Archives

Civil Rights Museum finances detailed

by Jeff Sykes

jeff@yesweekly.com | @jeffreysykes

Mid-October was a busy time for Lacy Ward, the former executive director of the International Civil Rights Center and Museum in Greensboro. On the job for about sixmonths, Ward was to be introduced to the museum’s charter members during a dinner in the Caldwell Ballroom at the O.Henry Hotel.

The invitations went out via email on Oct. 12 to the 1960 Society, and described the event’s purpose as “to introduce Lacy Ward Jr., the Museum Executive Director, to the museum’s founding donors; on the job for six months, he is sharing his vision, current challenges and plans for the future.”

The email invitation, included in a batch of records viewed by YES! Weekly, listed presenters being Greensboro Mayor Nancy Vaughan, Ron Milstein, executive vice-president of Lorillard Tobacco Company, and Ward himself.

The next afternoon, Ward sent a clarification email, emphasizing that Earl Jones, co-founder of the museum and vice-chair of its board of directors, would be presenting as well. Since Ward’s abrupt firing on Nov. 10, several published reports have alluded to this meeting of the 1960 Society as the beginning of the end of his attempts to turn around the often maligned leadership of what should be one of Greensboro’s cultural cornerstones. Ward is reported to have told the gathering that the museum had no cash reserves for operating expenses.

Whatever happened at this meeting, it was followed quickly by a succession of events that are vaguely sketched out in a path of emails between museum staff, board members and city officials. The details and specifics of his firing remain elusive, but what facts transpired between the 1960 Society meeting and Ward’s termination can be placed on the record after careful analysis of the electronic conversations and published reports.

The 1960 Society meeting was followed quickly by a meeting of the museum’s finance committee. The meeting took place on Oct. 17, a Friday. The day before, museum Chief Financial Officer John Swaine messaged committee members a set of financial documents in preparation for the meeting.

“Significant hours were spent on the summary Income Statement, due to the amount of formatting that was required to have a two-page report,” Swaine wrote. “I will have to work on a balance sheet later, but the most important items are the dropping attendance and lack of cash that we will discuss tomorrow.”

A meeting of the museum’s full board was set for Monday, Oct. 20, at noon. On Saturday, Oct. 18, Swaine sent out a revised financial statement reflecting formatting changes made in order to show a projected 2015 budget next to the audited 2013 and revised 2014 budgets.

Ward sent out the full packets later that Saturday. In his note to the board, he said that finance, development and special events were the “three main areas of discussion” to be had at the meeting.

Ward stated in an article published in YES! Weekly on Oct. 15 that separating the operating budget from the various paper entities erected in order for the museum to qualify for tax credit financing for construction costs was critical to improve public perception of museum operations.

“It made for a very complicated organization, which was hard for the community to have an understanding of the operational costs of the museum,” Ward told the paper in October. “What the public needed to see was the museum operating budget as pure as possible.”

Those numbers reflect the worrisome financial forecast Mayor Vaughan alluded to when defending her proposal last month that the city assume management of the Civil Rights Museum.

Looking at the operating budget, the International Civil Rights Center and Museum had lost $425,965 through the end of September, according to a consolidated profit and loss statement Swaine prepared for the Oct. 20 board meeting. The museum had budgeted for an operating loss of $380,850 for the entire year.

A separate “Summary of Cash Projections to April 2015″ shows the museum’s monthly operating loss ballooning in November and December. Operating losses above $100,000 are projected each month of the first quarter in 2015. A note on the summary for November, next to an entry for $33,000, states “end of city funds to be used for operations.”

Capital payments to Carolina Bank and Wells Fargo are listed on the summary of cash projections. The museum owed Carolina Bank $782,878 as of Oct. 1, according to ICRCM’s Updated Debt Schedule. An additional line of credit debt to Wells Fargo totals $131,141. Payments to Carolina Bank of $24,150 in November and $175,850 are listed, with a note at the bottom reading “Carolina Bank would like to have $200,000 by December 31, 2014.”

Perhaps driving the unbudgeted operating losses are the declining attendance and revenue figures stated in a Tours and Sales Comparison included in the financial materials prepared for the Oct. 20 board meeting. Those numbers show that projected attendance for 2014 is 20 percent below that of 2010. Compared to last year, seven percent fewer people visited the museum in 2014.

Some 62,894 people visited the ICRCM in the 11 months it was open in 2010, following its grand opening in February. Revenue from ticket sales has averaged about $385,000 a year since then.

Ticket revenue through September 2014 amounts to $280,379. Projecting end of year ticket sales based on last year’s attendance would only yield revenue of $353,350 for 2014.

Swaine’s revised budget for 2014 projects an even smaller amount of ticket sales, with $349,580 reflected on a threeyear consolidated budget.

The 2015 budget projects an operating surplus of $135,805, based on a doubling of 2014 revenues in annual fund donations, retail sales and rental fees. Swaine projected $400,000 in ticket sales for 2015, a figure that would exceed any previous year’s actual revenue.

DEVELOPMENT PLAN

Beyond the financial statements included in the materials for the Oct. 20 ICRCM board meeting, Ward also sent a documents labeled “2105 Development Plan.”

“For 2015, the ICRCM should focus its development efforts in the areas of operations, debt retirement, building an operating reserve, and addressing deferred maintenance/funded depreciation needs,” the plan reads.

The plan identifies a need to raise $600,000 in philanthropic support for operations and another $832,878 for debt retirements. Two extra levels of desired and preventative funds are listed, with a $600,000 goal for operating reserve, and $500,000 for deferred maintenance.

The plan states a need to find 687 donors at the $1,000 level.

“Board members are asked to indicate on the accompanying ‘Director’s Prospect List’ prospects they are comfortable approaching for donations at the $1,000 to $50,000 level,” the plan reads.

Included with the development plan were three excerpted pages from a 2012 report written by Alexander Haas, a fundraising consulting firm hired in late 2011 to propose a capital plan for the ICRCM.

“Looking forward, for the Center to truly thrive, there must be additional pillars of financial support, broader representation among its leadership and greater community buy-in to fully realize its mission and achieve long-term sustainability,” the consultant wrote.

The firm identified eight challenges facing the museum, including the fact that “Skip Alston and Earl Jones are shouldering the primary fundraising responsibility in the absence of adequate staff.”

“The board, of 14 members, is relatively small and needs additional members to expand its reach and capacity … The board does not always follow through when asked to assist in the development process.”

The consultant recommended implementing term limits for all board members, changing the board of directors to trustees and expanding the board to 23 members.

“Improve board diversity. (Can address by adding new members, more women),” the consultant wrote.

BEGINNING OF THE END

A week after the Oct. 20 board meeting,

Ward was scheduled to conduct a conference call with Ron Newsome of Stonehenge Capital, the primary external investor in the tax credit scheme that financed final construction of the museum.

But at 1:55 pm, museum co-founder and board vice-chair, Earl Jones, sent Ward a terse email with the subject line “Conference Call Directive 10-27-14.”

The email ordered Ward not to participate in the call with Newsome.

“As you are aware, there is a review of personnel matters regarding your directorship,” Jones wrote. “There was a unanimous vote of the Museum Board of Directors at the last board meeting to investigate the issues raised.”

Jones wrote that the review would be completed in about 20 days. Swaine, the museum CFO, and board treasurer Danny Duncan, would “provide Mr. Newsome with a quick update of the Museum’s finances.”

Jones said he would also participate in the call in the absence of the board chairperson.

Ward replied about 25 minutes later, stating that he would join the call “at Mr. Newsome’s request and in the normal performance of my duties.”

“I have not received any notice from last week’s board meeting, but will be happy to address such matters when they are presented to me.”

Jones’ initial email had been copied only to Ward, Deena Hayes-Greene, Danny Duncan, Skip Alston and Doug Harris. Hayes-Greene is the board chair, and a protégé to museum co-founder Alston. Harris is the museum attorney.

Ward copied the entire museum board of directors on his reply.

Mayor Vaughan asked for an update on the conference call about 5 p.m. in an email to Ward’s complete list. Board member George Johnson, of Elon School of Law, replied “yes, that would be very helpful.”

Earl Jones replied about three hours later, saying that the call lasted three minutes, with Newsome agreeing that it should be rescheduled.

Early the next morning, Greensboro City Manager Jim Westmoreland asked Tom Carruthers, the city attorney, to “call Mr. Newsome with Stonehenge today to gain his perspective on current status of ICRCM.”

Westmoreland had previously asked Swaine on Oct. 22 to answer a series of questions regarding the city’s $1.5 million loan to the museum. The questions, when combined with his request that Carruthers get an outside opinion on the status of the museum, show city staff searching for clarity on how public money has been used and what funds remain in restricted accounts set aside to prop up the tax credit scheme.

Two weeks later on Nov. 5, board chair Hayes-Greene sent a frantic email.

Several board members and others had approached her with concerns about the museum’s financial status. Several people had asked if she’d spoken with a local weekly newspaper “about being broke.”

“I have not been in contact with the media but believe that we may make headlines as early as tomorrow,” Hayes- Greene wrote. “I am very concerned about how information is being relayed to the public and the media about ICRCM. So I ask that all inquiries be directed to me as chair.”

Mayor Vaughan replied about one hour later, saying that John Hammer of the The Rhino Times had called her a week earlier.

“He told me that the museum had two weeks of reserves left. He would not tell me the source,” Vaughan wrote, adding that she informed Westmoreland and city council so they would not be surprised by an article.

“The consensus is that council was very supportive of Lacy’s leadership and the progress that has been made.”

Ward had breakfast with city council member Mike Barber the next day, Nov. 6, according to an email exchange between the two men.

Late that evening, Hayes-Greene sent out notice of a special called meeting for Nov. 10. The email is labeled “confidential” and outlines plans to go into executive closed session to discuss personnel, finance and accounting.

Rumors of Ward’s impending termination began to circulate by Monday.

“I just fielded a call from WFMY2 requesting comment on the vote today to fire me,” Ward wrote in an email to the board. “Per instruction, I directed the reporter to contact the chair or vice-chair for any comment.”

City Manager Westmoreland announced Ward’s firing to city council via email about 9:40 p.m.

“What happened?” asked council member Zack Matheny.

“This is very disappointing,” replied Nancy Hoffman.

“Thanks, Jim, this is very unfortunate,” replied Sharon Hightower. “I hope the ICRCM has a plan to move forward.”

By morning on Nov. 11 the news was on the front page of the News and Record and the lead story on several morning newscasts. Just after 8 a.m., Walker Sanders, president of the Community Foundation of Greater Greensboro, scolded Chair Hayes-Greene and Skip Alston in a strongly worded note. The CFGG had loaned the museum $50,000 to conduct an audit required by city council prior to the museum receiving emergency financial support from taxpayers.

“I have to say I read with some serious disappointment this morning about the firing of Lacy,” Sanders wrote. “I thought he brought a level of professionalism needed for the Museum and was doing an excellent job building critical relationships and rebuilding some trust in the community.

“I think your recent action has eroded any possibility of the Museum succeeding independently. I think the two of you should know better than most that trust is the most important aspect an important civic institution has and you have successfully destroyed any hope of the Museum regaining it.

“A very sad day for Greensboro. I just can’t express how disappointed I am.” !

Share: