Not for Profit Theatre

Roche Schulfer, with Dennis Bassett, Kevin Sweeney,
and Chris Mannelli

Roche Schulfer, Executive Director of the Goodman Theatre in Chicago, recently gave a presentation to the trustees of Geva Theatre on the economics of the performing arts and business models in the American theatre, and it was both common sense and eye opening. Most people don’t understand the difference between not-for-profit (e.g., Geva) and commercial (Broadway) theatre (let’s not get into the hybrid model of RBTL…). And until I joined Geva’s board, I was one of those. For example, it puzzled me when former Executive Director Tom Parrish bemoaned the high proportion of Geva’s income that was derived from ticket income. Wasn’t that a good thing? Didn’t that mean Geva was doing a great job at audience engagement so that it didn’t have to rely so heavily on donations? Maybe, maybe not, as it turns out…

Schulfer began with an interesting reframing of the question, turning “Why not-for-profit?” into “Why not for-profit?” He let us chew on a few statistics: Broadway has an 80% failure rate (defined as failing to make a return on investment, the holy grail of capitalism), and there are zero for-profit orchestras, opera or ballet companies (you might google and find one or two, but that’s virtually none). Unlike Geva and other not-for-profit (NFP) theatres, which plan a season’s worth of subscription shows, each Broadway show is a stand-alone business, driven by return on investment to producers and investors. This discourages risk-taking, and leads to lots of musicals, revivals, or adaptations from other sources. It also means most shows are usually star-centered, and ticket prices are as high as the market (mostly tourists) will bear.

The model that has developed for NFP theatres (and other performing arts organizations) usually includes: 1) art, not commerce, being the impulse for programming, 2) below-market ticket prices that minimize resistance to new work, 3) education and community programs, and 4) ticket income supporting 45-65% of budget. Understanding this, it’s easier to understand Parrish’s remark. Geva’s mission includes a plethora of educational programs and outreach, as well as a desire to keep ticket prices at a level that encourages a diverse audience. Ticket income, especially subscription income, is always well below the cost of productions. Hence, the need for donations – from individuals, foundations, and governments. That includes the NEA, which was created in 1965, and which each Republican administration seems to want to dismantle because they do not see the value of the arts in communities.

The NFP theatre industry also turns out to be a critical part of Broadway’s success. Most new musicals, and plays by unknown playwrights, begin their lives at NFP theatres for a “try out,” getting kinks worked out and demonstrating their potential for commercial success before heading to Broadway. This recipe doesn’t guarantee success, however, as demonstrated by the recent transfer of War Paint from the Goodman to Broadway; it featured two of Broadway’s divas, Patti LuPone and Christine Ebersole, and couldn’t survive the departure of one of the stars.

One of the reasons so many performing arts organizations are non-profit is that expenses continue to rise, but they can’t realize increases in productivity. since the product is the labor of artists and occurs in real time (it reminds me of the joke about 9 women not being able to make a baby in 1 month). In addition, seating capacity is fixed. While theatres might be able to extend a hot show by a week or two, they can’t magically add seats to the theatre. So, the economics dictate the need for subsidy. Otherwise, if these organizations increase ticket prices to cover expenses, they could price themselves out of existence. Should we care?

Zelda Fichandler, co-founder of Arena Stage, in Washington, D.C., expressed the answer to that question perfectly – that theatre is “an instrument of civilization no less important to the life of a community than a church, a major library, a museum, or a university.” *

It’s difficult to distill all of the information Schulfer provided into a short(ish) blog, let alone into a 2-minute curtain talk or ‘elevator speech’ to communicate to the public the need for financial support. And most audiences just want to be entertained, not to be asked for money. But without funding, NFP theatre, which has become America’s national theatre, will cease to exist. I, for one, think that would be a great loss.

* https://www.americantheatre.org/2016/08/05/zelda-fichandler-valiant-striver-in-the-arena/