New Management at The Kennedy Center Alleges Budget Shortfalls

The center’s new leadership team under Trump has claimed that the center has an operating deficit of $100 million and is $40 million in debt

According to the Washington Post (WP), staffers at The Kennedy Center may be facing more cuts following the dismissal of several employees and a message from administrators that the center is not financially sound — a claim disputed anonymously by some staffers. 

Since U.S. President Trump appointed himself as chair, the center has seen numerous leadership changes, including a full turnover of the board and the appointment of Richard Grenell as interim president. 

“For years, the Kennedy Center has been budgeting to lose money,” wrote the new Chief Financial Officer, Donna Arduin, in an email to Kennedy Center staffers. “Instead of balancing our bottom line, we have spent all the funds that were raised on paying off part of The REACH debt, leaving us $40 million in debt with no cash to pay our bills. We have an operating deficit of over $100 million dollars and are roughly $225 million dollars behind on capital maintenance needs, projects which are long overdue.

“Ambassador Grenell has hired new Department leaders with lower salaries than those they replaced, including his salary which is dramatically lower than the previous President’s,” she added. “[We will] bring accountability to our patrons and philanthropists … and will be using Key Performance indicators to drive business decisions going forward.”

The REACH project Arduin refers to is the $250 million expansion of the center completed in 2019, hosting numerous programs that are largely curated by the social impact team, of which most members were recently laid off, WP reported. 

In a recent post on X, Grenell agreed with Arduin stating that the “path forward” starts with “cutting executive pay and downsizing the staff where possible [and with] … commonsense programming that the general public will support. The Kennedy Center should be the premiere Arts institution in the country — welcoming everyone.”

However, staffers are disputing Arduin’s claim that the center faces a $100 million deficit, telling WP that this figure refers to ticket sales only and excludes donations and grants, which is a main revenue point for the nonprofit. 

Additionally, despite Arduin’s claims, the center’s recent tax filings show that the center reported a profit of over $6 million for the fiscal year ending in September 2023. 

The center’s total revenue for 2023 was over $286 million, with the main revenue sources being $140,861,307 in contributions (grants and donations — comprising 49.2% of total revenue) and $129,917,134 from program services (ticket sales and subscriptions — comprising 45.4%).

“The statement that we have an operating deficit of over $100 million is inaccurate,” added a Kennedy Center staffer with direct knowledge of the center’s finances. “Our audited FY23 financial statements, which are publicly available via ProPublica, show that this figure excludes essential nonprofit revenue streams such as contributions, grants, and endowment support.”

“Nonprofit organizations are designed to rely on philanthropic and institutional support in order to fulfill their mission,” they continued. “Using an ‘earned revenue minus expenses’ framework oversimplifies the picture and applies a for-profit lens that doesn’t reflect how nonprofit business models work.”

“Whomever your source is that said [our] numbers are not accurate, clearly doesn’t understand what the term operating deficit means,” the Kennedy Center’s head of public relations Roma Daravi told WP. 

Though not providing any financial documentation, Daravi stated that the previous leadership intentionally led the center into a budget shortfall. 

“I understand this can be confusing to grasp. An ‘operating deficit’ is the net margin from operations,” she explained. “Net margin is revenues minus expenses. The extreme mismanagement of funds is certainly shocking and was designed to leave the Center in the red.”

As the center continues to undergo programming and staff changes, WP added that at least 10 staff members have resigned since Trump’s takeover of the nonprofit; Ellen Palmer, the center’s vice president of corporate engagement, and Leslie Miller, the senior vice president of development, have both resigned from their roles. 

“[The $100 million loss described by Arduin is] a very big operating loss for an organization of this size. I am surprised at that report, and I would want to know more,” said Karen Gahl-Mills, professor of practice and director of arts administration programs at Indiana University. 

“Nonprofit performing arts organizations have two big revenue streams: earned revenue — things like ticket sales — and contributed revenue — things like donations and grants,” she added. “Contributed revenue is part of their structure. Their costs often exceed what they can recoup in ticket sales, so they raise money to make up the difference. This is best practice in the sector.”