Carolina Theatre Erases Accumulated Net Deficit of $1.7 Million

August 9, 2017 by Carolina Theatre

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Carolina Theatre Stages Comeback

Durham Nonprofit Has Fully Emerged from Accumulated Net Deficit of $1.7 Million

Eighteen months after a financial crisis threatened to force closure of the Carolina Theatre, the nonprofit that operates the venue has entirely erased an estimated $1.7 million net deficit. Carolina Theatre of Durham, Inc. reported an accumulated net surplus of nearly $200,000 at a meeting of its Board of Trustees on July 25. The financial report, which is preliminary and unaudited, includes operations through June 30, 2017, the end of the organization’s fiscal year. The nonprofit projects that the surplus will continue to grow through the current year.

Carolina Theatre of Durham, Inc. rallied from its financial woes thanks to extraordinary assistance from the City of Durham, support from fans and patrons, generous donations from private and public donors around the Triangle, the hard work of its staff and volunteers, and significantly improved financial performance in its rental, film, live event and concessions businesses. Under the leadership of Interim CEO Dan Berman, who has worked as a volunteer since January 2016, the nonprofit has focused on operational efficiencies, reducing risk and rededicating itself to mission based activities.

“The outpouring of support from all segments of our community is testament to the central role the Theatre continues to play in shaping the cultural life of our city and region. I’m happy to report that the arts-loving people of Durham remain fervently committed to a thriving, welcoming and relevant Carolina Theatre,” Berman said.

In February 2017, an independent accounting firm completed a comprehensive audit of the nonprofit’s 2016 fiscal year financials that helped clarify the scope of the financial distress under which the organization was operating when the board named Berman interim CEO. The audited financial statements were presented to the City of Durham and indicate that the Theatre had a more than $1.4 million accumulated net deficit as of June 30, 2015. This number grew to an estimated $1.7 million by December 31, 2015, putting the Carolina at imminent risk of closure and bankruptcy. The Theatre and the City of Durham recently filed suit against the nonprofit’s former auditing firm to recover losses stemming from the firm’s failure to identify significant errors in financial statements.

As the Theatre’s Board of Trustees began to uncover the scope of the financial crisis that went unreported by the auditors, immediate steps were taken to address the problems, including the appointment of Berman as Interim CEO. Soon thereafter, the City of Durham agreed to provide up to $600,000 to keep the Theatre operating, provided the nonprofit could match the investment through its own fundraising efforts by June 30, 2017. Paced by donations large and small from individuals and corporations alike, the community rallied around the Carolina Theatre, as it did in the late 1970s when a group of volunteers helped save the building from demolition. The nonprofit made its fundraising goal by the end of November 2016, a full seven months ahead of the city’s deadline.

“The Carolina Theatre has been one of Durham’s great gems for more than 90 years,” Board of Trustees Chairman Michael Schoenfeld said.  “Time and again the community has demonstrated its passion for the Theatre, making it possible for new generations of audiences to experience downtown Durham’s iconic venue.  On behalf of the Board, I am grateful to the City of Durham, the staff, our visionary interim CEO Dan Berman, and the many people in Durham and beyond who voted with their attendance and gifts to keep the Carolina Theatre strong and vital.”

In addition to sustained fundraising efforts and increased fiscal responsibility, the Theatre has benefitted from the overwhelming support of arts and entertainment-loving fans across the Triangle, who have continued to buy tickets and enjoy the Carolina’s welcoming atmosphere and diverse programming. Both the nonprofit’s self-promoted live events, and those of its national partner, NS2, were successful in generating a significant profit contribution for the organization.

Movie fans also flocked to the venue’s cinemas in record numbers over the past year, as the film program achieved new highs in attendance for its beloved Friday night Retro program and two of its newest film festivals: SplatterFlix and AnimeMagic.

Both event- and film-goers showed their love for the theatre — and its famous organic popcorn (made with real butter!). Concessions added to the theatre’s success story by exceeding budgeted expectations thanks to an additional beer stand, increased staffing and other audience experience improvements that have been implemented over the last six months.

“I am pleased to see the Carolina Theatre recovering from its financial deficit of 2015, so that the theatre can continue to be another source of entertainment, and historic pride as a venue, for visitors and residents of Durham,” Durham City Manager Tom Bonfield said.

The City of Durham’s faith in a restructured and rededicated Carolina Theatre has proven to be well placed. The nonprofit that operates the venue has tightened financial controls, quantified and minimized risk, and increased rentals and fundraising as a percentage of its operating budget. This disciplined business approach, combined with innovative and diverse programming choices, strategic partnerships with other presenting organizations and a rededication to arts education and community outreach, has transformed and rejuvenated the Carolina Theatre – creating a sustainable fiscal model and ensuring its place as a beacon of culture in downtown Durham.