By Caroline Culler (User:Wgreaves) – Own work, CC BY-SA 3.0, Link

August 10, 2017; Herald Sun (Durham, NC)

We too seldom get a chance to do such rapid turnaround stories on nonprofits that suddenly find themselves in unexpected yet profound budget difficulties.

When we first reported on the problems at the Carolina Theater of Durham in North Carolina, the article was titled, “Surprise! You’ve got a Deficit!” In short, the theater, which was seen as both successful and transparent, suddenly faced a deficit estimated at between $800,000 and $1.6 million when it was uncovered in December of 2015. Their explanation for the problem was faulty accounting combined with an inattentive audit. The group neglected to budget in admissions taxes, and when the board went in to take a closer look…well, a hornet’s nest of bad numbers that the auditor never caught presented itself.

Now, a year and a half later, the theatre has managed to pay down an estimated $1.7 million deficit and appears to be running a surplus.

The Herald Sun reports that the theater accomplished this with vigorous fundraising, aided by a matching grant of $600,000 in 2016 from the Durham City Council, which actually owns the theater that nonprofit manages.

“The outpouring of support from all segments of our community is testament to the central role the theatre continues to play in shaping the cultural life of our city and region. I’m happy to report that the arts-loving people of Durham remain fervently committed to a thriving, welcoming and relevant Carolina Theatre,” said Dan Berman, the man who has been acting in a voluntary role as CEO.

The group is just now in shape to begin its search for a new paid executive, and you can bet they will be checking his financial acumen as well as ensuring that they back that up with a board, accounting expertise, and an auditor.

In an interesting twist, the theatre and the city of Durham have filed suit against the nonprofit’s former auditor to recover losses that flowed from its failure to identify significant errors in the theater’s financial statements.—Ruth McCambridge