Today’s brief musing was prompted by an article this past Saturday in the New York Times:
It May be a Nonprofit Theater, but the Tickets Look For-Profit
It lists the ways in which nonprofit theaters in New York are acting more and more like their for-profit brethren: raising ticket prices, partnering with commercial producers to mount sure-fire hits, renting out space, rotating in established blockbusters and hiring star actors.
The article summarizes the justification for nonprofit theaters as places where “new works with homegrown actors are produced, where challenging Pulitzer Prize-winning plays are introduced, and where, until recently, ticket prices where low.” But clearly, activities focused on these ends alone are not paying the bills.
All of which raises a disturbing prospect of how long theaters can flirt with having their tax-exempt cake and eating it, too. I find this story disturbingly reminiscent of the way in which nonprofit hospitals (among the largest recipients of charitable donations) are increasingly coming into question for behaving in ways indistinguishable from for-profit hospitals. This has led to practical consequences such as the City of Pittsburgh challenging the tax-exempt status of the University of Pittsburgh Medical Center, which in turn prompted legislation currently waiting voter approval that would give Pennsylvania the power to determine tax status, shielding nonpos from cash-strapped municipalities scrambling to find funds.
The theater story leaves me (and museums) with the following questions:
- How far can nonprofits pursue “business-like” income opportunities without erasing the distinction, in the public eye, between their operations and those of a straight-up for-profit enterprise?
- How much public benefit does a nonprofit have to offer to justify public tax support? The NYT article cites the span of nonprofit ticket prices as being from $25 to the new high of $162, and that of for-profit Broadway shows as typically being $200-$477. But last minute and student discount tickets to Broadway shows are often available for $20-$30. At what point does public subsidy of nonprofit status cease to make art substantially more creative, or more accessible?
- There are already segments of the museum field (notably aquariums) that have successful for-profit counterparts. The nonprofit Georgia Aquarium has already been accused of trying to import and exhibit Beluga whales for their entertainment value, rather than benefits to research and conservation. How long before we see an article in the NYT or the Nonprofit Quarterly is examining the basis behind the nonprofit for-profit distinction for aquariums? And how will we, as a sector, respond?