By Maria Saporta
Friday, November 25, 2011
It’s a tale of the two Woodruffs — a relationship that spans the past five decades.
The latest chapter of the tale culminated with a $15 million gift from the Robert W. Woodruff Foundation to the Woodruff Arts Center as a “vote of confidence” in the cultural organization’s transformation in governance and financial management.
“It’s a huge vote of confidence in the new direction of the Woodruff Arts Center,” said Russ Hardin, president of the Woodruff Foundation (which has no direct connection to the cultural complex). “This is a recognition of the changes in governance which we think are positive at the Arts Center and the improvements made in the financial oversight and alignment of the different divisions.”
The Woodruff Arts Center has four divisions: the Atlanta Symphony Orchestra, the High Museum of Art, the Alliance Theatre and Young Audiences. Although the center files one tax return for all the entities combined, the divisions had been operating with relative autonomy.
That began to change when Larry Gellerstedt, CEO of Cousins Properties Inc., became chairman of the Woodruff Arts Center board in May.
Before Gellerstedt took over, the center’s $100 million annual budget had been overseen by an 80-member board that only met twice a year. While the 80-member board still exists, the fiduciary responsibility has been delegated to a 16-member governing board that meets once a month.
That executive board includes the chairs of each of the divisions to guarantee a closer working relationship between the various entities.
Hardin said the two-year, $15 million gift will go primarily to the center’s deferred capital needs. It is being given at this time as a recognition to “some really good folks who have done the difficult work of changing the governance model,” he said. “The Arts Center had an antiquated governance structure.”
The changes in the center’s financial oversight also have been significant. Hardin said that under the leadership of Doug Ivester, former CEO of The Coca-Cola Co. and an accountant by training, the center has professionalized the financial management structure of the center and each of the divisions.
About $5 million of the gift will go to retiring debt held by the Alliance Theatre and the High Museum that had been used on capital improvements.
“Both the Alliance and the High are operating in the black and have terrific professional leadership,” Hardin said, adding that by paying off those debts, it would help those divisions’ annual operating budgets.
The Atlanta Symphony Orchestra, however, is in a different situation. It has an operating deficit of about $3.5 million to $4 million a year, and that deficit now totals between $15 million and $20 million.
The symphony also faces another major challenge next year when it has to reach a collective bargaining agreement with the musicians by August.
“The symphony does have a structural operating gap, and they have built up a deficit, but then again, they are producing great music,” Gellerstedt said. “We just have to get the financial structure right. It’s an issue among symphonies all across the country.”
Until the ASO can get on an even keel, both Hardin and Gellerstedt said any discussion of a new symphony hall is premature.
Gellerstedt said that what makes the Woodruff Foundation’s gift so important is that it will pay for improvements that could be described as mundane.
“It will have an immediate impact,” Gellerstedt said. “We will be able to get a number of deferred capital projects done. It’s the hardest money to raise in a tough economy. But getting money to make sure the air conditioners work is extraordinarily important.”
As Hardin sees it, the gift is a continuation between the special relationship between Robert W. Woodruff and the Woodruff Arts Center. On June 3, 1962, a charter flight with 106 arts patrons from Atlanta crashed at Orly Airport in Paris, killing all but two crew members on board — a loss that shook the city’s cultural core.
Woodruff, the legendary leader of Coca-Cola, believed Atlanta should have a memorial to commemorate that loss — and that became the Memorial Arts Center (later renamed in Woodruff’s honor) that opened in 1968.
Much of the support to build the Memorial Arts Center came from the Emily and Ernest Woodruff Fund. In all, the related Woodruff and Whitehead foundations contributed $8 million for the $13 million project.
With the latest $15 million gift, the Woodruff and Whitehead foundations have given more than $130 million to the Woodruff Arts Center since 1963. Most of the support has been for capital needs — the original construction, land acquisition, the building of the new High Museum in the early 1980s, a renovation before the 1996 Summer Games and the recent expansion for the High.
“What we have done all keys off Mr. Woodruff’s gift that he made in the early ’60s for the Memorial Arts building,” Hardin said. “He was no patron of the arts, but he understood the significance of that tragedy and knew that the arts were part of what makes a great city.”
Today, the facility is nearly 45 years old, and it still has some of its original heating and air-conditioning systems. Some estimates have said the center’s physical needs total $30 million.
Gellerstedt said the Woodruff Foundation gift is a significant “first step” to updating the center’s physical facilities.
Hardin made it sound as though the gift was a down payment on possible future investments.
“The Arts Center is on its way, but it’s not there yet, to bolstering its financial foundation,” Hardin said. “Like most arts organizations, the Arts Center has not had enough of a cushion year-to-year to reinvest in the facility. It has not funded depreciation. Goodness knows we can’t catch up 50 years of underinvestment at one time.”
Gellerstedt said the grant provides validation of the center’s cultural contributions to Atlanta. “The Woodruff Foundation, making a statement like this with $15 million, is fabulous,” he said. “But the fact that they’re making an investment in the arts at this point in time is huge.”