"The flaw in your analysis is that in the Foundation model there is no
product bought and sold, merely created and distributed. The Standard Model
of theater business treats the art, rather than a boon to be distributed, as
a commodity to be bought and sold.Thus, the Standard NFP Model was started
as a charitable organization and has become a Corporate Machine."
A fair point. But I think that's part of the problem with the Standard Model. In your normal "corporate" entity or business, if you're the CEO, top manager, chair, what-have-you, there's some flexibility to market your product more effectively. You can deal with competition, changing markets, make decisions about efficiency more easily because the buck stops with you. The money coming in is spent as you see fit, or as demanded by your product.
In the Standard Theatre Model, as it's used in most places, the artistic/professional staff is hamstrung by their board. If the board doesn't support their decisions, the decisions don't happen. Again, the specter of the foundation world creeps in: the Carnegie Foundation doesn't have to worry about competition, doesn't have to worry about replenishing its funds (not through "sales", at least not as far as I know). They have to make sure that their treasure is well-spent, the books balance and none of the Carnegies are making money off of it.
I agree that there is intense pressure on theatres to operate as a business, but within this framework of having a board that can veto your business decisions and not take the blame for timidity or falling revenues. I'm of the opinion that the first place you start to change this is by changing the model. And not being afraid of the word "corporate". It certainly has the connotation of staid, controlling, timid business, but it doesn't need to. Rethinking how we talk about organization and working models is as important as rethinking the models themselves.