May 27, 2004 | Read Time: 8 minutes
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By BEN GOSE
In 1996, just a few years after the La Jolla Playhouse narrowly averted financial ruin, a veteran fund raiser proposed a bold idea: He urged the organization to raise money for a fancy new theater complex, an endowment, and operating support — all at the same time.
Eight years later, that risky plan has largely been a success. The eclectic regional theater in suburban San Diego, which nurtured the Pulitzer Prize-winning play I Am My Own Wife, and recently had Billy Crystal onstage for a solo performance, collected $44-million, exceeding its $36-million goal, by the time the capital campaign ended last year.
The administrative staff, which has been operating out of trailers for more than two decades, will move into offices in the new theater center in October. The complex includes a 450-seat theater, two rehearsal rooms, a restaurant, and a park, and will allow the playhouse to perform and rehearse nearly year-round. For years, the playhouse has turned over its theater from December to March to the University of California at San Diego’s drama department, under a space-sharing agreement.
But while the capital campaign was a success, many challenges arose along the way. The board members and managers of the theater learned that it is difficult to raise money for an endowment when people are presented with alternatives that offer immediate gratification. The playhouse concluded its campaign last year with an endowment of just $6.3-million (some $4-million of which is in irrevocable trusts, and not yet in hand), far short of the original $10-million goal set in 1996.
Midway through the campaign, the playhouse reduced its goal for the endowment, to $6-million, and raised its target for the theater complex, from $7.5-million to $16.5-million, after UC-San Diego provided land that would make it possible to add administrative offices and production space to the complex.
Geri Ann Warnke, an orthopedic physical therapist who served as co-chair of the campaign committee, says raising money for the endowment “was definitely the hardest part of this campaign to sell.”
“I could show people blueprints and mock-ups and get them excited about where they would put their name,” she says, “but when you’d talk about programming five years down the road, their eyes would just glaze over. People want their money to be visible.”
And throughout the campaign, Terrence Dwyer, the playhouse’s managing director, worried that the strong focus on fund raising and on planning for the future would hurt the playhouse’s artistic ambitions today. The group’s mission is to “cultivate a local and national following with an insatiable appetite for audacious and diverse work.”
“We’re not market-driven in our program, and it’s critical that we stay on point in that regard,” Mr. Dwyer says. “You have to make sure that nothing forces you into ‘mission drift’ just because you’re raising money for a building and an endowment. It’s a very tricky balance to strike.”
That the La Jolla Playhouse is in a strong enough financial position to worry about mission drift is a sign of progress. The playhouse was founded in 1947 by Gregory Peck and others as a place where actors, writers, and directors could tackle serious work away from the glare of Hollywood. By 1963 the playhouse had closed, as the energy of the initial founders had faded and the theater it had used at La Jolla High School had been torn down. But the playhouse’s board met intermittently for the next 20 years, searching for a way to bring the stage back to life.
The playhouse reopened in 1983, after enough money had been raised to build a theater on donated land on the UC-San Diego campus. Over the next decade, the playhouse accumulated accolades for its artistic vision — and considerable debt. It received a Tony Award in 1993 as America’s outstanding regional theater, but by the same year was nearly $2-million in the red.
“There were many board meetings in which we didn’t leave until everyone pulled out their checkbook,” Ms. Warnke says.
Mr. Dwyer arrived in 1992, and he and the board began the strategic planning that led to the capital campaign in 1996. The 1995 hiring of Michael Greif as artistic director turned out to be good for the theater’s finances as well as its mission. He had brought the smash musical Rent to Broadway, and in 1997 the playhouse had the musical’s West Coast premiere. The play drew standing-room-only crowds for 12 weeks, and another 1997 play, Harmony, featuring music by Barry Manilow, was also a big hit.
“That raised a lot of money, and got us out of debt,” says Ted Cranston, a lawyer and board member who served as co-chair of the recent capital campaign.
Roger Olsen, a fund-raising consultant who led a campaign in the 1980s at the University of Southern California that raised $641-million, helped plan the playhouse’s capital campaign in 1996. He is largely responsible for the decision to solicit money for the theater complex, the new endowment, and the operating budget in the same campaign. (Ticket revenue and other fees cover less than half of the playhouse’s annual expenses.)
“When you gear up to raise a lot of money, the hardest thing to do is to break the inertia and get the volunteers to wrap their arms around raising these kinds of dollars,” Mr. Olsen says. “If you’re going to go to all this work, do it all — don’t do it a piece at a time.”
The theater began collecting donations for the campaign in 1997 and officially announced the drive in 1999. Irwin Jacobs, a founder of Qualcomm, a wireless-communications company in San Diego, and his wife, Joan, made a $5-million “leadership gift” (the new complex is called the Joan and Irwin Jacobs Center). The playhouse had raised nearly $37-million by 2002, and a $1-million matching grant from the Kresge Foundation that came in near the end of the campaign helped push the final total to $44-million.
But the reviews are not yet in as to whether the playhouse asked its most-loyal supporters for too much money for the new complex at the expense of funds for the endowment or for operating support. The current endowment, which — amounts to just $2.3-million in cash, is invested in bonds and a diversified portfolio that is part of an investment pool at UC-San Diego, generates income of roughly $100,000 per year. Mr. Dwyer would like an endowment of at least $50-million, enough to easily cover, along with ticket revenue and annual donations, all of the operating budget.
But he acknowledges that the only way the playhouse will get there is through planned giving — which could mean several decades of waiting — or through a big gift of, say, $25-million. Although he declines to identify donors who might be able to make such a gift, at least one couple that supports the playhouse seems capable of it: Irwin and Joan Jacobs donated $120-million to the San Diego Symphony in 2002.
Few board members are counting on such a gift anytime soon. “We’ll get there, but it’s going to take a lot longer than we thought it would,” says Joel Holliday, a board member and retired technology executive, who — along with his wife, Roseanne — gave the playhouse more than $2-million during the capital campaign.
Meanwhile, the playhouse has found it challenging to raise money for operating support this year, though that is not uncommon in the first year after a capital campaign.
Was the playhouse wrong to set its sights so high, just a few years after overcoming serious financial problems?
“You’ll have to ask me that in five years,” says Ms. Warnke. “If we have this fine theater district in five years, and we can’t afford to put into it what our mission has been, it will have been a big mistake.”
But she and others associated with the playhouse don’t expect that to happen. Even though the new theater will allow the playhouse to schedule performances year-round, it will stick to its usual schedule of six plays through 2006, while it works on increasing the endowment and annual giving.
James Forbes, the theater’s director of institutional advancement, says the decision to set an ambitious campaign goal, focused on the new theater complex, will continue to bear fruit in coming years. “Whatever the risks — and the risks were enormous — it was probably the right decision,” he says. “Now, when we go out to speak to people about continuing and increasing their support, there’s a real confidence about the playhouse’s future.”
The artistic staff at the playhouse also understands the importance of fiscal prudence, Mr. Forbes says.
Shirley Fishman, the associate artistic director, says she and Des McAnuff, the artistic director, support the idea of building an endowment, as its growth will allow the staff to take even more risks with their work.
“It’s all about balance,” she says. “We’re in the passion business, and we have to marry that with a modicum of practicality. That’s what will take us into the future.”
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Section: Endowments
Volume 16, Issue 16, Page B17
