Nonprofit theaters squeezed by higher costs, lower subsidies

When the curtain rose on America's nonprofit professional theater movement some 20 years ago, it was with a flurry of fresh artistic goals and fistfuls of public funding. Today, however, those same theaters are facing a different decade. Beset by flagging federal and foundation subsidies as well as continuously rising operating expenses, the nation's not-for-profit theaters are experiencing challenges to both their artistic and economic foundations. As the de facto source for nearly all the major American dramas and many of the musicals during the past decade, nonprofit theater's changing fortunes carry implications for theater in general.

Underscoring the situation is the latest study from the Theatre Communications Group (TCG), a New York-based umbrella organization for noncommercial theater. According to the 1985 fiscal report, 217 nonprofit theaters across the country experienced a collective deficit of $4.5 million -- the fourth deficit in as many years.

According to the study released this month, the continuing shift in federal and philanthropic trends and escalating operating expenses continues to widen the gap between theaters' income and costs. Despite record-setting attendance and box-office income this year, more than half of the nation's nonprofit theaters ended their 1984-85 seasons in the red. Among those major Off-Broadway and regional theaters, the collective deficit was more than double that of the previous year.

``It is a real watershed,'' says William P. Wingate, executive managing director of Los Angeles's Center Theatre Group/Mark Taper Forum. ``The fear is that the young artist will be cut off and many of our important theaters will fall by the wayside.''

``The situation is deteriorating,'' says Roche Schulfer, producer of Chicago's Goodman Theatre. ``In 10 years, we will be wondering what happened to the vitality of the American theater movement.''

Since 1980, nearly 30 nonprofit theaters have ceased operation, while others have scaled back productions and seasons in a variety of belt-tightening moves. The subsequent production of fewer, smaller, and ``safer'' works by those theaters, originally conceived as a commercial alternative, continues to raise questions about the so-called ``artistic deficit.''

``Theater has to be able to continually reinvent itself in order to survive,'' cautions Mr. Wingate. ``If it doesn't, it leads to mediocritization and trivialization of theater, and then why should we exist?''

Such compromises, however, appear mandatory at least for the immediate future. The first round of Gramm-Rudman cutbacks, including an initial 4.3 percent reduction in the National Endowment for the Arts (NEA) budget, and fluctuations in the nation's corporate structure, particularly within the energy industries, indicate continued competition among theaters for available federal and charitable dollars.

``Almost all the nonprofit theaters have had to take cuts in their NEA subsidies,'' says Wingate, who is also chairman of the NEA's theater panel. ``At the same time we're losing some of our best corporate-giving models,'' including Exxon, Mobil, and Arco, according to Wingate.

With the continued decline in the original sources of contributed income to nonprofit theaters, managing directors are beefing up fund-raising techniques in increasing pursuit of individual and corporate donations -- the two leading sources of unearned income for nonprofit theaters today.

Directors say, however, that socio-economic changes within these two areas are causing theaters to ``run twice as hard to stay in the same place,'' according to the Goodman's Schulfer. ``You have to raise your overhead to raise the money.'' Earlier this year, the Goodman saw the cutbacks in one of its largest single corporate contributors when Beatrice Foods became a privately held company following a leveraged buyout.

One increasingly popular alternative to such fiscal vagaries is the endowment fund. While many established performing arts groups, including symphony and opera companies, have long maintained such funds, the relatively young nonprofit theater movement is only beginning to explore endowment possibilities.

``We need to get some continuity in our cash flow,'' says David Hawkanson, managing director of the Hartford Stage Company. ``Planning an endowment is absolutely essential.''

Although only 1 percent of theaters' expenses was covered by their own endowment funds this year, according to the survey, growing numbers of theaters are building funds that currently range up to nearly $6 million. Such efforts to boost unearned income, however, do little to relieve theaters' heavy dependence upon their box office -- a situation directors describe as increasingly onerous. ``We originally boasted about our high percentage of earned income,'' says Hartford's Hawkanson. ``But right now it's killing us. The terrific jump in ticket prices in the past five years is affecting the mix of our audience.''

According to TCG, since 1980, average ticket prices at nonprofit theaters have gone up more than 65 percent, while total attendance has risen only 7 percent.

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