Economy has nonprofits fearing donor dearth
With a global economy in turmoil, it’s harder than ever to make a profit.
And things are equally challenging for a not-for-profit.
Legit nonprofits around the country are facing high anxiety prompted by the recent weeks of fiscal turbulence. From Lincoln Center Theater in Gotham to Center Theater Group in Los Angeles, such orgs are vulnerable on two fronts: Worries of potential slips in consumer spending are compounded by a heavy reliance on donations from both corporations and individuals — and both seem less likely to feel generous in the coming months.
Nonprofits in general have put on a brave face, expressing confidence in subscriber and donor bases. However, box office varies from theater to theater, remaining steady at some but trending downward at others.
Many are keeping a tight rein on budgets, augmenting fund-raising tactics and introducing new aud development efforts.
Those in the nonprofit world agree that mainstage programming and the preservation of an org’s mission remain paramount — but many are cautiously starting to look at what other areas might need to be scaled back.
“We’re not at the moment looking to do anything drastic,” says Roundabout managing director Harold Wolpert. “Everyone is rightfully concerned, and it’s very difficult not to react out of fear. But all of us are trying to take a long view.”
For now, declining ticket sales are not a major worry for most, but they’re still a concern.
There are reports of strong box office from Chicago’s Steppenwolf, the La Jolla Playhouse near San Diego and from D.C.-area companies. But Denver Center Theater Company has noted a 5%-10% softening of subscriptions and ticket sales, and at CTG in L.A., “9 to 5” and “The House of Blue Leaves” finished slightly behind projected goals. Ditto the pre-Broadway tryout of “Vanities” at Pasadena Playhouse.
As for the donor side, contributed income makes up different percentages of the budget at different nonprofits. But it’s a sizable chunk of revenue for all of them, which is why shake-ups for companies with big bucks — not to mention the big earners who work for them — can spell trouble for the legit orgs that annually ask for support.
Gotham nonprofits could prove most vulnerable to the meltdown of financial markets, since so many economic power players are based in the city and tied to area theaters, either as corporate donors or individuals who moonlight as theater company board members.
At Off Broadway’s Public Theater, for instance, the 40-member board includes people from both artistic and financial communities, including former Bear Stearns co-CEO Warren Spector as its chairman.
“There’s more pressure on contributed income here at the Public — it’s 70% of the budget, so nearly $14 million,” says Public exec director Andrew Hamingson. “And certainly because of Shakespeare in the Park, we’re dealing with more corporate money.”
On that score, the Public is in better shape than most. Because its fiscal year ends in August, the theater has already secured much of its funding, including a commitment from Bank of America to bankroll Shakespeare in the Park through next year.
Still, the rest of the country is not immune to the economic fallout.
Take the Denver Center Theater Company, for which Wells Fargo and Wachovia banks were two separate corporate donors — until the failure of Wachovia prompted its hasty purchase by Wells. Now, in the estimation of DCTC a.d. Kent Thompson, the single donation from Wells looks likely to fall short of the coin that would have come from the combined total of the two separate donations.
In the northwest, most corporations have track records as vigorous supporters of the arts. But in Seattle, theater companies are jittery over an onslaught of corporate difficulties in the area: Washington Mutual Bank collapsed in September, Safeco Insurance was sold to a Boston-based firm earlier this year, Alaska Airlines and Weyerhaeuser are cutting jobs and Boeing, long the engine of the local economy, is coming off a damaging machinists strike that lasted more than 50 days.
In D.C., both Fannie Mae and Freddie Mac used to contribute some $47 million annually to philanthropic orgs like nonprofits. But although the two companies once maintained strong arts portfolios, they now support mostly housing-related causes.
Kennedy Center VP of development Marie Mattson says a smattering of corporate and individual donors were forced to reduce their support at this year’s gala. As a result, the center will work aggressively to expand its contributor base.
Some theaters have revenue from corporations all lined up but anticipate dips from individuals.
“Corporate money is mostly locked in for the year,” says David Hawkanson, exec director of Chi’s Steppenwolf. “Where we’ll likely see softness is in individual contributions — smaller-size gifts and special event contributions.”
Plus, theaters requesting coin from individuals now must take extra care not to approach potential donors at an indelicate time.
“A guy with $700 million is now worth $300 million. Is that going to impact the $25,000 he gives the Geffen? We don’t know yet,” says Geffen Playhouse producing director Gilbert Cates.
“If someone happened to have lost half a million dollars last week, you might not want to call them for a $5,000 donation right away,” adds Neil Pepe, a.d. of Off Broadway’s Atlantic Theater.
To prep for long-term economic hardship, some orgs are making cuts. Seattle’s Intiman Theater is freezing some open positions, and Goodspeed Musicals is nixing touring ambitions for the coming year.
Oregon Shakespeare Festival cut its $26.5 million 2009 budget by $1 million, citing anticipated shortfalls from lower investment returns and under-performing ticket sales.
At the same time, some orgs are working to boost auds, either by adding more Pay What You Can nights (at La Jolla Playhouse) or by initiating an “Entertainment Stimulus Package” offering a higher number of lower-priced ducats (at Center Theater Group).
There are also, of course, capital campaigns to be reconsidered. In Gotham alone, nonprofit ambitions include the leasing of a new Broadway theater at the Roundabout, the purchase of a Rialto space for Off Broadway’s Second Stage and a move from one midtown space to another for the Signature Theater.
For now, nonprofits are proceeding with caution.
“We are considering asking our long-term supporters to make a pledge earlier than usual, just to help, for planning purposes,” says Jeffory Lawson, currently in development at the Roundabout and moving soon to take up the managing director post at the Atlantic.
“We’re testing the waters with our donors right now who have not yet made a commitment,” echoes Michael Stotts, managing director of Hartford Stage, which is expected to begin a $20 million expansion and renovation campaign in January. “We’ll have a better idea in a month of what the impact will be on the campaign.”
Although nonprofits are at varying stages in their processes of fiscal re-evaluation, all argue that maintaining mainstage product and remaining true to an org’s mission are sacrosanct.
“What we won’t do is cut back on the quality of the shows,” says CTG a.d. Michael Ritchie.
“I think it’s the time that we have to capture the imaginations of the funding community with good programming,” adds James Houghton, a.d. of the Signature, currently benefiting from a recent push to move large-scale donors to multiyear giving instead of standard annual renewals.
All agree that hard times are ahead, and some speculate that midsize organizations have the most to fear, being neither small enough to get by on nothing nor big enough to count on heavy-hitting donations.
On the other hand, nonprofit vets note, times are always hard.
“There are always sleepless nights,” says the Roundabout’s Wolpert. “Now there are just more of them.”
(Sam Thielman in New York, Paul Harris in Washington, Frank Rizzo in New Haven, Bob Verini in Hollywood, Lynn Jacobson in Seattle and
Steven Oxman in Chicago contributed to this report.)