Several years of growing budget deficits have caught up with the nonprofit Lexington Art League, which has eliminated three of its six paid positions and depleted two-thirds of its $159,000 endowment fund.
On April 22, the Art League laid off curator Becky Alley and marketing director Elias Gross. Another position, education director, was scrapped in November while it was temporarily vacant.
"This was not something that I was terribly surprised about, to be honest," Alley said this week. "There have been some troubling patterns of financial problems over the last year and a half, two years. We were spending a lot more money than we were taking in. We stopped doing any sort of critical thinking about our income."
Speaking Tuesday, Art League officials said they erred in 2013 by canceling the group's popular money-making social events, such as the Fourth Friday parties and annual Nude exhibits, in favor of ambitious, expensive art projects meant to raise the group's international profile.
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One such project, last year's light-based Luminosity, brought in artists from around the world and showcased a 20-foot-tall sculpture in Triangle Park with more than 5,000 light bulbs. The sculpture was meant to be interactive, but it was plagued by mechanical problems.
The Art League lost $27,000 on Luminosity, said executive director Stephanie Harris. Overall, the group reported a $126,926 deficit last year with $781,386 in revenue.
The Art League wanted "an international reach for our exhibitions," Harris said.
"We all felt like it was a natural evolution for the organization," she said. "And so it was a calculated risk, but it was board-approved. It just didn't materialize on the other end like we would have hoped."
The Art League hoped to pay for its new programming with major grants from the National Endowment for the Arts and the Andy Warhol Foundation for the Visual Arts, said Shaye Rabold, president of the Art League's board of directors. But the grants never happened.
During this period, the Art League's dues-paying membership dropped by half, to about 350. Corporate support also shriveled. For example, American Founders Bank has ended its $26,000-a-year sponsorship of the group's annual Woodland Art Fair, held in August.
"I don't think we alienated a bunch of people, but I do think that people stopped coming regularly just out of the structure of what we were doing last year, for the past year and a half," Harris said. The Fourth Friday parties will return starting May 22, she added.
Harris also said this year's Woodland Art Fair, slated for Aug. 15 and 16 at Woodland Park, will go on as planned. She said the Art League is looking for a new major sponsor for the event, which is presented with Lexington's Division of Parks and Recreation.
The Art League gets a mix of private and public funding, including sales, booth rentals, donations, sponsorships and annual grants from LexArts and the Kentucky Arts Council. It pays a discounted $500 a month to rent the Loudoun House, a spacious Gothic Revival villa in Castlewood Park, from the Lexington-Fayette Urban County Government.
As its finances deteriorated last year, the Art League borrowed $75,000 from American Founders Bank to cover expenses. The note came due March 28. The bank, with an eye on the Art League's debt-to-income ratio, demanded full repayment immediately, Harris said. That forced the group, with its board's approval, to spend all but about $50,000 of its endowment fund, Harris said. Ordinarily, the fund's principal must not be touched.
That was when the board ordered Harris to slash recurring expenses, and "unfortunately, personnel was it," Rabold said. Alley and Gross were fired the next day. Other than Harris, the Art League still has two paid employees and about 20 college interns, she said.
News of the layoffs startled people in Central Kentucky's arts community as it trickled out. Some say the Art League has done a poor job of explaining its predicament to the public. Melissa Vandenberg, an art professor at Eastern Kentucky University, sent a letter last week to the Art League's board and to LexArts asking for an explanation.
"I'm not sure what's happened to the money that was there," Vandenberg said in an interview this week. "In my mind, as a member of the local artistic community, LAL should have raised a hue and cry before we were suddenly at this point and people were losing their jobs. There needs to be public accountability here if you want the community to continue supporting you."
On Tuesday, Harris said she has spoken with Vandenberg and said she understands the complaints.
"Certainly we have always been very transparent with our community," Harris said. "However, because we were laying off two full-time staff members, we were hoping for a little discretion. We certainly weren't going to send out a press release while they were making this transition. We wanted to show a little compassion."
LexArts will announce in late June which local arts groups are getting funding for the next year. The Art League's customary $60,000 allotment for general operating support was cut to $50,000 last year because the group said it was confident it would win those outside grants.
Nan Plummer, LexArts executive director, said the Art League was forthcoming about its financial problems during the application process last month. A group's "fiscal responsibility" plays a large role in deciding grant funding, along with its artistic quality, Plummer said. But LexArts also recognizes that many arts organizations have struggled since the 2008 recession put a dent in philanthropic giving, Plummer said.
"It has been tough all around," Plummer said. "The arts community may have been among the first to feel the effects of the recession, and I suspect we'll be among the last to fully recover from it."