Michael Gennaro was three years into his tenure as Executive Director of Goodspeed Musicals, a theatre committed to the production and preservation of musical theatre, when, in Spring of 2018, the Board of Trustees convened a task force to explore what meaningful steps could be taken to reduce Goodspeed’s yearly draw on its endowment.
Over its 55-year history, Goodspeed was fortunate to have amassed an unrestricted endowment of over $22 million, which went almost entirely untouched during the theatre’s many years of budgetary surpluses. However, beginning in the early years of the new millennium, changes in the environment led to a structural deficit that was routinely offset by authorizing distributions of endowment income that reached as high as 11% of the fund’s value in a given year. The Board was concerned that if leadership failed to curb this reliance on the endowment, that the annual draw could, in time, diminish the fund’s corpus.
Gennaro recognized the need to address this issue and also knew that in an organization as complex and entrenched as Goodspeed, the solution was unlikely to be simple. In response, Gennaro, the staff, and the Board considered maximizing the organization’s ancillary revenue by reexamining the management of Goodspeed’s production facilities, costume collection, restaurant, and property holdings. In addition, they interrogated the organization’s deficiencies in the area of contributed income and, further, raised the idea of adjusting the nature of the theatre’s programming and producing model. Finally, a contingent on the Board proposed that Goodspeed might reevaluate its mission altogether. “The Board…proposes changing the mission to fit the financials,” confirmed Gennaro, “but this place has built its name, its legacy…based on the work that it has been doing. We can't go too far from that.”
Gennaro knew that the Board hoped to have a strategy in place to address the endowment issue in advance of the FY ’20 budget process and that he, his staff, and the dedicated task force had a little less than a year to demonstrate a good faith effort to bring Goodspeed’s endowment draws down to the recommended 5%. Gennaro was devoted to this process but struggled to determine which of the solutions under consideration could be most expediently implemented and which would ultimately have the most impact.
Publication Date: 2020-11-16
Suggested Citation: William Gaines, “Goodspeed Musicals (2018),” Yale Theater Management Knowledge Base Case 19-99, November 16, 2020
Keywords: Mission, Nonprofit Finance, Strategy, Business Model, Case Video
Teaching Notes: Yes (contact email@example.com)
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