There’s an intriguing blog post by Jacob Harold published on 7/15/2020 at blog.candid.org where he examines potential scenarios that could drive nonprofits to close over the course of the pandemic.
While I’m still getting through all of the methodology, there’s no denying that we’ll see some retrenchment in the arts and culture sector. It happens ever major downturn and this will be no different.
In all of those instances, groups that survive are those who have done the best job at diversifying revenue, have strong, dedicated boards, and more than a few large donors they can rely on for bridge funding during the highest of stress points.
After the housing downturn, groups that relied too much on contributed income and/or invested poorly suffered most. During the COVID downturn, we’re starting to see that revenue diversification runs deeper than traditional unearned/earned/investment ratios.
Specifically, we’re seeing far greater importance on diversifying earned income in a way that doesn’t rely primarily on traditional live in-person concert activity. I plan on writing more about that soon but for now, here are some of the key points from Harold’s article:
- The arts and culture sector could see anywhere from 2.2 – 10.6 percent of organizations close.
- Those figures fare slightly better than the averages for the nonprofit sector as a whole.