Editor's note: The following guest column was submitted by Ashley Fisher from the Bloomington Area Arts Council in response to criticisms leveled by local artists in The Bloomington Alternative and other local media.
Fallout from the past
The new (Bloomington Area Arts Council) Board's 10-month story starts with the realization at the beginning of 2009 that the organization was failing -- again. Sensing this, both Ashley Fisher and Rob Hanrahan, who had recently joined the BAAC -- Fisher as a new Board member in October 2008 and Hanrahan November 2008 as a fundraising consultant -- took up the challenge as President of the Board of Trustees and Executive Director respectively in March 2009 to address the long-term sustainability of the arts council, despite its weakened state at that time. Both believed that the organization could be transformed -- and still do.
"The bottom line is that for any organization to survive and grow it must meet certain financial standards to remain viable."
The new Board and Executive Director spent much of the first part of 2009 being consumed with "fall out" from management decisions from past years. It took until the end of the summer for this to slow down enough for the board to focus on investigating the cause of the historically recurring financial crises of the arts council that kept jeopardizing the organization's existence and ability to conduct its mission.
Overabundance of issues
The new Board undertook a board strategic planning in September 2009, which resulted in the formulation of seven strategic goals being set for fiscal year 2009-2010. The most important of these was to improve the long-term financial stability of the BAAC, by instituting a long-term financial plan, including fundraising practices, which would strengthen the capacity of the organization and provide the necessary funding to fulfill mission and goals. High on the agenda was the transformation the Board and Organization to consist of trustees and staff who would be engaged and who would bring quality long-term leadership, governance and skills to the BAAC that would ensure continued health of the organization.
After observing the organization's cycle for nearly a year and after investigation and analysis, it was found, for example, that while there is a depreciation figure in the Profit and Loss reports, the amount has been unfunded for years. In addition, there was no evidence of a facilities maintenance plan for the designated historic limestone building, which used to function as Bloomington's City Hall.
Further, there was no evidence of an ongoing, systematic plan for any of these essential activities: membership recruitment, fundraising, solicitation of sponsorships for special events and programs or a grant plan. Nor was there an annual review of pricing structures. Some of these activities were taking place sporadically but not integrated into the core business of the organization.
The same applied to an earned-income plan to increase the capacity of the Waldron to earn rental income, to use the arts classrooms to capacity, and to increase the use of the gallery and gift shop to increase sales.
There was also an absence of a networked computer system and appropriately shared record keeping system. Making things more complicated, a conversion in accounting software in January 2009 encountered some issues which resulted in delays in the analysis of financials and tracking of payables.
In addition, a conversion to a new membership and fundraising system had its own issues. After a building cost analysis, it was found that rental pricing reflected in many rental contracts was set below the publicized rental schedule and below the cost break-even point.
Being proactive about the future
In November 2009 the new Board participated in an Indiana Arts Commission (IAC) funded Board Development Retreat presented by national independent board development consultants, BoardSource, whose focus was on governance best practices and procedures and positioning the new board to be a fully functional fundraising board. As a result, the new Board voted at the Board meeting immediately following this retreat to adopt the governance and fundraising practices and procedures as its own. Staffing is also leaner with only two full-time staff opposed to five. There are part-time staff, and they all serve essential needs of The Waldron building -- like facilities maintenance and janitorial services, gift shop and event management, and oversight of the arts education classes.
"The new Board and Executive Director spent much of the first part of 2009 being consumed with "fall out" from management decisions from past years."
The new Board has been working on a multi-year business plan which incorporates plans for the development of all available income streams. While already started, the intent is to roll out the business plan in full in January 2010 and would take the BAAC through to a planned capital campaign in 2015 when The Waldron building celebrates its centennial. Potential income streams included in the BAAC business plan are (1) Donations from fundraising efforts -- direct mail solicitations, annual fund programs, benefit events, capital campaign, planned giving; (2) Membership income; (3) Sponsorships of signature events and programs; (4) Administration fees from ticket sales from arts portal bloomingtonarts.info; (5) Grants; (6) Earned income from (a) arts education, (b) gift shop and gallery sales, (c) rental, and (d) concessions.
The success of the business plan rests as much on financial support from the communities the BAAC serves as the ability of the Board of Trustees and the personnel employed to leverage, drive and monitor these income streams and meet financial goals.
While the Board and staff work on developing a formal fundraising plan (2010-2015), some fundraising structures have already been implemented. "Friends of the Waldron" was launched in the summer with an annual contribution of $1,000 per member. A women's auxiliary, called the Beaux Arts Auxiliary, launched during the fall of 2009, exists to support the financial and human resource needs of the BAAC. It now has a membership of 40 women. Their fundraisers are the Art House (May) and Christmas at the Waldron (December).
A preliminary collaborative fundraising drive with other arts not-for-profits during the holiday season to raise funds jointly for those organizations and the BAAC, called Holiday Kaleidoscope of Talent, was piloted in December 2009. A fund was set up for pre-school art education through the Sue H. Talbot Fund as was a fund for education of the opera art form through Opera Tease Program, a collaboration with the IU Jacobs School of Music. Membership campaigns are planned in the early part of 2010 and sponsorships and grants will be sought on an ongoing basis through the year.
The bottom line
"If the bailout doesn't happen, then the Board will move to shut down the building on March 1, 2010."The bottom line is that for any organization to survive and grow it must meet certain financial standards to remain viable. The organization must meet the goals set when established. Some of the more important financial metrics it must meet are consistently having revenues exceed expenses so as to provide working capital to expand operations and to meet unexpected expenses, sufficient cash flow to pay bills when due, ability to obtain loans when needed and a consistent donor base. At the present time BAAC is looking at the terminal stage of its existence and time is of the essence if it is to continue as a going concern. Past years of audited financial statements clearly reveal this.
A six-year analysis of the building income and expenses from fiscal year-end June 04 through fiscal year-end June 08, shows a shortfall of an average amount of over $180,000. It is clear that the building has been far from sustaining itself and that the arts council has been, in effect, subsidizing a significant income gap for many years, which has been causing the steady deterioration of the arts council.
Bailout and accountability
At its most recent Board of Trustees meeting held on Tuesday, January 5, 2010, the Board concluded that the continuation of the arts council was dependent on two connected actions: firstly that the BAAC's debt of $120,000 be cleared (like a bailout) before March 1, 2010, and secondly that a proper business and fiscal plan is continued to be managed and driven by a qualified Board and Executive Director.
"The underlying question here is whether the community of Bloomington and surrounding communities -- artists and residents -- want this facility."
If the bailout doesn't happen, then the Board will move to shut down the building on March 1, 2010. It is the New Board's hope that this move will not be necessary, but if it is necessary, it is hopeful that an area arts council will evolve with a fresh balance sheet to fulfill a mission for the arts in the local communities currently served by the BAAC. The underlying question here is whether the community of Bloomington and surrounding communities -- artists and residents -- want this facility. If they do, then there is a need that they financially and actively support the BAAC through systematic financial contributions and volunteer efforts. The New Board has a sound business plan to make it work in a financially responsible manner, but the years of financial problems make it impossible to implement this plan without this immediate support.
The BAAC new Board members include Ashley Fisher (VP Marketing Director at Monroe Bank), Ron Stanhouse (Business/Property Owner-Crazy Horse, Jakes, Art Sanctuary, amongst others), Sally Walker (Business Owner-Argentum Jewelry), Martha Moore (Business Owner/Pictura Gallery), Pam Kinnaman (Director of Volunteer Services at the Shalom Center), Michelle Martin-Colman (Business Owner/Prima Protocol, The Venue), Jim Whitlatch (Senior Partner at Law Firm Bunger and Robertson), Marci Widen (Former business owner), and Board financial advisor, Larry Cady (CPA).
Information about the status of the BAAC and financial summaries and analyses are available on the BAAC's Web site.
Source: Bloomington Area Arts Council