This issue has…

• 💰 Nonprofit Stuff
  buckle up; it’s a long one

• 🧩 A New Puzzle
  jigsaw all day long

• 🎨 Members’ Spotlight Info
  come see some member art

SAUSAGE-MAKING

Why a nonprofit needs your help

You may have recently seen a letter from the Phipps in your mailbox, or maybe an email in your inbox (aside from this one). That’s because it’s fundraising time again!

We’re right in the middle of our fall fundraising campaign, and I thought it might be a good time to do a little “nonprofit explainer” so you can better understand why the PCA and other local orgs occasionally hound you for mon — ahem — request your financial support. 😁

Something I’ve heard more than once: “nonprofits aren’t supposed to make a profit, right?” WRONG. Just like any other for-profit business, nonprofits have to make a profit to keep the doors open.

To better understand what a nonprofit is, it might be useful to pin down what exactly a for-profit business is.

A for-profit business — let’s say the local car wash — exists for one reason and one reason only: to make a profit. That’s it. It’s as simple as that. The reason the car wash exists is to make money for the person that owns the carwash. Making money is the for-profit’s mission.

Although a nonprofit has to make a profit in order to continue existing (we’ve all got bills to pay), the difference is that making a profit cannot be the reason a nonprofit exists. The nonprofit’s mission has to be something other than making money.

In the case of the Phipps, the mission is all about art — creating art, promoting art, giving you a place to explore your artistic side. Uncle Sam gives the Phipps a break on taxes (and provides you an incentive to donate via tax deduction) because we’ve all collectively agreed on two things:

1. Art is an important part of society.

2. Art needs financial assistance to thrive.

Number one makes sense. A world without movies, books, theatre, poetry, paintings, etc. would be pretty gross. We need art, plain and simple. The second point, however, is a little more difficult to understand. After all, if everyone wants art in their lives, why does it need to be subsidized? Why can’t it make money on its own like the insanely profitable car wash?

It has to do with something called Baumol's Cost Disease, which is an economic theory first described by economist William J. Baumol in his mid-1960s study of the performing arts on behalf of the Ford Foundation.

In a nutshell, Baumol’s Cost Disease refers to the phenomenon where wages increase in industries that have experienced little to no increase in productivity, in order to keep up with wages in industries that have seen productivity gains.

Example: from 1925 to today, the auto industry has gotten much more productive — more cars produced with less labor due to increases in technology. However, a 2024 production of Hamlet still requires the same number of actors as it did in 1925. Theatre has not become more productive over time.

The labor-intensive nature of theatre (and other arts) means that productivity doesn’t increase in the same way as other industries. But because wages increase in the auto industry, they must also increase in the theatre industry…otherwise people will stop working in the theatre, and move to Detroit to work for Chevy.

Wages up. Productivity not up. That’s a bad combo. And it’s one of the main reasons Art needs financial help. Think about this: if the Phipps had to cover all its costs with ticket income alone, we’d need to charge over $100/ticket. WOOOOOF.

Your financial support is what helps us keep ticket prices accessible. It helps us keep the lights on. It helps us move forward with strength and take chances (what art is all about). Big thanks to you, because without you, the PCA just plain would not exist. That’s the truth.

And I’d probably be working at the local car wash.

👆
my favorite gallery piece of the week
Members’ Spotlight coming Nov 1st! Opening reception from 6:30-8:30!

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Talk to you on the 28th!