NEA Reports Nonprofit Theaters Holding On, but Economic Downturn May Affect Revenue
Monday, December 15, 2008
Nonprofit theaters experienced robust growth and "general financial stability" from 1990 to 2005, even as audiences for nonmusical productions were declining, according to a report from the National Endowment for the Arts. However, the study, which is being released today, does not reflect the current economic downturn, which has resulted in staff cuts and closed doors for some theater companies.
"All America's a Stage," a survey of 2,000 theaters compiled from IRS data and other sources, found that the number of nonprofit theaters doubled from 1990 to 2005, and that they held steady financially.
The number of theaters with substantial budgets increased over that period as well, with 1,982 theaters reporting annual budgets of at least $75,000 in 2005, compared with 991 theaters in 1990. And their physical assets, from land to equipment, grew in value by nearly 60 percent.
Since 2005, of course, the bottom has fallen out of much of the economy, and the arts are almost always the first to feel the pinch when endowments dwindle and school budgets are cut.
"Theaters are very sensitive to these downturns," said Sunil Iyengar, the NEA's research director.
In late October the Milwaukee Shakespeare Company closed, citing the loss of financial support from the Argosy Foundation, which had provided 75 percent of its $1.4 million annual budget. Last month New York's Public Theater announced it was postponing a major play by John Guare because of a loss of funding. And a few days ago, Charleston Stage in South Carolina cut staff and salaries, citing a 43 percent decline in donations from individuals and businesses.
It's not just the nonprofits that are cutting back. Broadway, too, is singing the blues, with the announced closings of several musicals, the most expensive productions to mount.
"It is too soon to say what the effects of the current economic crisis will be," said Bill O'Brien, the NEA's theater director. "These challenges at times force some hard decisions that make the administrative side as lean as they could be."
Nonprofit theaters range from community groups to powerhouses such as Washington's Arena Stage. Unlike most commercial theaters, they turn their revenue back into productions, education and outreach programs for schools and underserved populations. "They are designed to have a civic benefit," said O'Brien, former managing director of Deaf West Theatre in Los Angeles.
By looking at past troubled times, the NEA report foreshadows what could happen now.
Following the 2001 recession, revenue from ticket sales and contributions dropped nearly 12 percent the next year and continued to slowly decline through 2005, when the reporting period ends. Slightly more than half of nonprofit theater revenue came from earned income in 2005, yet that portion of the budget fell 13 percent between 1990 and 2005, with donations picking up more of the tab.
Iyengar said theaters have shown a steady resilience in past recessions: "It's encouraging with the way they managed those downturns. They held on to their fixed assets [buildings] and really managed to increase their contributed income, much more than their earned income. We take some encouragement that they have emerged with balanced books and a diverse source of income."
In addition to IRS information, the study used data from the Theatre Communications Group, the U.S. Census Bureau, the Urban Institute and an NEA public participation survey. Iyengar said the survey will be a model for future microscopic looks at segments of the arts community.
In examining the Washington-Baltimore area, the NEA survey found the same burgeoning theater scene it found nationally. With 56 nonprofit theaters locally, the area placed fifth in the country, after New York, Los Angeles, San Francisco and Chicago. The District had 2.4 theaters per 100,000 people -- tops in the nation.
One interesting nugget in the report: Audiences at all theaters, nonprofit or otherwise, increasingly prefer musicals to spoken-word productions. The survey found that the number of adults attending nonmusical theater dropped from 25 million in 1992 to 21 million in 2005, while the number grew from 32 million to 37 million over the same period for musicals.
This mixed picture emerged at a time when the NEA was directing more money into theater projects. In 2003 it started Shakespeare in American Communities, which stages professional productions in underserved communities. Touring musicals were supported by the American Masterpieces initiative. Along with the Theater Communications Group, the NEA has a career enhancement program for directors and designers, and recently it started the NEA New Play Development Program, administered by Arena Stage.