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Actors Guild appeals LexArts' de-funding, cites miscommunication

By Rich Copley rcopley@herald-leader.com

Actors Guild of Lexington appealed LexArts' decision to deny funds for the theater with a six-page letter Tuesday, saying there has been a misunderstanding between the groups and that the theater has been working to address its financial troubles.

Late last week, LexArts announced it that would not fund Actors Guild, which had requested $70,900 in its application for an allocation from the 2009 Campaign for the Arts. Lexington's only professional theater for adults received comparable allocations in previous years and has received money from the campaign for two decades.

"As you and your board of directors are well aware, LexArts' Allocations and Executive Committees have expressed strong concerns about the management and financial health of Actors Guild of Lexington," LexArts wrote in a letter dated June 15 and addressed to AGL artistic director Richard St. Peter. It was signed by LexArts allocations committee chairwoman Barbara Edelman, board of directors chairman Patrick O'Donovan, and president and chief executive Jim Clark.

"Based on the application submitted by AGL and the subsequent conversation with the Allocations Committee," the letter said, "it is apparent that our concerns have not been adequately addressed."

In Actors Guild's response letter, the theater's management and board say they were aware of the financial concerns that LexArts had. The letter says that they are addressing those concerns and that the funding cut is a result of misunderstandings between the theater and LexArts' allocations committee.

"As the leaders of LexArts and Actors Guild of Lexington (AGL), we bear considerable responsibility for allowing misunderstandings to turn a long collaborative relationship into a climate of mutual distrust," said the letter, signed by AGL board president Jim Dickinson, treasurer Tammy D. Farley, managing director Kimberly Shaw and St. Peter. It was addressed to the signees of LexArts' letter.

"We are open about AGL's past problems, and regret that LexArts has not acknowledged the responsible and productive corrective actions that we have taken."

Those steps date to a September 2008 agreement between AGL and LexArts that set out conditions under which AGL would receive its $70,000 allocation from the 2008 campaign.

At that time, LexArts expressed concerns that Actors Guild needed to strengthen its management and its fund-raising and to address more than $15,000 it owed the IRS in back payroll taxes.

In the letter, Actors Guild says the conditions were "a reasonable exercise of LexArts's fiduciary responsibility" and contends that it has met each criteria, including hiring Shaw as the theater's chief business manager. The theater is paying the IRS through an installment plan.

Clark, CEO of LexArts, said Tuesday that the lack of a business plan to address an accumulated debt of more than $80,000 is at the core of LexArts' decision not to fund Actors Guild.

Neither Actors Guild's allocations application nor the letter detailed a plan, although Dickinson, the AGL board president, said Tuesday that there is plan in place for moving forward and reducing the debt.

Actors Guild recently moved its offices from the Downtown Arts Center to a Manchester Street space in the burgeoning Distillery District. It also announced plans to launch a second stage series in that district and a cabaret series at area restaurants. Shaw billed all those as cost-saving and revenue-generating moves.

None of those moves nor any other specific debt-reduction plan are spelled out in Actors Guild's allocation application or its letter to LexArts.

A few allocation-related documents underscore concerns about AGL's financial stability, including an audit commissioned by the theater. The audit included a statement that the theater's debts, "as well as economic conditions in the community affecting the ability of Actors Guild to raise necessary funds, create an uncertainty about the organization's ability to continue as a going concern."

The audit acknowledges moves the theater made, including fund-raising and hiring a managing director, but it says that all of those initiatives must work for the theater to continue.

Dickinson said that Farley, AGL's board treasurer and a certified public accountant, advised that because the auditor's "going concern" statement was in the footnotes and not the main body of the report, it was not as important an issue.

But it was a concern to another CPA, LexArts' finance committee chairman, Nathan W. Lee.

In a May 21 report to the allocations committee, Lee cited the "going concern" note, saying, "I personally have grave concerns about continuing to fund AGL due to our own fiduciary responsibility to the donors of LexArts."

The Actors Guild letter, though, says LexArts' donors are a reason to reconsider the cut.

"Without doubt, many of your donors contributed money to you with the understanding that LexArts funds theatre for adults — and AGL specifically," Actors Guild's letter says. "AGL deserves a substantial portion of funds LexArts purported to raise on our behalf during the 2009 campaign."

Clark said there are procedures in the campaign so that contributors can designate their gifts to specific organizations.

He also said that money from the campaign — which also funds community arts grants, LexArts marketing such as its ArtsScene newsletter, and other operational and programming expenses — can be used to fund theater for adults in the area outside of allocations, including work by Actors Guild.

Of course, there is an appeal first.

Clark says it is up to LexArts' executive committee to take up Actors Guild's appeal. The committee's next scheduled meeting is July 7, although its members could decide to meet earlier.