Hitting the Boards

Scanning this year’s budget numbers for the Children’s Theatre of Charlotte, it is hard to find any evidence of the economic downturn that has so many nonprofit leaders wringing their hands.

Attendance at performances has risen 40 percent over the past two years. Unrestricted gifts

SURVIVAL STRATEGIES Plan aggressively for the long term, to position the charity favorably for bad times. Prod all board members, not just the development committee, to help with fund raising. Don’t just ask for money; look for mutually beneficial relationships with donors.

have grown by 27 percent over the previous fiscal year. Ticket sales through early September are running 1,600 above the same time last year, “and last year was a record for us,” says Bruce LaRowe, the theater’s executive director.

The success has come despite the fact that Charlotte is feeling the effects of the nation’s banking crisis. Two of the nation’s biggest banks, Wachovia and Bank of America, call the city home. Both have been laying off thousands of employees as they struggle with the nation’s mortgage crunch. And Kenneth Lewis, the Bank of America chief who helped spearhead a $12-million endowment drive for the children’s theater seven years ago, has faced pressure to improve the performance of his company.

Looking Forward

Thus far, the arts group hasn’t taken major financial hits, but its leaders aren’t waiting around. They feel the jitters among their friends in Charlotte’s neighborhoods and corporate towers, so they have drafted conservative budget projections for the year ahead. They also started board members on fund-raising calls this summer, instead of waiting until the fall as usual.

“Because of the softness in the economy, we want to have those conversations as quickly as possible,” Mr. LaRowe says.

The arts group owes its success — and an impressive 27-year run of budget surpluses — to that kind of aggressively forward-looking philosophy. Its staff and board members seem to be constantly scanning the horizon for opportunities and threats. That prudent approach has paid off in two smart business moves that have sparked a sharp upswing in the organization’s growth and given it insulation from the slumping economy.

One such move was a partnership with the local public-library system. The other was a rethinking of the theater’s board structure that even Mr. LaRowe admits was a bit risky.

The theater’s leaders say that while no one can control the economy, they are determined to do their best at anticipating problems, and at making sure they build a deep reserve of community support to sustain their organization.

“Our challenge is to be a good storyteller,” says Linda Reynolds, the theater’s development director. “Not just on the stage, but also from a development standpoint.”

For most people in Charlotte, the most tangible sign of the theater’s success is the building, opened in 2005, that houses its administrative offices, a 102,000-square-foot facility called ImaginOn: The Joe & Joan Martin Center.

The $42-million building contains two professional-quality theaters, as well as scenery and costume shops and rehearsal spaces. It is also home to a children’s library, whose whimsically designed, kid-friendly interior includes interactive game stations, an animation studio, and a floor made of recycled sneakers and tires. On any given afternoon, the building buzzes with youngsters’ energy and laughter.

The idea for the shared building stretches back to 1997, when the theater group was looking to upgrade from its cramped, outdated headquarters and the city library system was looking to build a new facility for children. The theater group at that time worked out of a building with insufficient air-conditioning and so little space that officials ran the scenery shop out of an old textile mill. Mr. LaRowe, who has led the theater for 15 years, remembers hearing about the library system’s idea and thinking, “Hmmm, maybe we should talk.”

The arts group and the library system joined forces to push for a $27-million public bond issue, which passed in 1999, followed by the two organizations’ successful campaign, ending in 2001, to raise a $12-million endowment to finance arts and library programs. Government money and private donations helped round out the total needed to complete the new facility.

When it opened, ImaginOn took the theater group from a cramped old Veterans of Foreign Wars building to the center of Charlotte’s uptown arts district.

“It puts us in a different light in the public’s mind,” says Mr. LaRowe. “If they don’t know us, they’re wondering, ‘What is this ImaginOn?’ It’s been sort of a launching pad for people to check us out.”

ImaginOn sits just steps away from Charlotte’s new light-rail line, the city’s professional basketball arena, and skyscrapers where thousands of potential theater patrons work. And it seems more people have indeed been checking out the theater’s performances. This past year, it surpassed the $1-million mark in ticket sales for the first time. From the fiscal year ending in 2004 to the one ending this year, its budget has increased by 96 percent, to $4.3-million. About 35 percent comes from corporations, while the rest is from individuals.

“It’s the quality of what we’re able to put out through ImaginOn,” says Tammy Stringer, chairwoman of the organization’s board. “We have trap doors [in the stages]. We have a musician’s pit. We can lift all these sets that we couldn’t lift before. It has been wildly successful.”

New Approach

The arts group, in its typically forward-looking style, saw all this coming, even before ImaginOn was completed. Its staff and board members underwent an intensive long-range planning process to prepare for the transition. They viewed it as a once-in-a-lifetime opportunity and challenge, and they figured they needed to re-evaluate every part of the theater’s business model.

One of their most significant decisions was to rethink the group’s Board of Directors. Rather than aim for the biggest-name community leaders, they decided they wanted up-and-coming professionals and other candidates, still in their child-rearing years, who could be the most passionate advocates for the organization.

Corporate leaders today are increasingly focused on international business issues, Mr. LaRowe says. Having one on a board does little good if he or she is too busy to make calls on a charity’s behalf.

“We don’t want people who are torn between three and four boards,” adds Ms. Reynolds. “We tell people, ‘We want to be your top priority.’”

A ‘Risky’ Move

The charity began asking new board members to sign a “commitment form” in which they specified how many meetings they would pledge to attend and how they would support the organization’s fund-raising efforts. And in a move Mr. LaRowe calls “risky,” the group abolished its 33-member board’s development committee. Instead of looking to a few trustees to lasso donations, everyone would be responsible for it.

“It scared the living daylights out of some people,” Ms. Reynolds says, “but it has allowed some people to be development stars who really didn’t think they could be.”

For example, Mindy Jones, a stay-at-home mom who arrived among the newer board recruits, found the idea of approaching strangers and corporations intimidating. But after Ms. Reynolds gave board members a list of corporate prospects, she realized she knew one chief executive personally. She told him about her work with the organization and how strongly she felt about its mission.

A few days later, he sent a check for $10,000 from his company.

“I was just floored,” Ms. Jones says. “It made me realize people are willing to listen to your story and what your passions are.”

The Children’s Theatre of Charlotte is counting on relationships like that to keep big donors from abandoning it during the economic downturn. It seeks out donors based not simply on their ability to write a check, but also on the likelihood of developing a mutually beneficial relationship.

“Nobody’s immune to tough [economic] situations, but we’re trying to be smart in our ask and in our approach,” Mr. LaRowe says. “We’re staying on top of the relationships.”

The same goes for the big banks.

The group will be making calls to its friends at Wachovia and Bank of America. Ms. Reynolds, a former corporate-giving officer at the erstwhile First Union Bank (which merged with Wachovia in 2001), says corporations often set their giving levels as a percentage of their income.

So in tough times, she says, they still give, but not as much — or to as many recipients.

“It’s a matter of jockeying for position within that pool,” she says. “We know things are getting tight, but we don’t want to be in that 25 percent [of charitable giving] that falls off the table.”

Bank of America officials say the corporation isn’t backing away from its philanthropic commitments, including last year’s grant of more than $25,000 to the children’s theater.

Next year, the bank will embark on a 10-year, $2-billion national giving campaign, and it plans to continue associating itself with “high-quality, high-need” charities like the theater, says Charles Bowman, an executive with the bank who oversees its North Carolina operations.

Still, he adds, the shaky economy will affect the way the company handles its giving.

“I think you will see everyone become more thoughtful in looking for maximum impact from the dollars that are spent,” he says. “We recognize the economic climate breeds some uncertainty. But we’re trying to be as consistent as we can in being a partner in the community.”

Controlling Costs

Ms. Stringer points to another, perhaps more mundane, explanation for the charity’s success in weathering tough times: good old-fashioned organizational penny-pinching.

She recalled how a scene in its production of The Wizard of Oz involving smoke unexpectedly required the group to hire fire marshals as a precaution. The staff dutifully made cuts in other parts of that season’s theatrical lineup to balance out the extra spending. “Our staff is unbelievable at controlling expenses,” she says.

The children’s theater is happy with its success but not content enough to stop there.

A year after moving into ImaginOn, the organization embarked on another round of long-range planning. It wants to continue broadening its reach within Charlotte but also hopes to expand its national profile.

Already among the largest children’s theater programs in the country, according to the Children’s Theatre Foundation of America, the Charlotte organization wants to work with more nationally known artists and attract more money from foundations and corporations that support groups nationwide, such as current supporters Target and U.S. Airways.

To map out a plan to carry them through 2012, the staff and board members studied similar organizations nationally and used the pro bono services of a major accounting firm to examine potential risks, their likelihood of occurring, and the severity of impact each would have on their organization.

Other organizations, says Mr. LaRowe, approach long-term planning only in terms of a crisis: “We have done all this advance planning from a position of strength.”

Adds Ms. Reynolds, “It’s a snowball that’s started to roll, and we want to make sure we’re ahead of it.”