Always Non-Profits?

Not for profit

It is far from obvious that theatre should be delivered by nonprofit companies.  Throughout most of American history, theatre was a profit-making activity, whether those making the profits were Broadway theatres or travelling vaudeville troupes.   Yet, by the middle of the 20^th century, the Ford Foundation was advocating a nonprofit model for regional theatre.  “The very nature of performing groups along with their need for artistic freedom and goals,” explained a foundation report, “make it both impossible and undesirable for them to limit their spending to what they can earn.” [1]

A moment’s reflection suggests that there is at least the ring of truth in this observation.  While one can identify profit making theatres, they tend to fall into categories embrace neither ambitious artistic goals nor require unfettered artistic freedom. Broadway is the obvious starting point.  They present shows that appeal to large audiences rather than those that probe ideas in novel or difficult ways.  

A second form of profitable theatre are the immersive experiences of theme parks, such as Disneyland.  While these institutions show a great deal of creativity, they are designed to present ideas that appeal to a broad spectrum, especially families.  One rarely experiences ground-breaking art in such circumstances

Touring shows represent a third form of profitable theatre.  Like the two prior forms of theatre, they also appeal to large audiences.  Furthermore, they consciously adopt a common organizational model.  Their producers invest in new shows and refine them to appeal to the public.  Then, they expand their revenue that exploits economies of scale.  They duplicate the show, reproduce the original sets and costumes.  They create detailed stage directions that allow new (and often lesser paid) actors to perform the roles.  

The model of the touring show follows a pattern that would have been easily understood by the mid-century industrialists of Detroit or even the early leaders of Ford Foundation Staff.  There is nothing in this model that suggests that touring productions would be superficial, or sentimental or merely pleasing to the eye, yet many might claim that those properties are the common nature of these productions.  When combined with combined with the experiences of Broadway shows, and theme parks, this last model could support the conclusion that artistic organizations should indeed possess nonprofit corporate structures.  

For its part, the Ford Foundation justified its recommendation by claiming that theatres adopted the not-for-profit model after the U.S. government began offering tax deductions for donations to charity. “The use of the nonprofit corporation as an instrument for the development of professional companies and groups attempting to achieve both permanence and higher standards of craft was spurred,” they claimed, “by federal inheritance and income tax provisions.”[3]

The timing on the Foundation’s claim is suspect.  The U.S. government started tax deductions for charitable contributions in 1913, some forty years before non-profit theatres started to emerge in large numbers.  Only a few nonprofit theatres in the 1920s and many of these tended to be community theatres, theatres staffed by artists who could spend only part of their time developing their craft.  

On the other side of the argument, the number of nonprofit theatres grew rapidly in the 1950s, a decade that corresponded to a period of rapid growth for non-profit institutions.  During this period, the US Government built a stronger system for tracking non-profit institutions.  Foundations, such as the Ford Foundation, started working to strengthen the managerial practices of non-profits.[4]

Ultimately, the claimed connection between non-profit theatre and income tax regulations may tell us more about the Ford Foundation than regional theatre.  The foundation was incorporated nonprofit foundation in response to a 1936 law that raised taxation rates on family corporations.  As Ford motor company was control by Henry Ford and a small group of his descents, this law threatened to remove the family from the leadership position in their namesake corporation.  Many support Ford’s efforts to keep the company under his control.  A senator from Michigan branded the law as “tax confiscation”. [5]

Even though the Ford Foundation was created in response to tax laws, it is unlikely that it was merely trying to reproduce its own corporate structure in the structures of the nation’s theatres.  However, the two ideas serve as a reminder that corporate structures are designed to protect capital, and that goal is quite different from the goal of protecting artistic freedom.  A nonprofit structure guarantees that a theatre will not have a group of owners or shareholders demanding a return on their investment.  It does not, however, release the theater leadership from the demand to articulate their vision and to ask if the theatre’s corporate structure is able to support that vision.  

[1] __________, “Finances in the Performing Arts”, Ford Foundation, 1977, page 5.

[2] Nye, David, Electrifying America, MIT Press, 1992, p 122-132.

[3] “Finances in the Performing Arts,” op cit, page 5.

[4] It is a little surprising that the Ford Foundation took an interest in theatre. It was founded during the 1930s in Detroit, a city which had no great theatrical tradition. The most prominent theatre was in the Fisher Building (owned by the family of General Motors Fisher Body Division.). It was connected to the New York theatrical community and presented touring shows.  The Foundations interest in theatre began after it had moved to New York and severed ties with Ford Motor Company. 

[5] __________, “Ford Foundation: Early History,” Ford Foundation, https://www.influencewatch.org/non-profit/ford-foundation/, last accessed Jan 15, 2025.