New business model needed for arts groups

info@islandpacket.comMay 26, 2013 

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Paige Meredith fixes an outfit for the musical "Anything Goes" at the Arts Center of Coastal Carolina in this May 24, 2013, file photo.

FILE, STAFF PHOTO — Staff photo

The Arts Center of Coastal Carolina's latest financial report offers no surprises or insights into the center's operations, only more of what we already know: The center spends more money than it takes in and that's even with a substantial boost from the Town of Hilton Head Island.

Its business model doesn't work. It hasn't worked since the center opened in 1996. It must change. The town's taking ownership of the facility won't accomplish it. That would only shift the center's problems to the town's ledger.

Center officials have asked the town to buy its building -- valued at about $6.5 million after depreciation -- and take on $400,000 in annual upkeep and about $2.5 million of needed improvements.

Here are some other numbers from the fiscal year 2012 audited financial report:

  • Total operating revenue was $3.3 million, while expenses were $3.5 million, leaving the center with a $230,316 operating loss. Add interest expense of $119,521, and the loss goes to $349,837.

  • Contributions and grants accounted for 40 percent of the center's operating revenue. The $346,793 from the town accounted for 6 percent of total revenue.

  • The center spent $385,046 to raise $2.2 million in a special capital campaign.

  • Salary and wages, plus payroll taxes and benefits, totaled $2.1 million, or 61 percent of the center's $3.5 million in operating expenses.

  • The center's endowment stood at $2.1 million as of Aug. 31, the end of its fiscal year; $386,524 was transferred to operations during the year.

  • The arts center is but one part -- albeit a large one -- of the issue of paying for the arts on Hilton Head. It is not the only organization that needs to rethink its mission and operation.

    The town, with the leverage it has in accommodations tax funding for these groups, is in a strong position to make this happen. Officials expect to hire a consultant in June to help sort out how to get the arts center and other arts groups on sounder financial footing.

    This is a big undertaking. The town's request for proposal lists 32 nonprofit organizations that could part of the project; 13 different types of facilities to consider; and 28 potential sources of public and private financial support. Diminishing private financial support, along with increasing costs, make it imperative priorities be reset.

    Among the questions the town wants the consultant's help in answering:

  • What should the town do to serve as a catalyst for growing the arts on the island, ensuring access to the arts for all and supporting the arts through public-private partnerships?

  • What is the role of the community in the arts, including what types of performing and cultural arts does the community want?

  • What are the appropriate funding methods and sources? How should the town restructure the way it finances arts organizations to have the strongest impact on the local economy, improve the town's competitive position to attract and retain permanent residents and visitors, and improve property values and the town's tax base?

  • What types of arts facilities are needed?

  • The most important task will be finding ways for local arts groups to collaborate, share resources and get more efficient. Some egos will be bruised in this process; some people might lose their jobs.

    But the status quo is not working, and the arts center is Exhibit A for that.

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