September 5, 2013; Wall Street Journal
The Wall Street Journal has been reporting on the dramatic restructuring efforts under Chapter 11 of Dance New Amsterdam, a dance company in NYC. The Nonprofit Quarterly thought that the filed court papers were instructive, in that the situation that the organization faces described therein is achingly familiar.
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The thirty-year-old organization provides a mix of dance classes, workshops, art exhibits, performances and an artists-in-residence program. Apparently, the organization is used to having demand for its studio and performance space lessen during the summer, but it was usually able to bring in installment payments for future space use at a higher level than they came in at this year. The group realized through making cash-flow predictions that it would be unable to pay rent and other expenses in September, and October looked similarly dim due to the triple payroll that would be due that month. The group estimated a shortfall of $50,000 over a 13-week period. The group was less able to lease out space to others because some of those contracts were dependent on the organization’s continued viability and their grant officers at foundations were hard to contact in August (we swear that is what is recorded in the court papers). Some had curtailed their support of the arts, and some were on a longer decision-making timeframe.
So the board decided to make one last plea to the public for support, and in one week, they brought in $50,000 in donations. It has been transparent about its situation. The court papers then state, “The outpouring of support has been very encouraging, but at the same time DNA has also experienced the loss of some future revenue streams based on DNA’s announcement of its potential wind down…”
And so, back to the drawing board. Is the organization viable over the long term and under what conditions? Only time will tell. NPQ is of the impression that for many organizations, the effects of prolonged starvation worsened by the recession, in conjunction with outdated business plans, are beginning to create failures now. We would love to hear your thoughts.—Ruth McCambridge