Arts council forced to drastically reduce support funding to grantees

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The arts council owes $4.5 million on the Milton Rhodes Arts Center, which opened in 2012. Balancing its own viability with grants to arts organizations remains an ongoing challenge.

Arts organizations in Winston-Salem are sustaining major cuts after the annual campaign by the arts council missed its goal by a whopping $400,000.

An email from Jim Sparrow, the president and CEO of the Arts Council of Winston-Salem & Forsyth County, to the executive directors of some of the city’s largest arts organizations foreshadowed some of the financial challenges the arts community would face.

The arts council was experiencing cash-flow problems, Sparrow said, and he hoped arts organizations would understand if payments from the 2016-2017 organizational support grants were behind schedule.

“The cash wasn’t here to give out,” Sparrow said in a recent interview. “I did send out a note, and said, ‘We don’t have extra reserves. We don’t have a cushion. We’re giving it out as fast as we can.’”

Sparrow acknowledged normal payments to some of the 18 major arts organizations supported by the arts council may have run as much as two months behind.

Sparrow had already warned arts organizations that previous levels of support weren’t sustainable, and they should brace for reductions ranging from 15 to 20 percent. When the 2017 annual campaign ended $400,000 short of its $2.81 million goal, it became clear the cuts would go deeper.

Reynolda House Museum of American Art and Old Salem Museum & Gardens suffered the deepest cuts in consideration of their position of relative strength as institutions with significant endowments, with Reynolda House dropping to $40,000 from its previous allocation of $75,000. Old Salem fell to $40,000 from $60,900. RiverRun International Film Festival, the Southeastern Center for Contemporary Art, Winston-Salem Symphony and Piedmont Opera all took 33 percent cuts.

The Sawtooth School for Visual Art; Triad Stage; the NC Black Repertory Company, the organization responsible for the biannual National Black Theatre Festival; and Little Theatre of Winston-Salem received funding reductions of 28 percent. Smaller organizations received special consideration, with Bookmarks receiving a raise from $15,000 to $20,000 and Piedmont Wind Symphony going from $20,000 to $30,000, while Winston-Salem Festival Ballet saw a 10.3 percent increase to $35,974. Piedmont Craftsmen’s grant was cut by a relatively modest 6.7 percent to $74,652.

“There was a conversation about the fairest way to do this that we had with the grantees,” Sparrow said. “There were a variety of tiers. Approximately 30 to 33 percent had to be cut from the overall pool that pulled about $400,000 out of that initial $1.4 million. Rather than doing it across the board, we asked ourselves: How do we do this in a way that manages our resources well and gives all of us the ability to operate? The smaller groups, the ones with the smallest budgets were the ones that not only did they score the highest, but a reduction was going to be significant. It wasn’t going to be something they could make up.”

Geoff Corbin, the executive director of the Sawtooth School, credited Sparrow with proactively communicating to the grantees about the shortfall.

“He telegraphed to us that the cut was going to be deep,” said Corbin, whose organization saw a reduction from $121,800 to $87,696. “He forecasted to us that the fundraising wasn’t going to meet the goal.”

Corbin said he is confident his staff’s dedication will carry the Sawtooth Center through a difficult year without any compromise to the quality of its classes and other programming. And he said the arts council is offering to help defray costs by sharing internet, phone and financial services considering that they’re housed in the same building.

Allison Perkins, Reynolda House’s executive director, said the funding cut is disappointing although understandable, and her organization will be forced to seek funding from other sources to maintain the quality of its programming.

Sparrow said two national trends are making arts fundraising more challenging. Mid-tier corporations are less willing to pony up money for general operating expenses, and increasingly want to see their dollars support specific projects or initiatives. And corporations are less willing to grant united giving campaigns access to their employees for workplace fund drives.

Rich Whittington, the managing director of Triad Stage, holds a unique vantage point as a representative of the only grantee organization with a presence in both Winston-Salem and Greensboro. Triad Stage’s 28-percent funding loss this year from the Arts Council of Winston-Salem & Forsyth County looks remarkably similar to the 29-percent hit the regional theater took when ArtsGreensboro ran into a funding gap in the summer of 2016. Triad Stage’s grant from the Greensboro arts council remained flat this year.

“What we’re seeing in Winston-Salem is what we’ve also seen in Greensboro,” Whittington said. “I’m hoping this becomes a call to our community to rally and realize this is a regional problem that we have to come together to address. The arts are too important to not solve this funding problem. Imagine this community without the theaters, the symphony and the operas. It would be a very different place.”

The arts community in Winston-Salem is adjusting from an ambitious and successful comprehensive campaign led by former arts council President & CEO Milton Rhodes that provided a major cash injection but also incurred significant costs to build the arts center that bears his name.

“Back in 2007-2010, the arts council ran a campaign that helped build the Milton Rhodes Arts Center,” Sparrow said. “That was sold as a comprehensive campaign for building, marketing and grants. We were able to stretch that gift over several years. The increases to operating grants were made with the expectation that we would raise that money annually.”

Before he took the job in 2013, Sparrow said the arts council arrived at a reckoning that the previous grant levels would not be sustainable. Sparrow said the arts council’s challenge is to find the “equilibrium” between dispensing grant money and eliminating debt, including more than $4.5 million owed on the arts center, while also building reserves. Before reducing grants, Sparrow said, he trimmed administrative expenses by moving his staff from a rented facility into the arts center. And his staff has shrunk by three positions since his arrival in 2013.

Sparrow indicated there’s no reason to expect fundraising prospects to improve in 2018. British American Tobacco’s acquisition of Reynolds American earlier this year adds to the uncertainty. From his previous experience as an arts leader in Fort Wayne, Ind., Sparrow is familiar with the consequences of losing a corporate headquarters.

“The community I came from where Lincoln Financial moved its headquarters to Philadelphia, when I started it was giving $250,000 to the arts and providing a $100,000 workplace — literally the building that housed us — to the arts council,” Sparrow said. “By the time I left, it was down to $50,000. That was a loss of $300,000.”

The funding reduction to major arts organizations comes at a time when the viability of live music is also under strain. The Garage, a beloved venue for original live music in downtown Winston-Salem, announced that it will stage its last concert on New Year’s Eve. Other indicators also spell trouble: Phuzz Phest, an indie music festival that previously received financial support from the arts council, went dormant earlier this year. And Ziggy’s, then the city’s largest music club, closed in early 2015.

Sparrow said he received a phone call on Monday inquiring whether the arts council could step in to support live music at the Garage. He’s not sure of the answer, although he was quick to say that live music is an important cultural asset. Musing on the question of how the community will respond to the plight of the Garage, Sparrow said the arts council of the future might be more of a facilitator than an institution-builder.

“I think figuring out ways we can provide resources and cash and technical support — it’s less about creating an institution and more about providing the opportunity for things to evolve,” Sparrow said. “It’s providing gasoline instead of the foundation of the building.”