Arts Nonprofits Grapple with Effects of COVID Year

Story by Korie Dean
Graphics by Hailey Haymond

UNC Media Hub

After more than a year of shuttered venues and cancelled performances, arts and entertainment nonprofit organizations are grappling with devastating amounts of lost revenue and facing a longer road to recovery than any other sector of nonprofits.

The core of many arts nonprofits—live, in-person performances—was impossible to provide during the pandemic, leaving organizations scrambling to make up revenue.

“That loss to gather together, which all of us experienced, for the performing arts, it meant that the core of what we do is simply not safe,” said David Brower, the executive director of PineCone, a Raleigh-based nonprofit dedicated to promoting traditional music.

Research from Candid, a philanthropy research group, shows that nonprofit organizations that rely heavily on “program service revenue,” such as ticket sales, tend to be more financially fragile and have fewer months of cash on hand.

While many arts organizations shifted their programming to virtual during the pandemic, the switch generally wasn’t enough to make up for revenue they were losing due to cancelled in-person events and performances.

“In the first couple of months, that was just such a dramatic cut in in revenue, it was really hard for organizations to figure out what to do,” said Sarah Guidi, a program officer for the Triangle Community Foundation, a Durham-based philanthropic organization. “After a couple of months, a lot of organizations started experimenting with virtual offerings. I suspect, from the few data points that I have, they’re not recovering that income through those offerings since a lot of them are being offered for free.”

Candid found that philanthropic organizations increased the amount of unrestricted and flexible funding available to nonprofits by 39% during the pandemic.

The Triangle Community Foundation offered grant funding to arts and culture organizations for the first time in 2020—and while that offering had been planned prior to the pandemic, Guidi said that seeing the pandemic’s effects on arts nonprofits encouraged the organization to make the funds more flexible.

“I think what we were learning from COVID just helped us really narrow in on flexible funding, and making the process as easy as possible for grantees,” Guidi said.

A process that wasn’t easy for nonprofits was applying for federal relief funds, such as the Paycheck Protection Program (PPP) and the Economic Injury Disaster Loan Program (EIDL), both of which included complex applications that deterred many organizations from applying.

In a survey of close to 1,800 North Carolina nonprofits conducted by the North Carolina Office of Strategic Partnerships and the Policy Lab at Brown University, 37% of nonprofits reported that they had not and did not intend to apply for PPP funds, while 51% reported that they would not apply for EIDL funds.Tom Kelley, a professor at the UNC-Chapel Hill School of Law who oversees the school’s COVID-19 Legal Assistance Project, said that small- and medium-sized nonprofits faced significant struggles in applying for relief funds and often decided the process was too risky.

“The application process for those relief funds was so challenging, and the documentation needs were so intense that an organization that is mostly volunteers just really has a very difficult time of even applying, much less keeping up with the documentation and reporting that is required,” said Cheryl Chamblee, executive director of the Chatham Arts Council, which applied for and received a PPP loan with significant support from a local bank.

A study published by the Johns Hopkins Center for Civil Society Studies predicts it will take more than two years for arts and entertainment nonprofits to fully recover from the effects of the pandemic.

And even as in-person performances begin to return, some nonprofit executives are worried that it won’t be enough.

“The cancellation of individual events is hard, but that’s a temporary thing,” Brower said. “What it really does, and what’s scary, is that we could potentially lose some of the infrastructure, we could lose some of the institutions that are operating in these communities and have taken decades to build up to the to where they are.”

Brower said that it will take audiences actually showing up and supporting arts nonprofits for a full recovery to take place.

“If we lose part of the audience because everyone’s gotten comfortable on their couch and watching Netflix and ordering in, it could be a longer time before we get back,” he said.

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