November 20, 2012

Show Me the Money: Kala Art Institute, Part 1

Show Me the Money is an earnest attempt to get people to talk about money in the visual arts.

For this installment of Show Me the Money, I will be focusing on the Kala Art Institute. Kala’s mission is to help artists sustain their creative work over time through its artists-in-residence and fellowship programs, and to increase appreciation of this work through exhibitions, custom printing, art sales, public programs, and education. Additionally, Kala offers art education to the general public and public school children through its on-site classes and workshops and its Artists-in-Schools program.

We are at an interesting point in the histories of nonprofits. In the burst of utopian exuberance during the 1970s, many arts organizations were born. The people who started these organizations, if they have been able to stick around, are starting to retire. Before they do so, I think it would be best to try to learn from these pioneers and look at how they have adapted their vision, as well as their financial models, over time. Kala is an interesting example because right from the start it had an earned-income stream as a backbone. Yet even in this case the founders not only did not pay themselves for 15 years, but they also kept putting money into the organization during that time, supporting themselves through teaching, selling artwork, and other odd jobs.

Thirty-eight years is a long time, so I will be breaking up this Show Me the Money Spotlight into two parts. This, the first, will focus on Kala’s history and timeline, the challenges and hurdles they’ve overcome, and how they broke through their period of stagnancy. The next will focus more on their financials, the ways they’re changing their model in order to ensure future sustainability, and on Archana Horsting, personally, as the codirector of the organization through its entire history.

Timeline graphic developed with Lauren Venell

So, you started in 1974?

Archana Horsting: Yes. My cofounder, Yuzo Nakano, and I met in 1972, when we were both students at Atelier 17 in Paris. During a very interesting series of conversations over many cups of coffee in the little French cafe across from the studio, we started talking about the pros and cons of the workshop there. We liked many things about it, but we didn’t like that we had to go home at 6:00 or couldn’t store anything there. There were a lot of people crammed into a small space, so we thought, “Well, if we started a studio of our own, we would do this and that but not those things.”

The two of us thought that California would be a good place to locate it because I was from there. I was also very interested in printmaking from Japan and other parts of Asia, and he was very interested in Western art. We thought this would be a good place where East and West would continue to meet and develop ideas. I was doing some more traveling, so Nakano landed first in Northern California, put the down payment on the press, and found a place in San Francisco’s old Japantown. We each had about half the value of the press saved up — it was just a few thousand dollars total — but we didn’t have much saved. We also hand-built the first table and put together a hot plate from parts from a hardware store.

The place that we started in (on Wilmont Street) was really just a dark little basement garage, so when I arrived back in town six months later, I found this place right near Ashby BART that was an old storefront. We looked into renting that and realized we could rent that for less than his house. So Nakano slept in the little attic there for a while. But with the move, we basically ended up with about 3,000 square feet instead of 500. So we’ve been in the East Bay ever since. We moved to this space about five years later because we were told by the landlord they were selling the building. They gave us almost a year to find another space. It took about that long, too, at least nine months until we found this space and fell in love with it.

At what point were you able to start hiring people?

We hired our first guy back in 1977 or ’78; it was after we got our very first grant from the San Francisco Foundation. We hired someone rather than ourselves because we needed help more than we needed money — to write grants, get the gallery going, and a couple other projects, so that was good. Then when we moved to this space, we hired someone for bookkeeping. Our growth was slow and incremental. You know, most nonprofits don’t survive more than 18 months because of financial stress or philosophical differences.

What are some turning points in your history?

Coming to this space was a big turning point, and we Kala artists said, “Oh, we’ll never fill this space up.” Now, I think, even after the latest expansion, that we could use another couple thousand square feet, but that’s not in the cards right now. During the ’80s we really got our gallery going, and we did a whole series called Seeing Time, a decade of commissioned performances and installations all over the Bay Area.

But when the 1989 earthquake hit, it was the death-knell for us doing those really big projects outside. The artists were writing ever more ambitious proposals, and they cost more and more. We’d bet sort of the kitchen sink on a performance, Life on the Water, down at Fort Mason. Opening night was October 17, 1989, at 8 p.m., and at 5:04 p.m. everything stopped. Our artists had to climb out of the building onto the third-floor fire escapes, and the whole Marina was a mess. Fort Mason was closed for 10 days. People were very frightened. Here, the building rocked like crazy — mirrors popped off the walls and broke, and all kinds of things happened. Luckily, nobody was really harmed. We had taken out big ads in the Pink Section [of the San Francisco Chronicle] for that performance, so we lost all that income from the box office that we had been counting on. And afterward our San Francisco–based artists couldn’t get across the [Bay] Bridge for six months, so they couldn’t attend classes or use the studio. We got behind in taxes, we got behind in everything, and we ended up dragging around a lot of debt. It took us a couple years to come out of that. That was a very big turning point for us.

And after that you were more reserved?

We had to be careful afterward because we only had a small budget. We still kept the Seeing Time program going for a couple years, but the events were on a smaller scale, like a quartet instead of an orchestra. We couldn’t lose both the baby and the bath water, so to speak. We just couldn’t lose it all, and that was the chance we were taking. We still have installations and an occasional performance built into our fellowship programs, depending on what the artists want to do while they’re here. Instead, we’ve been putting more energy into getting better equipment and better facilities for the artists to work.

I think in the ’90s I really felt like we were treading water financially. Things were slow for a while, in terms of getting more capital. But finally we got to a fairly stable place — we were getting a certain amount of grants, or certainly our fair share, I would say. Between those grants, the individual gifts, and 40 percent earned income, we felt at least reasonably assured to start our expansion. But even then we didn’t go further until we had gotten our two major gifts — you know, in a capital campaign you look for your leadership gifts and that sort of thing. We followed all the rules of a capital campaign pyramid. We went by the book. It worked.

When you decided to expand, did you flirt with the idea of buying?

We checked into it, but at the time we were looking, which was ’07, prices were high. We looked into buying and building out this one place across the street, but finally we decided that it wasn’t the right place for us. Then our landlord showed us an available space in the same building as our studio. The good thing about that was that the board had gone through that whole process with us, so when we saw the space in this building we were educated enough to know a good deal when we saw it.

So we negotiated that contract right away but couldn’t sign it until six months later because we had to get a $250,000 rent guarantee for the landlord. He didn’t feel comfortable making a really long lease with us without it, but it had to be a long lease since we were going to raise capital. So I had to figure out how to do that. I ended up contacting one of our longest known foundations and spoke to them about getting a PRI — a Program-Related Investment. It took six months to work out the details, not only with the organization but with the Northern California Community Loan Fund, who would have to loan 25 percent to Kala. That was very much of a collage — an unusual kind of financial dealing. So by the time I finally got that done, it was about the beginning of July 2008.

When we handed our landlords the guarantee and finally signed the contract that we had negotiated so long before, they were surprised that we pulled it off, but thrilled to get it. We started building immediately. In April 2009 we did our first walk-through to donors of the campaign and opened the doors to the public about May 1.

But between that July signing and the opening, the world crashed financially. Some people don’t remember, but it really kind of fell apart. It was a scary time to be taking on a big, expensive expansion. We were not quite doubling our monthly net, but doubling our rent and utilities. So that was a challenge. We’re still growing into our new, bigger boots, but we are getting there. We moved from 40 percent earned income, down to about 23 percent after the expansion, and slowly but surely we worked to get it back up. Now we’ve more than reached that 40 percent. In this coming year, in our search for sustainability, we are aiming for 50 percent earned income. While getting multiple-year donations from donors certainly helps, the more income we can earn, the more stable we will feel in the long run.

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