Suffet, you say in part:
"Most of their money comes instead from playing at schools, community centers, libraries, museums, arts centers, old age homes, hospitals, etc."
Although I'm not performing for pay, my experience has been that most of the venues you list can get all the local amateur volunteers they need to entertain and don't have to pay. Of course they may occasionally have to suffer through a poor quality performance but their philosophy seems to be "What the hey? It's free!" An exception to that might be when some of these are holding fund raisers and the like and need to impress donors so they hire quality pros. Then, though, they usually don't go with folk music but with pop or dance music suitable to the expected guest age range.

What you're saying may be true for your locale, but it's not true everywhere.