My firm is currently developing a cultural facilities master plan in a resort community. As a part of the plan, we’re being asked to suggest how our government client should respond to a certain request for funding from a local arts center where the dominant user of the facility also owns and operates the building.
The center opened 20 years ago as the home of a theater group and other local arts organizations. Over time, management decided to shift from being an amateur, community theater to a professional venture — with paid staff and productions that are nationally cast talent. As that organization grew and became more successful, the other local groups in the building found it increasingly difficult and expensive to secure dates in the shared venue. Eventually, the financial challenges of managing a large facility caught up with the producing company. They had borrowed money in order to improve the venue and were struggling to keep up with deferred maintenance. Their shows were selling fairly well but fundraising was difficult — as they were serving a fairly narrow cross-section of the community that was aging and often inclined to give money back where they’d come from.
The group and their backers are now proposing that the town buy their theater and lease it back to them for a nominal amount. This arrangement would allow them to retire their debt, fund improvements and create an endowment. It’s a controversial proposal that would seemingly only benefit this one group and not the many other artists, organizations and facilities seeking support.
In thinking about how to advise our municipal client in their situation, we looked at arts facilities in other resort communities, searching for trends and best practices. One of the places we looked at is the Center for the Arts in Jackson Hole, WY. In fact, I authored the original feasibility study for that project back in 1992. It was one of my first feasibility studies but I remember the process very clearly. We worked with the local community, seasonal residents and folks representing the tourism sector to come up with a plan for several new facilities. Given the high cost of living in Jackson Hole and the struggle to develop affordable housing, our project was seen as a way to maintain the local workforce. A new arts center would enhance the quality of life such that fewer people would move away and more would come.
The first building phase of what is now known as The Center opened in 2005 with offices, rehearsal spaces and classrooms; the theater opened in 2007. Then the facility went through several years of turmoil — seven different executive directors in only the first 10 years — which could be contributed to the control of the board and a conflict between the local community and deep-pocketed seasonal residents who bullied their way to control of the organization.
Now, finally, things have calmed down and the facility is busy and financially stable. Executive Director Martha Bancroft, who is from Jackson Hole, has been on the job for four years. The theater is active 200 days a year, up from a few years ago. The operating budget is $2.5 million, with $1 million in earned income and $1.5 million in annual fundraising, virtually all from the private sector.
A facility managed by its dominant user is problematic.
I’m grateful for the lesson learned: it is risky to count on any one use or user in a community arts center over time. As I’ve written previously, nonprofit arts organizations should come and go.
The exception is when facility management is an arts presenter, meaning that they buy and promote touring cultural programs and entertainment to promote locally — hopefully making a little money on this activity. This means that they can proactively curate interesting shows to bring to the community and build its profile beyond the work of local arts organizations. Presenters can shift that programming mix through the artists and productions they book. But presenting differs from producing: the latter is more invested in creating a certain type of work, while the former often involves picking and choosing from what the market offers at any point in time.
Separation of a facility’s content from its management makes sense as a way to reduce operating risk. The next step in this conversation, which I’ll explore in May, is to develop a structure whereby facilities and presenters can provide better support to creators while also maintaining a healthy separation in the eyes of audiences and funders.