Here’s a Strib editorial from Jon Campbell and Richard Davis entitled “Minn. Orchestra makes a stand.” It’s… Just go read it. If you’ve read this blog before, you’ll know what I think of it.
There’s not much new in it, but one new thing is a big new thing: Campbell and Davis have finally confirmed the 17% endowment draw in print. Despite my sadly limited mathematical abilities, I anticipated this number on September 25. I’m not exactly sure what the thought process was behind this small but meaningful tweak in PR strategy, but make no mistake; it is a marked departure from what has been said in the past. This is a risky, double-edged sword of a figure to publicize. Yes, it demonstrates the gravity of the situation quite neatly, but it also begs the inevitable (unanswered) question: when donors for the Building for the Future campaign were being courted in 2010, and 2011, and 2012…were they told that the orchestra’s finances were being managed so poorly that the organization was being forced to draw from the endowment at an annual rate of 17% to meet their obligations? (Because make no mistake: given the figures they’ve cited, if they were drawing at a rate of 17% in 2011, then they were also drawing at a 17% or 18% or 19% rate in 2010, too. Even I can figure that out, and trust me, John Saxon and I were never very close.) (Edit 10/29: We now have more concrete information about rate draws from 2007-2012. They aren’t quite as extreme as 17%, but they were pretty darn high.) I really wonder if donors were told, because in December 2010, Richard Davis proudly proclaimed, “This was a season characterized by disciplined budget management [bold mine] and significant expense cuts, which kept our operations stable in an unpredictable environment.” But we now have conclusive proof from Richard Davis himself that this was, to put it politely, total cow crap. (Because let’s get real: a draw rate over 10% isn’t “disciplined budget management” ……is it???) If they lied to the paper, why wouldn’t they lie to their patrons and donors? (Or to their musicians, for that matter?)
Bottom line: how many people would have donated to the lobby renovation if they’d known the Orchestral Apocalypse was coming? I’ve read comments online again and again and again from people who said they would never have donated to the hall construction effort if they’d known that a 30-50% pay cut for musicians was in the works. I haven’t heard a single donor say, “Well, if I had to choose between keeping all of our musicians in town, or building an amazing new lobby, I’d definitely take the amazing new lobby!” I mean…I’m sure there were people and companies who wanted their money to go to the hall rather than the musicians, but…I know there were lots of people who felt otherwise, too. And their concerns should be acknowledged.
Here’s an FAQ from management’s website:
Why not “re-allocate” the $47 million raised to reduce deficits instead?
The donors who have contributed to the Orchestra Hall renovation would not have contributed these funds if there weren’t a building project to support and we need to respect their intent. For example, the State of Minnesota provided $14 million (funds that we need to match) to support the renovation and these funds cannot be used for a different purpose. Similarly, many foundations and corporations have specific guidelines around capital support that our project fulfilled; this support cannot be re-allocated.
But interestingly, their answer says nothing about individual donations. I have the summer 2012 Showcase right here… There are roughly 150 individuals or couples who appear to be non-corporations who gave $10,000 or more, who presumably do not have specific guidelines around capital support, who could theoretically re-allocate their funds. Of course we’re too far along now in the renovation to re-allocate much (if anything), but… Yesterday I did some quick back-of-the-envelope calculations. On the low end, these individuals gave roughly $32 million. On the high end, they gave about $70 million. A certain percentage of that was doubtless used for construction. How many millions of dollars would be re-allocated if their donors could do it all over again? Based on the information we have now, it’s impossible to know.
I wonder… In a perfect world, where cost isn’t an issue, would management be afraid to contact these donors in a short independently conducted survey? Maybe have three questions:
1) When you made your donation, were you aware that the orchestra was drawing from its endowment at an annual rate of 17%?
2) Would that knowledge have encouraged you to donate less, or more?
3) Knowing what you know now, if you could go back in time, would you donate to the hall construction effort or request that your gift go toward other operating expenses? Or would you have chosen to withdraw your donation altogether?
I have no idea what the answers to such a survey would be, but they would be so interesting to parse.
I don’t know. Maybe these wealthy individuals knew about the high draw rate. Maybe they were all told of the likelihood of a months-long lockout and orchestra dismemberment, but they still felt the need for a hall was more pressing. Maybe every single one of them wanted their money go to a new lobby. But we haven’t heard from them except through management’s filter, so we just can’t know. However, if these big donors are anything like the small ones, there are some who are feeling awfully betrayed right now.
To sum it all up, I’m impressed that Campbell and Davis finally came clean about the 17% draw. But I’m less impressed that they didn’t answer the inevitable accompanying questions that such a high number raises, like: why didn’t you tell us this was happening two years ago?, and why did you lie to us?
While we’re asking questions about the funding for the hall, I have a couple of quick ones… Would the hall renovation have even been possible without the $14 million from the state of Minnesota? Why did then-Gov. Pawlenty, once opposed to using state funding to remodel the hall, change his mind a few weeks later (without explanation), and decide at the last minute not to veto the Orchestra Hall renovation? Interesting questions. Unfortunately we’ll never get answers to them, because the ex-governor recently left his political career behind him, likely forever, to become the CEO of the Financial Services Roundtable. You may be interested in looking at a list of that organization’s directors; a certain name will be familiar to you. Who knows what all happened there, and what (if anything) it has to do with the hall and the orchestra and the fact Pawlenty changed his mind so quickly. It’s very possible there’s nothing there there. But…oh, wouldn’t it be fascinating to know for sure?
I never donated to the Building for the Future campaign (thank goodness), but I did donate an encouraging blurb to their website, a fact which now humiliates and angers me to no end. I really feel like I was taken advantage of. Would I have taken the time to write what I did if I’d known such flagrant mismanagement and misrepresentation was occurring behind the scenes? Well, holy crap, no! Of course not! So I can only imagine how utterly cheated certain individuals who actually gave money might feel.
Are you a donor? As a donor, were you ever given a different picture of the organization’s finances than members of the Strib-reading public were in December 2010? Were you ever told about the endowment fund draws in the upper teens? Would you consider a 10%+ draw to be “disciplined budget management”? Were you ever given any indication that a months-long lockout was just around the corner? Would you have reconsidered your donation if you’d known this was all going on? Do you think money was mismanaged in any way? Or are you cool with it all? Do you feel like you were lied to? Or do you trust management to do what’s right, and to honor your intentions? No snark or sarcasm here; I’m genuinely curious.
I know that I won’t give to the Orchestra until the current leadership is gone. I just don’t trust them to paint fair, accurate pictures of their financial status. Do you blame me? I wonder how many other individuals feel the same way I do, and how this will affect the orchestra’s ability to fundraise in future…
PS – Oh, and also? The idea of the “playing and talking” period being over the last few months is just…stupid. Like really, really stupid. It’s not really like the musicians had a choice. They were kinda contractually obligated to play. Management is not going to win any PR points with that, and whoever thought they would is…kind of delusional.
PS 2 – And also also, I find it odd that management has chosen to put up the link to the “A change in key” Strib editorial on its Industry News page, apparently subtly endorsing it, but then refusing to actually do what it recommends. Um…