Meeting #1

Post date: Aug 27, 2015 4:24:48 PM

Meeting Notes from the Ad-Hoc Venue Chair Autonomy Committee (AVCAC)

August 25, 2015 (7:15 to 8:50); 25 Center Avenue, Morristown, New Jersey

Present: Barrett Wilson (Chair); Mike Agranoff, Chris Riemer (Scribe) and Jay Wilensky

Absent: Elizabeth Lachowicz

Introduction

Barrett began by explaining why he felt this committee was necessary, and why he selected these particular members.

When he first stepped into the president’s shoes, he was surprised to learn that most directors had only a tentative grasp of the organization’s finances. There was little understanding of our overhead costs and no formal or informal budgeting process. And he was even more surprised to find there was sometimes “vehement opposition” to the idea. That is, some board members felt worrying about money would only blunt the organization’s creativity.

He pointed out, though, that we are clearly part of the folk music landscape, especially in light of our recent 40-year anniversary. We may not like to think of The Folk Project as a business, but we have a fiduciary responsibility to run it like one. So he recruited this band of brothers (and sister), to bring together the insights of a long-time venue chair, a new Trustee, the Treasurer, three former presidents and himself.

He also thinks that we’ve somehow gotten off kilter when it comes to balancing the autonomy of the committees with the appropriate level of board oversight. He’d like to see more interaction on decision-making, and more collaboration. So the big question is what does this ideal end-state look like, and how do we get there?

He thinks that while we can sketch the former in fairly broad strokes, we also need to develop specific recommendations that can be voted on by the board. And he has two things in mind: a fair and equitable mechanism for allocating general and administrative expenses (details now under development by the Ad Hoc Finance Committee) and the introduction of a venue budgeting process.

G&A Considered

Chris started with a brief history of G&A.

Back in the day, we ran the organization with a single metric: the balance in the checking account. And once or twice, we suddenly and unexpectedly went broke and couldn’t pay our bills. We always dug out of it, but gradually came to recognize that since we had overhead expenses (like insurance) that weren’t being charged back to the venues, the venues had to do more than just pay their own rent.

And it turned out that if each venue generated 10% more than their expenses, that would be enough. This was a convenient budgeting number, but its rule-of-thumb nature wouldn’t work for the Festival, since the Festival’s expense profile was so high. And rather than worry about it, we decided to just let it slide. No one wanted to bother figuring out a better approach, because the 10%-applied-to-everything-but-the-Festival model was good enough.

Barrett pointed out that if we decided to spread the G&A expenses over three venues, rather than four, we’re asking the “taxed” venues to underwrite the Getaway. Is that fair? Mike believes that in principle, G&A should apply to all our activities. However, he pointed out that if we decided to grant the Getaway an exemption, it wouldn’t mean the Minstrel would bring in less money, it would just reduce its profitability. He’s fine with the idea that the Minstrel will be less profitable on the books, especially if the Getaway continues to thrive. And he also thinks it’s fine if we decide to let some things run at a loss, as long as the organization as a whole remains fiscally sound.

Jay observed that the Getaway has really changed qualitatively in recent years. Minstrel, Swingin’ Tern and Special Concerts are pretty much the same creatures they’ve always been, but the Getaway is not. So this might be an appropriate time to revisit those assumptions.

On the Question of Budgeting

Barrett wanted the group’s thoughts about budgeting in general.

He feels it would be both reasonable and appropriate to ask venue chairs to submit some kind of budget for the board’s consideration. That might be an annual projection (for Minstrel and Swingin’ Tern) or an event-based projection (for Special Concerts and the Getaway). Mike wasn’t sure about that, feeling that venues with a long track record, like his, don’t really need to do budgets in a formal way, since he does them in his head month to month. But he was willing to be the guinea pig for a budget generated via QuickBooks Online (something Chris will look into further).

Barrett also felt that given the extremely simple nature of our bookkeeping, budgets should be easy. Venues have only one real income stream (admissions) and only a handful of expense items (performer fees, rent, food, misc). If a venue chair felt unable to produce a simple budget in writing, perhaps he or she shouldn’t have the job.

There was agreement among all present that budgeting would be a reasonable step forward for the group, with Jay clarifying that it would only be reasonable if we provide support for those who might find it burdensome. Barrett sees it as a “healthy” step that could lay a foundation for more collaborative discussions.

On Venue Autonomy

Mike is firmly on the side of venue independence, but concedes that troubled venues may need help from time to time.

He feels the real problem is that the board lacks the will to intervene, and Chris is strongly in agreement. And it’s not just about venue chairs. Over the years, Chris has seen many cases of spotty meeting attendance, missed deadlines and poor job performance. Generally, we don’t even like to mention it in private (let alone in public) for fear of hurting someone’s feelings. Barrett feels the board should be neither harsh nor nit-picky, but needs to accept that it has the responsibility to oversee the Folk Project’s activities. We need to be “appropriate” more than we need to be “nice.” We can’t be conflict-averse.

Mike suggested that as a starting point, maybe we could agree that if a venue loses money for some defined segment of time (a year? two years? three consecutive events?) the board should step in. But he also acknowledged that it’s about more than money, and there are intangibles that need to be considered. He’s not sure how to weigh those, or who could do the weighing. Is that up to the President? It’s a matter of leadership.

For example, some years ago, several people decided the Minstrel needed fixing. They collectively brought their complaints to Mike, he thought it over and changed his booking policy. He put more emphasis on likely draw and less on his personal taste. It worked, and the Minstrel returned to profitability.

Thinking Philosophically

Acknowledging that it was a strange question “from the only guy in the room wearing a tie,” Jay wondered if we risked losing something if we tried to make the group too “business like.” He asked “is it only money that matters?” Mike felt the answer was no. It’s not the only thing, but “it’s not a bad metric.”

Personally, Jay doesn’t really like thinking of the Minstrel as a Profit Center, and worries that we might turn away potentially creative and productive chairs by expecting them to act like business people. Mike and Chris acknowledged that raising the bar on professionalism might make it harder to deal with turnover, but Mike pointed out that the chairs needn’t do the budgeting on their own. Chris felt the Treasurer should be able to help with that. It could be a service provided for the venues, in the same way that we approach publicity or electronic communications. But that won’t work if the venue chairs feel the board has no right to know what happens within the confines of their committees. The collaborative spirit has to be there first.

Jay also thought that whatever recommendations we make, they have to apply across the board. He doesn’t think it would be fair to go through this exercise and build in special dispensations. We can’t recommend changes that don’t apply equally to everyone.

Barrett agreed that we don’t want to go for too much “spit and polish,” and we don’t want the chairs to make decisions based only on profit. But we need to start taking some small steps toward greater organizational maturity, where we can.