Since the Powerhouse Science Center closed its doors suddenly May 9, board members and supporters alike have been adamant about one thing:
“It’s not uncommon for a nonprofit to hit a pretty big speed bump,” said Beth Lamberson Warren, who now works as a consultant to nonprofits after leading KSUT-FM public radio for many years. She was contracted by the Powerhouse in 2012 to lead a capital campaign. “But it’s challenging for the community to have it closed.”
A number of people already have reached out to the Powerhouse’s board of directors offering to help, and others are reminding people what the restoration of the Powerhouse and the Powerhouse’s programs already have accomplished in four short years.
“The building is significant not only in local history but national history,” historian Robert McDaniel said, giving credit to his wife, Jill Seyfarth, for her efforts in raising awareness of how important the structure is. “Back in the 1990s, the City Council was not the most enlightened we’ve ever had, shall we say. Most wanted to tear it down and redevelop the property. The others wanted to transform it into a ‘cop shop.’”
People have also forgotten how much work this group did to save the Powerhouse, he said. Asbestos, mine tailings and pigeon refuse had to be removed before starting the $4 million restoration.
“The museum did not open with the depth and quality of exhibits we wanted because of those increased infrastructure challenges,” said Bill Carver, who has been involved with the project since it was based in the Children’s Museum at the Durango Arts Center. “We’ve had a long list of exhibits and we’re working on it. We opened six new ones in the last 18 months.”
Carver said the lower number of exhibits may have created some visitor dissonance.
“Seeing such a beautiful building really increased the expectations of visitors,” he said. “World-class museums really require steady funding to meet those.”
A co-owner of Carver Brewing Co., he and his family probably have been among the center’s biggest contributors. Carver, who led the science center’s fundraising effort for almost a decade, estimates that between individual family members’ contributions and the business’ support of fundraising efforts, they have given an estimated $500,000.
“It has been a great investment in education for the area’s kids,” he said. “I don’t know how many thousands of kids have been touched by the science center, but it’s (School District) 9-R, all the surrounding school districts, the Southern Ute (Indian) Tribe and other tribes, students as far away as Chinle, Arizona.”
Carver noted that in the original research for the Powerhouse’s business plan in 2001, they found that similar-sized science museums in the country received an average of 27.8 percent of their revenues from local governments and the state. Then doing business as the Children’s Museum of Durango, it was receiving public support at the time the plan originally was written, dollars that disappeared during the recession and never returned.
The Powerhouse claimed an in-kind use of buildings and land from the city in value of $109,687 on its 2012 and 2013 tax returns. Its 2013 Form 990 shows $39,880 received in governmental grants but does not detail what governmental entity gave the grants or for what purpose.
“The Powerhouse financial situation is a bit of a canary in a coal mine,” Carver said. “All of the cultural nonprofits are struggling, and we’ve been working on a public-funding mechanism with the city and (La Plata) county for some time now. We almost got it in 2012 with the proposed increase in the lodgers tax or being included in the half-cent sales tax-extension language in April.”
But why the sudden closure?
On Thursday, the board of directors issued a letter to the community identifying the problem in a nutshell:
“From the outset, much of our programming was priced to attract the Durango community to what was then an unknown entity. We also reached out to remote communities with school programs, again to build awareness of our facility, and we expanded our staff to run these programs. Since our opening, we’ve managed to maintain a delicate balance between extensive and underpriced programming and ‘barely scraping by’ fundraising, but this has proven to be an unsustainable business model.”
Why the financial situation had reached the stage of requiring an emergency meeting and closure isn’t quite as clear.
“I’m actually trying to figure that out myself,” said Peggy Zemach, who joined the board at the end of February. “We had seen some financials, but they didn’t really give the whole picture. We’re going to step back and look at it in a more business-oriented, strategic-plan approach.”
Bill Luthy, Powerhouse board president until his resignation earlier this week, did not return calls to comment on how the board didn’t know about this situation earlier. Kathleen O’Connor is acting president until the board can elect a new one at its board meeting at the end of the month. She asked that the letter to the community serve as her statement.
It has been a busy week for the board since the closure. Terry Bacon, chairman of the Science, Theatre, Education, Arts and Music Park (STEAM) project, has been asked to join a newly formed Advisory Board to help with the reboot. The Park would build on the Powerhouse’s prime location on the Animas River by building a performing arts, exhibit and education center complete with outdoor amphitheater alongside it on the river corridor.
“We’ve been working overtime to diagnose the situation since we became aware of it,” Bacon said. “All the problems stem from growth mismanagement and lack of controls. It’s not as bleak as it originally seemed, and I think it’s definitely resurrectable.”
It was a rough start for new Executive Director Nana Naisbitt, who had started about four weeks before the closure. The Powerhouse had been under the management of interim Executive Director Brett Cadwell since the end of October, when Chris Cable stepped down from the position.
There is no malfeasance suspected, Naisbitt said, and no reflection on the staff, which she said worked incredibly hard.
“They thought if they created more programs and brought in more revenue, that would right the ship,” Naisbitt said. “There was no lack of dedication; they just didn’t have the right business model.”
The other problem, she said, was the free facility usage often given to other nonprofits.
“It was the notion of spirit of community,” Naisbitt said. “I’ve looked at those nonprofits’ 990s (tax returns), and most of them are in better shape than we are. They would also give away programs to other nonprofits, not understanding that there are costs involved with those that impact the Powerhouse directly.”
What do the numbers say?
The Powerhouse’s 2014 990 tax return has not been completed and filed yet, so it’s not available to analyze the most recent numbers, making understanding what happened more difficult for everyone trying to solve the puzzle. But the 2011 through 2013 990s show losses every year, and although they decreased significantly from 2012 to 2013 – more than $253,000 in 2012 to slightly more than $36,000 in 2013 – it totalled more than $520,000 over the three-year period.
“Often, nonprofits spend more money to generate more money, but that money doesn’t always materialize,” said Michelle Sainio, audit manager for FredrickZink & Associates.
Rich Hoehlein, who sits on several boards in the area, including as president of the KSUT-FM public radio board, has taught classes about how to be a responsible board member.
“There are often so many things on the agenda, and board members are taking a big-picture look,” he said. “They’re looking at morale, stability, trying to maintain an engaged board, planning for the future. ... Usually, they have a treasurer or finance committee, and if they don’t bring it up, the board members who don’t have a financial background might assume they’re OK.”
Sainio also said the nonprofit picture has changed dramatically in the last decade and certainly since 2008.
“In the Four Corners, there are so many nonprofits competing for the same dollars,” she said, pointing out that the science center depended on contributions and grants to cover about half of its expenses, “so organizations can’t depend on contributions so much anymore.”
The numbers always need to be put in a larger context, Sainio said.
“Sometimes an organization is doing something that is really good for the overall community,” she said, “but sometimes it doesn’t happen that the dollars come immediately afterward.”
The board held a retreat Saturday with several community leaders to begin focusing on a more sustainable business model, but that’s just the beginning, they said.
A business plan with strong controls is Bacon’s goal, and he said he’s impressed by Naisbitt and her skills in helping create it.
“You have to manage a nonprofit as vigorously as any for-profit business,” he said. “I’m doing this not just because we plan for the Powerhouse to be the anchor of one end of the STEAM Park, but because I believe it is critical for the community and the children here to keep it open.”
Carver thinks this is only the first stage of what needs to be done, noting that both the Durango Arts Center and Animas Museum also have had deep financial problems in recent years.
“We need to develop a Community Culture Plan that will outline public funding necessary to stabilize the institutions and allow them to thrive,” he said.
Warren said the board and the science center have her complete vote of confidence.
“My biggest concern is the attention span of the average Durangoan, where I’m afraid they’ll think that once it’s closed, it’s done,” she said. “Other nonprofits have retrenched and come back stronger than ever, and I hope the community will commit to being part of making that happen.”