Monthly Archives: July 2016

I have been involved with non-profits both at my day job and with BAT for many years. One thing about them, and this is more true in the world of theater arts non-profits, non-profits have a very strange business model.

BAT’s fiscal year closed not that long ago. Looking back over the year, I can say BAT is making progress. A closer look, however, shows what a strange business model theater non-profits function under.

Ticket sales, bar and concession profits made up about 70% of BAT’s income. Donations and grants made up about 30% of BAT’s income. That means BAT is below the national average, because BAT earned too much money from what is called earned income (ticket sales, bar and concession profits).

In 2000, the last date for which I found statistics, nationwide, theaters had about 49% earned income, 40% of income came from donors and 11% came from government support.

Nearly 24,000 nonprofit arts and culture organizations filed tax returns circa 2000. These organizations reported revenues in excess of $23 billion, of which roughly $11.5 billion (49 percent) derived from earned income, close to $9.4 billion (nearly 40 percent) came from private donors, and over $2.6 billion (11 percent) came from government support.

LINK to report

With BAT’s 94 seats, the difference between 30% of BAT’s income coming from donations and grants and the national average of 51% coming from donations and grants is the difference between having one or more paid staff. BAT currently does not have any paid staff.

Many have trouble understanding a theater’s business model. Even a few of BAT’s past Trustees struggled with it.

In a nut shell, here is the business model: Open a business where your products produce just under half of what it takes to sustain the business, and then ask others give you money to meet your budget. The money they give you is not a loan. It is a gift. And, you fully expect to stay in business longterm with that model. (So far, BAT has survived 37 years on this model.)