The Portland symphony is in trouble. The unresolved dominant-seventh chord — a $2 million loss over the past eight years, and a possible shortfall of $220,000 this year alone — would be a setback for any company. But for the symphony, this is more than that. It means the end for some of the PSO's signature events, the disappearance of community-outreach programs, and layoffs and pay cuts for staff.
"This process of sharing challenges with the community is just the first step," says PSO executive director Ari Solotoff. "We want to share the story with anyone who will listen."
The endowment, the symphony's invested assets, has lost more than a third of its value in the past five months, and is down to $2.1 million from a 2007 high of $2.9 million. Most of that money is untouchable, except for the interest it earns; last year, endowment interest provided only seven percent of the symphony's operating cash. But if the interest earned isn't enough to offset the value lost, then the symphony can't use any of the interest at all because it has to use the earnings to try to make up the lost value.
"With the fall of the market, those losses have to be applied against the (interest earned). This leaves us with no safety net," explains Solotoff. Many arts organizations around the country are in similar — and similarly dire — straits. Layoffs and cutbacks have hit major arts organizations nationwide, including the Baltimore Opera, which filed for bankruptcy in December.
Americans for the Arts, a New York City and Washington, DC-based non-profit advocating for the arts says 10,000 arts organizations are at risk of closing just this year — 10 percent of the country's total, according to spokeswoman Liz Bartolomeo. Another 20,000 are going to make spending cutbacks of as much as 20 percent, she says. Smaller arts groups, ones that already operate day-to-day financially and have just one or two staffers, may not suffer as much because their size makes them flexible, she says. The biggest ones will survive, too, with sizeable endowments and support bases, though they will also need to rein in spending. Bartolomeo says most of the blow will fall on mid-sized arts groups, who get a significant portion of revenue from ticket sales, and smaller-but-still-significant amount from government programs, and the rest from donations. All three of those funding streams are shrinking, Bartolomeo says.
In response, arts groups across the country are quietly building support for what some are calling a "cultural stimulus" to go along with the federal economic stimulus package proposed to address other needs. And the John F. Kennedy Center for the Performing Arts in Washington, DC, just last week announced what might be called a "mini-bailout" for American performing-arts groups, offering free Kennedy Center staff assistance and money to pay some expenses "to provide emergency planning for fundraising, budgeting, marketing or other strategies as box office revenues decline and donations and endowments run dry," according to an Associated Press story on the program.