ISO must raise $5M in less than four months, according to deal

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Musicians have returned to Hilbert Circle Theatre, concerts have resumed, and managers say they have a financially sustainable future for the Indianapolis Symphony Orchestra.

But all of that hinges on the organization’s fundraising abilities.

The group has a little more than three months to collect $5 million—almost as much as it typically raises in a full year.

Missing that goal by the time a “bridge” agreement expires Feb. 3, 2013, would nullify a five-year agreement that’s set to kick in the following day. If that happens, musicians would again be without a contract, and negotiators would have to return to bargaining.

Thornburgh Chairman John Thornburgh says the ISO is proving it’s fiscally responsible.

“Because of the significant stretch in our fundraising needs to support the five-year agreement, the board [of directors] wanted us to demonstrate how we could lay the foundation quickly for additional, substantial fundraising before it approved the five-year expense of the musicians’ contract,” ISO spokeswoman Jessica Di Santo said in an e-mail.

The new contracts, announced Oct. 16, brought ISO’s 72 orchestra members back to work, ending a 5-1/2-week lockout that left them without pay or benefits.

Management, meanwhile, had to cancel the first five shows of the season, losing out on ticket revenue the orchestra needs as it restructures its entire business model.

“If you look at it from the lockout being over and the contract being signed, most people take that as a sigh of relief,” said Robert Swaney, a locally based fundraising consultant for orchestras. “This is really just the beginning for the organization to rebuild. There’s a lot of hard work ahead.”

The $5 million drive is the first step in the ISO’s plan to step up the aggressiveness of its fundraising. Those plans include increasing annual contributions to $12.6 million by the end of 2014. That’s nearly double the $6.5 million raised in the fiscal year that ended in August.

ISO board Chairman John Thornburgh said the organization already has lined up some donations for its February deadline. But he said the ISO will not announce specifics on gifts for at least a couple of weeks.

“It’s not as if the organization has been sitting still the past few months,” he said.

Gary Hawkins, the ISO’s interim vice president of development, said the staff began reaching out to potential donors—with a focus on new ones—when he took over the position about six weeks ago.

“The success is really going to be based on our ability to get out, sit with people face to face, and explain to them why the symphony is great, what its challenges are, what it’s done, and ask for their support in the way that makes the most sense to them,” said Hawkins, who is also with New York-based Community Counseling Service Co., a consultant for the ISO.

The ISO—which reported large deficits in the fiscal years ending in August 2009, 2010 and 2011 and expects to do the same for 2012—revealed the fundraising spree after announcing the new contracts Oct. 16.

Musicians had been locked out because management said it could no longer afford to operate under previous agreements, which expired Sept. 2.

The ISO intends to capitalize on the public’s outpouring of support for the orchestra.

“The heightened sense of publicity and attention, both positive and negative, has let people know that the symphony was having issues,” Hawkins said.

Musicians are trying to figure out how to take a more hands-on role in fundraising than in the past, said Richard Graef, chairman of the negotiating committee for American Federation of Musicians Local 3.

“Musicians are confident that their goal is an attainable goal,” Graef said, citing the unannounced leads on major donations. “The goal is to involve the musicians because they are the ones who’ve got the support of the community.”

Swaney, who runs Robert Swaney Consulting Inc., said the ISO will have to regain the public’s trust while also showing that it’s hitting fundraising goals.

Swaney said community members initially might be skeptical about ISO’s finances because the recent disclosures of problems seemed out of the blue. The community for decades had thought the organization was on firm footing, he said.

Fundraising staff also have to avoid leaving the impression they are asking for donations out of desperation. That’s why a campaign launched in 2010 to raise $100 million brought in only $12 million, Swaney said.

“They’re in the same sort of situation right now—it is need-based,” he said. “But when they expand it out to the larger portion of the community, it can’t just be about the business model. It has to be about being part of the community.”

Hawkins said potential donors the ISO has spoken with have focused on financial responsibility.

“The one thing that we’ve heard was, ‘Show us a budget that doesn’t require deficit spending,’” he said.

Later this year, the ISO will release financials for the fiscal year that ended Aug. 31. In 2011, it reported a $1.7 million deficit, down from the $2.7 million deficit for 2010 and the $2.8 million deficit for 2009.

Operating budgets during those three years totaled $25 million. The new contracts cut back to a $20 million budget for the first year, Thornburgh said.

Musicians have conceded $11.5 million over the five-year contract, in part by cutting starting pay from $78,000 to $53,000. Pay will increase annually, landing at $70,000 in year five.

Management had pointed to orchestra payroll as a major reason it was drawing unsustainable amounts from its endowment.

The organization drained about 13 percent from the endowment in 2012 even though experts advise drawing as little as 5 percent. The endowment finished the latest fiscal year at $80 million—$50 million below where it was in 2007, before the 2008 and 2009 market crash.

The smaller budget reduced the need for endowment draws, Thornburgh said. As a result, he said, donors are coming around because they are seeing the organization on a more financially sustainable path.•

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