Income Grows at Non-Profit Theaters, but So Do Expenses, New Study Finds

The strong economy continued to buoy non-profit theaters last year as their average income rose 7.1 percent, a new survey reports.

But the rate of income growth tapered off compared with the previous year, when it rose 11.6 percent (The Chronicle, July 15, 1999).

And while non-profit theaters’ income outpaced their expenses in 1998, last year expenses grew at a faster rate than income, rising 12.1 percent.

The survey is conducted each year

by the Theatre Communications Group, a New York organization that represents non-profit theaters.

A total of 313 theaters responded to this year’s survey.

Of that group, 155 theaters completed the full survey, while the remaining 158 theaters provided only a basic summary of key fiscal, attendance, and employment information.

For the first time, the survey pool included smaller theaters with budgets under $250,000.

Among the findings:

• Over all, a majority (62 percent) of the 313 theaters broke even or earned a budget surplus last year.
• Of the remainder, 26 percent had deficits equal to 10 percent or less of their operating budgets, 8 percent had deficits equaling 10 to 20 percent of their budgets, and 4 percent had deficits greater than 20 percent. When the 63 smaller theaters were excluded from the analysis, the proportion of theaters breaking even or earning a surplus rose to 65 percent.
• Among the 155 theaters completing the full survey, the average theater generated $2,002,619 in earned income and $1,485,081 in contributed income in 1999, for a total of $3,487,700. It spent an average of $3,289,282 on expenses, leaving an average net surplus of $198,417.

Ben Cameron, executive director of the Theatre Communications Group, said he saw the survey findings as “a cause for

celebration” because a greater proportion of the large theaters ended last year with a surplus compared with the previous year.

But he also expressed concern that while a majority of theaters have been in the black in recent years, their long-term fiscal health remains uncertain, in part because many theaters (47 percent) still do not have endowments, and of those that do, few report that the endowments generate significant income.

Comparative data covering the past three years were available for only 98 of the theaters. Among the trends at those theaters:

Earned income. The survey found that theaters faced a harder time using earned income to cover expenses in 1999 than in 1997.

While earned income paid for 65.1 percent of expenses in 1997, it covered only 61.8 percent of expenses in 1999.

Year-long subscriptions and single ticket sales accounted for nearly three-quarters of earned income.

Although theaters’ ticket income grew 14 percent over the past three years, its capacity to cover expenses declined by 2.2 percentage points, largely because expenses rose at a higher rate than earned income.

Donations. The number of individual donors increased by 2 percent while the average individual gift remained steady at around $260.

The number of trustees who made gifts increased 5 percent and the size of the average trustee gift rose 4 percent, to $5,094.

Corporate and foundation giving continued to outpace inflation, rising 11.3 and 9.8 percent respectively.

While the average size of each foundation gift declined from $24,651 in 1997 to $21,657 in 1999, the number of foundation gifts increased 21 percent. The average corporate gift remained steady at about $6,500 over each of the past three years.

Government support. Federal aid declined 15 percent while state support rose 20.8 percent. Grants from city and county governments rose 118.1 percent, but after excluding one theater with a $6-million increase, city and county support rose 21.6 percent.

Expenses. Among the most significant increases in expenses for theaters were payroll costs, which rose 20.8 percent from 1997 to 1999. The survey found that the total number of paid employees in the theater’s work force did not increase significantly. But it also noted that the number of weeks actors were employed increased 13 percent, which suggested that theaters are producing plays with larger casts.

“The fact that cast sizes are growing is a great sign for the art form,” said Mr. Cameron, who said this finding assuaged his concerns that fiscal conservatism among theaters might lead to esthetic conservatism, “and that we would begin to limit the scope of artistic aspirations, that casts might get smaller, and so forth.”

Fund-raising expenses increased 23.7 percent, which the Theatre Communications Group said was the result of theaters’ relying heavily on funds from special events. Such events are costlier than other types of fund raising, such as direct mail or telephone solicitations.

Copies of Theatre Facts 1999 are available for $5 each plus shipping and handling.

Contact the customer service department at the Theatre Communications Group, 355 Lexington Avenue, New York 10017 at (212) 697-5230; fax (212) 983-4847; e-mail custserv@tcg.org; http://www.tcg.org.