Collective Bargaining and Arts & Entertainment, etc. and Contracts and Unions and Music and Indianapolis Symphony Orchestra and Fundraising and Gifts and Donations and Philanthropy

Indianapolis symphony's woes aren't just about money

September 1, 2012

Even if the Indianapolis Symphony Orchestra’s management and musicians overcome gaping differences and reach a contract agreement by their Labor Day deadline, industry experts and fundraising consultants say disconcerting questions will continue to hang over the organization.

A few key ones:

• If a new contract includes deep cuts, will the symphony’s scaled-back ambitions reduce audience appeal, thereby accelerating the orchestra’s decline?

• Can the symphony, which tends to attract an older audience, win over deep-pocketed donors who can rebuild its endowment and ensure the organization’s long-term viability?

• Will musicians be able to re-establish a strong relationship with management—an important step in the quest for artistic excellence?

The symphony has weathered heavy turnover in its management ranks in recent years, most notably the abrupt departure of CEO Simon Crookall in February.

“Indianapolis, I think, is unusual because of the condition that they’re in with a very large leadership vacuum right now,” said Chicago orchestra consultant Drew McManus, who writes the orchestra news blog Adaptistration.

“I can’t remember the last time I’ve seen the positions of CEO, the vice president of development, and the vice president of marketing all open. It’s a much larger issue than any financial matter.”

Crookall launched a $100 million capital campaign in 2010 and enlisted Indianapolis Colts owner Jim Irsay and Indiana Pacers owner Herb Simon as co-chairmen. But the names alone weren’t enough to get the fundraiser going, and the ISO had raised less than $13 million as of July.

The campaign was supposed to replenish the endowment, which reached a high of $135 million in 2007 but tumbled during the recession to $94 million.

Even before the downturn, the symphony was drawing more heavily from the endowment than many not-for-profit experts advise. So the sharp decline quickly became a crisis.

Robert Swaney, founder of Robert Swaney Consulting Inc. in Indianapolis, said a capital campaign the size of the ISO’s should have started with $50 million to $65 million already donated.

“It shows that the campaign already has a chance of being successful,” said Swaney, a former ISO employee who worked on the group’s previous fundraisers.

Successful campaigns usually communicate to donors that their gifts would enhance the organization, he said. Rarely do groups have luck with fundraising if they say they need the money to keep operating.

“In any gift endeavor at all, be it major or minor, the case is extraordinarily important,” he said. “The story that’s being told about why the organization needs it, what it will do with those funds, and how it will create a brighter future for the community … those have to be very carefully crafted.”

In the wake of the unsuccessful campaign, ISO’s board and management entered contract talks in June seeking deep expense reductions. The previous agreement, negotiated in 2009, is set to expire Sept. 3.

As of IBJ’s Aug. 30 deadline, the ISO wanted to scale back the orchestra from 52 weeks to 38 weeks and reduce the number of performers from 87 to 63. The contract, if approved, would reduce performances in the classical and pops series, as well as remove the orchestra for the majority of the Symphony on the Prairie performances.

ISO-charts.gifUnion officials say management’s five-year contract proposal calls for a 41.5-percent pay cut. A performer with at least 20 years’ seniority earned about $80,000 during the 2011-2012 season, according to figures from the musicians’ union.

Proposals have changed slightly since IBJ on Aug. 28 broke the news that ISO’s management and board wanted to shift the orchestra from full-time to part-time status. At that point, ISO wanted to reduce musicians’ pay 45 percent and cut back to 36 weeks.

“The society’s proposal will ruin the ISO,” said Richard Graef, a French horn player who serves as chairman of the union’s negotiating committee. “Indianapolis will no longer have a major-league orchestra.”

An ISO spokeswoman said the organization’s management would not comment on negotiations until an agreement was reached.

Ultimately, the ISO wants to scale back its annual budget to $19 million, Graef said.

The organization spent $25 million in fiscal year 2011, which ended July 31 of that year, and $26 million in 2010. They were steep cuts from the $35 million spent in 2009.

Despite the reductions, the ISO finished fiscal 2011 with a $1.7 million deficit. Interim CEO Jackie Groth said in a July interview with IBJ that the ISO would report a deficit for fiscal 2012, albeit a smaller one. She was not available for an interview for this story.

“They really are at a critical juncture,” said Charles Kocal, a consultant at Indianapolis marketing and audience development firm CRStager. “I don’t think they can get more money from the endowment. They have no choice but to either raise a bunch of money or get significant reductions in expenses.”

The symphony and its board began looking in 2009 for ways to address the financial problems after the ISO began taking a larger draw from its endowment, said board member John Mutz.

Mutz listed a few ways ISO could resuscitate its finances.

“Obviously, we can re-energize a fundraising program,” he said. “We tend to continue to work on attendance for the various kinds of performances that the orchestra provides. We can also take a look at the causes of the structural deficit and try to alter those things.”

One of the negotiations’ biggest hindrances likely has been a lack of familiarity with the people on the other side of the table because of Crookall and the other executives’ departures, said McManus, the Chicago consultant.

Finances have been a problem for performing arts groups throughout the country. The ones that can power through the tough conversations are the ones where rapport and trust exists between management and musicians, he said.

“I think the groups that are working best with this are the groups that had good labor relations to begin with,” he said.

Graef, the union’s lead negotiator, said discussions have remained “respectful, cordial and congenial” throughout, despite the extreme disagreements.

But it is often hard for the two sides to see eye-to-eye, especially in already tough circumstances, when the parties don’t know one another, McManus said.

On top of that, he added, negotiators know it will be Crookall’s replacement—someone with no presence in the contract talks—who actually will have to uphold management’s end of the agreement.

Musicians said they fear that if management doesn’t soften its stance, the orchestra’s stature will suffer, making it harder to attract both audiences and artists.

They had proposed a five-year agreement they say would have conceded $3.8 million in pay but preserved the orchestra’s artistic integrity. The offer included a 13.9-percent pay cut the first year of the contract and 14 weeks of furloughs over the five years.

“I don’t have a crystal ball, but I see a very large philosophical shift,” Graef said.•

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