The nonprofit performing arts industry in the United States is facing crises on a variety of fronts. After two boom decades, its unprecedented growth has ground to a halt. From the mid-1960s to the mid-1980s, contributions from foundations and corporations grew from $15 million to nearly $700 million, the number of professional orchestras swelled from 58 to more than 1,000, and the number of professional resident theater companies increased from 12 to more than 400. By 1987, ticket revenues for nonprofit performing arts organizations exceeded ticket revenues for sporting events. Many arts organizations displayed their newfound affluence in more elaborate productions, larger management staffs, and new performance facilities that contain more seats to fill than the old ones. For the first time, midsize orchestras gave their musicians full-year contracts instead of fee-for-service agreements, thereby providing them with a welcome measure of financial security formerly enjoyed only by musicians with large symphony orchestras in major cities. These changes reflected optimism in continued growth in both audiences and contributions.

A version of this article appeared in the January–February 1996 issue of Harvard Business Review.