The financial perspective is seen as
an enabler in the not-for-profit arts presentation field. Financial performance
provides the means to pay artists and staff, secure facilities and market
programming. Arts presenters on average receive 52 percent of their revenue
from earned income (ticket sales, concessions, rentals) and 48 percent from
contributions by individuals, foundations and government entities. Over half of
unearned income comes from individual donations (Hager & Pollock, 2002).
Both earned and unearned revenue sources are lagging measures indicating
whether or not the presenter is achieving the value proposition that is
attractive to its target audiences. Individuals will attend events more
frequently and make contributions to the arts presenter in proportion to level
of benefits experienced. Private and public institutions will also act in their
self interest by funding presenters that are perceived as providing community
benefits not available from other sources.
Although financial returns are not the
stated goal of mission driven arts presenters, financial measures are a clear
and objective measure indicating how well the presenter is providing the
intrinsic and instrumental benefits its target audiences want. The long term
sustainability of any arts presenters is dependent on responsibly managing its
financial perspective resulting in a positive net income over an extended
period of time. Kushner and Pollack (2004) identify net income as a significant
indicator in their study of the financial health of performing arts
organizations; highlighting a drop in net income from 5.3% in 2001 to 4.2% in
2002 as a percentage of expenses. The same study indicates that over half of
the organizations studied reported negative net incomes. A similar measure is
also indicated in the Theatre Communication Group Study (2011) of 1876 theatre
organizations that filed Form 990’s. Change in Unrestricted Net Assets (CUNA,
total unrestricted income – total unrestricted expenses) increased by 24% from 2007 to 2009; resulting in a CUNA of 7.7% of expenses in 2011. Positive net income is seen as the overriding financial objective of arts
presenters for sustainability.
