How Can the Underdog Come Out On Top?
We’ve all seen those articles, right? One quick Google search or Twitter scroll can land you on any number of these headlines:
“The Coronavirus Economy’s 7 Biggest Winners and Losers” -New York Post
“Here Are the Biggest Winners and Losers of Our New Post-Covid-19 World” -Forbes
“The Winners and Losers of the COVID Holiday Season”-Axios
“Winners and losers: How Covid-19 is Reordering the Global Economy” -The Economist
And the list just goes on and on. But on all of these lists two things stay the same:
We are entering a global recession
Some business models are inherently more equipped to survive this particular recession
So in these bullet points, where would nonprofits fall?
Due to COVID-19, many economists predict another major recession. In the most recent recession in 2008, 23.4 percent of all nonprofits lost 20 percent or more of their assets between 2007 and 2010, which contributed to an increase of nonprofit bankruptcy according to Nonprofit Quarterly.
Kevin Kearns is a professor at the University of Pittsburgh’s Graduate School of Public and International Affairs and an expert in strategic management in public and nonprofit organizations. He expressed concern for the future of nonprofits, even after lockdowns end.
I think we're going to see a lot of nonprofits not survive this [pandemic]
“It's going to be a long time before [nonprofits] are back to any semblance of normality, and they may actually end up closing,” Kearns said. “I think we're going to see a lot of nonprofits not survive this [pandemic].”
Some nonprofits' services are free, but many charge small service fees and tuition. For those organizations, finding people willing to pay their fees during the pandemic is a struggle.
“Small organizations that are heavily dependent on a fee for service basis, where you get money for every individual you serve, are in trouble,” Kearns said. “They're struggling right now to find other sources of income.”
While some organizations are blessed with corporate partners, lucrative investments, generous donors or large cash reserves, many small organizations live paycheck to paycheck. Kearns said that during the pandemic, these small organizations are often hit the hardest.
“There are nonprofits who had no reserve funds to count on, they had no cash reserves and no endowment that they could draw upon,” Kearns said. “They are struggling, and they've either got immediate assistance from some type of angel investor, they have suspended services, greatly reduce their staff or they have simply gone under.”
Kearns predicts that nonprofits that are deemed non-essential will fall the farthest, specifically nonprofits in the arts and culture sector because they do not provide essential services like nonprofits in the education and health sectors do. The arts suffer great damages because they often rely on in-person events for funding and campaigning.
Who knows how they're going to come back. They're really struggling
“The arts can't put people in the seats, they can't have performances,” Kearns said. “They're probably relying on enormous gifts and grants. Who knows how they're going to come back. They're really struggling.”
Some art nonprofits, however, still find ways to perform. Pittsburgh Musical Theater (PMT) is a nonprofit committed to providing quality education in musical theater that runs on a tuition-based model. The Development Director, Allison Hannon, said that PMT was able to do a small scale live performance this summer.
In a photo taken by Hannon, students performed a production of Mamma Mia with masks and face shields. The photo, taken during a casual rehearsal, shows students spaced far apart. After each rehearsal, a crew member can be seen wiping down props with disinfectant wipes.
PMT still operates on a hybrid platform and started a Virtual Intensive Program (VIP) that draws students from outside of the Pittsburgh area. Immunocompromised students are able to take classes at home, and about 52 kids currently take classes in a socially distanced building.
While PMT benefits from tuition fees, government grants, and generous donations, Hannon admits that PMT is currently at a deficit. As of fall 2020, PMT only sees about 60 percent of their normal enrollment and they still suffer from a loss of revenue from a decrease in ticket sales.
“We estimate an over $300,000 loss in the spring,” Hannon said. “And I think by this point, it's probably over half a million with the loss of fall performances.”
Hannon admits that while PMT is operating fine right now, the constant loss of revenue is not sustainable-- a sentiment that many nonprofits share.
We're managing right now, but I don't know how sustainable it is in the long term
“We're managing right now, but I don't know how sustainable it is in the long term,” Hannon said. “We're not meant to be going without our programming for this long. That's how we generate most of our revenue.”
But while Broadway has closed its doors for months, PMT continues to serve its community with the same ferocity as before. Only this time, it looks just a bit different.
Donate to Pittsburgh Musical Theater: https://pittsburghmusicals.com/support/donate/