In March we talked about the staggering debt accumulated by the Baltimore Symphony (EIN 52-0629696 Form 990). Shortly later, we missed the Baltimore Sun report that the symphony board decided to liquidate 30% of the organization's $90 million endowment to cover the shortfall. (The cached version is here and nowhere else.)
As part of the arrangement, the balance of the endowment will be transferred to a new, independent body that will in the future be prohibited from further raids on the principal (or corpus). Apparently this resembles part of a proposal floated a year and a half ago (ArtsJournal: "Saving Or Selling Out Their Future In Baltimore?", September 29, 2004).
Other symphonies have converted endowment to cover operating deficits, but the case cited of the Cleveland Orchestra involved a transfer of $6 million from a $120 million endowment.
Board chair Philip D. English sounded a note of optimism, while the new interim president and CEO W. Gar Richlin committed to a balanced budget. Jane Marvine of the BSO Players Committee, whose contract with the symphony is up for renewal in September, indicated that the key will be increased fundraising.
On the donor side, the symphony says that the amount being transferred represents unrestricted investment earning, not the restricted principal (or corpus). Nevertheless, they are seeking approval of the transfer from both the IRS and state officials.
Donors quoted in the article have mixed views; one indicates that it probably is not smart, but it does give the organization a fresh start; besides, she is less inclined to give to a "sinking ship" organization that shows huge and increasing amounts of debt.
