“We got hit really bad last year,” says Richard Rose, the producing artistic director of the Barter Theatre in Abingdon, Va. One of the nation’s longest-running professional theaters, the Barter launched the careers of actors such as Gregory Peck, Kevin Spacey, and Patricia Neal. Despite its rich history and successful track record, “we probably lost about $550,000 on a $6 million budget last year,” says Rose. “For 2009, we cut our budget back by a million dollars.”
The current recession has left few nonprofits unscathed and has hit theaters particularly hard, reports the most recent communiqué from the Johns Hopkins University Listening Post Project. “But nonprofits are responding with incredible courage, creativity, and conviction,” says Lester M. Salamon, lead author of the communiqué and director of the Center for Civil Society Studies at Johns Hopkins University, which guides the projects.
To take the temperature of the U.S. nonprofit sector, the Listening Post Project regularly surveys more than 1,400 local nonprofits. In its most recent survey, the project found that 83 percent of its 363 respondents were feeling some financial pinch, with close to 40 percent describing their stress as “severe” or “very severe.” A “perfect storm” of declining revenues, increased costs, shrinking endowments, and reduced cash flows is to blame for their financial discomfort, write Salamon and his coauthors.
Yet by deploying smart coping strategies such as conservative financial management, intensifi ed fundraising, belt-tightening measures, and entrepreneurial expansion, almost three-fourths of the nonprofits in the Listening Post study have been able to maintain or actually increase the number of people they serve. Of these coping strategies, says Salamon, entrepreneurial expansion tends to be the least used but most successful. As the figure at right shows, for example, few nonprofits undertook such entrepreneurial feats as starting a for-profit subsidiary, sharing staff with other organizations, or renting out their facilities. But those that did experienced greater financial success than did organizations that stuck to more tried-and-true belt-tightening and fundraising strategies.
The Barter Theatre, for instance, is using several entrepreneurial strategies to weather the recession. “Our budget is about 80 percent earned income because we’re in a region that is so remote and not wealthy, with no big corporate sponsors,” Rose explains. “And so we are forced to earn our way.”
To this end, the organization is launching a national tour of its production of Of Mice and Men, which is expected to bring in $600,000 in 2009, says Rose.
The theater has also adjusted its off erings to the changing mood and makeup of its audience. “From the standpoint of programming, we went for what I call ‘comfort food,’” he says. “And we’re actually having a record season. We’re doing The Wizard of Oz, which we would normally stay away from. We usually appeal to adults, not families, and we do theater that’s a little more challenging. But we knew we would be relying on local audiences rather than tourists.” The theater is also avoiding more depressing productions, says Rose: “If you are having a tough life,” as people are during this recession, “you want to escape it in the theater.”
The theater’s need to earn revenue may actually protect it from the recession, suggests Salamon: “Fundraising strategies that involve commercial income are better than charitable income.”
Despite its uptick in activity, the theater has had to make some difficult sacrifices. “We had to cut half a dozen personnel, and we’re also using fewer freelancers,” says Rose. “And so a lot of us are working a lot harder.”
Although cutting back on staff and staff time may be a good coping strategy in the short term, says Salamon, “I’m not sure that I would recommend it for the long term.” More generally, he says, “while nonprofits have been able to protect clientele and continue services [during the downturn], we are at real risk of pushing organizations beyond the breaking point.”