After eighteen months of the most tumultuous time in Company One Theatre’s 21-year history as a social justice and arts organization, we have learned that the idealized nonprofit arts business model that encourages an over reliance on earned revenue is both unreliable and inequitable.
As evidenced in the major findings within CEP’s most recent report, Persevering Through Crisis: The State of Nonprofits, on average, nonprofit organizations focused on theatre and performing arts saw significant negative impact this past year. We feel deep resonance with one nonprofit leader highlighted in the report as saying, “Our earned revenue is down by more than 50%. Audiences are not able to attend our live performances. We lack confidence in what lies ahead.”
The art of theatre is the art of collective storytelling. It is essentially the collaboration of a large group of people over a sustained period of time, refining a variety of production elements to bring to life an entertaining and impactful narrative for a select live audience. Put another way, it’s a resource intensive art form, both from a people and materials perspective.
A “successful” theatrical model is one where the earned income (subscriptions, ticket sales, tuition, etc.) comprises 50% or more of the annual budget. This usually results in hefty single ticket prices and expensive subscriptions; according to the NY Times, the average price of a ticket to a Broadway show in 2019 was $124. These costs are one of the primary reasons that American theater audiences skew predominantly older, wealthier, and whiter. As this report from SMU DataArts identifies, “The more seats these performing arts organizations filled with subscribers, the lower their levels of audience racial and income representativeness.”
In addition to the problem inherent with communities of color not being served, the reliance on this earned income model also means that when crisis akin to the pandemic occurs, as CEP’s report states, “Leaders of arts and culture organizations rate the impact of COVID-19 on their organizations more negatively than leaders of other organizations.” Since the American theater’s business model was not equitable prior to the pandemic – and it nearly broke entirely over the past year – we must ask: can the performing arts sector imagine a new business model moving forward? Will that model be both sustainable and equitable?
Company One Theatre’s mission is to build community at the intersection of art and social change. Our multi-racial leadership team and our racially diverse staff and board, largely focus on serving Boston’s marginalized communities by recentering the people who generate, create, and tell our stories for our stages and our audiences. Furthermore, in a city like Boston where the substantial wealth gap amongst racial lines is well known and publicized, we tend to think a lot about financial accessibility in regards to our productions. Our ticket prices are low (averaging $20) and two-thirds of the shows in our season are “pay-what-you-want” (note: “want” and not “can”) with a $0 minimum. This, among a slew of other equity-driven audience and community engagement initiatives, has resulted in an audience demographic that is 40% BIPOC (compared to the rest of Boston’s 11% – Arts Boston Audience Initiative) and 55% under the age of 35 (compared to the rest of Boston’s 25%). These measures have also resulted in earned income making up 20% of our overall budget, a model that is generally not considered “successful” or sustainable.
However, in line with the findings of the CEP report, we found that during the pandemic, we fared better than our colleagues who were reliant on earned income. Government relief funding certainly aided our standing. To reaffirm what one leader says in the report, “The effects of the pandemic would have been even worse were it not for the very helpful forgivable PPP loan.” Between city and state relief funding and forgiveness loans, this is the most robust and concentrated government support our organization has ever received.
In support of another example of CEP findings, we cannot overstate the value and impact of foundations offering flexibility with their grantees in times of crisis. Several of our foundation partners allowed program grants to be used as general operating support, showing not just an understanding of the challenges we were facing, but also trust in our decision making and fiscal responsibility. As others reported, our individual donors also helped to reaffirm our organizational value by investing even more deeply. Thanks to these contributing factors, and because we were contributed-income-reliant at the start of the pandemic, we were able to do the following:
- Zero staff layoff or furloughs. (In fact, we were able to expand and hire positions.)
- Pay half or full stipends to all artists whose projects had been cancelled
- Pivot reasonably quickly to a robust offering of digital programming
To be fair, one of the reasons we were able to see this level of organizational health in a challenging time was because Company One Theatre still relies on a percentage of sweat equity from artists and staff. Though everyone is paid, no one is paid enough. As we grow and look to the seasons ahead, our continued top priority is to bridge the gap between a payroll subsidized in part by sweat equity and one that is a true full cost model.
Even though the increase in our revenue was driven in part through substantial relief funding, it has made us reflect on how much easier it is to provide our services to our communities when government funding and philanthropy underwrites general operating expenses. This also has resulted in our leadership’s ability to prioritize people (and not programs) during the mentally and physically exhausting time of a pandemic and heightened awareness of racial injustice. We are proud to have been able to pay-forward the flexibility that foundations bestowed upon us to our staff and artists. As noted by many other leaders within Persevering Through Crisis, our leadership team intentionally took the time to check in with individual staff members and to offer support by way of HR support, funds, flexibility, time off, morale gifts, and more. This external support actually opened up space and energy for our leadership team to focus on the “mental and emotional wellbeing” of our staff.
As we consider the impact of relief funding on our operations, we are left asking ourselves similar questions as our nonprofit colleagues did in the CEP report; “There is still so much uncertainty about the rest of 2021 and perhaps even into 2022.” Our uncertainty extends through 2025. As we forecast in a 3-year time frame, we are looking at projected operating deficits that are ranging anywhere from 25% to 30% of our overall budget. At present, we are not certain what replaces the relief funding we saw this past year or the “anti-racism” funding we finally received for work we have been doing for the past two decades. We are left asking ourselves: what are we going back to and what is the commitment we can make to our communities moving forward?
Tonya Allen of the McKnight Foundation, Kathleen Enright of the Council on Foundations, and Hilary Pennington of the Ford Foundation have argued that foundations should build on and sustain the changes they made in 2020, saying, “Now is not the time for us to go backward. Let’s use this moment of converging crises to impose excellence upon ourselves for the long-term benefit of philanthropy, our own institutions, nonprofits, and the communities that need us more than ever.”
At Company One Theatre, we are concerned that going “back to normal” will mean we will once again feel the pressures imposed by an earned income model, which invariably results in an organization serving white and/or wealthy theater-going audiences, which is antithetical to our mission. In the end, we’re left with more crucial questions: are we going back to business as usual, or can we continue to invest in necessary sector-wide conversations? Will we be able to sustain the positive gains we made in the face of a global pandemic and a tipping point in our country’s relationship with racial justice in 2020?