MINNESOTA ORCHESTRA REPORTS FISCAL 2015 BALANCED BUDGET ACCORDING TO PRELIMINARY UNAUDITED RESULTS
Strong fundraising from more than 7,000 donors helps balance budget in
first full season “back” for the Minnesota Orchestra
Endowment draw for operations held to 5 percent policy
September 10, 2015–The Minnesota Orchestra has completed its 2014-15 season with a balanced budget, according to preliminary unaudited results. The Fiscal 2015 budget of $30.6 million is balanced due to expense savings and strong fundraising from the community, which supported the Orchestra through gifts to its Guaranty Fund (annual operating fund) as well as through major gift contributions. The Orchestra’s annual endowment contribution was based on a 5 percent draw for operations, consistent with the organization’s policy. The 2014-15 season was the Minnesota Orchestra’s first full season of operations following a 16-month lockout that ended in February 2014.
“As we launch our 2015-16 season this weekend, we want to share this snapshot of last season’s results,” said Board Chair Warren Mack. “Many people have worked hard to see this day arrive, and we owe great thanks particularly to our community, which helped the Orchestra surpass its fundraising expectations and achieve this result. This puts the Orchestra in a positive position for the year ahead.”
In an August meeting, the Orchestra board approved a balanced operating budget for Fiscal 2016.
President and CEO Kevin Smith cites both cost savings and revenue increases as key factors in balancing the budget. Expenses for Fiscal 2015, which totaled $30.6 million, reflected savings of nearly $800,000 over anticipated costs in administration and general overhead due to lower staffing and health care costs.
“We were able to hold costs down over budgeted expectations and, at the same time, to surpass contributed income goals,” Mr. Smith said. “The spirit of engagement and collaboration we are feeling within the organization has clearly also been sensed by donors, who have been eager to support the Orchestra at every turn.”
The Orchestra raised a total of $14.8 million in contributions supporting operations during 2014-15. This funding includes contributions to the Guaranty Fund, which is the Orchestra’s annual operating fund drive, as well as major gifts for operations and artistic initiatives including the Cuba Tour. Total contributed income, including a distribution from the Oakleaf Trust, reached $18 million. By comparison, Fiscal 2014 contributions reached $7.4 million (or $10.5 million including the Oakleaf distribution) for a shortened concert season that ran from February to August.
In total, 7,105 unique donors contributed to the Orchestra, an increase of nearly 30 percent over the previous year. “Support for the Minnesota Orchestra is coming in from donors at all giving levels and from all sectors, including government, individuals, event patrons, foundations and corporations. This creates a strong base of support for us to build on for the upcoming season,” said Mr. Smith. “We were pleased to welcome many corporate sponsors back this year. We received gifts from 47 corporations, an increase of ten companies over the prior year.”
In Fiscal 2015, earned revenue totaled $8.1 million. By comparison, Fiscal 2014 earned revenue totaled $5.8 million for that shortened season. Total capacity for all concerts reached 83 percent, the same as the prior season’s result. In total, the Orchestra reached approximately 250,000 people through concerts at Orchestra Hall and beyond. Rental and food and beverage revenue, which is a part of total earned revenue, saw significant gains since the Orchestra Hall renovation, ending the year at a nearly 75 percent increase over the same revenue line prior to the renovation.
With regard to invested assets, the Orchestra used $7.7 million in draws for operations from its trust and investments, an amount which is based on an overall draw of 5 percent across all investments, endowments and trusts. “We made the strategic decision this year to eliminate from our books approximately $9.5 million in debt that dates to the early 2000s,” said Mr. Smith. “It has been a long held goal to pay this off and now we are clear of it.” As a result of the debt elimination—in addition to normal draws and market performance—the Orchestra’s total invested assets for Fiscal 15, as of June 30, 2015, decreased from $164 million to $147 million.
Clarinetist Tim Zavadil said, “The musicians are absolutely thrilled with the news of this year’s balanced operating result, and we are incredibly grateful to our board, staff, supporters and community for this achievement. Under the leadership of Warren Mack and Kevin Smith, the Orchestra has laid the foundation for a strong financial future. We now look forward to a strong musical future, continuing our work with Osmo Vänskä, and serving our community.”
The Minnesota Orchestra’s fiscal year ended August 31, 2015. The organization will release its audited financials and annual report at its December 2 Annual Meeting.
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