September 13, 2019
Dear MusicNL Members,
Further to my last correspondence dated AUGUST 30, 2019 I write to you today in response to questions MusicNL has received and to provide additional information to you about the financial situation of MusicNL and the anticipated impact of our current situation.
How bad is the financial situation?
- MusicNL’s financial situation is dire. To date the new treasurer in conjunction with the financial advisor and MusicNL’s accounting firm, have targeted the debt to be approximately $200,000 as compared to a total annual operating budget of $436,000. As a not-for-profit organization without any assets, the organization should not run a deficit or have significant debt of any kind. Unfortunately, financial challenges continue to plague the organization as unexpected bills continue to emerge. The Interim Board continues to monitor the financial situation closely.
Will MusicNL be forced into bankruptcy?
- The Interim Board and its advisors have been working closely with government agencies and the bank to prevent this from happening. It is not something we can guarantee, but it is something we are working hard to avoid. We continue to be hopeful that we will be able to lead MusicNL out of this situation and are grateful for the understanding and assistance of our funders and lenders.
How did the financial situation get so bad?
- The extremity of the financial situation is due to a number of compounding issues, but based on our review of records to date we believe that it is largely a product of significant budget overruns on various projects over a number of years with no emphasis on debt recovery. The Interim Board has spent a considerable amount of time with the organization’s auditors, funders and the bank reviewing the financial records of the organization. At this time, the Interim Board believes the financial situation is a likely a result of inadequate financial management and has not found any evidence of intentional misconduct. The Interim Board believes the organization will need to make changes to its policies and procedures going forward with respect to required approvals for debts and deficits, and the bylaws and governance of the MusicNL board to ensure a high level of financial expertise.
Why have you eliminated two positions and created one?
- Unfortunately, our current financial situation can only support one core full-time position. The new position – Operations and Program Manager – will be assisted by two employees: one Communications & Events Coordinator, and one Program & Administration Coordinator both hired under the Job Creation Partnership through specific funding provided by the Department of Advanced Education, Skills, and Labour. These two positions will remain with MusicNL until the end of March 2020. In addition, the members of the Interim Board have taken an active role in the organization in order to support staff and ongoing operations.
- Due to financial challenges, we will have to scale back some aspects of our operations and programming until we are in a healthier position. The job title and duties of the new position reflect those changes.
- This is not intended to be a permanent change to the organizational structure of MusicNL; it is the Interim Board’s intention that MusicNL work towards returning to a larger staffing complement when the financial situation allows it to do so.
Do you think eliminating one position will make it difficult for MusicNL to grow as an industry association to respond to the changing needs of the music community?
- This was the only viable solution to keep any administrative presence within the organization. The goal for this year is to right the ship and get our house in order before we can think about growth. If we don’t take these actions—there will be nothing to grow.
How does the financial situation affect MusicNL Grants?
- MusicNL’s main priority in the current funding structure is to ensure that musicians access regular grants/funds. Our grant programs include Artist Development, Market Access, and Professional Development and we confirm that we will be opening up programs again in the coming weeks. We are encouraging members to apply as they normally would.
How does the financial situation affect programming?
- Programming refers to all other events and projects other than artist grants for example: MusicNL presence at Folk Alliance International, MusicNL Week, MusicNL Awards & Showcases, and the Export Program.
- Due to our fiscal challenges, we will not be able to host a multiday model of MusicNL Week 2019 which includes a conference, showcases, and a concluding awards gala. This model of MusicNL Week will not take place in Corner Brook or anywhere else this year. Additionally, we will not be able to operate the Export Program at this time. Although a full MusicNL Week isn’t possible for 2019, the MusicNL Awards portion will go ahead, albeit on a much smaller scale in contrast to the sizable event shows produced in previous years. The Call for the 2019 Award Submissions will be announced shortly.
- We are still exploring what our involvement in Folk Festival Alliance International will be.
How will this situation affect the ECMAs coming to St. John’s in 2020?
- The interim board is committed to working closely with the ECMA team on the ground to execute a successful event in St. John’s.
The Interim Board understands the vitally important role that MusicNL plays for musicians in our Province. We want to reassure you that we take the job ahead of us seriously and that we are working hard to save this organization and to protect vital services that MusicNL provides to musicians of our Province. Understandably, you may still have questions about the financial situation of MusicNL and the implications of the situation on the organization and for yourselves as members. We encourage you to submit any questions by email to email@example.com. Please understand that we will not be answering each individual email but will strive to answer your questions as a collective in the next communication and will continue to release information as it is available.
On behalf of the Interim Board:
Amy House, Chair
Ann Anderson, Board Member
David Smallwood, Board Member
Marlene Cahill, Treasurer
Thea Morash, Secretary
With Special Advisors to the Interim Board:
Tauna Staniland, Legal Advisor (Partner—Stewart McKelvey)
David Hood, Financial Advisor (Retired Partner—Grant Thornton)
Melanie Martin, Funding Advisor (Manager of Culture—The Department of Tourism, Culture, Industry and Innovation, Government of Newfoundland and Labrador)