Planning Ahead: Why Did This Historic Opera House Net a Historic Gift?

Loyal IP readers know that we talk a lot about the "Bilbao Effect," a term that describes the transformative potential of an expensive, capital-intensive project. 

The risk with such a strategy is clear. Fundraising for a glamorous new performance hall may attract donor dollars in the short term, but it's far more challenging to raise the necessary funds for upkeep and future renovations. The net result? A perpetual fundraising vortex. Not fun.

But news out of Adrian, Michigan suggests an obvious solution to this problem: Plan ahead. 

The Croswell Opera House received a $2.5 million gift from Adrian native Julianne Argyros and her husband, George to support the opera house's ambitious renovation campaign. The Croswell, which opened in 1866, is the oldest theater in Michigan and one of the oldest continuously operating theaters in the United States.

The gift is the single largest donation in the Croswell’s history.

The Croswell’s renovations, which are scheduled to be finished in spring 2017, are aimed at updating the theater's infrastructure and providing new programming opportunities while "staying true to its historic character." The capital campaign had an initial goal of $6.2 million, and the Croswell board later set a "stretch goal" of $7.2 million—and therein lies the lesson. As the press release notes:

To guard against unexpected complications with renovating the 150-year-old building and to build an endowment large enough to make an impact on long-term financial stability, some fundraising will continue through the end of the year.

In other words, fundraisers acknowledged that as unsexy as it may sound, they needed an additional financial cushion to prepare for the unexpected.

Two takeaways here.

First off, as we previously noted, the Bilbao Effect's allure isn't relegated to huge Big City museums and concert halls: Sure, a regional museum won't undergo the kinds of six-figure renovations we see in New York and Los Angeles. But they can spring for something that's proportionately ambitious—and equally risky—if they think funders are willing to play ball.

Related: Strange But True: For Museums, Sometimes Smaller is Actually Better

And so Croswell's board—devoted IP readers, no doubt—understood that while a renovation project would certain attract donor dollars—additional funds came from the general public, corporate donors, and grantmakers like the Sage Foundation—their work wasn't done once renovation began. Quite the opposite, in fact. Ongoing fundraising would be required to compensate for any unforeseen downstream costs.

Second, it isn't exactly news that fundraisers should plan ahead for unforeseen costs, and yet organizations continue to get burned, including, most recently, New York’s Metropolitan Museum of Art which put its $600 million expansion on hold. Why is that?

Each situation is different, and the culprits can range from inefficient organizational planning to an uncooperative stock market to convoluted Freudian mumbo jumbo. But there's also a kind of "tiger by the tail" phenomenon whereby organizations make a calculated gamble to ride a wave of momentum with the fervent hope that they'll be able to rally donors down the line if they hit a wall. (For a more thorough exposition on this phenomenon click the link below.)

Related: Feeding the Beast: Do Top Art Museums Have an Unsustainable Funding Model?

But as much as donors are drawn to flashy capital projects, they also appreciate transparency and knowing that they won't be getting hit up for cash in four years because the organization can't pay the renovation bills. Which brings us to the donors in question, for whom the gift is personal.

Julianne Argyros grew up in Adrian and graduated from Adrian High School in 1958. Through the Argyros Family Foundation, they have supported numerous arts, educational and health care organizations, both in California and across the United States. Their gift of $1 million to the Croswell in 2013 helped launch the capital campaign. They are also supporters of the Adrian Schools Educational Foundation.

In related theater renovation news, click here for our take on the Foundation for the Carolinas's Bold Plan to Renovate the Carolina Theatre.

Related: Go Big or Go Home: Museums as the Vanguard of Nonprofit Fundraising