January 8, 2009 - General Motors Foundation, Detroit MI

GM Foundation yanks funding to art and cultural groups

A decision by the General Motors Foundation to sharply cut back on its multimillion-dollar sponsorship of metro Detroit's top cultural institutions puts Michigan's nonprofit community on notice that it stands to lose millions in philanthropic dollars as the auto industry fights for its life.

GM has already notified about a dozen arts and cultural groups, including the Detroit Symphony Orchestra, Music Hall, the Michigan Opera Theatre and the Detroit Institute of Arts, not to expect any annual support from the company in 2009.

That loss of more than $1 million -- confirmed by GM Foundation Chairman Rod Gillum -- is another blow to the cultural treasures and could mean more program cuts and red ink.

Even more ominous for Michigan is that GM's cuts to the arts might be only the first notes of a glum symphony.

In 2007, the most recent year figures are available, the foundation awarded nearly $12 million to Michigan-based organizations in areas such as social service, education, arts and culture, health care and other causes. While the foundation's 2009 budget has not been finalized, Gillum said that the amount of money earmarked for charity would be "nowhere near as big" as the worldwide figure of $31.4 million in 2007.

Gillum, who is GM's vice president for corporate responsibility and diversity, declined to cite a specific figure but agreed that any organization previously funded by GM should be making contingency plans.

A spokeswoman for Chrylser LLC said the budget for the company's foundation awarded $21 million nationwide in 2008, but would not be surprised if the total declined in 2009.

While the ultimate philanthropic fallout from the auto crisis remains unclear, one area where the picture is coming into focus is the arts. GM told the major local cultural groups in November and December not to expect funding in 2009.

The early notice was intended to give groups more time to adjust if they had always gotten annual operating support.

GM's pullback means cuts of $350,000 to the Music Hall Center for the Performing Arts, $250,000 to the Michigan Opera Theatre, $100,000 or more to the Detroit Symphony Orchestra and $75,000 to the Mosaic Youth Theatre.

For local arts institutions, already reeling from the fallout of Michigan's troubled economy, the news came like another in a series of body blows -- even as leaders expressed sympathy for GM's fight for survival.

"It's a major hit for us," said Rick Sperling, founder and chief executive officer of Mosaic, a youth theatre group widely admired as one of the city's shining success stories.

"For the first time in our 16-year history, we'll serve less young people this year than the year before," he said, noting an expected drop from 1,200 to 700 kids because of program cuts.

The General Motors Foundation is funded entirely by the automaker -- the foundation does not have a separate endowment to generate income. With the company on the verge of collapse, grant money is simply not available, despite what Gillum said was tremendous need in the community -- and arts institutions with superior track records.

"We are so linked to what's happening with the business and the business climate," Gillum said.

Gillum said rescue money now flowing from the federal government would not be funneled into foundation activities.

Michigan's lifeless economy has led to a flood of red ink, cutbacks and conditions that cultural leaders say are the most challenging they've ever seen. Deficits are up, corporate and individual donations are down and ticket sales are weak.

Leaders at several arts organizations said they had been expecting cuts from GM but that it was still difficult to adjust because the economic news was gloomy on so many fronts.

MOT dealt with a projected deficit of up to $800,000 by canceling its spring production of "I Pagliacci" -- the first such jettisoning in company history -- and by eliminating three jobs.

The withdrawal of GM's $250,000 means this will be the first spring that the company hasn't underwritten MOT's spring season since the Detroit Opera House opened in 1996.

MOT general director David Dichiera said he was looking at cutting spending by an additional 15% across the board and calling in overdue pledges from well-heeled donors who had been allowed to slide because their portfolios had declined. A chief concern is making sure the company can meet its $2.5 million in annual loan payments on the opera house and adjacent garage, Dichiera said.

"We're doing a lot of cash flow projections to make sure we can make our obligation with the banks," Dichiera said.

The company is making it, he said, but it's close to the bone.

Original Story - Detroit Free Press