Financial planning and the Chautauqua Foundation took precedence at Wednesday morning’s Chautauqua Board of Trustees Porch Discussion, where Sebastian Baggiano and Geof Follansbee served as speakers.
Baggiano, treasurer, vice president and chief operating officer for Chautauqua Institution, began the discussion by outlining the changes made by Institution administration to increase revenue and control expenses in the past few years.
Overall revenue is split into two categories: earned revenue, which accounts for about 80 percent of overall revenue, and philanthropy, which accounts for 20 percent.
Years ago, when the administration began creating a financial strategic plan, it realized, according to assumptions and projections they had made, the gap between expenses and revenue was too small, Baggiano said.
“We knew we could not continue on that path, and we needed to change the assumptions inside of our annual budget as well as our strategic decision-making,” he said.
Gate ticket prices were one such component Baggiano knew needed to be changed. Prices had been increasing by 6 percent each year, but the volume of visitors remained flat. After evaluation and a few years of controlling expenses, the administration was able to bring the increase down to a yearly 3 percent increase in gate ticket prices, Baggiano said.
The administration identified levers that it could pull in order to keep the Institution financially sustainable. Some of these included increasing the volume of people on the grounds, keeping prices down, increasing philanthropy and controlling expenses.
The regulatory environment is also something Baggiano said had to be taken into account. The minimum wage in New York has been increasing, which affects Chautauqua because of the number of seasonal employees the Institution hires each season. The Affordable Care Act will also have some impact on the Institution’s financial standing.
The Institution has made large strides in investing in capital so that money can be invested in operating costs and the buildings on the grounds, Baggiano said. Three buildings in particular are the focus of those capital investments: Hagen-Wensley House, the Amphitheater and Bellinger Hall.
However, the operating model is always evolving to accommodate changes the Institution goes through.
“It is a fluid model, it is not meant to be perfect, it is not meant to be exact,” Baggiano said. “It is meant to inform and be used for decision-making.”
Follansbee, vice president of Chautauqua Institution and CEO of the Chautauqua Foundation, followed Baggiano to discuss the 20 percent of revenue that is raised through philanthropy.
There are three types of philanthropy, Follansbee said: annual giving, endowment and capital.
Annual giving is the primary objective, Follansbee said. This is the money that goes to the Chautauqua Fund, which has a goal of raising $3.85 million this year.
“Annual giving is crucial to the delivery of each season’s program and our ability to invest in capital infrastructure,” Follansebee said.
Follansbee said these three types of philanthropy are very important in funding the activities and operations of the Institution.
“Philanthropy is an important source of revenue both in terms of each and every season but also long-term,” he said. “We take very seriously our fiduciary responsibility to manage those assets and ensure that they are here and they grow and support the Institution in a meaningful way.”
Trustees Porch Discussions cover different topics of interest to the Chautauqua community with speakers from the board of trustees and the Institution administration. Porch discussions occur each week at 9:30 a.m. on the porch of the Hultquist Center.