Amanda Mainguy | Staff Photographer
Sebastian Baggiano, Chautauqua Institution vice president, treasurer and chief operating officer, discusses the Institution’s financial operations during the Trustees Porch Discussion on the porch of the Hultquist Center Wednesday morning.
Chautauqua Institution’s sustainability for future generations was at the heart of this week’s Trustees Porch Discussion, on “Chautauqua’s Financial Planning.”
The meeting, which took place Wednesday on the Hultquist Center porch, was led by Sebastian Baggiano, Institution vice president, treasurer and chief operating officer, and Geof Follansbee, vice president and Chautauqua Foundation CEO, along with several members of the board. The mission of the discussion was to both break down the Institution’s financial sustainability model for the community, and to field related questions from the roughly 20 audience members in attendance.
Baggiano began by explaining the four different components of the financial sustainability model: pricing, attendance, philanthropy and expense. These branches incorporate details such as ticket sales — the trends of which are changing, with one-week passes becoming the most popular gate pass — and the volume of Chautauqua’s visitors, which Baggiano said has been relatively flat over a period of time.
Baggiano also said that capital management is a crucial part of Chautauqua’s financial planning. In the early 2000s, for example, he said that Chautauqua was dramatically underfunding its capital needs by allocating less than $1 million in capital.
“We decided we need to move away from the way we budgeted capital and really assess the way we manage it,” Baggiano said. “I’m happy to tell you that, since then, we’re going to be able to spend about $4 million this year.”
A good portion of this capital will be directed toward infrastructure care, which primarily focuses on road and sidewalk repairs, he said.
In an effort to achieve sustainability, Baggiano said that Institution administration is also looking to make budget cuts where necessary. This has been successfully accomplished at least once before, when the Institution was able to reduce its expenses by $1.6 million after the recession. To achieve that reduction, cuts were made to administration expenses and several other departments across the Institution.
“Right now, the Institution’s charge is to manage and reduce costs over the next three years,” Baggiano said. “It’s a high priority for us today.”
Still, claims of budget cuts and a pursuit of sustainability made a few audience members flinch. One woman in attendance expressed the opinion that “sustainability” was a euphemism used by administrators that led to worse program quality, particularly in regards to the arts.
“ ‘Sustainability’ has become a dirty word in my mind,” she said. “You’ve cut back on so many programs in the name of sustainability.”
Ron Kilpatrick, a trustee, responded by saying that financial limitations are realistically necessary and unavoidable, and that sustainability is not meant to carry a negative connotation.
“There will always be budget tradeoffs,” he said. “Don’t let ‘sustainability’ become a loaded term. Sustainability doesn’t mean cutting all the things you love. It means preserving Chautauqua for future generations.”
Follansbee then took the microphone to talk about philanthropy in Chautauqua. The Chautauqua Fund is the main source of philanthropy toward the Institution’s operating budget, he said. The second major source is payout from the endowment, which currently stands at $75 million. The Chautauqua Fund’s goal is to increase philanthropy by 5 percent annually. While it has seen increases over the past two years, he said neither year achieved the goal of a 5 percent increase.
“This year’s goal is to raise $100,000 more than the $3.6 million raised last year,” Follansbee said. “It’s an aggressive initiative.”
In order to achieve this goal, however, Follansbee said that Chautauqua will either need a greater number of donors, or greater donations from the current philanthropists. The number of Chautauqua’s donors has been dropping by about 1 or 2 percent each year, he said.
“In any one year that not a big deal, but it’s definitely not a trend we’re looking to sustain,” he said. “We’re looking at initiatives to bring more people into the Chautauqua Fund. And we need people at every level. Everybody’s important.”
Follansbee also touched on Chautauqua’s Promise Campaign, including a strategic push to raise an additional $30 to $40 million dollars in endowment. The funds generated will then be used to sustain Institution programs and infrastructure.
“Our final fundraising thrust is for capital projects,” Follansbee said. “We’ve already seen capital improvements due to the gifts of many generous Chautauquans in previous campaigns. Philanthropy has just made all the difference.”
Follansbee listed the renovation of Hagen-Wensley House, the Amphitheater project and the planned renovation of Bellinger Hall as three significant projects that were or will be made possible by philanthropy, through The Promise Campaign. He said that the Foundation tries to focus on funding several key projects. Spreading funding evenly may sound good in theory but doesn’t amount to much progress overall.
“We don’t want to spread the money so thinly that we have gifts for everything but not enough for anything,” he said.
There was some unrest in the audience concerning the financing of such projects as the Amp renovation. One member worried that if the Institution began the renovation without every dollar needed to pay the expenses already in the bank, that new, hidden costs would accumulate as the project continued, and that philanthropists would be pressured to donate more and more.
“All the money for the Amp is going to come from philanthropy, and we will have all the commitments made before we start, to make sure the project’s financially sustainable,” Kilpatrick said. “There’s always risks in doing projects like this, but there’s a lot of risk in not doing it as well. Not moving forward does not sound like the right thing for Chautauqua.”
The Trustees Porch Discussions will return this Wednesday, with a discussion titled “Lifelong Learning: Chautauqua’s Educational Impact.”