After 40 seasons and over 300 performances, Watertown’s New Repertory Theatre will permanently close.

“It’s a bit of the frog in the boiling pot, where we’ve been gradually coming up to this point,” said New Rep Board Chair Chris Jones. “It’s always a challenge to put the puzzle pieces together, and then you add in all the different factors over the last couple of years, [and] it’s really swimming upstream to get to sustainability.”

The news follows a tumultuous three years for the midsize regional theater.

In 2021, New Rep paused its operations due to financial losses incurred during the pandemic. It reopened nine months later on a smaller scale with a renewed focus on new work and diverse voices. 2023 marked its first full-fledged season since the pandemic, featuring productions of “The Normal Heart,” “A Raisin in the Sun” and the world premiere of a new play, “DIASPORA!”

“This is in the order of hundreds of thousands of dollars to produce these kinds of shows,” said Jones, referring to the theater’s recent black box productions. “Tickets can be excellent for those shows, but you need contributed income.”

Jones declined to share the theater’s current operating budget, but said the organization would wind down with its financial affairs in order and no debt.

He pointed to a shortfall in philanthropic funding as the primary reason for the theater’s closure. The nine-month hiatus, followed by a reboot into an untested incarnation, seemed to put some funders off, at least from the perspective of New Rep leadership.

“In all frankness, these tend to be organizations and folks that say, ‘Yeah, I believe in what you’re doing and I think it’s great, and that’s the direction things should be heading in,’” said New Rep Resident Artist Maria Hendricks. “But there’s that apprehension, there’s that stutter, almost.”

“They want you to be successful before they’ll help you be successful, and that’s the Catch-22 just in the funding game,” Jones added.

Following the racial reckoning of 2020 and broader conversations around equity in the arts, New Rep leaders had pledged to pay its artists and workers a living wage.

“That’s not a model that existed, necessarily, where every person employed by a theater was able to live on what they were making at the theater, and that is something that we were aspiring to,” New Rep Board Vice Chair Danielle Galligan said. “That would have also impacted the amount we needed to sustain ourselves moving forward.”

New Repertory Theatre began its life in 1984 in a Newton church before relocating to the larger Watertown Arsenal, later renamed the Dorothy and Charles Mosesian Center for the Arts. The theater made a name for itself in the 1990s as a destination in the Greater Boston theater scene, despite having fewer resources than the area’s heavyweights, The Huntington Theatre and the American Repertory Theater.

New Rep’s travails began in March of 2020, when it abruptly shuttered, along with the rest of Greater Boston’s theaters, as COVID-19 cases ticked upward. In December of that year, Michael J. Bobbitt, the organization’s first Black artistic director, departed after only 17 months on the job to lead the Massachusetts Cultural Council. Six months later, the theater announced it would pause operations temporarily and laid off most of its staff, estimating over $1 million in losses since the pandemic began.

When New Rep returned, it was with a newly-honed progressive vision and a reduced budget. Rather than hire an artistic director, it appointed a group of “resident artists” to put the new vision into practice. Maria Hendricks, Lois Roach and Michael Hisamoto piloted a residency program to develop new work by local theater makers and organized numerous one-off productions and community events before launching the 2023 season.

“Being at the forefront of that and walking that [walk] is not a simple task. And we did it with our programming. We did it with our community outreach and in dealing with professionals and being able to pay them their worth,” Hendricks said. “Just that, alone, is tremendous.”

She said the focus on work by theater makers of color and other marginalized identities, along with the emphasis on new work, seemed to be resonating with audiences.

“As far as the numbers and attendance question, that wasn’t really a factor at all as we gained traction over the last year,” Hendricks said.

New Rep’s decision to shutter comes amid a wave of theater closures across the country. In Boston, the fallout from the pandemic put arts leaders on edge. New Rep’s closure follows the shutdown of StageSource, a membership-based nonprofit that connected and supported local theater artists.

“The COVID-19 pandemic has presented unprecedented challenges to the arts, with many organizations still struggling to bring audiences back while navigating changes in consumer habits, reduced revenues and an altered arts economy,” said Catherine Peterson, the executive director of ArtsBoston, a nonprofit that supports the arts in Greater Boston. “In talking to many arts organizations, I worry that New Rep is not an isolated case.”

But Galligan sounded a more optimistic note.

“I’m encouraged by the idea that there are other fledgling companies, midsize companies, growing companies that can step in and still do great work, and will maybe take some of the pieces that we’ve laid out … and experiment with it themselves,” she said.

She hoped that other theater companies would make use of the mainstage and black box at the Mosesian Center for the Arts, New Rep’s home since 2005.

Said Galligan, “There’s still a stage to be filled.”