Author: Eric Marder Associates

Publication Year: 1973

Media Type: Report

Summary:

The report presents and analyzes data from a national survey begun in 1971 and describes the nature of, and reasons for, nonprofit artistic groups and the ways they function. The report shows how these various arts organizations came to be as they were in 1971 and traces historical influences. The report concludes with an examination of the growth of arts organizations and possibilities for the future.

Abstract:

The report presents and analyzes data from a national survey begun in 1971 and describes the nature of, and reasons for, nonprofit artistic groups and the ways they function. The report shows how these various arts organizations came to be as they were in 1971 and traces historical influences. The report concludes with an examination of the growth of arts organizations and possibilities for the future.

Almost all professional performances of symphonic and operatic music, of ballet and modern dance, and many of the noteworthy drama productions in theaters all over the are made available through nonprofit corporations. The exceptions are seen in the commercial theaters along Broadway, in their Off-Broadway and beyond New York counterparts, in the array of roadshow companies and dinner theaters, and in some, but not all, of the summer stock companies . In addition, performing organizations from other countries in all the arts ordinarily make their appearances here under commercial auspices. The use of the nonprofit corporation as an instrument for the development of professional companies and groups attempting to achieve both performance and higher standards of craft was spurred by federal inheritance and income tax provisions. Some patrons, however, often make contributions for which they do not receive an equivalent tax benefit.

Performing arts organizations are nonprofit corporations because, like colleges and universities, they do not earn enough to support themseves. They require contributed income. It is already generally understood that colleges and universities do not subsist on tuition. But it is by no means generally understood that arts organizations do not subsist on ticket sales and performance fees. The very nature of performing groups along with their need for artistic freedom and goals make it both impossible and undesirable for them to limit their spending to what they can earn.

This study of 166 of these organizations - theaters, operas, symphonies, and dance companies - covers the six seasons from 1965-66 to 1970-71. It was a period of steady growth, and at its end in the 1970-71 season the groups taken together except for the Metropolitan Opera spent $138 million. They earned $76 million. Thus, they were left with an earnings gap of $62 million. Private local patrons (including local foundations and businesses) contributed $36 million, or somewhat less than 60 per cent of the unearned income required. The remaining $26 million came from other sources, chiefly a very few national foundations and public agencies on the federal, state and municipal levels. The contributions of the national foundations approximated those of federal, state and municipal sources combined. Although the income of the 166 organizations taken together in 1970-71 equaled their expenditures, this does not mean that each organization balanced its budget. Half did not, and this is the report's first finding.

Over the survey period as a whole, both income and expenditures grew, but total income equaled expenditures less often than it fell short of them. Although there are many exceptions, the organizations taken together had a cumulative six-year operating loss of $8.4 million while total operating budgets grew from $75 million to $138 million.

For many reasons it is not possible to forecast exactly what expenditures the organizations will have and what contributions they will need in the future. But it is possible to ascertain trends and speculate on their implications. One salient implication is that private patrons, foundations, corporations and federal, state and municipal programs all must increase their support substantially in the future just to maintain the 1970-71 financial position of the performing organizations in the study. This is the second important conclusion of the report.

Even if other sources greatly increase their funding, the local private sector, as we have seen, will in all probability remain the principal supporter of the performing arts. This is the third important conclusion of the report to follow.

CONTENTS
1. Summary and conclusions.
2. Historical introduction.
3. The sample and the data.
4. The financial setting.
5. Expenditures.
6. Income.
7. Growth and growth rates.
8. Implications for the future.

Arts & Intersections:

Categories: Financial Management