of what they were in 2019 across all three of CTG’s stages,” according to the L.A. Times. As a result, CTG is $12 million to $13 million in the red. Getting trustees to chip in for even half of that amount is a pretty big ask.
Engaging recession-wary donors
Three years after the pandemic, donors are skittish due to fears of a recession that hasn’t materialized and that some market watchers now say may never come to pass. Eyring said that theaters can most effectively engage them by “taking holistic, relational and cross-departmental approaches to developing strong relationships with their communities.”
She stressed that organizations must rekindle an authentic and personal approach, citing Classical Theatre of Harlem Artistic Director Ty Jones, who “addresses the audience after each performance and recognizes special supporters who are in the house,” and invest in front-of-house and box office staff to create a welcoming and inclusive environment. This outreach needs to be supplemented with rigorous analysis of patron behavior so leaders can design engagement campaigns based on hard data. (I encourage leaders seeking out additional guidance on this point to check out the Wallace Foundation’s Building Audiences for Sustainability case studies.)
While making audiences and donors feel appreciated doesn’t require organizations to spend an extra dime, the old adage “you have to spend money to raise money” still applies for those that can afford it. Eyring said best-in-class organizations are investing in their marketing and development staff, which, as TCG’s 2022 Salary Survey suggests, experience the highest levels of staff turnover at theaters. As one would expect, this constant churn makes it difficult for organizations to build long-term relationships with donors.
The other big piece in organizations’ donor engagement calculus is leaders’ attention to mission, which, according to Eyring, “remains the primary motivator for giving.” Theatre Facts 2021 looked at how Cleveland’s Karamu House, whose mission honors the Black experience, more than doubled giving from trustees and individual donors over a five-year period by recommitting its programming to its social justice roots.
Calling all theater people
Looking ahead, the good news is that performing arts fundraisers are operating in a climate where 72% of Americans believe the arts “unify our communities regardless of age, race and ethnicity,” Erying said. The real work will come in the figurative trenches — making visitors feel welcome, collecting and analyzing behavioral data, leaning into the organization’s mission and creating demographically targeted engagement campaigns.
This latter activity will be especially important as baby boomers make way for Generation X and millennials who, unlike their generational predecessors, are more inclined to view the arts experience through the lens of advancing social change. “It seems likely that there is a general shift underway, but we’re still trying to understand its full impact on donor bases,” Erying said.
Mega-donors need to be part of the contributed revenue mix. “Organizations will need donors to step up to plug the gaps and theater makers will need to continue to be innovative in their approach to programming and income streams,” Busch said, while noting that “an overreliance on any one income stream, be it audiences or donors, is too risky of an approach given the economy and political climate.” In addition, playwright Jeremy O. Harris told Gelt that some theaters have shown a penchant for funding expensive building projects, “making companies increasingly dependent on the whims of wealthy, often out-of-touch board members,” Gelt wrote.
Lastly, a top-heavy approach could alienate everyday donors who feel that organizations are beholden to their affluent patrons. But research from the Center for Effective Philanthropy showed that organizations that received huge gifts from MacKenzie Scott didn’t see a drop-off in aggregate funding. In fact, some recipients leveraged her support to generate add-on funding from everyday donors.
Of course, all of this prognosticating is moot if audiences don’t return to pre-pandemic levels of in-person performances. Eyring encourages readers who have been touched by the power of theater to “see a show, subscribe or become a member at your favorite theaters, and if you can donate to their vital work. Our theaters are resilient, but the compounding crises we’re facing are severe, and we need theater people everywhere to show their support.”
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