Reliable revenue in a project world
Episodic income is a central challenge of arts management practice
“There’s really only one business model, and that’s reliable revenue that meets or exceeds expense.”
— Clara Miller
Arts managers navigate a central financial challenge: running organizations that demand “reliable revenue that meets or exceeds expense” when the work is episodic and unpredictable. The revenues come in unknowable bursts over a season (ticket sales, gate fees, annual fund gifts, grants, major gifts) even as payroll, overhead, production, and planning expenses roll in every month.
By many measures, arts organizations are “project-based firms,” described by Söderlund (2015) as “organizations that privilege projects in their organizational structure – a type of organization that carries out and coordinates most of its work in projects.” Mintzberg (2016) called these “project organizations.”
So what’s an arts manager to do in the face of relentless expenses and blotchy revenues? One possible focus is Monthly Recurring Revenue (MRR) – a metric developed for and by the software-as-a-service (SaaS) industry. Although, as always, such industry-specific and for-profit approaches need to be adapted rather than directly adopted.
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MRR captures “the total amount of monthly revenue that a business can reliably expect to receive on a recurring basis” (Stripe). It’s a strategy metric, not a standard accounting metric, developed to understand and craft the dynamics of the software-subscription business (CloudNuro 2026). MRR is calculated by summing the monthly-normalized amounts of all active subscriptions (an annual $120 subscription would count as $10 toward the MRR).
It’s essential to note that “subscription” here is not the subscription model we tend to use in the nonprofit arts (a lump-sum payment for a season or series of future events). Rather, it’s a recurring payment for an ongoing service.
Why might this be useful? Because MRR offers a language for interrogating revenue relationships rather than just counting revenue totals. There are four factors that shape MRR, each providing a lens for analysis and strategic action:
new subscriptions - new subscribers begin paying
expansions - existing subscribers upgrade
contractions - existing subscribers downgrade
churn - existing subscribers cancel, default, or vanish
Smart subscription businesses measure and manage the dynamics of all four factors to support a solid and growing MRR.
Obviously, arts organizations can’t and probably shouldn’t become monthly-subscription-driven businesses (although some have tried). But they should interrogate and innovate around recurring and reliable revenue. Expanding the time window from monthly to yearly (aka, Annual Recurring Revenue or ARR) reveals a wide array of strategies to do so.
What if, for example, you divided your revenue streams into useful groups – ticket sales, individual gifts, grants, contract service revenue, major gifts – and explored the annual dynamics of each according to new, expansion, contraction, and churn? Not by individual account, but by category.
Each category would have its own reliability profile, its own renewal logic, its own churn risk. Naming those dynamics, tracking them annually, and budgeting from the realistic recurring base rather than the optimistic ceiling is the discipline this framework requires.
True, MRR or ARR won’t solve the disconnect between reliable revenue and project reality. But the approach may sharpen your thinking and focus your strategy in ways that smooth the ride.
From the ArtsManaged Field Guide
Function of the Week: Accounting
Accounting involves recording, summarizing, analyzing, and reporting financial states and actions.
Framework of the Week: Recency Frequency Monetary (RFM)
Recency, Frequency, Monetary Value (RFM) is a simple but powerful framework for segmenting a customer, audience, or donor list according to transaction patterns – focusing on how long ago they were active (recency), how often they were active (frequency), and how much they spent or contributed in total (monetary value).
Photo by Behnam Norouzi on Unsplash
Sources
“A Brief History of SaaS: From ASPs to the Subscription Economy.” 2026. CloudNuro, January 12.
Mintzberg, Henry. 2016. “Species of Organizations.” Simply Organizing, April 14.
Söderlund, Jonas. 2015. “Project-Based Organizations: What Are They?” In The Psychology and Management of Project Teams, 1st edition, edited by François Chiocchio, E. Kevin Kelloway, and Brian Hobbs. Oxford University Press.
Stripe. n.d. “Understanding Monthly Recurring Revenue (MRR) and Annual Recurring Revenue (ARR) ” Stripe Support. Accessed May 4, 2026.
This hits home as I’m building out Sallery Studios. The tension between the "episodic" nature of a residency and the "relentless" monthly overhead of a physical space is the central challenge.