“I don’t know what to believe!” writes a Clayworks student and petition signer. That’s understandable. Questioned at the May 2 hearing in Annapolis, the administration’s representatives left many questions unanswered and listeners skeptical.
What follows is a detailed account of the financial history of Baltimore Clayworks by Deb Bedwell, who knows the truth. Please read it and decide for yourself. Is cash flow is the problem? Are there options regarding the debts? Or have inadequate fund-raising and alienation of loyal Clayworks donors combined to endanger the future of this treasured institution?
By Deborah Bedwell
The following was presented to the House Appropriations/Capital Budget Subcommittee at a briefing in Annapolis on Mary 2, 2017. To download a copy, click this link: Letter from Founding E.D. Deborah Bedwell
Until very recently, I would say the last couple of years, Baltimore Clayworks had a stellar reputation locally and nationally. We offered an extraordinary level of public access to ceramic fabrication facilities, along with technical support and artistic expertise and assistance, that cannot be found anywhere in Maryland or its environs.
From institutions to individuals, anyone can come in, rent a classroom or a kiln, get small or large pieces of clay pottery and sculpture fired in a variety of kilns. Local universities, such as Coppin, Morgan, Towson and Johns Hopkins, as well as diverse community groups of all ages, classes and ethnicities, come to Clayworks for the institution’s ceramic artists and technical resources. It is unprecedented to have a facility that is completely open and accessible to the public, with supportive technical, artistic and safety staff to assist and supervise.
From a financial standpoint, a key component of our operating budget was revenue received directly through charitable contributions. Approximately 50% of annual revenue came from contributions and grants, and the other 50% from earned revenue (class fees, rental fees, and sales of pottery and sculpture). Of the 50% from grants and contributions, the majority came from individual donations of members and friends and supporters of Clayworks and its mission.
As Executive Director, it was critically important for me to know who our donors were, and we kept track of each donation. The vast majority of our individual donors came from Mt. Washington and the adjoining communities of Roland Park and Pikesville. The majority of enrollees in our many classes and courses came from these nearby communities as well. Accordingly, I can state without hesitation that, although Baltimore Clayworks had a national reputation, its financial support was principally reliant on the community of Mt. Washington and adjacent neighborhoods.
Without strong community support – meaning support from the Mt. Washington and adjoining neighborhoods — the business model does not work. Just as it is an important component and resource for the Mt. Washington and adjoining neighborhoods, Clayworks is reliant on the same neighborhood community for its financial viability.
Donation revenue decline
As a concerned and involved member, I routinely read the Annual Report and publicly available IRS Form 990s filed each year by Baltimore Clayworks Inc.. These documents clearly demonstrate some important facts about the operation and the importance of the continued ownership of the buildings in Mt. Washington for the organization’s financial survival.
Despite repeated requests, we do not have access to the 2016 financial data. The available information shows the total grant revenue and total earned revenue for the four year period 2012–2015. While the earned revenue — listed as “Program Revenue” – has remained fairly consistent or even increased slightly as core staff with years of experience continued their work for Clayworks, however the revenue from contributions and grants experienced a severe decline. This decline is principally in the area of non-governmental gifts and grants – in other words, donations from the same members and friends in the three neighborhoods discussed earlier. Whereas in 2012 and 2013, these non-government donations were between $409,962 and $426,216, they plummeted 23% in 2014 to $328,146 and dropped another $38,000 in the following year. In the last two year reported period, individual and foundation donations dropped more than $135,000.
It is this loss of non-governmental individual contribution and grants that has created the cash flow crisis facing the current leadership. During my tenure as Executive Director, in 2009 we secured a $150,000 line of credit, used to cover normal operating expenses. We had successful year end fundraising campaigns, both annual giving appeals, and individual donor solicitations made by the board members and I, as well as an ambitious autumn Gala which went to pay off or down any outstanding amount on the line of credit. This all worked according to the fundraising plan built into the annual budget. There was no crisis as long as individual contributions and foundation grants came in. We kept the bank satisfied. No one talked about selling buildings.Ever.
When you have a $150,000 line of credit to pay down, a drop off in contributions and grants of $98,000 from 2013 to 2014, now that IS is a crisis. Another $38,000 loss the following year – now $135,000 in the hole on fundraising — and the crisis is even bigger.
The drop off in fundraising support is directly the result of two executive directors who attempted to change the culture of inclusive and community input and involvement. A great deal of alienation resulted, a real backlash from the 1,000 plus members and surrounding community base. The first problem was executive director Benjamin Schulman who in 2012 fired two respected members of the staff, and then quit in the face of an uproar by the Board and the membership. A great deal of damage in the important relationship between Baltimore Clayworks and its members, donors and surrounding community had been done.
Next, Clayworks had an almost 2 year period with an experienced and gifted contractual interim executive director, Paul Derstine of Transition Guides. Paul got finances and operations back under control, and the Board hired Sarah McCann, a young woman who had been a popular teacher at Clayworks, but had no previous executive director or management experience. The job was too big for her, and she did not have the capacity or the ability to engage the community or the donors. Several large institutional donors, as well as individuals who had given five figure contributions in the past, had reached out, but Sarah did not respond or follow up. So their donations and grants did not appear. The $135,000 decline in contributions was suffered during Ms. McCann’s tenure. She left earlier this year.
Baltimore Clayworks’ failure to reach out to past consistent donors and grant makers such as private and family foundations, and to follow up with them when they have expressed interest in making grants but required further information, constitutes negligence by the organization’s leadership. Additionally, alienating the membership that is so vital to its financial well-being is negligence as well. This is “biting the hand that feeds you.”
The cost of occupying the current buildings vs. moving and relocation
Audit information from the 2014 fiscal year further shows the actual costs of occupying the buildings on Smith Avenue. The organization paid approximately $45,000 each year for amortization on its mortgage and interest on the loans. From an agreement with the Baltimore City Parking Authority, it receives parking lot revenue of $30,000 – $33,000 annually. This translates into a net ownership cost of under $15,000 per year, which is less than 1.5% of the total annual budget. With just over 15,000 square feet of finished interior space, the ownership cost of the two buildings and parking lot may be calculated at the rate of approximately One Dollar ($1.00) per square foot.
While I am not an expert in real estate leasing rates around the “arts districts,” to which the Board says they propose to relocate, I question how the space they may choose could accommodate Baltimore Clayworks’ programming needs at so modest a cost.
In addition to leasing new space, the expense of relocating and re-establishing the many facilities and equipment vital to proper functioning, particularly the kilns, would be extraordinary. Donors who contributed to Clayworks’ on-line campaigns to fund the building of the gas, soda and wood-fired kilns, will be extremely unhappy to see them abandoned. They would understandably be hesitant to support the expense of rebuilding them elsewhere again.
Most important, however, is that moving away from the Mt. Washington community, would also divorce the organization from the Pikesville, Roland Park and Mt. Washington neighbors where the majority of its members and its financial contributors reside. As over 800 people have signed a petition that Baltimore Clayworks not move from its current location, it is logical to conclude that the donors will not follow Clayworks to a new location outside of this area. In addition, lost revenue will also threaten Clayworks’ satellite locations and its broader programmatic reach in Baltimore neighborhoods, schools and universities.
Consider these factors:
- Creating alienation within the community of existing donors and adult students by failure to communicate the impending financial crisis. Deepening that alienation by a steadfast refusal to allow that community to help the board in planning to resolve the crisis. Heightening the intensity of alienation by announcing sale of the building as the ONLY solution;
- the nominal cost to own the two buildings;
- the fact that the majority of financial contributions, so critical to the viability of Baltimore Clayworks’ annual budget, come from Mt. Washington and surrounding neighborhoods;
- the fact that relocation will result in substantially higher annual housing/leasing expense and most likely result in further erosion of donor support;
- the fact that high costs for a sale and move may be anticipated and have not been analyzed to date (including legal and professional fees, packing and moving expenses, tenant fit-out of a new space, and moving and re-building the gas and wood kilns);
- a substantial lag time in which little or no programming would be offered;
- entrusting artistic and educational programmatic leadership to unqualified and inexperienced leadership.
If one looks at these factors, the announced intentions of this board to sell the Baltimore Clayworks buildings and move elsewhere amounts to financial suicide.
For these reasons, it is my considered opinion, based on my 35 years as Executive Director and my last six years of involvement as a teacher and a donor, that the proposed sale of the two buildings and a move out of the Mt. Washington neighborhood will result in the funds and the assets of Baltimore Clayworks, Inc. to be seriously diminished, lost, or wasted.
— Published May 2, 2017. To download a copy of this letter, click on this link: Founding E.D. Deborah Bedwell
Please express your opinion. Complete this quick Clayworks Community Questionnaire.