What's a board to do when it's business plan just doesn't work out? Ask for forgiveness - of its loan that is.
I suppose the best thing about doing business with a town is its ability to waive debt. Assuming the town can afford to do this AND assuming the nonprofit who owes the town has put its best foot forward in trying to make a seemingly good business plan work.
So, asking for forgiveness appears to be the best prospects for this Framingham, MA nonprofit who just doesn't seem to be able to generate enough revenue to pay for the upgrade costs of a building it didn't have to pay for. Now asking for debt forgiveness can indeed make sense and give a bit of breathing space financially but there are other numbers that should also be a red flag that a much more or different business plan should be pursued. In particular the place has an annual budget of $313K but a loss of $73K. These are not good numbers. Bottom line (literally): debt forgiveness is not the solution to their economic challenges.
There are a number of variables requiring deep analysis to ensure a nonprofit's sustainability. At least these folks have a starting point but a lot more work to do.
Here's the full story.
Framingham: Amazing Things Arts Center gets extension to pay $90K debt
FRAMINGHAM — Amazing Things Arts Center received an extension Tuesday to settle its $90,000 tab for improvements to the old firehouse on Hollis Street that serves as its event space.
The nonprofit leased the building at 160 Hollis St. from the town in 2007. It faced a December deadline to cut Framingham a check for work that was undertaken to revamp the facility before it moved in.
But in a closed-door meeting Tuesday, selectmen voted to extend the due date for the nonprofit to repay the balance through June 30, 2018. The move allows Amazing Things time to negotiate next year with Framingham’s incoming mayor and City Council about clearing the debt.
“I just very much appreciate it,” Executive Director Ellen Sturgis told the board, “and look forward to working with the new administration.”
Amazing Things holds a 50-year lease on the firehouse, where it stages live musical performances most nights of the week.
Under the terms of its lease, Amazing Things paid the town an initial sum of $50 when it moved into the building. The town agreed to perform up to $90,000 worth of work on the facility, including ensuring the fire alarms were functioning, repaving and striping the parking lot and performing other capital repairs.
The lease obligated Amazing Things to reimburse the town for the work by Dec. 3, 2017. However, the organization has struggled in recent years to improve its financial picture.
In 2015, Amazing Things recorded a net loss of more than $73,000, taking in revenue of close to $240,000 from contributions, grants and programming, but paying out expenses of more than $313,000, according to paperwork it filed with the IRS. It finished 2015 with about $268,300 in assets.
In a recent letter to selectmen, Amazing Things Executive Director Ellen S. Sturgis wrote that she has been in talks with various town boards about “creative ways” to address the unpaid debt to the town since taking over the position in 2015.
“Meanwhile, we are addressing the need to have better cash flow by more active fundraising, increasing our liquor license availability and advertising our shows widely to increase audience sizes,” Sturgis wrote.
The group hopes to find an “equitable solution” no later than the close of 2018, she wrote.