The Empty "Empty Space" - Part II

You would think then, that there is no way theaters can make it. Theaters can't raise their ticket prices much higher because they are in a competitive market with movies, iTunes, the Internet, DVDs, and about a million other entertainment options. And it is unlikely any theater can raise enough money to beat inflation every single year.

But there are options. And the silver bullet option has got to be an endowment. In the last 25 years, the S&P500 went up 1100%. In other words, if a theater in 1981 had taken $100,000 and put it a mutual fund that tracked the S&P500, today that money would be worth $1.1 million even assuming no other donations to it were made. If donations were made on the order of ,say, $25,000 per year that endowment would be up to about $3.1 million.

Of course, theaters are going to want to take a percentage off the top every year to supplement their operating budgets, but you get the idea.

If we want to see non-profit theater 25 years from now, endowments are the best way to make it happen. Because an endowment is the only thing that will be able to beat out inflation and all other rising costs over the long run.