The Kennedy Center, Misinformation, and the Urgent Need for Financial Literacy in the Arts Across America
In March 2025, The Washington Post reported significant changes at the John F. Kennedy Center for the Performing Arts. These included program reductions, staff departures, and a widely circulated narrative suggesting that the institution is facing a $100 million operating deficit. Contradictory accounts from anonymous staff members and former leadership challenge this version of events. For many observers, the portrayal of financial mismanagement reinforces long-standing misconceptions about the instability of arts organizations. Those of us in the field are familiar with the refrain that needing to raise money beyond ticket sales is somehow a failure of management. Many of us have heard this from board members, donors, or constituents.
The truth is far more nuanced. The message coming from the Kennedy Center’s new leadership appears to rely on the public’s lack of understanding about nonprofit financial models. Whether this is a strategic move or an accidental misrepresentation, it presents an oversimplified view of the situation. By suggesting that the institution may be on the verge of collapse, current leadership is positioning the organization for dramatic restructuring while directing blame toward past administrations.
This moment is both troubling and instructive. For professionals working in the arts, particularly in small and mid-sized communities, it provides a rare opportunity to clarify how nonprofit cultural institutions actually function. There is an urgent need to raise awareness about the fundamentals of our financial structures, especially in places where there are fewer arts organizations and limited public familiarity with how they are funded and governed.
Understanding the Financial Model of Nonprofit Cultural Institutions
Let us begin with an acknowledgment. The nonprofit cultural model is imperfect. However, the structure of nonprofit arts organizations is out of necessity. These institutions exist to serve a mission rather than to generate profit. As a result, they are not well suited to traditional market systems. The basic principles of supply and demand do not apply in the same way. Revenue is typically derived from two very different sources, each with distinct motivations.
The first source is earned income and is transactional. This includes ticket sales, tuition, merchandise, concessions, and rental fees. These prices are often set with accessibility in mind rather than based on market value. The second source is contributed income and is built on care for a community. This includes foundation grants, corporate sponsorships, individual donations, and public funding. These contributions help bridge the gap between what it costs to produce programming and what the community can afford to pay.
Many nonprofits also receive restricted funds. These are grants or donations earmarked for specific purposes, such as educational programming, capital projects, or building maintenance. These funds cannot legally or ethically be used for general operations. As a result, an organization may have cash in hand that is unusable for everyday expenses like salaries or utility bills.
Some larger organizations have endowments or receive public appropriations, but these are typically governed by specific terms. The presence of these resources does not mean that unrestricted funds are readily available. Sound financial management in this context requires careful planning, compliance with legal obligations, and a long-term outlook that balances present needs with future sustainability.
The Kennedy Center: The Weaponization of Misunderstanding
The Kennedy Center is currently undergoing significant internal changes. Staff terminations and the discontinuation of several programs have been partly presented as necessary responses to severe financial strain. The public was told that the organization faces a $100 million deficit, which created an image of immediate crisis.
Upon closer examination, this deficit figure appears to overlook or undervalue the role of charitable contributions in the organization's financial model. The Kennedy Center has continued to meet payroll. There has been no public indication of emergency borrowing. Current and former staff have stated that the organization is not in a state of collapse.
While a decline in contributed income in the coming year is a legitimate concern due to the change in organizational leadership and approach, it is a projected risk, not a failure rooted in the past. Even so, the narrative of a failing institution has taken hold. Some critics have used it to argue that the Kennedy Center is mismanaging public resources. Others have suggested that its operating model is fundamentally flawed. Some of these arguments are driven by ideology, while others reflect a genuine lack of understanding of nonprofit finance.
This situation illustrates how misinformation can rapidly shape public perception. Once this perception takes root, it can have long-term consequences for cultural institutions across the country.
Why This Matters for Local Communities
Arts organizations in smaller communities are especially vulnerable to these consequences. In many areas, a single theater, museum, or arts center is responsible for providing access to cultural programming for the entire region. These institutions typically operate with limited staffing, modest budgets, and deep community connections.
When misinformation circulates, it undermines public trust. Donors may hesitate to give. Local governments may reconsider their support. Volunteers and board members may begin to question the institution’s sustainability. Once trust is lost, it can take years to rebuild.
This is not merely a question of public perception. It has real implications for an organization’s capacity to serve its community. In many places, the arts are not considered an optional enhancement. They are fundamental to education, economic development, and civic identity.
How Public Education Can Build Trust and Support
In response to these challenges, arts leaders must embrace public education as a core responsibility. Explaining the financial realities of nonprofit operations should be integrated into the mission of every cultural organization.
Clear and accessible communication is essential. Donors and audiences should understand why a sold-out performance may still require additional sponsorship. They should be informed that certain funds are restricted and cannot be used to cover general expenses. They should also know that maintaining financial reserves is a sign of sound management, not unnecessary accumulation.
At the Academy Center of the Arts, we provide a brief financial explanation before each of our self-produced performances. We explain how our budget works, how revenue is split between earned and contributed income, and why both are essential to our mission.
Other practices that build trust include publishing annual reports, holding public meetings with leadership, and offering guided tours that explain how decisions are made. These efforts promote transparency and foster a sense of shared ownership and accountability.
Arts organizations can also partner with schools, local media, and civic groups to increase general financial literacy. A more informed community is more likely to appreciate the value of its cultural institutions and to defend them when necessary.
Conclusion: Clarity Is a Strategic Necessity
The situation unfolding at the Kennedy Center is not isolated. It is a national moment that highlights the fragile state of public understanding about nonprofit arts finance. When arts institutions fail to clearly explain how they are funded and managed, they leave a vacuum. That vacuum can quickly be filled by misinformation, misplaced blame, and public doubt.
To prevent this, arts leaders must be proactive. Financial education should be considered part of the organization’s mission. We must communicate the reality of our financial models, the importance of public and private support, and the ways in which funding directly connects to outcomes that benefit the entire community.
When people are informed, they make better decisions. They become more engaged. They advocate for institutions they understand and value. If the arts sector is to remain strong and resilient, it must be built not only on creativity and vision but also on transparency, trust, and shared understanding.