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?

Read the full article about theatre nonprofits and social justice by Karthik Subramanian and Shawn LaCount at The Center for Effective Philanthropy.