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Fundraisers Help Nonprofit Theaters Through Tough Economic Times

WASHINGTON (AFP eWire - Sept. 15, 2003) - Large increases in individual contributions in the past five years helped many nonprofit theaters stay afloat in 2002, but their future remains uncertain, a new report shows.

Although the number of donors did not increase from 1998 to 2002, their contributions were much larger, according to the report, Theatre Facts 2002, sponsored by Theatre Communications Group, the national organization of professional, nonprofit theaters. Contributions from individuals who are not trustees grew every year by leaps and bounds, from an average of $322,560 in 1998 to $971,304 in 2002. Trustees were also more generous, giving a total average of $161,895 in 1998 and $398,459 last year.

However, as successful as fundraising was for the nonprofit theaters examined in the report, it's unclear how they will fare in the coming years. The theaters studied in the report are relying more and more on contributed income: Contributed income was 44 percent of total income in 2002, according to the report. Total contributed income far exceeded the growth in expenses, at 37 percent, and in total earned income, 12 percent.

Financial challenges

While contributed income has increased substantially, earned income has not, making it difficult for theaters to meet their ever-growing expenses, according to the report's author, Zannie Giraud Voss, a professor of theater at Duke University and an expert on arts management. More than half the theaters studied ended the year with a deficit, as expenses rose at double-digit rates and theaters experienced severe capital losses due to the poor economy, the report said.

This was the first year the study looked at working capital, the ability for a theater to meet its daily cash needs and current obligations. In a profile of 176 theaters, the report showed that, on average, all theaters except the largest had negative working capital. Only theaters with a budget of $10 million or more had a positive working capital, meaning that most smaller theaters were forced to borrow money just to meet their theater's day-to-day needs.

Clearly, many theaters are in need of funding to support their general operating funds - not only special projects, Voss said. Yet, few funders provide contributions for general operations, she added.

It's also important to note that contributions included money pledged during capital campaigns that were begun when the economy was healthier. None of the theaters profiled began a capital campaign in 2002, which raises a 'serious concern' about future contributions if the economy doesn't pick up, Voss told eWire.

Reaching out to donors

Like most of the largest theaters profiled, the Chicago Shakespeare Theater did not face a deficit at the end of 2002, and the theater's director of institutional advancement, Sherre Jennings Cullen, CFRE, is optimistic about the 2003 fiscal year.

'We're hoping to increase [contributions] by $1 million this year,' said Cullen, a member of the AFP Chicago Chapter. 'We're trying to focus on 'asks,' not 'tasks.' That's our motto.'

To do this, the development staff will hold smaller, more intimate gatherings for potential donors such as pre-theater dinners, behind-the-scenes tours and meet-the-actors events, Cullen said. Most of these events will be hosted by a theater board member.

'I'm very optimistic,' Cullen told eWire. 'I think the potential is there?.It's just a matter of strategically identifying those people who have the capacity to support the theater and [connecting] them to our theater.'

More findings

Theatre Facts 2002 includes a profile of 191 theaters that shows that:

  • 21 percent of theaters were in the middle of a capital campaign in 2002, generating a total of $61 million or 17 percent of all contributed funds
  • 28 percent of total individual gifts came from trustees, who gave an average of $7,100 each
  • foundations were the second greatest source of contributed funds, making up 11 percent of total contributed income
  • 8 percent of theaters received donated performance space and 9 percent operate out of donated offices and
  • small theaters (annual expenses of less than $500,000) rely more on foundation grants than middle-size or large theaters.

Theatre Facts 2002 is the 28th annual update on attendance, performance and fiscal health of American nonprofit theaters, covering the fiscal year of Sept. 1, 2001, to Aug. 31, 2002. Researchers used IRS data to analyze the fiscal health of 1,146 nonprofit professional theaters and conducted several surveys to analyze trends. For a copy of the report and its full methodology, visit the Theatre Communications Group website

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