Arts Groups Fret the Woes Of Big Donors

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Wall Street in Turmoil

Global stocks have experienced wild fluctuations this week in the wake of the U.S. government's seizure of insurance giant American International Group, the failure of Lehman Brothers, the disappearance of Merrill Lynch as an independent company and reports the U.S. government will set up a government entity to take on bad debts from financial institutions.

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At the off-Broadway Classic Stage Company, executive director Jessica Jenen said that if the downturn continues, she's more likely to charge $49 per seat instead of $75. And if less money ultimately comes through the box office, she's not sure the shortfall will be made up through donors.

"I don't want to indicate that we're hurting," she said. "We've doubled our budget in the last three years. But we have a fundraising spring gala every year where people buy tables for $10,000. Are those people still going to be there?"

What you're likely to see as well is a greater emphasis than ever on tapping into diverse sources of income. The idea, lifted straight from Wall Street, isn't new to nonprofits, and it's one reason you don't hear full-on freakouts this week, even from groups that have been favorites of the companies behind the terrible news. Arena Stage received $1 million from both Fannie Mae and Freddie Mac in 2006, and it's been given all but $20,000 of a $100,000 grant from Lehman Brothers. ("I think it's gone," Molly Smith, Arena's artistic director, said of the remaining $20,000.) But only 2 percent to 3 percent of the company's annual $14 million budget comes from corporations.

Fannie Mae gave the Studio Theatre $100,000 when it was expanding along 14th Street NW, and in 2006 the company kicked in about $45,000 for operating expenses. But overall, corporate support at Studio is about 5 percent.

"Every year, a few new corporations sign on," said Morey Epstein, the theater's executive director of institutional development, "and some that have been supportive drop off. It is fairly steady."

Anyone in need of reasons for optimism can study the past.

"If you look at the history of philanthropy since the '50s, it has dropped about 1 percent on average in a recession," said Reynold Levy, the president of Lincoln Center and author of "Yours for the Asking: An Indispensable Guide to Fundraising and Management." "Whenever there's a recession, or the closure of a given firm, the natural tendency is to extrapolate and predict a very strong downturn. But that has not been the case."

And just because corporations might pull away from the arts in straitened times doesn't mean arts lovers will. It's an article of faith among theater honchos that when the going gets depressing, the depressed go to the theater. Bernard Gersten, who runs the Lincoln Center Theater in New York, recalls big crowds soon after the stock market wreck of 1987 -- for "Anything Goes," a musical set during the Depression. Today, he expects the house to remain packed for "South Pacific," which has been earning $900,000 a week for months.

"The sky hasn't fallen," Gersten said. "It's just the humidity has increased."