The Business of Art

Financially burdened, nonprofit institutions struggle to make dreams come true

that will help any nonprofit organization become more financially sound, increase marketing, woo qualified board members, pay down debt, and put a succession plan in place so the organization’s legacy survives its founder.

BRICK FROM STRAW
The basement of Ephesus Church on 123rd Street and Lenox Avenue in New York City is where Turnball started his Boys Choir of Harlem in 1968. With money from Turnball’s own pocket, the choir grew into an internationally acclaimed choir and a landmark school called The Choir Academy of Harlem. The academy serves more than 500 boys and girls, ages 8 to18, through a partnership with the New York City Department of Education (DOE).

Yet, in many ways, the nonprofit organization is still being run the way it was back in 1968. “The struggle has always been enormous, robbing Peter to pay Paul,” says Turnball. But times were not always so bad. At the choir’s peak in the late 1980s and early 1990s, its performances were bringing in up to $3 million per year, more than enough to cover the choral curriculum, which cost $691,000. The choir performed in Europe, Japan, and Turkey and dined with several U.S. presidents.

A Memorandum of Understanding was signed with the New York City DOE in 1986 that stated that the city would provide the academy with a building, teachers, and the teachers’ salaries. So the $3 million the choir was bringing in would go toward the choir’s expenses, instructors and other supervisors, after-school programs, and performance expenses that were not covered by the host, explains Barbara Ranta, a member of the choir’s board.

Things took a turn for the worse after 9-11 when contributions dropped off and the economy began to tank. Then the molestation scandal occurred in January 2004 and had a reverberating effect on the organization. The city called for both Turnball and his brother to resign but settled for the removal of only the brother. Turnball was forced to give up his position as CEO and take the title of artistic director.

Compounding matters, the choir may owe about $5 million to creditors, including the IRS. Turnball says the choir produced only about $1 million in 2005 but has been able to survive because it laid off more than 20 employees. Alicia Maxey, spokesperson for the DOE, affirms that the city had been engaged in ongoing discussions with the choir about a new Memorandum of Understanding. But on Dec. 22, 2005, the DOE officially terminated its contract with the choir, evicting it from its home effective Jan. 31.

THE TURNING POINT
In the fall of 2004, the choir called in Deryck Palmer, an attorney from Weil, Gotshal & Manges L.L.P., to help negotiate a 10-year payment plan with the IRS. Negotiations are still underway to determine the amount the choir owes in back taxes.

One strategy Turnball says will help overcome the obstacles facing the choir is rebuilding of the board, which has been undergoing major changes, including the addition of six new members and a new chairman. One prospective chairman has

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