Low on money, Petaluma Arts Center lays off staff
There was a time late last year when Delfin Vigil was enamored with the idea of running the Petaluma Arts Center.
That enthusiasm and admiration carried him through three rigorous rounds of interviews, eventually earning the job as executive director in December 2017. But it also blinded him to a stark reality.
After he was hired, the Petaluma resident discovered the PAC’s unstable financial footing and its subsequently bleak future, which recently culminated in the entire staff succumbing to sacrificial layoffs – an idea Vigil proposed just so the nonprofit could keep the lights on.
If Vigil had looked closer, he would’ve discovered he was being courted by a nonprofit that had been skirting a fiscal cliff for years, wrought by an unhealthy dependency on its original $1.5 million endowment when the PAC first opened its doors at the Railroad Depot in 2008.
“You want to believe. You want to be idealistic. This is a common thing with nonprofits,” Vigil said. “But there’s a difference between being a hero and a leader and, while I wish I could’ve been the hero to save the day and come through with another big donation, it was more important to be a leader who’s honest and saying this model wasn’t sustainable.”
Over the last decade, that seven-figure buffer became the means of survival for the arts center. The PAC was ambitious with its offerings, highlighted by world renowned exhibits like Edgar Degas or vibrant celebrations of El Dia de los Muertos. But it was also marred by waning membership, a donor base that was too small, and an ever-changing board that failed to find a sustainable business model that could properly address those dynamics.
Rather than undergo the kind of drastic overhaul needed to generate new sources of revenue, the arts center continuously leaned on events and exhibits, hoping to increase sponsorship dollars while reeling in new members that could eventually become donors.
That model forced the PAC to tap its endowment year after year, averaging about $102,000 in withdrawals each fiscal year from 2010 to 2017. According to tax filings, despite relatively stable operating costs, the nonprofit’s net assets steadily declined from $787,274 in 2012 to just $249,281 in 2016.
“All the signs were there that the business model we were using was not working,” board vice president David Powers said. “We were running at a deficit, and I have not seen the books before my time … but I’m almost positive the arts center never did run at a profit.”
Vigil said he inherited a “crumbling infrastructure” that had been functioning with a roughly $300,000 per year budget. Once he became wise to the inner-workings, with $70,000 of the original endowment left when he was hired, the focus became less about the arts center’s offerings and more about finding money, quickly.
In January, the board and executive director determined a point in the year when “drastic measures” would have to be taken if the cash they needed never materialized, said board president Sandy Rozmarin, the former director of ambulatory care at Stanford who joined the PAC board in July 2017.
If they could locate a cornerstone donor or quickly raise six figures, the PAC could hold its rescheduled “Frolic” fundraiser, which netted about $40,000 in 2016, fulfill its obligations for the rest of the year, and start turning the corner toward Vigil’s “long-term” vision for the arts center.
“I got off to a pretty good start,” Vigil said. “The goal was to not use the rest of the endowment as a crutch and I did pretty good for a couple months. I was writing successful grants and meeting with key donors. … But it’s one thing to fundraise to sustain a budget and another thing to fundraise to create a budget.”
As the year went on, finding a cornerstone donor eventually became the only viable strategy, Rozmarin said.
“We identified some sources that could have done that,” she said. But they were unable to get a check cut, and they were forced to call off the Frolic event altogether. The donor that initially provided the $1 million endowment in 2008, which was a match of $500,000, no longer lived in the state.
“I ended up calling it a dangerous luxury,” said former executive director Val Richman, Vigil’s predecessor from 2014 to 2017. “I’ve been the head of nonprofits and, if you were five years into formation and had all sorts of operational things and fundraising in place, then you get that gift, that’d be a far different scenario than having that at the beginning.”
Once the 2018 calendar reached the tipping point, with $40,000 left, the board began the process of laying off its employees one by one. Including Vigil, four staffers were dismissed, leaving behind just the unpaid board.
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