Rising costs. Hesitant audiences. Shaky funding. It’s a make-or-break year for the arts sector.

It started with uncomfortable calls from bankers and bookkeepers. As 2023 progressed, Canada’s cultural institutions began to realize that the money coming in was down and the money going out was up. Way up.

The Vancouver Folk Music Festival was one of the first, and was nearly dissolved after its postlockdown costs surged. The artist-space provider Toronto Artscape Inc. was one of the next to reckon with this reality, last summer, when it could no longer make its $70,000-a-month loan payments. Soon, globally lionized festivals from Hot Docs to Just for Laughs reached the brink. Even beloved lower-budget local institutions such as Victoria’s Blue Bridge Repertory Theatre and Toronto’s Open Studio printmaking centre revealed they were struggling to survive.

The reason for this, put simply, is that the already-fragile math that long underpinned the arts is now utterly broken. Organizations emerged from lockdowns to surging costs, dwindling audiences, hesitant philanthropists, distracted corporate sponsors and mostly stagnant government funding. “Whoever invented the phrase ‘show business’ really did a disservice to our area of society,” says Brian Richmond, a five-decade performing-arts veteran who’s trying to rescue Victoria’s Blue Bridge after it lost access to its home at the Roxy Theatre in December.

With few exceptions, such as for stadium fillers and commercial blockbusters, the struggle is near-universal. That struggle takes different forms; not everyone is facing failure, but even some organizations exuding success, such as the Stratford Festival, are quietly trimming costs. With surpluses and savings accounts dwindling and the last of government pandemic-relief programs drying up, there will be more waves of organizations, the workers they employ and artists they serve coming to grips with this new math. At risk is the $63.9-billion-a-year Canadian culture industry, its more than 600,000 artists and workers – carpenters and electricians and graphic designers and so many more – and organizations big and small, local and national.

“There’s a real feeling that the current models aren’t serving us any more – and that a new deal is needed,” says Brad Lepp, executive director of the Professional Association of Canadian Theatres (PACT).

There is a harder-to-quantify risk to local economies, hurting everything from restaurants to summer jobs. Even less tangible is what this could mean for the very notion of Canadian identity. Fewer Canadian cultural organizations means fewer Canadian stories and less Canadian expression.

Ask artists and anyone in their ecosystem about the state of the cultural sector right now, and their responses will almost all be variations on a single theme: it’s in a financial crisis. Some of those still standing are pushing through it with creativity and perseverance. Others might not have much left to stand on. But the same factors are putting pressure on everyone.

The audiences

The new math of the arts pays little heed to geography. The Vancouver Arts Club Theatre Company’s patrons fell from 220,000 before the pandemic to 173,000 last season, with an expected 180,000 this season. In Toronto, both Soulpepper Theatre Company and Factory Theatre cut shows after low audience attendance last fall.

This past March, PACT published a startling number from the Canadian Arts Data statistics database: Theatre attendance was down 46 per cent from 2019 across the country. A mix of factors is likely to blame. A recent RBC report tried to unpack why consumer spending is much higher right now in the U.S. than Canada. It suggested, among other reasons, that Americans’ average 30-year mortgage terms leave them more insulated from rate shocks – which Canadians, with mortgage contracts usually lasting five years, constantly need to brace for.

A late-April analysis of Statistics Canada data by TD Economics offered more context on what arts leaders had feared was driving much of this trend. Middle-income Canadians have seen prices outpace earnings growth since 2019, with increased costs forcing them to spend more conservatively – to the detriment of cultural spending.

In the live-music industry, concert attendance appears to be down outside of massive stadium and arena tours, according to Erin Benjamin, chief executive of the Canadian Live Music Association. In fact, she wonders if the success of high-demand, high-priced concerts by the likes of Taylor Swift is eating into the “fun” budgets of fans who, in previous eras, might have spent hard-earned money on tickets to a bunch of concerts instead of just one.

In the absence of much national data across the arts-and-culture sector, the Canadian Association for the Performing Arts’ director of research, Frédéric Julien, keeps close track of a few proxies.

Off the top was GDP: New Statscan data released this week confirmed that live performances’ recovery lagged behind the rest of the cultural economy by a year, in terms of gross domestic product. And while their contribution to the economy had an annual growth rate of 5.9 per cent between 2010 and 2019, Julien points out that it was effectively the same in 2023 as in 2019. This isn’t a perfect proxy, but it suggests less enthusiasm for the stage.

Julien’s research has led him to a few non-monetary theories, too. With so much culture consumed digitally starting in March, 2020, and with digital services desperate to keep users on their services with if-you-like recommendations, he believes that all this algorithmically served-up culture keeps reinforcing society’s pandemic habits. Meanwhile, so much working from home has made travel – such as to cultural events across town – seem more cumbersome.

One controversial – and certainly subjective – matter stirring the discourse around disengaged audiences has been the role of programming. When the Prairie Theatre Exchange said in February that it had seen a 57-per-cent drop in subscribers, the influential Winnipeg philanthropist Gail Asper linked the decline to its decision to program four world premieres by “relatively unknown Canadian playwrights.” “People will put aside health and financial concerns for great theatre,” Asper added.

On the surface, one might find that, say, the Stratford Festival – Canada’s most prominent non-profit theatre organization – offers evidence to support this thesis, showing that pandemic-starved audiences will show up when the programming hits the right notes. Stratford’s 2023 season buoyed its bread-and-butter Shakespeare with known Broadway hits Spamalot and Rent, with new Canadian plays such as Casey and Diana and Women of the Fur Trade selling out their runs.

But while the festival saw year-over-year audience levels jump 35 per cent, it’s still tens of thousands of visitors away from reaching its 2019 attendance of 463,838. And though it boasted a $404,000 surplus, it did so in part thanks to saved-up government funding and $10-million from a multiyear philanthropy campaign to relaunch the festival after lockdowns.

Executive director Anita Gaffney says that Stratford’s costs last season were up 25 per cent over 2019, and that her team has cut the 2024 budget by 3 per cent over last season in ways they hope won’t interfere with artistry and audience experiences. So far, that’s meant trimming digital content, marketing consultant fees and even cutting down on printed materials wherever possible.

“I would never want to convey that we have this solved,” Gaffney says.

The givers

When the Contact Photography Festival opened in Toronto last month, it was the last edition with a roughly half-million-dollar blessing from its longtime title sponsor, the Bank of Nova Scotia. The festival has since reached out to dozens of giants of corporate Canada for a replacement, hoping for three or four new sponsors to make up for Scotiabank’s gifts, and “as the rejections came back, it became more apparent that this was going to be difficult,” chief executive Darcy Killeen says.

He’s only been able to get commitments for 10 per cent of Scotiabank’s annual contributions. The festival is now restructuring, with several staff already laid off. Sponsors are much keener on data-rich sports organizations and social-justice causes these days; even the Toronto International Film Festival, which parted ways with title sponsor Bell last year, is still looking for a replacement.

(It’s worth noting that Scotiabank-sponsored events, including Contact, Hot Docs and the Giller Prize, have independently received criticism for a subsidiary’s stake in an Israeli arms manufacturer Elbit Systems – raising separate discussions among artists about art’s role in challenging powerful institutions, at a moment when the sector depends on money from them to survive.)

The Hot Docs Ted Rogers Cinema in Toronto in May, 2024. Scotiabank-sponsored events, including Hot Docs, have received criticism for financial ties to an Israeli arms manufacturer – raising questions about art’s role in challenging powerful institutions, at a moment when the sector depends on money from them to survive. SAMMY KOGAN/THE GLOBE AND MAIL

Trends in individual philanthropy are demonstrably worse. The analytics agency TRG Arts reported last January, using a large swath of primarily performing-arts data, that gifts to the Canadian arts sector had fallen 45 per cent between 2019 and 2023. This is in line with general giving patterns, according to annual data compiled by the country’s biggest online giving platform, CanadaHelps, which has found that the number of Canadians making charitable donations has declined for 11 straight years.

Duke Chang, CanadaHelps’s CEO, says this is in part owing to the same factor as declining attendance: People have less disposable income. And arts donations fall behind giving in general: Only 9 per cent of Canadian donors gave to such causes last year, making it one of the country’s lowest-supported sectors, according to CanadaHelps’s latest survey of online donations.

The richest Canadians, whose gifts can make or break an organization’s financial well-being – and are often tied to tax incentives – have also spent the past year warning that changes to the federal tax system could lead to fewer significant donations to charities, including in the arts.

Since the nineties, philanthropists have taken advantage of alternative-minimum tax (AMT) rules implemented by finance ministers including Paul Martin and Jim Flaherty, which reduced capital-gains hits on gifts of publicly listed securities to, for a while, zero. The current Liberals walked back some of this benefit in the 2023 budget, drawing ire from charity leaders and philanthropists.

Ottawa did offer an olive branch in the 2024 budget, proposing to let philanthropists claim a tax credit of 80 per cent for charitable donations instead of 50 per cent in AMT calculations, but didn’t budge on other changes. “Even with this change, donors are still facing a high cost when giving substantial donations,” says Donald K. Johnson, the longtime Bay Street magnate who has marshalled support for AMT changes for decades.

There are plenty of other tax-related ideas floating around to save the arts; PACT head Lepp wonders why governments don’t offer the performing arts similar tax credits as the screen sector, for one. But part of the arts sector’s fundraising problem might be related to its makeup.

Non-profit arts organizations don’t always have the budget or prestige to hire on full-time fundraising staff. “High-achieving fundraisers are needed in the other not-for-profit subsectors,” says Oliver Armstrong, producer with One Yellow Rabbit Performance Theatre in Calgary. It would be nice to hire fundraisers with the right contacts and skillsets, but often, “we just can’t afford it.”

The governments

When the longtime Montreal music programmer and curator Peter Burton dropped by a late-summer edition of the electronic-music series MidField last year, his conversations with other musicians kept steering toward the Canada Council of the Arts. Application results from the council’s latest Explore and Create funding program, which offers grants for artists expanding their practices, had just come in. “Everyone had had their applications denied,” Burton says, which he feared was “not good for the experimental music scene going forward.”

The Canada Council has been a crucial lifeline for Canadian artists and arts organizations since 1957, offering up grants to support the creation, sustaining and promotion of art. Under previous CEO Simon Brault, the council began making changes to how funding is disbursed, including allocating 20 per cent to first-time applicants and introducing cross-disciplinary juries to assess applications.

No one could have expected that many of these changes would coincide with a global pandemic that set the council’s application numbers surging.

Burton began reaching out to artists and administrators across other disciplines in Montreal – dance, theatre, film, writing, visual arts and beyond. Everyone was shocked at the number of declined grant applications and felt disconnected from the national granting body. In late November, they published an open letter to the Canada Council, asking for greater transparency, more community involvement with major decisions, more discipline-specific juries and a renewed focus on mid-career funding.

The letter shot across Canada, garnering more than 1,000 signatures. The council’s new director and CEO, Michelle Chawla, eventually responded. In her own open letter in February, she promised to be more transparent and committed to taking feedback. But she came armed with depressing numbers, too. Applications for the Explore and Create program had tripled between 2017 and 2023, resulting in only 16.6 per cent of 6,750 applicants getting grants in its latest competition.

And though the Council’s funding had effectively doubled since the Liberals took power in 2015, topping out at $365-million last year, Chawla said the government would now require it to lower its spending over three years, including by $9.88-million, or 2.7 per cent of current funding, in 2026-27. Just as the Canadian arts sector began calling out structural problems with the Canada Council, and many granting organizations’ pandemic-specific funding programs were coming to a close, the federal funding body would also soon have less money to work with.

Both individual artists and nationally recognized organizations are trying to grapple with this. The Vancouver-based Chutzpah! Festival, for one, had to launch a $60,000 fundraising campaign through CanadaHelps in part to compensate for recently declined grants. Numerous dance organizations and performers, such as Vancouver’s Kidd Pivot and Shay Kuebler, have told supporters they’ve lost significant grant funding and had to make extreme adjustments. In some cases, dancers have had to give up hotels and billet with locals on tour.

Lise Ann Johnson, the council’s acting director general for arts-granting programs, said that cost reductions would come from cuts to administration and time-limited programs, and that none of the organization’s permanent grant programs would see declines. But she acknowledged that this would do little to assuage surging demand. “People need more support to be able to undertake the same projects than they would have needed a number of years ago,” Johnson says.

Some of the major recent changes to the Council’s rules, such as reserving funding for first-time applicants, have helped make its grants more accessible for a wider range of artists, Johnson says – in particular those from diverse backgrounds. But the increased demand is harder to deal with.

Many arts organizations have been grappling with stagnant or declining grant funding from their provincial and municipal granting bodies, too – sometimes because of cuts to arts-council budgets, sometimes because their applications had been declined.

Since 2019, the Conseil des arts et des lettres du Québec’s government funding has grown mostly steadily, while the Alberta Foundation for the Arts just got a sudden 18-per-cent boost after much stagnation. Meanwhile, the British Columbia Arts Council’s budget has grown at a glacial pace, and the Ontario Arts Council’s base funding has been effectively stagnant for years, despite the surging cost of living.

When governments don’t nurture arts-funding bodies in tandem with other major policy decisions, the consequences can be difficult. Consider how the grant-supported Artist-Run Centres and Collectives Conference, a federation of more than 180 visual and media-arts centres across the country, plans to handle Ontario’s coming boost to minimum wage from $16.55 an hour to $17.20.

“The only thing I can do is cut back staff hours because our budget didn’t increase,” director Clayton Windatt says.

Governments have no problem throwing billions at other industries. When Ontario and Ottawa announced in April that they’d contribute a combined $5-billion to entice Honda to keep or add thousands of jobs in the province for electric-vehicle manufacturing, PACT’s Lepp pointed out that Ontario employs tens of thousands in the live performing arts. And the sector, he added, gets “a fraction of the investment” that Honda received.

This isn’t to say all funding comes from granting bodies. In April’s federal budget, the Liberals offered boosts to programs such as the Canada Book Fund, the Canada Music Fund and the Canada Arts Presentation Fund, the latter of which helps numerous festivals, including Fringes across the country.

But granting systems are crucial in a country as spread out and thinly populated as Canada, where there isn’t always an obvious commercial market for artists hoping to launch and sustain careers. “If I didn’t get arts grants, I wouldn’t have been able to finance my early work,” says Atom Egoyan, one of Canada’s most well-recognized filmmakers. Some of his earliest grant money paid for film stock. “It meant that someone like me could actually start making short films and build up a body of work.”

Artist Victoria Day has worked as a member and instructor at Open Studios in Toronto for years, relying on the low membership costs. After financial hardship, the studio will be closing for six months, leaving Day concerned for the future of the art space. SAMMY KOGAN/THE GLOBE AND MAIL

The costs

In quick succession earlier this year, the multidisciplinary artist Victoria Day watched three of her studio spaces slip away. One had landlord trouble; another shut down; and her downtown printmaking studio, Open Studio, revealed serious financial strain and a plan to shut down for half a year.

With so many studios on unsteady ground, Day says, “My fear in Toronto is that we’re going to just fully lose an entire generation of artists, especially recent grads, who are not going to be able to get their foot in the door.”

In its plea for public support in March, PACT warned that operating expenses have surged between 35 and 41 per cent for its member theatres across the country. Sometimes those costs are as basic as the wood required to build stages. For organizations, the cost of labour is rising, as unions fight their own battles against inflation, sometimes in campaigns that highlight a class divide widened by their bosses’ massive paycheques. And across the spectrum, it’s become a struggle to keep a roof over your head.

The company behind Calgary’s Grand Theatre nearly had to vacate the premises after a dispute with its landlord that led to negotiations through the spring. Blue Bridge in Victoria is still without a home. Close to 100 concert venues shuttered during the first couple of years of the pandemic, the Canadian Live Music Association found. Even just this week, Toronto’s Phoenix Concert Theatre, which has hosted artists from Billie Eilish to Odd Future to The Ramones, said it was looking for a new home after 33 years, with its current site to be redeveloped for residential use. “Small and medium-sized venues are struggling under the weight of market forces,” says Erin Benjamin, the Canadian Live Music Association’s CEO.

Some venue owners that have survived the tumult have done so by turning conventional real estate decisions on their head. In Montreal, Bain Mathieu, housed in a former public bath, uses a pool as a performance space. It’s become a key local venue. “The main mission is to offer the space to any kind of artist who wants to showcase or explore their own art,” says Noëmie Lachapelle, a partner at the venue.

221A, a non-profit that operates 140,000 square feet of cultural spaces around Vancouver, has in recent years been working on a much bigger idea to stanch the suffering from rising costs. With a growing percentage of artists’ income – including grants funded by taxpayers – being diverted into home and studio rents, 221A is one of several arts organizations worldwide exploring land trusts.

As it hopes to secure six properties by 2027 and 30 by 2050, much of 221A’s vision for its Cultural Land Trust is tentative: Organizers believe that investing in real estate now can shield arts organizations from future rent increases. But they need to get buildings somehow, perhaps through social-finance tools, government transfer or donations from arts patrons.

Executive director Brian McBay sees this as a necessary step forward – even if the trust has to convince its way into potential patrons’ wills. “If they own a house, they can donate that for resale to use towards acquiring trust properties,” McBay says.

At Turbo Haüs, which began its life as an 800-square foot Montreal DIY punk space and is now a full-fledged venue in the Quartier des Spectacles, noise complaints – on a street full of busy bars – are now a regular occurrence. So goes the march of gentrification. But that’s not the real estate problem that co-founder Sergio Da Silva wants to talk about.

He’d rather point out how the real estate crisis is changing how, and how much, art gets made. Montreal used to be cheap; when he played in the band Trigger Effect more than a decade ago, he remembers fellow musicians being able to tour for five or six months a year and maybe work the other half. “We had the energy and creative juices from not having to give everything to work,” he says. “Now the price of everything has exploded. If you have to work three jobs to make it work, you’re tired. You can’t do it.”

The Globe and Mail, June 7, 2024