The Business of Art

Financially burdened, nonprofit institutions struggle to make dreams come true

Walter Turnball watched helplessly as the legacy that took him more than 30 years to build was ripped from him. In 2004, the number of appearances by the New York City-based Boys Choir of Harlem was cut back dramatically, and earned revenues from their performances dropped from more than $1 million to half that amount by the end of that year. Unearned income from philanthropic sources (foundations, corporations, the government, and individuals) totaled $1.6 million, not nearly enough to cover the nonprofit organization’s $2.5 million budget.

The financial shortage forced the organization to develop a new budget of $1.8 million, which required laying off half the choir’s employees. Payroll taxes went unpaid, which led to an IRS audit. Half of the organization’s board members deserted, grants the organization had applied for were denied, and the choir’s 19-year relationship with the New York City Department of Education was compromised. And then there was the scandal that almost ruined the nonprofit single-handedly. The city was calling for Turnball’s resignation.

As the founder and artistic director of the choir, Turnball was devastated. The pain of the experience still haunts him, and his booming, musical voice becomes low and almost inaudible when he talks about it. “It was such a dark time and had such a profound effect,” he murmurs, shaking his head. “As a matter of fact, it still does.” Two years ago, Turnball and his brother, Horace, who was a top executive within the organization, reportedly ignored child molestation accusations that had been brought against an employee who was subsequently convicted of sexually abusing a 13-year-old choir member.

Since that incident, the choir has been struggling to maintain its artistic vision and manage its business responsibilities, including erasing debt, increasing marketing efforts, building a functioning board, increasing fundraising amid negative criticism, and cultivating longevity. The organization has been minimally successful with these goals. It’s working to elect a new board chairman, negotiating a payment plan with the government to repay what could amount to $3 million to $5 million in back taxes, and slowly resuming performances.

Many of today’s African American, arts-related nonprofit organizations have a hard time striking a balance between their art and business. Among them is The Dance Theater of Harlem, which was once forced to close the doors of its school and lay off its main company, and the Alvin Ailey American Dance Theater, which ran up a $1.5 million deficit. Nonprofits often suffer from poor money management, which leads to financial shortfalls that can eventually tarnish the product that makes these organizations so valuable to the communities they serve. At one time, the American Ballet Theater had accumulated a deficit of $5.5 million and the Royal Opera House had racked up $30 million in debt.

One problem, according to Michael Kaiser, president of the John F. Kennedy Center for the Performing Arts, is that once nonprofits rack up large debts, it’s often handled inefficiently — by cutting back appearances, for example, which is a revenue stream. Instead, there are proven, strategic steps

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