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Nonprofits' merger an artful dodge of debt

| Wednesday, Aug. 23, 2006, 12:00 p.m.

Two years ago, the finances of the Pittsburgh Center for the Arts showed more red than the paintings on its walls.

Since its Jan. 1 merger with Pittsburgh Filmmakers, however, the center no longer projects a deficit, no longer needs oversight by the Pennsylvania Attorney General's office and has developed what may be a model for other financially struggling nonprofit groups.

"From what I've seen thus far, (the progress) is outstanding," said Janet Sarbaugh, senior program director for the arts and culture at The Heinz Endowments. "We really have the making of a national model for two organizations with different histories coming together to link where their core missions are compatible."

Other groups are taking notice. Two pairs of nonprofits in health and human services have contacted Charlie Humphrey -- who heads the new organization, called Pittsburgh Filmmakers-Pittsburgh Center for the Arts -- about the pros and cons of merging. He declined to identify them.

"There's no question that when you do these things, there are growing pains," said Humphrey, former executive director of Filmmakers. "Considering how complicated a merger like this is, it's gone really well."

Pittsburgh Filmmakers, based in North Oakland, was founded in 1971 as a center for providing equipment to artists. It expanded to offer media classes and run three theaters that show independent and foreign films.

The Pittsburgh Center for the Arts was set up in Shadyside in 1945 to exhibit and sell the works of artists and offer classes. Its problems began when donations and class enrollment dropped after 9/11.

The group hit rock bottom in 2004, when it temporarily shut its doors, laid off 13 workers and posted a $337,242 deficit.

"What got the Pittsburgh Center for the Arts in trouble was they wanted to be the Carnegie Museum instead of the focus for artists of Pittsburgh," said Jerry Coltin, director of the arts management program at Carnegie Mellon University. "They were trying to do very upscale exhibitions on a scale of what a museum would do."

To make ends meet, the center paid for daily operations using money that foundations had donated for specific purposes. That caused it to run afoul of the state Attorney General's office.

"There was no evidence of self-enrichment or wrongdoing in the use of these funds," said Attorney General spokeswoman Barbara Petito. "It was a concern, and that concern is no longer present as a result of our review, and the merger agreement and the parties' commitment to resolve any of those outstanding issues."

The consolidation has meant blending two different cultures and taking advantage of the strengths of each. Andrew Swenson is the new director of Filmmakers and Laura Domencic is the new director of the center.

"I haven't gotten a sense of any in-fighting," said Alan Gordon, president of the merged group's board of directors. "It has exceeded our expectations."

Filmmakers, for example, gives members a voice in governing it. The center is now trying to do the same with its members.

A photography exhibit on hate crimes uses Filmmakers' skills in exhibiting photos and the center's visibility at Fifth and Shady avenues. Filmmakers officials hope that children who take art classes at the center will take Filmmakers classes when they get older.

Another key issue is improving the neglected infrastructure of the center.

Besides seeking $370,000 in operating money from the Allegheny Regional Asset District, the combined group is asking for $150,000 for building and equipment needs. Of that, $100,000 would be used for the heating, ventilation and air-conditioning system and roof repairs of the center's Scaife Building, and $50,000 for projection and sound equipment at the theaters.

"They've made a lot of progress," said RAD Executive Director David Donahoe. "I think it would be wrong to say all the problems have been solved. There's still debt associated with the Pittsburgh Center for the Arts."

The center's debt has dropped from $1.1 million in 2004 to $300,000 now, and Pittsburgh Filmmakers is paying off the balance by refinancing its loan on the Melwood Screening Room in North Oakland.

The merger was aided by more than $300,000 donated by Gov. Ed Rendell's office and local foundations such as Heinz, Richard King Mellon and Mary Hillman Jennings.

"Are we rolling in dough• Absolutely not," Humphrey said. "But are we bringing in money and expensing it as we anticipated• Yes."

Filmmakers and the center expect to end fiscal 2007 with a balance of $561,331.

"Things are stabilized if nothing else," Coltin said.

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