Scene: The American nonprofit theatre. Period: Sept. 1, 1999 through Aug. 31, 2000. Players: The artists, audiences and staffs of more than 250 nonprofit theatres. The curtain’s up and so are attendance, net assets, contributions, actor workweeks, endowments and overall investment in art and artists. Surely, this drama will have a happy ending. Right?
A quick plot summary of America’s nonprofit theatres reveals that last year’s strong U. S. economy helped them achieve healthy attendance, fundraising and balance sheets. They played more than 66,000 performances of 3,200 productions before an audience of nearly 22 million people, contributed more than $700 million to the U.S. economy and employed nearly 41,000 people. Like most great dramas, however, their story is more complex, intriguing and unpredictable, depending on how deeply you immerse yourself.
That’s the quick dramaturgy on Theatre Facts 2000, TCG’s annual survey and report on the fiscal health of the American nonprofit theatre, which was issued May 21 and is now available both online (www.tcg.org/tools/facts) and via mail order. Authored again this year by Duke University professor Zannie Giraud Voss and North Carolina State University professor Glenn B. Voss, with contributions from TCG’s Christopher Shuff and Dan Melia, and based on survey responses from 262 nonprofit theatres, Theatre Facts 2000 attempts both to examine the current state of the art and to provide some recent historical perspective on theatres’ fiscal health, attendance and performance trends, with the goal of understanding how the field is evolving. The final 20-page document is packed with facts, analysis, charts and data, much of which can be intimidating to theatre lovers and artists, artisans and administrators not daily immersed in the world of balance sheets or statistical interpretation. But the report provides such insight into the overall soundness of the American nonprofit theatre that it’s worth exercising your left brain for a bit to take it all in.
First, get the language down. That way you won’t be too confused when you learn how FASB (the Financial Accounting Standards Board) made an important change in 1997 in how nonprofits calculate their CUNA (that’s Changes in Unrestricted Net Assets). The gist of this financial alphabet soup is that CUNA tells you whether a theatre is operating in the black or the red. Before 1997, CUNA basically equaled a theatre’s net surplus or deficit in annual operating expenses. Then the folks at FASB changed the rules so that CUNA now takes into account all of a theatre’s net assets, not just annual operating funds. That includes plant funds, board-designated funds and endowment campaign funds. So if a theatre had a weak year in box office receipts versus its production expenses but was conducting a successful capital campaign or seeing its stock holdings rise in the super-heated economy (remember, this was 2000), its CUNA might be positive despite an overall dip in its annual income versus expenses. It’s a good way to look beyond a single year’s budget and measure the larger, ongoing financial health of an institution.
The other detail that’s useful to remember as you read Theatre Facts 2000 is how the report is organized. There are three major ways the data is sliced and examined, and within those major categories there are subsets that give further detail. In “The Survey Universe,” the authors provide an overall snapshot of the nonprofit theatre circa 2000 by aggregating the information from all 262 respondent theatres, 230 of which are TCG members. This is the second straight year the report has included non-TCG theatres, many of which were recruited to participate with the help of the Association of Performing Arts Service Organizations, a national network of nonprofit regional service organizations. This is also the second year the authors included data from the growing number of nonprofit theatres with annual budgets under $250,000—which means the report can really give a broader view of the field, examining organizations from that relatively tiny budget range all the way up through those with annual operating expenses topping $10 million.
To put the 2000 data within some recent historical context, the authors next analyze the responses provided by 83 “Trend Theatres” over the last four survey years (that is, since FASB made the CUNA changes). This section helps establish some sense of how the field has changed from 1997 to 2000. There’s also a subset of 65 “Trend II Theatres” that have been reporting for a six-year period on items not affected by FASB. That information is included to help establish an even longer-term view on items where that’s possible.
Finally, Theatre Facts 2000 takes detailed information from a group of “Profiled Theatres” and uses it to compare how theatres of different budgets and staff sizes perform differently when it comes to finances and attendance. The full 12-page survey that qualifies a theatre for the Theatre Facts 2000 “Profiled” section was completed by 159 organizations, four more than in 1999.
Exploring the Universe
The Survey Universe in Theatre Facts 2000 is the big-picture view of how nonprofit theatre was faring during the survey period. A total of 262 theatres are represented, including 31 with annual operating budgets under $250,000. Different theatres participate in the survey year-to-year, so this section is about the field as a whole at a specific point in time and is not for trend-watching (that comes later).
In the 2000 survey year, nonprofit theatres in the Survey Universe experienced an unprecedented CUNA equaling 11.7 percent of total expenses. That is, they took in nearly 12 percent more (in all unrestricted net assets) than they paid out. While theatres with annual budgets under a quarter million dollars had a CUNA of about 7.9 percent, the overall 2000 CUNA figure was more than double the 1999 total of 5.3 percent.
Fewer theatres, 31 percent, faced operating deficits in 2000 than in 1999 or other recent years. That’s seven percent better than in 1999, but it still means more than 80 theatres were operating at a loss. Still, overall, even theatres that had trouble finishing the year in the black weren’t as bad off as they had been in the past; only two percent of theatres had negative CUNA of 20 percent or more, while nearly a quarter of the Survey Universe theatres had a positive CUNA of 10 percent or more. Survey Universe theatres’ CUNA ranged from a deficit of $2.1 million (which seems huge until you realize that the worst CUNA of 1999 was negative $7.6 million) to a surplus of $13.5 million.
The only theatres that, as a group based on their budget size, had a negative CUNA were those that Theatre Facts 2000 classifies as Group 2, with annual operating budgets of $500,000 to $999,000. The Group 2 theatres finished with a collective negative CUNA of 0.3 percent of budget, while both larger and smaller budget theatres finished in the black. What is it about theatres this size that perhaps makes them more vulnerable to financial fragility?
“We have expenses and liabilities smaller theatres don’t need,” says Jeffrey Herrmann, producing director at Alaska’s Perseverance Theatre, which has an annual operating budget of around $700,000, “but not really enough staff to bring in a lot of income.” Herrmann notes that theatres hovering just below the $1-million budget range often face “a weird double standard. We’re expected to perform at a certain level, but we can’t charge high ticket prices because we also have to compete for customers with the amateur theatres in our market.” Perseverance relies on an unusually high percentage of contributed income, 70 percent, to make its budget, and most of those gifts come from foundations far from tiny Juneau, population 30,000, where the next nearest audience is a boat or plane ride distant.
Like Perseverance, the Bloomsburg Theatre Ensemble (BTE) can’t rely on a huge number of wealthy local donors or neighborhood corporate headquarters to fund its work and help grow it into a larger budget category. Located in a tiny town (population 12,000) in rural Pennsylvania, BTE has a subscriber base of about 1,000 and an annual operating budget of just over $600,000. Although long-time subscribers to the 23-year-old theatre are extremely loyal, says managing director Jon White-Spunner, “there are people in town who still don’t know what BTE is. Our number one challenge is audience development.” While White-Spunner’s bigger-budget wish list includes a black box theatre, he admits that right now he just wishes BTE could afford more money to market to potential new audiences, “but where does it come from?” he laments. “We’re in a corporate black hole, and there aren’t too many deep pockets to tap into here.”
Both White-Spunner and Herrmann use the word “plateau” to describe how it feels to run a theatre that aspires to produce artistically high quality work on a budget under a million dollars. But Herrmann, in particular, feels that Perseverance is poised to explode into the next level, and that kind of optimism and ambition is one of the things he considers an advantage to being a smaller theatre.
“I feel like we’re like a bantam-weight boxer,” he says. “We’re a little more nimble. We’re under the radar screen. We’re young, we’re scrappy and we feel we have this mission: To get out of the quicksand and get to the next level.” If indeed theatres like Perseverance and Bloomsburg Theatre Ensemble can get to the next level—at least in Theatre Facts terms—they’ll find that the bottom line improves dramatically. Group 3 theatres, with their budgets of $1 million to $3 million annually, had a positive CUNA of almost 10 percent in 2000.
Lest anyone worry amid all this focus on finance in the technology- and marketing-driven economy at the dawn of the new millennium, nonprofit theatres are still first and foremost about art. Nearly 85 percent of those employed in nonprofit theatres are either artists (54 percent) or production staff (30 percent). Theatres employed an average of 72 paid actors during the 2000 season (up significantly in recent years), and artistic payroll remains theatres’ greatest allocation of resources.
Theatres continue to receive about 59 percent of their income from earned sources (ticket sales, capital gains, etc.) and 41 percent from contributions. That breakdown has held steady for several years, although again the under-$250,000 budget theatres differ, garnering only 42 percent earned versus 58 percent contributed income.
Amid the Survey Universe’s overall positive financial news, “Time will tell whether the improved fiscal health of theatres in 2000 was the beginning of a long trend,” caution the authors, “or whether it was an anomaly driven by an unusually strong economy.”
Tracking the Trends
There are 83 theatres that have participated in TCG’s annual nonprofit theatre survey every year since the FASB changes of 1997, 65 of which have reported in steadily since 1995. In order to examine how the field has changed since the study began, the authors compared historical responses from these “Trend Theatres” over time. Wherever there is apples-to-apples information unaffected by FASB’s rule changes, the trends cover the full six-year period; in other categories, just four years of comparable data is available. Together, though, information from these trend theatres presents the best barometer of changes in the ways theatres earn income, allocate expenses, raise contributions and attract audiences. It is the section of Theatre Facts 2000 from which the most interesting and valuable conclusions bubble up from the raw data, including:
- Total attendance and total number of performances reached their highest level in six years in 2000.
- Average single-ticket income exceeded average subscription income in 2000 for the first time in study history.
- Contributed income soared in 2000, and its growth has outpaced inflation by nearly 36 percent from 1997 to 2000. The increase has been driven by surges in both state and local arts funding and the support of individual donors.
Here’s a bit more detail in each of those three trend areas:
The Steadily Growing Audience
The TCG Fiscal Survey has been questioning theatres about their attendance and performances for many years and questioning them on their market information—including ticket prices and subscription renewal rates—since 1997. So there now is enough apples-to-apples information about these critical subjects for Theatre Facts 2000 to provide a comprehensive snapshot of the last four years.
Aggregate attendance at the 65 “Trend II” Theatres was 8,490,794 in 2000, an increase of about .5 percent over 1999 but up nearly five percent since 1995. These aggregate figures include attendance at both resident productions and touring shows, although tour attendance is down significantly—about 8.4 percent—since 1995. The total number of touring performances actually decreased 14.3 percent from 1995 to 2000, however, so the 8.4 percent touring audience drop seems to say that tours are playing fewer performances to fuller houses.
A great contributor to the Trend II Theatres’ attendance upswing has been the increase in staged readings and workshops. The number of these public work-in-progress performances increased 93.3 percent among the Trend II Theatres from 1995 through 2000, and the audience for them grew 73.6 percent over that time. There’s also been strong growth in special productions (holiday chestnuts, one-time blockbusters, etc.), which are up 27 percent in the last five years. Meanwhile, despite a 65.4 percent upswing in booked-in events during 1999?2000, that type of event has declined more than 12 percent over the five-year period.
Single Tickets vs. Subscriptions
One significant attendance change that the authors of Theatre Facts 2000 feel bears watching is the shifting balance between income earned from single tickets and income from subscriptions. 2000 was the first year that average single-ticket income exceeded average subscription income among the Theatre Facts Trend Theatres. Single-ticket income has grown twice as much as subscription income over the last four years—24.5 percent versus 12 percent (see sidebar).
The difference is not about pricing. Over the 1999 through 2000 period, subscription ticket prices rose six percent faster than inflation and single-ticket prices rose four percent faster than inflation. Thus weighted, it would seem to follow that subscriptions would continue to contribute more to the bottom line than single tickets. Yet that has become less true over the last four years and was completely reversed by 2000.
Contributed Funding Sources
The growth in total contributed income from 1997 to 2000 has been very strong—up nearly 36 percent, a growth rate that far outpaces not only inflation but also expense growth (roughly 22 percent). That’s why the aggregate CUNA of the Trend Theatres is up 11.6 percent. Simply put, increased giving has been the key reason theatres are in relatively sound financial health.
The most dramatic rise in contributed income comes from city and county governments, which now give 140 percent more to the 83 Trend Theatres than they did four years ago. Some of that funding may be money that’s shifted into municipal coffers from federal arts funding, which is down 11.3 percent since 1997.
Individual giving, consistently the greatest source of contributed income, has also gained ground over the last four years, up nearly 50 percent in that period. This growth is unquestionably fueled in large part by the generosity and leadership of theatres’ boards of directors. Average trustee income over the trend period rose 77 percent in inflation-adjusted numbers, and the average number of trustees making a donation each year rose from 29 in 1997 to 52 in 2000. Interestingly, the significant increase in the number of trustee donors brought the 2000 average trustee gift down to $5,374 from a 1999 peak of $7,076, despite the fact that in 2000 aggregate trustee giving was $23 million, as compared to $17.9 million in 1999 and $12.6 million in 1997. Perhaps inspired by the strong community vision these trustees have expressed, other individual donors have also answered theatres’ calls to action, with individual giving outpacing inflation by 37 percent over the trend period.
Corporate and foundation giving also remain strong and have increased more quickly than inflation over the last four years. Corporation giving grew nearly 27 percent over the study period, and foundation gifts were up more than 42 percent.
A Wealth of Information
Theatre Facts 2000 is a treasure trove of information about the fiscal health of America’s nonprofit theatres, much more so than could be summarized fairly here. Whole articles could easily be devoted to any of the myriad other revealing facts the report contains: What does it mean that production income (that is, income from co-productions and enhancement money from commercial producers) is up a stunning 120.5 percent in the last four years? How and when did rental income become such a significant part of theatres’ operating income? What are other ways theatres are thinking creatively about income generation, without compromising their artistic missions?
Some of these issues are addressed in the accompanying sidebars. For others, a thorough and attentive reading of Theatre Facts 2000 is certainly a must for serious devotees of the American nonprofit theatre.
Linda Geeson is a Baltimore writer and former director of communications at Center Stage.