As last weekend’s CenterFest arts celebration was wrapping up in downtown Durham, leaders of the Durham Arts Council, the event’s longtime sponsor, were doing some behind-the-scenes celebrating of their own.

After two years of spiraling budget deficits, the nearly 50-year-old arts education and grantmaking organization is nearing break-even status for the current fiscal year. That’s a big achievement, considering that the gap between revenues and expenses reached nearly $500,000 in 2002 and threatened to widen this year while city funding stayed flat.

Executive Director Sherry DeVries, who’s been on the job since March 2002, says a combination of staff cutbacks, more earned income and greater program efficiency has helped the nonprofit pull its $2 million budget into line without skimping on popular offerings–like the annual CenterFest street fair.

“All arts organizations are going through tough times and we’ve had to make some drastic changes,” says DeVries, who came to Durham from the Hinsdale Center for the Arts in suburban Chicago. “We’ve gone through a difficult transition and we’ve fixed some things. This is a success story.”

But behind the scenes, not everyone is so upbeat. Some current and former arts council employees say the transition has been marked by a new top-down management style that has depressed morale. They say DeVries’ focus on the bottom line has pushed staffing resources to the breaking point, while leaving key positions unfilled or handled by contract employees. And, they say staff members who’ve questioned DeVries’ decisions have either been fired or have quit. Overall, the number of arts council staff has dropped from 24 to 14 since she came on board, due to layoffs, firings and attrition.

Joanne Blum was one of those who initially welcomed DeVries’ hiring but ended up leaving because she didn’t like the new director’s approach. “I understand when someone new comes in and cleans house and rebuilds,” says Blum, who quit last summer after a year as the arts council’s communications and marketing manager. “I just don’t see a lot of rebuilding going on.”

Blum, one of the few who would talk publicly about her experience at the arts council, says other staff members, course instructors and program participants have kept quiet for fear of hurting the group’s reputation. She’s speaking up because she’s convinced that the inner wrangling will eventually spill outward into arts council programs.

“We’ve lost too many people with history and ties to the organization,” Blum says. “I think programs will suffer.”

Members of the DAC’s board admit that relations between DeVries and the staff have been “rocky” at times. (The board’s roster includes Sioux Watson, publisher of The Independent).

But board President Barker French–who met with concerned employees several months after DeVries was hired–says such tension is not unusual in tough financial times.

“What we saw in Sherry is an understanding that you have to run the organization as a business. And that doesn’t sit well with the artsy types,” he says. “If she hadn’t taken that approach, we wouldn’t be here. What we’re hearing is the noise that occurs when change is under way.”

Artist Services Director Margaret DeMott, who’s been at the council for 20 years, says turnover is a perennial problem there–as it is for many nonprofit arts groups. But, she adds, the recent shakeup began well before DeVries was hired. “Starting in the fall of 2000, the director of finance, the director of development–every big position you could imagine changed over,” DeMott says. “So when Sherry walked in the door, we had some old people, a lot of new people, and a lot of procedures that had just fallen apart.”

So far, save a few small wrinkles, the council’s public face has shown no obvious signs of strain. Besides pulling off another CenterFest, the organization has added programs, launched new exhibitions and upped class enrollments–though this fall’s offerings were set back a week due to delays in getting out the catalog.

The council has also stepped into the public spotlight as the lead organizer of Durham’s Cultural Master Plan. Funded by the county commissioners, the plan will document existing arts and cultural activities in Durham, and implement strategies to support them in the future.

As head of the coordinating group, DeVries gets high marks from nonprofit and municipal leaders who say she has represented the needs of the broader arts community well, in the planning process.

“I think she is right on target in terms of where the arts community needs to be,” says City Council member Cora Cole-McFadden, the council’s official liaison in city government.

What remains to be seen, DeVries’ critics say, is whether she stays on target with her staff and with the council’s nonprofit mission now that finances have stabilized.

“Saying we had to do all of this because of the budget is the easy way to look at what’s happened,” says Siobhan Callahan, who left in June after two years on the council’s communications and development staff. “But if you lose the kinds of people we lost, there’s a problem.”

This isn’t an easy time for nonprofit arts councils. In May 2002, city and county budget cuts led to the closing of Wilmington’s venerated network, the Arts Council of the Lower Cape Fear. In Raleigh, the United Arts Council has had to trim grants to Wake County arts groups by up to 15 percent in each of the last three years, because of sluggish private-sector donations.

Besides financial pressures, the Durham Arts Council faced a leadership vacuum after its longtime director, E’Vonne Coleman, left in 2001 for a job at Duke University. Coleman, who declined to be interviewed for this story, proved a hard act to follow. The director’s position stayed open for 12 months as the board worked to narrow a field of 80 candidates.

Board members say DeVries was their top choice because of her background in arts marketing and nonprofit finances. In her letter to the search committee, DeVries noted that she had “stepped into my current arts organization [Hinsdale] at a time when it was nearly going under and totally turned it around.”

What nobody realized was that she would soon be facing a similar scenario in Durham.

While Coleman’s eight-year tenure was marked by many achievements, people who worked with her say she focused more on making the arts council accessible to Durham’s African-American communities than on the business side of the operation. Over time, income was declining, fundraising goals were not being met, cash reserves were being eaten up and staff was turning over. After Coleman left, the cumulative weight of those problems began to bear down.

When DeVries was hired, council leaders agree she stepped into a budgetary mess. (As one board member ruefully put it, “She inherited the Titanic.”) It didn’t help that the extent of the organization’s money woes didn’t become clear until several months after she started work.

An independent audit, presented to the board in November 2002, showed arts council revenues–including grants, tuition, city contracts and private donations–fell by 6 percent between 2001 and 2002, while expenses rose 8 percent. During that same period, operating deficits climbed from $184,306 to $462,412.

The audit also highlighted poor record-keeping, noting that financial statements contained summarized information that “does not include sufficient detail to constitute a presentation in conformity with generally accepted accounting principles.”

DeVries had already started analyzing every program and department to see where money was being spent and how much was coming in. In the wake of the audit, she set up new financial and computing systems, restructured the education department, instituted “performance reviews” of staff and eventually proposed layoffs.

She doesn’t mince words about what happened.

“Essentially, we had to pay for the errors of the past,” DeVries says. “People’s performance throughout the agency–with some exceptions–had just declined. The numbers were not being hit and there was no way the agency could sustain that level of staffing. Expenses weren’t going down, so we had to start making tough decisions.”

But even before layoffs were announced last spring, some arts council staff had become anxious about their new leader. The firing of longtime Education Director Annette Smith just weeks after DeVries was hired, they say, jump-started concerns.

Smith declined to be interviewed for this story and DeVries would not discuss “personnel matters” in print. Whatever the reason for Smith’s departure last year, her position remains open, as do several other key arts council jobs. (The organization is advertising for a new director of youth education and community outreach position that combines some of Smith’s old duties with those of the director of Creative Arts in the Public/Private Schools (CAPS) program–a post that’s gone unfilled since April.)

In November 2002, staff members met with French to discuss their feelings about DeVries. Not satisfied that their concerns had been heard, they sent a letter to the board’s executive committee describing a lack of communication, “inflated” budget goals and the burdens that cutbacks had placed on remaining arts council employees.

The letter also criticized DeVries’ “hasty attempt to make educational programs financially self-sufficient” and a decision to budget “more than the allotted amount” for administrative expenses from corporate grants to the CAPS program.

Jane Williams, who was director of the CAPS program at the time, says she brought up the grants issue several times with DeVries but was told the figures would stand. Williams says in one case, half of a large corporate grant to the CAPS program was budgeted for administrative expenses in violation of the funding agreement.

DeVries denies that “anything like those numbers” were contained in the final budget. She says there were problems with the way the CAPS grants had been administered in the past, but that those have been “fixed” and that all of the arts council’s grant money is being spent appropriately.

French says her explanations satisfied the board, which did not pursue the subject.

Five months after the staff’s letter to the board, Williams was asked to leave. She says she was fired without cause. Again, DeVries declines to discuss personnel issues.

One thing that did result from staff complaints to the board was a consultant’s report examining management practices at the arts council.

The results were shared only with top board leaders and DeVries, none of whom will comment on the specifics. But some staff and board members say that in the months that followed, DeVries made more efforts to communicate with employees. Even some of her remaining critics on the staff say an arts council get-together last month was a success in boosting morale.

Arts council leaders chalk up the turmoil of the past year to nonprofit angst.

“Part of what happened here happens anytime you change leaders,” says Susan Allen, a veteran board member. “Sherry had different strengths and quirks and the staff had to get used to her. In an arts organization, people are more sensitive to those quirks than they might be at a big corporation.”

Others say the transition was difficult because it came on top of a budget crunch that put DeVries in the role of bearer-of-bad-news.

How much of the arts council’s hard-won financial stability is due to staff cutbacks and how much to new revenue is unclear.

Seated in her neat, spare office down a newly-painted corridor, DeVries carefully dodges that question. “Everyone who is here now is working better and harder,” she says. “Just because you’ve downsized doesn’t mean you’ve lost that much capacity. We’ve set the bar high and we’re positively working together.”

Leaders of other arts organizations haven’t seen any major pullback in services.

Ed Hunt, whose Manbites Dog Theater Company is a longtime recipient of arts council support, says that although grants are down, the council remains responsive to the community. “I love that they help anyone who walks in the door and says they are an artist,” he says. “They’re still doing that.”

Now that the budget is back in shape, DeVries says she can focus on rebuilding the staff, launching a major fund drive and repositioning the council as a leading arts programmer.

Holding up a “how to” brochure from the N.C. Center for Nonprofits that lists strategies groups should use to stay in the black, DeVries notes that the only one the arts council hasn’t implemented is cutting programs.

“We don’t want to reduce our services to the community,” she says. “Durham is a dynamite place and the arts council is right in the middle of it. We’ve got to have a strong mission and financial accountability–both.”

That’s a balancing act even critics hope she can pull off.

“I just want something good to happen there,” says former staffer Callahan, who now works at a private school in Rhode Island. “I hope Sherry can do it. Maybe she can. But she needs people to work with her.” EndBlock

Durham Arts Council

History: Founded in 1954 as Allied Arts with headquarters at the former City Hall building on Morris Street. Changed its name to the Durham Arts Council in 1975.

Support: Almost 40 percent of DAC’s $2-million budget comes from the city. The rest is from program fees, foundation grants and individual contributions. This year, the council received among the highest scores given to nonprofits in the city’s new “performance based” budgeting. Despite those ratings, city funding has been flat for the past three fiscal years.

Programs: Manages the Durham Arts Council building, a multipurpose community arts center, and The Clay Studio on Foster Street. Provides grants to arts groups, exhibit space for visual artists and classes in literary, performing and visual arts. Produces the annual CenterFest and Edible Arts festivals. Coordinating agency for the city’s new Cultural Master Plan.

Look for: A 50th anniversary celebration in spring 2004 that will feature Durham natives who’ve made it big in the arts. A new partnership with Durham Technical Community College that offers classes in “Making A Living in the Arts.”

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