At Latz & Company, we work with nonprofits to help transform their organizations. As fundraising partners, we are honored to work with a number of theater and arts organizations. With Chicago Theatre Week upon us, (February 6 to16) we wanted to shed a spotlight on the challenges and future opportunities for nonprofit theater in America. While events like this rekindle enthusiasm, nonprofit theaters face post-pandemic challenges, including declining audiences, donor shifts, and reduced funding but there is hope for the future.
Read on to dig into the future of nonprofit theater in America.
Post-Pandemic Financial Strains & Economic Impact
The pandemic hit nonprofit arts organizations particularly hard. Performing arts revenues fell by 73% from 2019 to 2020, making it one of the hardest-hit economic sectors. Job losses in the arts sector were five times worse than the average for nonprofits (U.S. Bureau of Economic Analysis). However, arts organizations remain vital, contributing significantly to local economies and community vibrancy, as detailed in the AEP6 study below
Economic Impact of Arts & Culture Organizations
Photo Source: AEP6 Study Findings
The Challenges and Opportunities Facing Theaters
The proposed STAGE Act (STAGE Act) aims to allocate $1 billion annually to nonprofit theaters, helping cover operating costs and adapt to new challenges. However, without timely intervention, theaters continue to close at alarming rates.
Nonprofit theaters face structural challenges, including “cost disease,” where expenses rise faster than revenues. Experts like Stephanie Ybarra suggest shifting from relying heavily on major donors to building a broad base of community engagement. Some theaters, like Long Wharf Theatre, have adopted innovative models such as producing shows at various venues rather than maintaining costly permanent spaces. While the partnership model is becoming increasingly popular throughout the theater landscape, from a revenue perspective, co-productions can lead to brand dilution, while also failing to expand the physical theatre space to exist as the community hub envisioned for the future.
Could the issue lie in the disconnect between rising costs and stagnant donations? Stephanie Ybarra’s point on “cost disease” highlights how production and staff expenses outpace revenue. In a recent article by the Driehaus Foundation Jack Tamburri of Purchase College notes that theaters often subsidize productions by underpaying labor, a practice invisible to audiences, funders, and boards. He suggests reeducating stakeholders about the true costs of theater to address unrealistic expectations shaped by decades of ingenuity and resourcefulness.
Shifts in Audience & Donor Behavior
One option for theaters is to enhance their fundraising efforts. Engaging younger, diverse audiences who can be engaged to provide philanthropic support in addition to attending theater will help but theaters must also retain traditional donors. This is a delicate balance. Smaller events, like $10 community gatherings, have proven effective in building connections and attracting new patrons. However, these types of events, while driving little revenue, often come with operational costs that can be more manageable for larger organizations with greater resources. Smaller theaters, on the other hand, face challenges in producing these events, as they require significant audience research and strategic communication to ensure the effort resonates and attracts attendees.
Additionally, philanthropic trends reveal that ultra-wealthy donors (those worth $30 million or more) now contribute 38% of global charitable giving, further highlighting the need for theaters to diversify their funding strategies. Nonprofit theaters must balance these efforts—cultivating smaller, community-focused events while maintaining relationships with major donors critical to their survival
A Path Forward: The Development Perspective
At Latz & Company, we believe in the power of relationships and the philosophy that people support what they help to create. Engaging donors in the real costs of producing theater allows them to be part of the solution, fostering stronger connections and a sense of ownership. Start by cultivating the relationships you already have—your existing donors are there for a reason, and building on their support is key to sustainable growth. Use meaningful cultivation and stewardship opportunities to deepen these connections, from hosting behind-the-scenes events to sharing transparent insights about the challenges theaters face.
When it comes to attracting new audiences and new donors, consider applying a relational approach similar to cultivating major gifts.
Engage potential audiences intentionally by inviting them to provide input through post-performance surveys, participate in committees, or attend exclusive events. This not only helps bring new voices into the fold but also creates authentic opportunities to advocate for your community. A thoughtful, inclusive approach allows theaters to better understand and reflect the needs and values of their audiences while building long-term relationships.
It’s important to emphasize that diversifying your audience base doesn’t mean alienating current supporters. The goal isn’t to swap out donors but to expand the circle of engagement intentionally. Your existing donors are invaluable not only for their financial contributions but also as audience members or connectors to new supporters. Their networks can help you reach untapped communities and grow your base organically.
By focusing on authentic storytelling and inviting donors and audiences alike to help shape the future of your organization, nonprofit theaters can navigate the evolving landscape with purpose. Embrace intentionality, build on existing strengths, and lead with the relationships that sustain your mission—both now and in the future.
ABOUT US
At Latz & Company, we partner with nonprofits to transform build sustainable fundraising strategies for greater impact. We are honored to have worked with arts and culture partners such as The Harris Theater for Music and Dance, National Black Theatre, the Chicago Symphony Orchestra, and Kehrein Center for the Arts, to name a few. Contact us to discuss your needs at info@latzandco.com.
Chicago Theatre Week offers a chance for theaters to connect with audiences through affordable tickets. Check it out!