Wrapping it up: Bon Voyage, A-ha! Round 1!

When we started the first round of the A-ha! program, all anyone could see was a bright horizon of innovation and creation. And of course, innovation never ends, it just keeps right on moving – Seema Sueko of Mo'olelo Performing Arts Center has become a fixture on the “green theatre” circuit, the Playwrights Center is taking time to evaluate their trailers project, Theater Grottesco soldiers on in pursuit of an alternative capital campaign model, and Woolly Mammoth is reporting on their final sabbaticals.

But A-ha! is about more than brilliant success – it’s about the process, and the challenges. And between you and me, the process is what took all of us by surprise. With projects so exciting and groundbreaking, it’s hard to foresee any turbulence on the horizon, but of course, the challenges are the parts of the process that teach us, and stay with us… for better or for worse. If you happen to be joining us at the TCG National Conference, a few of our A-ha! veterans will be discussing these sticky, hair-pulling parts of innovation in the breakout session: Turning Failure into Opportunity: Navigating the Unexpected. It’s a brave group, and we hope to see you there. (And if you haven’t registered for the TCG National Conference, sign up now!)

Thank you for taking this first leg of the A-ha! journey with us. We look forward to sharing more stories with you!

"Wait a minute, that’s us: Theater Grottesco"

This week in A-ha!, a missive from John Flax of Theater Grottesco, reminding us that Wall Street isn't the only place Securities and Exchange Law can be... well, exciting!

The project: Theater Grottesco forms a Limited Liability Corporation (LLC) which invests in downtown Santa Fe property for the purpose of creating a performance space for small non-profit organizations.

There was a healthy dose of absurdity in this proposal even in 2008: Theater Grottesco, with a $250,000 annual budget, raises $3 to $4 million dollars. But isn’t that the point of the A-ha! Program? Think outside the box, test something grand, reach beyond your traditional scope.

By 2010, absurd has become grotesque…wait a minute, that’s us: Theater Grottesco.

It’s a great idea – beautiful in its simplicity and embracing of community spirit and ownership. Our committee of business leaders and lawyers saw no problem. Then came our first visit to New Mexico’s leading authority on Securities and Exchange Commission law. No Wall Street type, this slight southern woman who raises horses dazzled us with a legalese far beyond what we’d grown comfortable with – a screaming web of rules and regulations that blew our plan right out of the water. And when we were certain of defeat, she showed us a small beam of light we could follow: the issuance of bonds based on the Calvert Foundation, a micro-lending entrepreneurial model. To that, we’ve added a traditional capital campaign option and a community building phase. Not our perfect idea, but a way to get there nonetheless - maybe even in these times. It has been a wild ride, not easy, but then that’s the point. Stand by for a final report at: www.theatergrottesco.org

New Models; New Challenges

Here on the Aha! Blog, we strive to bring you the whole truth about the Aha! projects, from success to challenge to total conceptual reboot.

Take, for example, Theater Grottesco’s original concept of creating an LLC as an alternative capital campaign. Well, it turns out that SEC (the Securities and Exchange Commission) laws and regulations limit partners in an LLC to 35 people, each with a net worth of $1,000,000 or more, not including their homes. Suddenly the idea of offering shares to anyone with a spare $1,000 and an interest in downtown Santa Fe real estate seems pretty impractical.

But in true Aha! spirit, Grottesco has some new ideas:

In Model 1, a small group of partners invests substantial funding that is paid back with modest interest in 7-15 years. Investor motivation is less about return than community investment. However, in the current economy, this may present a more lucrative opportunity than standard securities or real estate. And the investments are understood to be risky. They may be transferred to a chosen non-profit organization as a tax-deduction as needed. Initial investments become a challenge to the general public to donate to the project in a conventional capital campaign. A third stage encourages volunteers to help build under the supervision of a licensed and insured contractor.

Model 2 is based upon the Calvert Community Investment model. A 501c3 solicits loans (not investments) of any size which are paid back with modest interest in 7-10 years. A 2nd campaign is then waged to repay the loans, a daunting prospect. On the other hand, with the low-interest loans, a theater could be created and we would be in a much stronger position to raise money the second time around.

Theater Grottesco: New Models, New Language

Unbelievably, we have reached the midway point for some of the current Aha! projects. John Flax from Theater Grottesco was kind enough to reflect on the Aha! process so far. Here, he discusses the challenges of learning a “business language” to complete their Do It! project.

Theater Grottesco is used to working with complex multi-dimensional structures in the creation of its artistic projects. But legal terms like “qualified investors”, “securities”, “merit review”, and “wealth transfer” have never been mentioned by creative artists. At this stage, our A-ha! Project has been both a positive anomaly and a burden in much the same way that learning a new language is difficult. Once the language is learned, however, the transformation can begin.

Soon, artistic and administrative staff will join board members in presenting a creative and sophisticated business model to Santa Fe’s leaders of commerce and philanthropy. We anticipate increased awareness and respect for our organization and our art, along with the necessary funds to create a state-of-the-art intimate performance venue which will add another layer of understanding and commitment to Grottesco and to smaller performing arts organizations everywhere, as we create a national model that will hopefully we duplicated and developed by others.

Up next on the Aha! Blog from Theater Grottesco: decoding some really complicated SEC legalese!

Meet Theater Grottesco

Theater Grottesco (based in Santa Fe, NM) had a string of bad-renovation luck. One space was condemned after a flood. One lease fell through when a co-lesee ran into administrative troubles. Then when the company found the perfect space and renovated it for a site-specific performance, the company realized they just didn’t have the network and resources to raise several million dollars in a capital campaign.

Grottesco is renowned for its organizational agility and adaptability. The company was founded in Paris in 1983, then moved to Detroit, and then again in 1996 to its current home in Santa Fe. So when faced with these real-estate setbacks, Grottesco decided to look at the bigger picture. There were other groups in Santa Fe whose work didn’t exactly fit into the traditional proscenium stage at the local community theatre, and none of them had the resources to start a campaign. What to do? Form an LLC.

As far as performance space real estate goes, this is a pretty radical idea. Everyone who purchases a share of Grottesco’s Limited Liability Corporation (LLC) will own a share in the venue. Shareholders are investors rather than donors, and shares will be sold for as little as $1,000 each.  As the project develops, TCG and Grottesco will report on how this new strategy is panning out. In the mean time, if you are interested in learning more about Theater Grottesco, visit their website.