The Indianapolis Symphony just reported a substantial deficit:
A year of declining contributions and ticket sales left the Indianapolis Symphony Orchestra with a $2.8 million deficit.
Symphony officials say its current budget has been cut by $3 million, to $26 million, in part through a 12 percent pay cut accepted by musicians in a new contract last month.
Symphony President Simon Crookall said Monday that the deficit was “a warning sign” but that he didn’t anticipate more cuts.
The recession caused the symphony’s endowment to drop from $128 million in mid-2007 to about $90 million now. Crookall says about $100 million more is needed to make the endowment adequate for an orchestra of its size.
The symphony also continues searching for a new music director following the failure over the summer of contract talks with Mario Venzago.
A “warning sign?” That’s one way to describe a deficit of over 10% of the budget. Of course, cutting $3 million from a $29 million budget is not trivial either.
The endowment calculation is very interesting indeed. Not too long ago, an endowment was considered sufficient if it was twice the size of the annual budget. It appears that Crookall believes that an endowment of less than 7-8 times the budget isn’t enough. Using the traditional 5% draw, that would suggest that the endowment should provide around 40% of the entire budget, or not much less than what’s typically the percentage of the budget that goes to musicians’ compensation.
He might be right. It’s certainly a financial model closer to museums that to show business.