Tax returns show Arts Center is still in the red

gsmith@islandpacket.comMay 20, 2013 

The Arts Center of Coastal Carolina continued to struggle financially, ending its most recent fiscal year nearly $215,000 in the red.

Tax returns released Monday indicate the center, which received an infusion of cash from the Town of Hilton Head in November and has asked the town to take over its building, brought in more than $3.3 million in the fiscal year that ended Aug. 31. However, it spent more than $3.5 million.

The return indicated:

  • The center's revenue included $1.3 million in grants and contributions from the town and others, as well as more than $1.5 million from programming and advertising.

  • The town is a major revenue source for the nonprofit organization. It gave the center a $346,000 advance on an accommodations-tax grant to help it prepare for its theater season. However, more money is needed long-term, arts center president and CEO Kathleen Bateson said, because the 17-year-old Shelter Cove venue needs many repairs.

  • Of its $3.5 million in expenses, $2.8 million is associated with show programming. The nonprofit center also spent more then $374,000 on a fundraising campaign that generated nearly $2.2 million, according to the return.

  • Bateson said she is not pleased with the latest news but believes the organization is doing all that it can to improve its finances.

    "2011 was a very good year for us, and it's not good to go from that to $215,000 in the red. I'm not happy," she said.

    Comparing 2012 to the prior fiscal year, the center generated about $333,000 less and spent about $4,000 less.

    Much of that difference could be attributed to a popular wine auction, which brought in about $250,000 for the center in 2011 but was not conducted in 2012. Instead, the center organized a gala that raised less than $100,000.

    "We'll do the wine auction again next year," Bateson said.

    For most of its 17-year existence, the center has had a deficit, when interest expense and depreciation are taken into account, according to its tax returns.

    The center's hallmark is producing its own shows in-house, but that practice comes at a high price.

    The center spent more than $2 million in salaries, wages and benefits for its 28.5 full-time-equivalent employees, which include those who build sets and sew costumes. More than $265,000 went for scenery, props and costumes. Nearly $115,000 was for housing visiting performers.

    Center leaders have asked the town to buy its building and take on its $400,000 annual upkeep and roughly $2.5 million in needed improvements. They point out that most arts centers are supported by governments or universities.

    The center's Shelter Cove land is valued at $900,000, and its building is worth nearly $9.3 million, according to the tax return.

    Town Council has been hesitant to take on the financial burden. Its members have also pointed out that many of the area's arts groups are struggling financially, and it can't afford to subsidize them all.

    Instead, council will hire a consulting group to help get the center and other arts groups on solid financial footing. The group will help the town determine how much public funding it should provide to the arts center, the Hilton Head Symphony Orchestra and other arts organizations, as well as what should be done about the arts center's building.

    "We have narrowed down the (consultants') list and are scheduling interviews," town manager Steve Riley said Monday.

    A consultant is expected to be selected in June, he added.

    Center leaders have also set out to cut costs and aggressively raise money.

    It is switching out light bulbs, shutting down its chilled-water pump during off-hours and implementing other energy savings as recommended in an audit by Palmetto Electric Cooperative.

    In January, it announced it raised $5 million in contributions and pledges during the previous 15 months to pay off its $2.5 million debt and make building improvements. It will be several years before all $5 million is available. More than $2 million is in pledges and bequests, which will come only when donors' wills are implemented.A second and final phase to raise $1 million is underway. About $100,000 has been raised so far, Bateson said.

    Follow reporter Gina Smith at twitter.com/GinaNSmith.

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