New research reveals that arts nonprofits, including museums and theaters, face a significant attendance decline when relying heavily on contracted staff. A group of nonprofit management scholars recently published a study examining data they gathered from 2008-2018 over 7,838 organizations. Their research revealed that organizations that relied entirely on flexible labor saw a shocking 27% drop in attendance, compared to organizations that utilized permanent, full-time staff.
These results suggest that staff costs—which are typically the biggest line in nonprofit budgets—are attractive targets for budget cuts. Contract worker hiring can provide immediate cash flow relief. This strategy fails to enable sustainable financial solvency for organizations.
Research Overview
Their detailed study looked across a wide range of cultural nonprofits. It shone a light on under-resourced community arts centers and small dance companies to name just two. Like the rest of the nonprofit world, nearly nine-in-ten museums and visual arts institutions operate as nonprofits. Separately, about three quarters of dance companies and 60% of theaters have this designation as well. The research assessed operational performance by using in-person attendance at live events—like theatrical performances and museum exhibits—as a key proxy for success.
Those three studies have now been published in two peer-reviewed journals— Nonprofit Management & Leadership and Public Management Review. Equally important, they shed light on the innovative staffing strategies that these organizations are employing. The initial impact study went live in June 2025, soon followed by the second in July 2025. Researchers aimed to understand how staffing decisions impact not just finances but the quality of programming offered to the community.
The Impact of Flexible Labor
This over-reliance on flexible labor raises the stakes in terms of quality of programming provided by nonprofits. When key personnel for youth programs or community outreach are hired on a short-term basis, the damage is often deep. The uniformity, effectiveness, and wisdom of those programs quickly erodes. This lack of stability can often result in communities with diminished public interaction and reduced event attendance, causing an even greater financial strain.
Nonprofits tend to see expanded use of flexible labor as a cost-saving measure in financially challenging times. This strategy can have dangerous long-term impacts. When attendance starts to shrink down to nothing, so do larger potential donations and grants. This results in a pernicious cycle of economic precarity that can be difficult to escape.
Staffing Decisions and Financial Health
The study’s findings highlight a crucial dilemma facing arts nonprofits: the need to balance immediate financial pressures against the necessity for stable staffing. Additionally, as every organization knows, operational costs are continuing to increase and sources of funding aren’t necessarily consistent. In this environment, many are opting to pursue temporary hires, such as contractors and consultants, versus investing in permanent staff.
Yet, this approach frequently trims attendance numbers and undermines the broader impact of a program’s effectiveness. Consequently, it can damage an organization’s brand, reputation and long-term viability. This research underscores the fiscal wisdom of investing in full-time employees. This investment is more than a line item expense, it’s an assurance of future sustainability for our arts organizations.