July 17, 2017; Baltimore Sun
On Monday, Baltimore Clayworks’ board of directors decided to close the organization’s doors after 37 years in operation. NPQ has been following the sunsetting of Clayworks, which has taken place amid significant controversy and conflicting opinions on how to lift the arts nonprofit out of its $1.3M deficit.
The board’s decision came immediately after its plan to sell its current Mount Washington historical facilities and relocate fell through. Clayworks had penned an initial deal for a $3.7M sale to Itineris, another Baltimore-based nonprofit, which was designed to lift the organization out of debt.
According to Clayworks’ leadership, the start of its path to financial insolvency can be seen in the 2008 financial downturn and the accumulation of resulting cash flow deficits. Interim Executive Director Devon Powell said the point of no return seems to have come with the community’s opposition to the sale of its building.
“We told everyone that this would happen if we couldn’t sell the buildings,” Powell said. “We’ve been drowning for six months. But unless there is a dead body, people don’t react.” Powell characterized the ultimate closing of the organization as a “totally avoidable and unnecessary loss.”
This is the latest blame thrown in the growing controversy that surrounded the efforts to save Clayworks. There was broad consensus across Clayworks leadership, community groups, the city council, and Baltimore citizens that Clayworks should be saved, but opinions were divided as to how. The result was a head-to-head battle between Clayworks’ leadership and the Clayworks Community Campaign, led by the organization’s founder, to save the organization.
The community campaign against the sale resulted in a city council resolution to ask the state to halt the deal just last month. The campaign raised $200,000 and offered it to Clayworks’ leadership as a means to buy time to plan a financial rescue in exchange for board representation. Clayworks’ board declined the offer, purportedly due to the timing of the grant and restrictions that prevented access to the whole of that sum.
“It was not enough, nor in enough time, to stave off bankruptcy,” said Kathy Holt, board president. “An infusion of an immediate $200,000 would have allowed us to file for a Chapter 11 bankruptcy, giving us time to continue operations and restructure, to continue to seek a buyer for our [properties], to work with the steering committee, and, potentially, to survive.”
While it’s unclear exactly why Clayworks’ key stakeholders were so strongly divided, what is clear is the role of that split in Clayworks’ ultimate decision to close. The level of the organization’s financial woes—$1.3M of deficit for a $1.2M organization—requires significant and coordinated effort to reverse. A capital injection, either through a community capital based campaign or a slashing of expenses, could have established a path to recovery. Unfortunately, in this case, the chances of either strategy were crippled by an inability of the organization’s internal and community supporters to work together and drive forward a broadly supported rescue plan.—Danielle Holly