A Symphony Plays Offense

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August 13, 2011; Source: Voice of San Diego | While big-city symphonies struggle to stay alive, the San Diego Symphony announced a new contract that will give musicians and management small raises for each of the next five years. While the new contract is good news, the symphony will be walking a financial tightrope as installments from a 10-year-old major pledge wind down.

The symphony hasn’t always been on strong financial footing. It went through major challenges in the 1980s and 1990s and even closed its doors for two years. Then in 2002, Joan and Irwin Jacobs made a 10-year, $120 million pledge, which remains the largest gift ever to any U.S. orchestra. Next year, the pledged installment payments will end.

The gift came in three parts: $20 million to cover day-to-day operations, $50 million for the endowment fund, and $50 million payable when the couple passed away. Both the operational and endowment installments were paid in equal amounts over the ten-year commitment. The agreement also called for minimal amounts drawn yearly from the endowment fund.

The symphony’s leadership face a tricky balance of thanking their benefactors for a gift that is keeping the organization in the black while confronting the image that they don’t need any additional help. Ward Gill, the symphony’s president, notes that the gift, while generous, wasn’t large enough to keep up with the growth in the community’s artistic needs.

Today, the San Diego Symphony’s operating budget is just under $20 million a year. The new labor agreement increases musicians’ salaries to $68,000 a year by 2017, far below the six-figure salaries paid to many musicians in top U.S. orchestras. The symphony receives approximately $2.5 million per year from a growing endowment, $2 million from the Jacobs’s gift, and $7 million from selling tickets. The remaining $8.5 million or so per year must be raised from other sources.

Future plans call for increasing the symphony’s visibility with tours, renovating its hall, and playing new styles of music to attract new audiences (and donors). “Doing the status quo means you will die,” Gill said. “The orchestras around the country that are running into trouble are doing the same old thing.”

That’s called playing offense, not defense. Does this story sound familiar? How have other organizations managed the expiration of major pledges?—Nancy Knoche