On September 12, the Glenbow Museum presented the public with its latest financial report, revealing a deficit of $1.67 million — its fourth consecutive deficit over $1 million. Some former staff say the financial picture is even worse than what senior management has highlighted. Though the museum’s stated deficit is its largest yet, other major performance indicators show improvement. The museum increased its income in admissions, memberships, fundraising and overall revenue. However, some point out that is not accurate.
Fast Forward Weekly sat down with several former staff members who had until recently been closely involved in handling the museum’s finances before leaving over what they agreed were “ethical” disputes. They each spoke on condition of anonymity, explaining Calgary’s non-profit community is so small that identifying themselves would be professional suicide.
Beginning with the deficit: they say that in January of 2012, Glenbow was projecting a deficit of between $2 million and $2.5 million. When the statements were issued in September, the $1.67 million shortfall was a surprising improvement. Yet upon examination, the museum included deferred income in its revenues for the year. Essentially, deferred revenue is money pledged by donors but not yet received.
“It means that it’s money that’s promised, but there’s no contractual obligation for those donors to [fulfil their pledge],” says one former staff member. “The money doesn’t exist till it’s in the bank.”
Recognizing pledges as real money is not illegal, but it will detract from future fiscal statements, as it can only be recorded once, and not again when it actually comes in, if it comes in at all.
The former staff also point out discrepancies in the way fundraising successes were publicized. Museum CEO Kirstin Evenden told the media, including Fast Forward Weekly when she was interviewed for a related story in July, that fundraising revenue increased 30 per cent over the last year.
“Which is right, it went up 30 per cent from this year to that,” says one former staff member. “She fails to mention there’s costs to fundraising.” When the fundraising costs related to events such as Schmancy, fundraising programs like PIVOT and consulting fees are subtracted, staff say, “the difference is, we went down from 4.7 [after costs] to 4.6 [per cent]. We actually lost.”
When Glenbow management such as Evenden and board chairman Jack Thrasher are questioned by the media over the museum’s losses, they frequently cite the global recession which began in 2008 as the root of the problem.
Thrasher declined to be interviewed for this story, but on September 13 he told CBC Calgary Eyeopener host David Gray that “2008 through 2010 was a very significant recession on a worldwide basis, and effects on the financial markets, and a number of other areas of the economy. And then we’ve had other issues: Europe’s situation, the commodity prices have been very low.”
This line of reasoning is related to the Glenbow’s use of an endowment fund for operational funding. Investment returns from that endowment took a hit in early 2008 and the fund lost 10 per cent of its value. However, former staff say the shrinking fund cannot now be blamed on investment failures.
“The problem there was not the return rate but the fact they drew down $1.525 million — note 11 in financial notes — to support operations in 2011-12,” says one. “The investment managers have been doing their jobs and getting good returns, but we were constantly going to them for money to make payroll and support her [Evenden’s fundraising] parties.”
In a July 17 interview with Fast Forward Weekly, Thrasher also implied the economic downturn had affected the museum’s other revenue streams: “We found that we were being very much challenged with a severe drop-off in private sector donations, either individual or corporate,” and that the Glenbow is not unique in this challenge.
In this respect, Glenbow may be unique in Alberta. Although there are differences in size and operations, the financial statements from 2008 to 2011, and when available 2012, show that the Royal Tyrell Museum in Drumheller, the Galt Museum and Southern Alberta Art Gallery (SAAG) in Lethbridge, the Art Gallery of Grande Prairie and the Red Deer Museum are all running surpluses, and in the past four years only SAAG, Red Deer and Grand Prairie recorded one year of deficit each, the highest of which was only $31,282.
With consecutive deficits in the millions, a problem the Glenbow did not face before 2009, the big question is: where is all the money going?
Calgary Arts Development (CADA) president and CEO Terry Rock agrees with one of the claims Thrasher made on Calgary Eyeopener, that provincial funding cuts in 2009 and 2010 of roughly $500,000 took a toll.
“When one of your major, major funders lowers their contribution, like the province to the Glenbow, it can be very challenging,” says Rock.
Rock is concerned with where the money is going, because CADA supplies an annual grant to the Glenbow, which could be reduced or withdrawn if the museum doesn’t put its house in order.
“We have a framework that we call ‘organizational resiliency,’ and it looks at whether or not an organization is running a deficit, whether they’re decreasing programming, and/or whether their audience is decreasing,” explains Rock. He says Glenbow management has met with CADA to discuss its finances, though there has not yet been any “adjustment” to CADA funding.
“Our main concern,” says Rock, is “are you going to deliver what you’re saying you’re going to deliver to the citizens of Calgary?
“If I look at some of the programs that the Glenbow is putting in place to build audience, to build new generations and things like that, you know, some of those things seem to be interesting and a way to move out of [deficit],” he says.
CADA is not the only one keeping its eye on the Glenbow. The museum’s first mission is to maintain and provide access to a vast collection of art and historical artifacts owned by the province. To this end the Alberta government provided $5 million in start-up funds to the museum’s endowment and gives the Glenbow additional grant money every year.
Culture Minister Heather Klimchuk says she and her staff are in regular contact with Evenden. Klimchuk says she believes the Glenbow receives adequate government support.
“Last year they received a seven per cent increase in funding,” she says, adding, “Glenbow leases the building from the City of Calgary for $1 a year… We’ve determined that that building alone is worth about $8.8 million, so that’s another incredible subsidy. We also pay for a number of other things on their behalf. I’m confident the support that we’re providing as a government is strong.”
Klimchuk doesn’t rule out the possibility of a future audit of the Glenbow’s finances.
“Everything is, at the end of the day, accountable to the taxpayer. So if that [audit] indeed does take place, it’s, you know, taxpayers need to know how their money’s being spent,” she says. “It’s my intent to keep working with the museum.”
The former staff say that regardless of the ethics in counting deferred income, there is nothing illicit in the financial statements.
“We made sure they weren’t doing anything illegal, because [we] were all over them in case they were doing anything illegal. They might have tried to push some of it. We’ve always had clean audit reports; it’s never been an issue. It’s not the finances.”
What it is, they claim, is a long list of very poor decisions. As an example, they point out the costs of the Schmancy fundraiser — for branding, catering, hiring Jian Ghomeshi to speak — all for an ultimately unsuccessful fund development effort.
They admit that raising money for the arts is not easy, but as each continues to work in Calgary’s non-profit community, they argue the money is there for the taking. All say the museum must be much more ruthless in the way it saves money, beginning with eliminating the sorts of events and exhibitions that haven’t appealed to Calgarians so far. They also want management to admit to the reality of Glenbow’s situation, and work harder to make sure not a dollar is wasted, rather than bank on a “golden donor” to rescue the institution.
“Here’s what I think,” says CADA president Terry Rock. “I think the Glenbow is a really important institution for Calgary... and that people are pulling for them to get, to turn it around. And that I think there’s a lot of evidence of support for some of the decisions they’re making. But the proof is in the pudding, and people want to see a stronger performance as they do and as their plans hope for.”
CEO Kirstin Evenden did not respond to an interview request. Eight members of Glenbow’s board of governors were contacted for comment on this story. Those that responded advised Fast Forward Weekly to speak to Jack Thrasher.