The announcement last week that Nancy Buirski was stepping down as head of the Full Frame Documentary Festival was a surprising but not totally unexpected departure. For several years, Buirski has contemplated pursuing a more active role in nurturing independent filmmaking and other film-related ventures. Still, her exit raises eyebrows for both its timing and context. The move comes a scant three months after the resignation of executive director Tammy Brown and less than four months before the 2008 festival.

It also comes amid speculation about the financial stability of the Durham mainstay. Sources close to the festival report an organization saddled with ballooning debt, resulting in numerous vendors from the 2007 festival that have yet to be paid and wild speculation about the future solvency of the festival and its legal entity, Doc Arts, Inc.

A review of Doc Arts’ financial statements filed with the IRS through the fiscal year ending June 2006 portends Full Frame’s recent financial travails. Initially, however, the news was good. In the tax years spanning the festivals of 2003 to 2005, Doc Arts’ annual revenues grew twofold, from $991,939 to more than $1.8 million. A modest surplus of $21,867 after the 2004 festival blossomed the following year into an unprecedented excess of $251,031, a 1,000 percent increase. Perhaps coincidentally, this was also a period that saw documentary filmmaking enter the movie mainstream: Bowling for Columbine, Super Size Me, Murderball, Fahrenheit 9/11, March of the Penguins.

Buoyed by this newfound windfall and creative energy, in July 2005 Buirski relinquished the business responsibilities of her executive director position, shifting to the newly created posts of CEO and artistic director. In December 2005, Brown, former director of the Progress Energy Foundation with leadership experience in other nonprofit organizations, was hired as executive director. Buirski was tasked with handling the creative side of the organization, while Brown would coordinate the business end, and both would lend their talents to further increase fundraising.

However, despite an increase in expensesincluding an additional $55,000 for fundraisingrevenues the following year dropped to $1.44 million, resulting in an annual deficit of $164,439 by June 2006. While Doc Arts’ financial statement for the tax year ending June 2007 is not yet available, Palmer acknowledged that the downward financial spiral continued.

In the Full Frame press release that announced her departure, Buirski stated that she “wanted to return to her creative roots and felt that the 10-year demarcation was a perfect time to do so.” Indeed, the 2006 festival saw the unveiling of Time Piece, a Buirski-produced film consisting of contributions from a dozen Turkish and American documentary makers, including Albert Maysles and Alex Gibney.

Buirski, a long-time photo editor at The New York Times, moved to Durham a decade ago and founded the earliest incarnation of Full Frame under the aegis of Duke’s Center for Documentary Studies. Ten years and one name change later, Buirski presided over a festival that had become the Triangle’s premiere film event and an important stop on the documentary film festival circuit; among the many luminaries attracted to Durham were Michael Moore, Martin Scorsese and Frederick Wiseman, along with perennial visitors such as D.A. Pennebaker and Chris Hegedus.

Palmer was brought in largely to right a financial ship that had slowly run aground. “When Nancy became artistic director [in 2005],” says Palmer, “she was giddy with relief at not being totally responsible for the financial side anymore; it was no longer part of her purview. At the same time, on the business side, all the bases were not being covered as thoroughly as they should. Stuff slipped through the cracks, and people didn’t realize how it would snowball.”

“As a result,” Palmer continues, “the artistic side and business side were not working in concert like they should have. There wasn’t enough money for the agenda being pushed, and that’s something Tammy should have been on top of. Nancy is very compelling when she talks about her artistic direction, and you want to make it happen. Tammy was very, very impressed, and anxious to make that creative side work. As a result, the lines of accountability were blurred, and people committed resources without figuring it into the budget.”

“Having Nancy on the creative side and Tammy supposedly fundraising created a sense that each would be their own respective rainmakers and we didn’t have to be as careful about our spending. Now, we realize the level of funding didn’t match the spending.”

After Brown’s resignation, Peg Palmer was appointed to serve as interim executive director beginning Oct. 1, 2007. Palmer is a longtime Full Frame volunteer and veteran of community organizations and boards, including Durham Central Park, Central Park School for Children, Seeds and Nasher Museum. When asked if she would be paid a salary for her work with Full Frame, Palmer said only that it had not been determined. Palmer’s work will be aided by longtime staffer Robin Yigit Smith, who rejoins Full Frame to resume her former position of managing director.

Palmer contends that there were many reasons expenses skyrocketed over the 18 months preceding her tenurebeyond just the costs associated with Full Frame’s 10th anniversary festival last April, which included a high-water number of curators and panelists, and their associated travel, lodging and meal expenses. Specifically, she points to additional executive salaries taken on beginning in 2005, including a $43,333 annual salary for Brown. There was also $64,000 paid annually to development director Ellen Cotler (who, like Brown, is no longer a member of the Full Frame staff). Palmer indicated that Buirski, whose salary as artistic director and CEO was most recently $75,000 per year, would continue to be on salary as a festival consultant but declined to discuss her new level of compensation.

Palmer also cites expenses associated with Full Frame’s move to its new office at the American Tobacco Campus, notably upgrading the office’s technology via costly, multi-year lease agreements. She also cites several creative and business ventures outside the festival itself, including the concept of year-round programming and the Full Frame Institute, which was set up to procure funding from sources that might not normally fund a festival by themselves.

In theory, Palmer supports the Institute, “but the concept was not fully fleshed out.” Funds were spent on assorted film projects, “and the idea was that with increased corporate relationships and contacts, the revenue would follow. But, corporations are often slow to act and deliberate about which organizations they fund out of the hundreds, if not thousands who ask for money. Lots of nonprofits see a ‘pie-in-the-sky’ that’s just not there. Corporations and donors in general are going to weigh the benefits they gain through a four-day festival versus paying $25,000-$50,000 in sponsorship.”

“I support the concept of year-round programming, but we also have to be careful about how to pay for it and go about it. It would be tragic to lose the festival because we got too ambitious too fast.” To that end, Full Frame will sponsor a special event on Feb. 11, featuring the theatrical world premiere of Black Magic, the latest film from director Dan Klores (Crazy Love). Klores and his co-producer, basketball legend Earl “the Pearl” Monroe, will attend the screening, with ticket proceeds from the film and a pre-screening party benefiting Full Frame.

While the economic ledger is being redressed, the creative process continues to flourish. Full Frame’s staff is already planning the 2008 festival, which begins April 3. There has been no decline in the filmmaking community’s interest in Full Frame: To date, a record 1,200 submissions have been received. Of those, approximately 100 documentaries, including 65 new docs, will comprise the program. This would be the smallest number of films since the 2004 festival. Palmer and others on the board say, however, that the contraction is needed to streamline the festival and re-establish its intimacy.

There will be at least one other noticeable change that Palmer and Smith say is not a cost-cutting move: Instead of undertaking the difficult conversion of American Tobacco Bay 7 into a screening venue, the festival will use Weaver Auditorium at Durham School of the Arts. Smith said, however, that the festival will still use American Tobacco’s Bay 7 for parties.

“We have to remind ourselves what business we are in. Our main mission is the festival,” says Palmer. “I’ve been in Durham 30 years, and seen many things come and go, and I would really hate to lose Full Frame.”