Facing rising costs, theaters get into the fund-raising act

Like the rest of the American arts community, nonprofit theater is facing both good news and bad news at the cash register. A steadily improving economy with reduced inflation and increased earnings has beefed up both box-office attendance and corporate donations. But lagging government subsidies, as well as continually skyrocketing production costs, have left America's noncommercial theaters laboring under a fiscal albatross - a multimillion dollar deficit accrued for the third consecutive season.

While few of the nation's regional theaters have closed as a result - unlike the late 1970s that saw more than 20 theaters shut down during one three-year period - several have made artistic compromises in order to remain solvent. And in nearly every case, not-for-profit theaters are diverting increasing amounts of manpower and money toward fund-raising efforts simply to stay in business.

According to the 1984 Theater Communications Group (TCG) fiscal survey of 189 nonprofit theaters across the country, both box-office revenues and philanthropic support have increased over previous years. While federal funding rose roughly 10 percent, private corporate support increased nearly 26 percent.

Although the size of the average corporate gift actually declined - which forces theaters to lobby more donors - overall corporate donations are now the third leading source of contributed income after individual and foundation gifts. And in some instances, such as the Minneapolis Guthrie Theater, corporate donations to theaters have increased several hun-dredfold during the past decade. Many observers credit the boost in corporate philanthropy directly to theaters' improved fund-raising techniques.

''In the first year of the Reagan cuts, people really got scared,'' says Robert Holley, TCG director of management services. ''But they also got serious and professional about fund raising and endowment drives.''

''While many (theaters) can't afford the granddaddy (fund-raising) firms, there is a proliferation of small theaters hiring independent fund-raising consultants,'' says Peggy Powell Dean, one such fund-raiser in New York City.

According to leaders of many of the nation's regional theaters, spiraling production costs rather than federal cutbacks have been the catalyst for the closer relationship forged between corporate coffers and noncommercial theater. Between 1981 and 1983, federal arts subsidies, including National Endowment for the Arts (NEA) grants to nonprofit theaters, declined only 9 percent, while theater costs, according to TCG surveys for the period 1979-83, increased more than 60 percent. Current NEA funding levels are just above those set during the heyday of the Carter administration.

''During the past four or five years we realized the box office (revenue) wasn't going to increase as rapidly as expenses,'' says Alexander Speer, administrative director of the Actors Theater of Louisville (ATL). ''So we opened a development office and increased our corporate fund-raising efforts.''

''Fund-raising levels that had previously reached a plateau are now accelerating,'' says Grant Brownrigg, director of the National Corporate Theatre Fund, an umbrella fund-raising organization for nonprofit regional theaters. ''Theaters are trying to kick up their (non box-office) revenues.''

According to Mr. Brownrigg and other observers, regional theaters are intensifying not only their general operating fund drives, but they are initiating new ways of gaining access to corporate dollars. One of the more successful approaches has been the advent of corporate sponsorship of special projects. It's indicative of the growing trend by theaters to reach business marketing dollars in addition to those funds earmarked for charitable contributions. For businesses, project sponsorship offers a more visible return for the donation; theaters normally highlight the corporate sponsor's name on tickets, programs, and other promotional material.

Some recent corporate sponsors include the following: Citicorp, which backed a recent student theater festival at the Cleveland Playhouse; Consolidated Foods Corporation, which underwrote the musical ''Candide'' for the Goodman Theater in Chicago; and Prudential-Bache Securities, which sponsored a benefit for new construction at the Seattle Repertory Theater.

Other corporate sponors, such as the Louisville-based Humana Inc., annually bankroll a theater's special project. Humana has funded the new-play festival at the Actors Theater of Louisville, Ky., for several years. ''We couldn't do the festival without them,'' says an ATL spokesman.

Despite the particular appeal that project underwriting holds for theaters and corporations alike, some caveats have been voiced. The Guthrie Theater, for instance, limits its project underwriters to those corporations already supporting the theater's general operating fund with at least a $10,000 donation.

''It's a different motivation,'' says Henry Young, Guthrie development director. ''We can't count on (corporate) marketing dollars. One year it might be the Guthrie, the next it might be the Olympics. All (marketing decisions) are made on a case-by-case, year-by-year basis.'' Nonetheless, the Guthrie's current production of ''Twelfth Night'' is supported by Citibank, and a revival of ''Anything Goes'' will be backed by a local Minneapolis bank.

Indeed, most corporate donations to nonprofit theaters reflect geographical location rather than interest in a specific project. According to TCG, three of the most significant corporate contributors to nonprofit theater - Humana Inc., the Beatrice Foods Company, and Dayton-Hudson Corporation - supported those theaters - in cities where the companies are headquartered - Louisville, Chicago , and Minneapolis, respeca case-by-case, year-by-year basis.'' Nonetheless, the Guthrie's current production of ''Twelfth Night'' is supported by Citibank, and a revival of ''Anything Goes'' will be backed by a local Minneapolis bank.

Despite nonprofit theater's track record as one of the nation's top recipients of corporate philanthropy, some unique hurdles remain. Not only are noncommercial theaters competing with those health and social service organizations that have been more adversely affected by federal cutbacks, but some theaters are finding their artistic choices an impediment to private giving. While few artistic directors publicly admit to such pressure, other observers are outspoken. ''There's nothing inherently controversial in opera and symphony orchestras,'' says Mr. Holley of TCG, ''but with theaters, especially ones devoted to new plays, many corporations are hesitant about getting involved.''

Even when not directly confronting corporate cold feet, many theaters continue to scale down their seasons simply because of a shrinking bottom line. Actors Theater of Louisville has abbreviated not the number, but the magnitude of productions. The average cast size is now roughly 12 people per production and large, classical works are limited to one or two a year, most of which are under-written by local sponsors.

Yet Mr. Speer of ATL sees theater's flexibility as its saving grace: ''Unlike a symphony orchestra that has a set number of company members, a theater can stage a one or two person play and be much more responsive to (economic) changes. It's a little easier for us to adapt.''