Nonprofit theaters: bigger audiences but even bigger deficits

It's tough times in American theater. While Broadway weathers one of the worst seasons in recent memory -- only one-third of the 21 new shows opening this season are still running -- its noncommercial counterpart, including many Off Broadway and regional theaters, is staggering under its own fiscal albatross. Buffeted by flagging federal subsidies and rising production costs, America's nonprofit theaters are facing escalating challenges not only to their creative artistry but also their survival. As the ad hoc source for virtually all of the major American dramas and most of the musicals during the past decade, the fortunes of nonprofit theater carry implications for theater as a whole.

Underscoring the situation is the latest report from Theatre Communications Group (TCG), a New York-based umbrella group for noncommercial theaters. According to the 1984 fiscal study, the 230 nonprofit theaters across the country compiled nearly a $4 million collective deficit -- the third deficit in three years.

According to the study, shifting philanthropic trends, declining federal endowments, and continually escalating costs are widening the gap between income and expenses for nonprofit theaters. While attendance, box office revenues, and corporate and individual gifts were up over previous years, such gains were more than offset by increases in operating expenses and flagging subsidies. Operating deficits among nonprofit theaters doubled last year -- more than 50 percent ended the year in the red.

``Our ranks of donors continue to grow, but we still have a deficit,'' says Carolyn Stolpter, development director of Playwrights Horizon, an Off Broadway theater that has developed such hits as ``Sister Mary Ignatius Explains It All for You'' and ``Sunday in the Park with George.'' ``That's the other part of the equation. Even though we're achieving public acclaim and the business sector is responding, . . . we're still not raising what we need.''

Of more concern, however, is the growing size of those pools of red ink, a trend that many observers say goes beyond artistic compromise. ``Lots of theaters have posted deficits in the past, but these were slight,'' says Robert Holley, TCG's director of management services and author of the report. ``Now we're seeing an increasing pattern of serious deficits -- a quarter to three-quarters of a million dollars in one season. This creates enormous pressure.''

``The past 20 years have not really been years dedicated to artistry, but years dedicated to survival,'' said Lloyd Richards, TCG president and dean of Yale University's School of Drama, in response to the study. ``Noncommercial theater has long been taking artistic shortcuts,'' adds Mr. Holley. ``Now we're really talking about survival.''

Since 1980, 28 regional theaters have closed, including, most recently, the First All Children's Theater, in New York. Other theaters, such as the Boston Shakespeare Company, have scrapped entire seasons in the face of mounting deficits. Such changing fortunes, according to several directors, are traceable to two particular problems: the decline in federal and foundation grant-giving and the evolution of nonprofit theater itself.

According to the TCG study, federal and foundation donations have fallen to last place among major contributors to noncommercial theater. These two pioneering backers, largely responsible for the initial growth of the nonprofit theaters during the '60s and '70s, have been outstripped by corporate and individual donations, now the two leading sources of contributed income. These gains, however, are expected to be adversely affected by proposed changes in the federal tax system. Also, the 1986 budget figure for the National Endowment for the Arts -- if approved by Congress at the proposed $144.45 million -- would represent a nearly 12 percent decrease from last year's allocations.

Equally steady declines in private foundation donations, observers say, stem from competition from increasing numbers of health and social-service organizations that have also been affected by federal cutbacks. ``There is a growing social consciousness among foundations that when push comes to shove, funding arts organizations just isn't as important . . . ,'' says Holley.

For the Hartford Stage Company, changes in foundation support have meant a decline of more than 50 percent of those revenues. ``The Ford Foundation was our principal source of revenue during the 1970s,'' says managing director William Stewart. ``Now arts program funding [from foundations] is virtually nonexistent. [Foundations] are much more socially oriented now.''

``Contributors are making much more careful choices because there is so much need now,'' says Peter Donnelly, producing director of the Seattle Repertory Theatre. ``And we have to be much more cautious about what we do now, since the margin for error is so much slighter than it was even three years ago.''

Coupled with these changing fiscal fortunes is the evolving role for noncommercial theater. Although many of the nonprofits, including the Guthrie Theater in Minneapolis and the Seattle Repertory Theatre, have forged unique niches within their regional communities and earned broad public and corporate support, others have found the dual allegiances to both the audience and the art form a more difficult line to tread. The Hartford Stage Company, in trying to reach such a compromise, has seen a 40 percent decline in its subscription rate in the last three years. Theater members attribute the falloff to artistic misperceptions.

``In many cases the audience is confused about what to expect from us,'' says Hartford managing director Stewart. ``Many communities now see [nonprofit theater] as a [less expensive] substitute for commercial theater. But that is not why we came into being. We did it to raise the artistic standard. We're trying to maintain a different level of artistry, and as a result our earned income is down.'

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