In early September this year, City Opera, New York’s number two opera company announced that it would be forced to cancel most of its current season and all of its next season if it failed to raise $20 million by year’s end; the first $7 million was needed by end of September. On Oct 3 the company filed for bankruptcy.
Apparently they were persuaded by one of the development team to raise $1 million of this via Kickstarter. The Kickstarter crowd funding closed $700,000 short. What on earth let the board and CEO to believe that any of this crisis fuelled fundraising was possible, especially in the light of their past performance? If fundraising is about relationships, trust, good stewardship and knowing your donors and prospects, what follows is a story of how not to fundraise.
Much of the back story is told in the Metropolitan Opera Guild's Opera News. The author describes it as, "… an epic saga of economic hardship, mismanagement and just plain bad luck". Money problems had dogged City Opera throughout its history. Even in its heyday, under the general directorship of Beverley Sills, the company racked up a $3-million deficit. Yet Sills was a consummate fund raiser as well as a terrific artistic leader. She worked her social connections for everything they were worth. "She knew who had money and knew who would give it," according to one person who worked with her. "And she had no problem asking anybody for it." She was the face of the company — and she knew it," said another former employee. The donors who gave to New York City Opera were giving money to her, someone whom they trusted and respected. Unfortunately none of her successors had the same strengths at fundraising.
But there was an endowment. In 2003, City Opera was sitting on an endowment of $57 million. That seemed like insurance against hard times ahead. But it didn't last for long. As the New York Times noted by 2009 City Opera had raided these funds. They had been reduced to $16 million, to pay off debts and cover operating expenses. The practice is known in the US as endowment invasion - Wikipedia gives some background. Another egregious recent example of endowment raiding was Brooklyn’s Long Island College Hospital.
[For more on the endowment read this story in The New York Times published after this blog was originally written]
The board's penultimate appointment as CEO was Gerard Mortier, a former artistic director of La Monnaie in Brussels, the Salzburg Festival and Paris Opera. In each of his previous roles Mr Mortier had been well insulated from the pressures of box office and fundraising by the very, very generous government subsidies that were the norm in Europe at the time. Mortier resigned in November 2008 at the height of the Wall Street crash on discovering that a promised budget of $60 million was a chimera. According to the New York Times the board had counted on his name and help in fundraising to make the larger budgets he was asking for possible: “The board understood they were going to work closely with Gerard towards the raising of $60 million.”
The present CEO, George Steel, was untried in the complex and demanding role of managing a large arts company. He had been a success at Columbia University's small music theatre space, Miller Theater. From there he had been briefly, and some say unsuccessfully, at Dallas Opera. His City Opera programming failed to draw audiences. Ticket sales for the 2010–11 season hovered near a dismal 40 percent of capacity. In 2012 the company announced that it would finally be leaving Lincoln Center, the company's home for more than forty years.
The final last efforts to raise funds saw acts of desperation such as approaching George Vilar. Vilar has served time for fraud and his name had to be chiseled off the walls of Royal Opera House Covent Garden among other opera companies to whom he had promised donations that were never fulfilled.
The denouement may well have been the final production staged by the company. The work was 'Anna Nicole', a salute to the tragic life and death of blonde model/actress/reality-show-star, Anna Nicole Smith. Anna Nicole had married J. Howard Marshall II, an oil tycoon. The rest of the Marshall family loathed her, fighting bitterly to keep her from inheriting any of the family estate. Billionaire philanthropist David H. Koch had in the past been a big donor to City Opera. However, Marshall once had been a big investor in Koch Industries. When approached , Koch declined to make the kind of gift that might have saved the New York City Opera - "Out of respect for the wishes of the Marshall family".
Another version of this story by me appeared as a Nonprofit Quarterly Newswire
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