The Pittsburgh Cultural Trust really knows how to put the non in nonprofit.

The lead actor in Downtown Pittsburgh's cultural scene is among the best-managed arts groups in the country, yet being in the red is written into its very DNA. In fact, when it comes to programming theater, dance, music and other arts events, the Trust goes into every year with the anticipation of losing money -- it does so as part of its charitable mission of making Downtown vibrant and bringing high-level art to the city, despite the costs.

Sometimes, that means taking a bath financially.

	Richard Winsor and Kerry Biggin in the staged dance version of "Edward Scissorhands," an underperformer for the Pittsburgh Cultural Trust in January. Click photo for larger image. Related article 'Hairspray' among shows added to Broadway series

The Trust is having the worst fiscal year in its two-decade history and has been forced to lower its spending on arts programming by $5.4 million this year, in response to lower-than-expected attendance at some big-name dance and Broadway series shows.

The tumble has forced the Trust to cut performances and visual arts by 20 percent and administrative costs by 10 percent in order to keep its $39.8 million budget balanced. Trust president Kevin McMahon said the Trust has never ended a year with a deficit and will use $1.2 million in reserves plus $400,000 in performance contingency funds to balance the budget this year.

McMahon also has had to go hat in hand to the Allegheny Regional Asset District board, asking for an almost $1 million increase in sales tax funding to help its budget next year.

At the same time -- and to underscore what a gamble the culture business is -- the Trust plans to double-down next year, increasing its arts spending by $6 million, confident that 2007 is an aberration.

"We certainly continually are optimistic," McMahon said. "We know that overall if you blend years together and seasons together, the general trend in the Cultural District is up -- we have a combination of things causing a little aggravation at the moment."

Doing the postmortem on the Trust's cultural programming this year requires a look into the ugly world of arts economics, where nonprofit promoters have to weigh the benefits of booking a highly regarded show vs. the audience's ability to pay for it.

In between there is usually a financial shortfall. The gap then gets filled with subsidies -- from fund raising, philanthropy, public taxes and grants -- and the challenge for the nonprofit is to keep that gap as small as possible.

When it opens into a maw, as it has for the Trust a few times this year, it can send an entire year's budget tumbling.

The biggest culprits this season were a dance production of "Edward Scissorhands" in January and the Tony Award-winning play "Doubt" in March. Due to poor ticket sales, one of the five performances of "Scissorhands" had to be canceled, so after one weekend early in the year the Trust had already lost about $100,000.

For "Doubt," the math was like this: take eight performances at the roughly 3,000-seat Benedum Center, subtract the 10,000 PNC Broadway Across America subscribers, and there were 14,000 tickets left. The Trust budgeted on the expectation of selling about 70 percent of them to break even; instead, it sold a little more than half.

"Doubt," said the Trust's vice president for programming, Paul Organisak, "was an amazing show, one of the finest stage presentations imaginable, and it just didn't sell single tickets."

That is not to say the Pittsburgh theater market is bad. Rather, arts programmers simply do not know for sure what will sell and what will not, outside major blockbusters such as "The Lion King" or "Spamalot." But even with the major shows, there's a rub: They require huge upfront guarantees, up to about $400,000 per week, or $1.2 million for a three-week run.

Still, due to sellouts and high ticket prices, the Trust can bank on making about $1 million from such major shows. That is part of the reason why the Trust is planning on better returns from performances next year. It has a long run of "Lion King" in January and another, unannounced blockbuster in the fall.

Ticket sales for most performances aren't so easy to predict. Organisak opened up the books on a pair of other shows in the past year to show how such predictions -- and yearly budgets -- routinely go awry.

Last October, the Trust booked the Paul Taylor Dance Company, an internationally known, artistically accessible dance troupe, for one night at the Benedum. Dance does fairly well in Pittsburgh, with subscriptions to the Pittsburgh Dance Council jumping 22 percent and regular sell-outs of the smaller Byham Theater, so programmers thought the large company would be a good fit for the start of the 2006-07 dance season.

The Trust spent $90,000 on the three phases of typical programming costs: the artist's fee, marketing the event and theater costs, which include paying stagehands and renting the hall (even though the Trust owns the Benedum, it still pays itself rent to keep the books straight).

The fee for the full dance company for the two-hour show was $30,000; marketing (including posters, flyers and print ads) was $25,000; and theater costs $35,000.

The Trust sold only about 1,500 tickets -- about half of the Benedum house -- for a total of $47,000.

In just one night, it lost $43,000.

Even when there is a near sell-out, as there was for a January show by singers Sweet Honey in the Rock, the promoter can lose money.

The Trust booked the Grammy-winning a cappella gospel group into the 1,200-seat Byham Theater, selling 1,170 tickets.

The artist fee was $20,000, marketing $8,000 and theater costs, $10,000, for a total of $38,000 in expenses. They sold $28,000 in tickets.

"We were basically sold out, and we lost $10,000," Organisak said. "Kevin [McMahon] likes to say we operate in an upside-down business model, since people don't like to see these negative [losses] in parentheses, but nearly everything we do loses money. The only difference is the magnitude."

"The real basic way of saying it is, we cannot charge enough to cover all the costs. If we were to charge almost 40 percent more, we may be able to balance the budget. But being mission-driven and community-responsible, we want to make it accessible -- meaning affordable," Organisak said.

The Pittsburgh Cultural Trust was founded in 1984 to oversee redevelopment of the Cultural District, using arts and culture to help resuscitate the Downtown economy. It owns the Benedum, Byham and O'Reilly theaters and is spearheading a $460 million, 700-unit riverfront housing development adjacent to the 14-block Cultural District.

That long-term project will not be affected by this year's budget swoon, McMahon said.

The Trust runs a tight ship, according to nonprofit watchdog Charity Navigator, which rates it the second-most efficient charitable arts presenting organization in the country, spending nearly 90 percent of its budget on its cultural mission.

Still, revenue from Trust performances is expected to be $11.6 million this year, down from $17 million in 2006. To close that gap, the Trust is spending just $12.4 million on the presentations, down from $17.6 million the previous year.

There will be no impact on the Trust's flagship Broadway series shows, Organisak said. Instead it is booking fewer one-night-only Trust Presents shows.

About a third of the nation's nonprofit arts presenters run a deficit each year, according to Charity Navigator.

The losses are a regular -- and indeed essential -- part of the business for nonprofit arts providers, said Peggy Morrison Outon, executive director of the Bayer Center for Nonprofit Management at Robert Morris University and a consultant for more than 30 years to more than 600 nonprofit groups.

"The role of the nonprofit is to innovate, to challenge, to bring something that doesn't have a big audience but is really important. ... It's extremely important that a vibrant city has a wide variety of cultural offerings -- that's part of the way of measuring vitality. And by doing that you take risks," she said.

The problem is the gamble is usually done with other people's money, whether it comes from individual giving, grants from private foundations or tax money from the 1 cent RAD sales tax.

When arguing for that support, the Trust -- and other nonprofit arts groups -- can point to results of a countywide economic impact study released in June, showing the arts pump $341.6 million annually into the Allegheny County economy and support the equivalent of 10,192 jobs.

Support of the best art is also about something more ephemeral than the red numbers at the bottom of a ledger.

"We could be doing comedy every night [to make money]. Big deal. That's not what we're about," Organisak said. "We're about giving this community the highest level of art, and we're willing to do the work to make it possible, and we're willing to pound the pavement and say, 'We need your support.' "