‘We just ran out of money’: Schwartz Center couldn’t attract enough revenue to sustain operations

DOVER — The Schwartz Center for the Arts will hold its last public event today before the downtown Dover arts venue closes its door on June 30.

Tracey Miller, president of the board of directors, said Friday the group will vacate the building that day, but keep the Friends of the Capitol Theater entity intact for now.

“What led to this decision is we just ran out of money,” she said.

The directors, seated last May as a working board, labored to raise funds and respond to community feedback with increased and diversified programming, but she said, the nonprofit couldn’t make enough to sustain operations. It does not carry debt.

“We thought we were going to be able to figure out some more revenue sources. We just kind of ran out of time,” Ms. Miller said.

Patrons file into the Schwartz Center for the Arts in Dover for a show in 2012. (Delaware State News file photo)

Wesley College and Delaware State University, which stepped in more than a decade ago to save the Schwartz when it faced closure in 2004, own the building at 226 S. State St.

According to city and county records, the property is exempt from tax assessments.

The higher education institutions, which have provided a combined $120,000 a year to the Schwartz for nearly a decade, decreased and then stopped their financial support last year, but continued to lease the building to the Friends group rent free.

Financial support cut

Ms. Miller said that reduction in financial support, coupled with the loss of rent after a church group moved to a bigger facility, caused too significant of a funding crunch too fast even with ticket sales up 99 percent over this time last year. She cited a variety of other factors that created challenges, from perceived parking and safety problems to insufficient private sponsorships.

“It’s right in the middle of downtown. It’s just going to take us standing in the middle of the road begging people to come in,” she said. “I think the key here is going to be figuring out what the exact combination is to engaging people downtown to just come into the theater. To just try it. “

Paul Weagraff, director of the Delaware Division of the Arts, which has provided the Schwartz with $797,453 in grant money since 2000, mostly for general operating support, complimented its board for aggressively trying to salvage operations. He said the programming they offered this year fulfills the grants received for fiscal year 2017.

“I think the reality is, that given the change in the structure of the organization over the last couple of years, that the change in the organization structure wasn’t accompanied by a change in a funding structure as it was insufficient to sustain sustainable operations,” he said. “They just could not continue to operate under the financial model they were operating under.”

Biggest challenge

While he said having programs that the community wants is critical, organizations need a broad range of revenue streams, from ticket sales, to grants, private contributions, government subsidies and corporate sponsorships.

“I think historically that’s where the Schwartz has had the biggest challenge,” he said. “An organization has to have a variety of funding sources in order to survive. Ticket sales alone won’t cover it.”

A primary function of a nonprofit board is fiscal oversight and fundraising, Mr. Weagraff said, but with the longtime financial support from Wesley and Delaware State, the Schwartz board wasn’t always situated to meet that goal.

John Leventhal and Rosanne Cash perform at the Schwartz Center for the Arts as the Gala Opening act in 2001. (Delaware State News file photo)

“They were for a period of 10 to 12 years extremely generous to the Schwartz,” he said. “During the time, there was not a sufficient fundraising mechanism developed, in part because the colleges were underwriting much of the cost. As the colleges withdrew over the last few years, they weren’t able to replace (that) support with adequate funding strategies.”

“To Tracey’s credit, I think her efforts in building programming and really, (former executive director) Sydney Arzt before her, to build significant programming was substantial. In recent months, they’ve seen an increase in ticket revenues as they’ve been reporting them to us,” he said. “Clearly the Schwartz has been serving a valuable need in the community.”

Partnership changes

The following is a list of the people who served on the Schwartz Center for the Arts Board of Directors, according to the nonprofit group’s website:
Tracey Miller, president
Candice Fifer, vice president
Tim Paret, treasurer
Laura Howard, secretary
Todd Stonesifer
Joe Baione
Amy Mullen
Sophia Ghanayem
Mike Rushe
Tony Espinal
Larry Friend
Nate Ames
Laura Lee Kirby
Samantha Hemphill
Meghan Garrison

When the Schwartz faced financial woes in 2004, a strategic alliance was formed to collaborate the resources of Wesley College, Delaware State University, and The Friends of the Capitol Theater. A few years later, that alliance became an official partnership.

Delaware State University Spokesman Carlos Holmes said Wesley and DSU have a lease agreement with the Friends of the Schwartz II (also known as the Friends of the Capitol Theater) outlining that the Friends group which runs the Schwartz Center did not pay rent, but would handle routine costs such as utilities and the higher education institutions would take care of major structural repairs needed for the building, such as HVAC issues. That lease began in 2007.

In addition to that lease, Wesley and Delaware State provided regular financial aid to the Schwartz until last year.

“From 2004-2007, DSU and Wesley were involved in a strategic alliance with the Schwartz, in which both institutions programmed some of their events at the theatre. Per the 2007 agreement, from 2007-2016, DSU and Wesley contributed $120,000 annually to the Schwartz ($60,000 per institution).”

Then, Mr. Holmes said, the financial support for DSU dropped to $55,000 in fiscal year 2016. He could not speak for Wesley’s contribution and Wesley President Robert Clark was unavailable for an interview this week.

No plans for building

As for plans for the building, Mr. Holmes said, “No plan is yet in place that addresses its future. There is presently no timetable with respect to the development of such a plan.”

Ms. Miller said it takes more than $100,000 a year to run the theater and an additional $25,000 in liability insurance. That includes $7,000 a month in the summer in electric bills for the three-story, 550-seat theater.

“It’s not like we had huge amounts of people working there or anything like that,” she said. “The building costs a lot of money.”

Ticket sales raise significant revenue, they can’t make up the costs needed to pay acts, which require deposits and fees in addition to their performances.

“In terms of debt, we don’t own the building so there’s no way to go out and get a loan,” she said, and without a long-term lease, it makes it difficult to raise significant capital.

She said within the new board being named in May, members learned in a span of 45 days that they would lose $150,000 with the colleges’ support and the church rental. While she said the board was determined to try and compensate, and had a plan in place, plus the successful Battle of the Schwartz that raised more than $60,000 in February, it simply ran out of time and money.

From left, Belle Shade as Marion Paroo, Josiah Rich as Harold Hill and Logan Williams as Marcellus Washburn in the Music Man. (Delaware State News/Marc Clery)

“There is no cushion. We are day to day,” she said. “There is no way for us to deficit spend.”

She said before the decision in December 2015 to create a new working board, “they had not had an active board since 2013.”

“We tried to figure out seven ways to Sunday to make this work. I really thanked my board for that (Thursday) night. No one gave up.”

She echoed Mr. Weagraff’s opinion that the theater needed supplemental funding and was grateful to the state’s support through the years.

“They have been phenomenal in their help to us. That’s our largest grantor. They really stepped up when they came on board. They did everything possible to keep us afloat,” she said, adding that the Twilley Foundation and the Mid Atlantic Arts Foundation also have provided significant aid.

Saddened by reaction

Ms. Miller acknowledged it was frustrating to see some of the public reaction to the Schwartz’s closure on social media. She lamented that people who may be saddened by the turn of events didn’t support the theater to help prevent the current situation.

She said she would talk to people who promised support and attendance for events, but then didn’t come. A free weekday movie for seniors, despite the pre-event hype, wasn’t well attended.

“We do it and then people don’t show up,” she said.

The board considered options from offering valet parking to focusing programming this summer on day camps for local kids. The program slate this year included a Steely Dan tribute show, a hip hop performance and a zydeco band.

Just as she doesn’t believe there is a parking issue — “you park and walk,” she doesn’t believe there is a safety issue in the Schwartz vicinity. “I have walked in and out of there at all times of the day and night and I have never felt unsafe,” she said.

But she said if the theater can’t get past those stigmas and secure regular financial support, it won’t get back to the root of the issue: being able to sell tickets.

“If you can’t get butts in seats. If you can’t engage your community, you’re not going to make it,” she said. “If you can’t get people in Dover to believe, then it’s not going to make it.”

Help from arts peers

The Delaware Division of the Arts awarded the following grants to the Schwartz Center for the Arts since 2000.
Arts Stabilization 2009 $8,000
Arts Stabilization 2013 $3,700
General Operating Support 2000 $8,493
General Operating Support 2001 $7,778
General Operating Support 2002 $55,000
General Operating Support 2002 $6,613
General Operating Support 2003 $2,030
General Operating Support 2004 $32,478
General Operating Support 2005 $22,000
General Operating Support 2006 $27,216
General Operating Support 2007 $64,650
General Operating Support 2008 $49,710
General Operating Support 2009 $46,260
General Operating Support 2010 $41,070
General Operating Support 2011 $41,010
General Operating Support 2012 $41,765
General Operating Support 2013 $36,080
General Operating Support 2014 $89,850
General Operating Support 2015 $61,000
General Operating Support 2016 $80,000
General Operating Support 2017 $64,000
Special Project 2012 $5,000
Special Project 2015 $3,750
Total: $797,453

The board reached out last fall to representatives from theaters and arts groups throughout Delmarva and invited them to tour the Schwartz and discuss ways to make it succeed.

Fred Munzert, executive director of the Milton Theatre, was part of that roundtable discussion, as was Clear Space Theatre in Rehoboth Beach and the Freeman Stage at Bayside near Fenwick Island.

“We were all sad to hear the news. Everybody was really rooting for the venue and the organization that was there. So much time, effort and money has been invested in that thing over the years,” Mr. Munzert said. “Live art is so important to a community and humanity.

Anytime a community has a theater that’s not functioning, it makes me sad.”

With 38 years working various roles in the arts business, he knows how difficult it is to keep a venue operating successfully. Knowing that funding from government and private sources fluctuates in good and bad fiscal times, he said the key for nonprofits is having community support.

“What really makes it work is when a local community supports an effort,” he said, which means patrons buying a painting at an art show, purchasing a ticket to a show and paying to see a film.

He sees that happening in Milton, where neighbors bring friends to expose newcomers to the theater’s offerings and people putting one dollar in a jar at the door makes a difference.

“That’s where the majority of any support comes from. I don’t like the climate and the talk around current funding. It just creates a negative thing. The funding is helpful and necessary, but in the end, it’s people in the seats … that makes it happen,” he said. “That’s my hope that on a grass-roots level, people are becoming more aware of that and supporting.”

“We’ve seen it here in Milton for sure. I know they’ve struggled with it in Dover.”

Underlying challenges

Mr. Munzert, who led the effort to reopen the Milton Theatre three years ago in June of 2014 after it had been closed for four years, agreed with Ms. Miller that there are varied underlying challenges to running a successful community theater. He named ticket prices, having varied programming and offering shows and movies that the community wants. While it is important to stick to one’s mission, he said, groups also have to be willing to try offbeat events that expose people to new arts areas.

“I think we touch on just about every genre and people group,” he said, ranging from Frank Sinatra tribute shows for the mainstay older audience to an annual drag show.

Saturday night’s performance of “The Vagina Monologues” was 75 percent sold out as of Friday morning and he said he wasn’t sure if anyone would even come when the show was first planned.

“My goal was to kind of offer a lot so people could explore, too.”

The Delaware native was told he shouldn’t host the drag show, but, “They come and they laugh and they have fun. It introduces them to a new kind of art they may not have been exposed to before.”

While Mr. Munzert said major donor drives and capital campaigns are needed for special projects, he said it is a balance for arts groups not to rely on those revenue streams for day-to-day operating costs.

“Honestly I think the greatest error nonprofits make is to lean on endowment, to lean on donations. The primary focus is what is your programming is doing and how are you raising money for that?” he said. “The programming has the ability to bring funds in. Even at $5, you have a revenue stream.”

Loss for arts in Delaware

Mr. Weagraff and Mr. Munzert emphasized the significance of the historic theater’s closure.

“In terms of the impact, I think the closing of the Schwartz Center is a great loss, not only to downtown Dover, but central Delaware. It is a gem of a facility. It’s a shame if it doesn’t get utiltized for what it is,” Mr. Weagraff said. “We don’t envy them the anguishing decision that they’ve made, but really feel they have thought through the process carefully,” Mr. Weagraff said. “And really been responsible in their decision.

The state arts division, as it does with other groups in Delaware, he said, had provided support beyond the general operating fund grants and awarded grants for consults to build new strategic plans designed to boost fundraising and increase community engagement.

“That’s where we’ve stepped in a number of times with them and are still open to doing that.”

Mr. Munzert lauded that type of help from the Division of the Arts and Delaware leaders in general, who have created strong support for the arts in Delaware, offering grant funding and educational support.

“There’s a vibrant group of people here in the state that want to see the arts thrive and be alive,” he said. “I love the Schwartz. I wanted to see that work for a million reasons. I hate to see (small theaters) sit dark.”

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