Donald Trump's takeover of the John F. Kennedy Center for the Performing Arts has led to major cancellations, departures and warnings that donations are drying up, with the Washington Post reporting on Friday that there are now questions over how the new management is describing the venerable institution's financial situation.
A week ago, MSNBC reported that the Kennedy Center was in "free fall," due to event cancellations and a delay in releasing a schedule for the upcoming season.
According to the Post, Donna Arduin, the center’s newly installed chief financial officer under interim center president Richard Grenell, issued a staff memo advising cuts will need to be made and called the center's financial situation “difficult” while adding, "We have an operating deficit of over $100 million dollars."
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Some Kennedy Center staffers are taking exception with Arduin's characterization and are accusing her of playing fast and loose with the figures.
As the Post's Travis M. Andrews wrote, "Several staffers disputed Arduin’s claim of a $100 million deficit, pointing out that it appears this is only the case if just ticket sales — and not donations and grants — are counted as revenue. The center, like most arts nonprofits, relies heavily on donations. The staffers spoke on the condition of anonymity because they feared retaliation."
Pointing to a September 2023 financial statement showing a profit of $6,495,064, based on revenue of "$286,438,548, with the main sources of revenue being $140,861,307 in contributions (such as grants and donations, which made up 49.2 percent of the total revenue) and $129,917,134 from program services (like ticket sales and subscriptions, making up 45.4 percent)," one outside analyst found the new assessment confusing.
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Karen Gahl-Mills, a professor Indiana University who studies nonprofit management and specializes in arts programs offered the $100 million shortfall is "...a very big operating loss for an organization of this size. I am surprised at that report, and I would want to know more.”
In light of the the 2023 profit statement, she added, "It would be a breathtaking drop in revenue.”
According to one Kennedy Center staffer with an understanding of the finances and who contacted the Post, questions indeed should be raised about Arduin's appraisal.
“The statement that we have an operating deficit of over $100 million is inaccurate," they accused. "Our audited FY23 financial statements, which are publicly available via ProPublica, show that this figure excludes essential nonprofit revenue streams such as contributions, grants, and endowment support.”
They added, “Nonprofit organizations are designed to rely on philanthropic and institutional support in order to fulfill their mission. Using an ‘earned revenue minus expenses’ framework oversimplifies the picture and applies a for-profit lens that doesn’t reflect how nonprofit business models work.”
Indiana University's Gahl-Mills elaborated, "Nonprofit performing arts organizations have two big revenue streams: earned revenue — things like ticket sales — and contributed revenue — things like donations and grants. Contributed revenue is part of their structure. Their costs often exceed what they can recoup in ticket sales, so they raise money to make up the difference. This is best practice in the sector.”
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