The generation currently holding the reins of power has a strong preference for flashy expenditures, yet it likes to talk about green, conservation, and recycling. Maybe it should stop building McTheatres and McMuseums.
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closing its doors on February 7 due to financial problems. David Ng, Pasadena Playhouse’s Impending Closure Brings Surprise, Dismay, L.A. Times (January 31, 2010). According to its executive director, the theatre company owes $500,000 in immediate bills and debt service payments on a $1.5 million loan and other debts.
We have no doubt that the Pasadena Playhouse will survive. In fact, much of the Times article focuses on a reorganization. The company has staged too many important shows. Moreover, another Times article suggests that the company will eventually received financial support from the Hollywood community. Mike Boehm, Pasadena Playhouse Will Close February 7 (January 30, 2010). That article is a little dispiriting when it comes to sound financial practices. It quotes the theatre’s executive director as hoping for a transformative donation of $5 million. Eli Broad serves as the model donor. Mr. Broad came to the rescue with a $30 million pledge to the LA Museum of Contemporary Art after the museum ran into financial difficulties in 2008.
The executive director’s reliance on a Hail Mary pass signals financial mismanagement and a lack of focus on what matters by all involved. Hail Mary passes are lots of fun, but no one should ever begin a game by counting on a Hail Mary pass to bring victory. Our suspicions of financial mismanagement are supported in a later portion of the Boehm's article when we read about plans for a Frank Gehry designed expansion of the company’s existing facility. Gehry donated his time for the design, but converting paper to bricks and mortar presumably would have cost a lot of money.
So what do we have? A prayer for money and a plans for a costly new facility--those plans apparently have been off the table for some time. Which brings us to our main point today. Cultural and arts organization should focus on building endowment first and new facilities only after a sufficient endowment has been built. According to newspaper reports, this is not the first time the Pasadena Playhouse has run into financial trouble. Moreover, the Playouse isn't the only arts organization that takes it in the shorts when the economy heads south. An endowment is designed to smooth economic cycles, providing additional income when ticket sales decline temporarily.
Take a look at the company’s 2007 Form 990. It has $3.1 million of cash on hand and $3 million of pledges, but no investment assets. Although $3.1 million is a lot of money, it apparently was not enough to continue staging performances during a recession. Moreover, some of the pledges apparently are payable over an extended period of time. Given its financial condition at the time it was considering a major expansion to its physical plant, the company had no business considering that expansion. It should have focused on a campaign to build permanent endowment.
While we find fault with the company and its board of directors, we also look to the universe of potential donors to arts and cultural institutions. It clearly is more fun to give for shiny new buildings, particularly if a hall or a foyer will carry your name or you will be invited to a gala grand opening thanking you for your support. Yet, major donation to an endowment offers a company artistic freedom without fear of financial catastrophe just around the corner. It is more old line and far less nouveau riche.
We are not the only ones who have come to this conclusion. While researching this post, we came across the Culture Monster in the L.A. Times. Charles McNulty, Pasadena Playhouse: A Time to Rethink Fundamentals (January 29, 2010). McNulty refers to “Starchitecture” and the “Edifice Complex,” pointing out that truly great theatre doesn’t require elaborate staging—just great actors and material. We need only consider our own experience this past summer in Greece. The crumbling stone was hard on the butt and if you needed to “go,” you went in a Port-a-Potty. There were no props or elaborate stages. Just actors on a dirt stage and classical musicians on a wobbly wooden risers. But we were quite pleased with the performances we saw in 2,000 year old theatres.
Boards of nonprofit cultural institutions should focus far less on the glitz and parties. Instead, the focus should be on the numbers and financial stability. Theatres come and go, as do recessions. Far fewer theatres would go if they were better endowed.
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