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Facing funding crunch, Toronto’s Luminato develops new business model

After celebrating its 10th anniversary at a decommissioned Toronto power plant last summer, Luminato is heading back to the downtown core.

The trip from the Hearn Generating Station in the eastern Port Lands to downtown Toronto is not far, but festival cheif executive officer Anthony Sargent and his new artistic director, Josephine Ridge, are facing a tsunami of challenges along the way, including: paying off the high cost of the 2016 birthday bash without sliding into deficit; finding a way to make up for the declining financial support from the Ontario Liberal government, which started a decade ago when former premier Dalton McGuinty bought into the vision of the co-founders, Tony Gagliano and the late David Pecaut; and putting together a strong lineup for 2017 even though Ridge did not arrive in Toronto until her predecessor, Jorn Weisbrodt, was leaving – whereas it would have made more sense for the new AD and the departing one to overlap for a year.

"It has been a very short runway," Ridge explained in a phone interview. "That's not ideal."

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Sargent accentuates the positive this way: "We were enormously proud of the acclaim heaped on our 10th-anniversary Luminato in the Hearn, and the way that acclaim translated into record earned income and high levels of private-sector partnership. This one-off anniversary festival carried some additional costs specific to the scale and condition of the Hearn, but of course containing the whole festival in one venue also meant we saved costs renting and using other venues around the city."

As for relying on the Ontario government, the province is gradually pushing Luminato out of the nest and telling the festival that it can't go on being the sugar daddy forever. Dollars started flowing with seed money in 2006 and continued with such generous funding in its formative years, starting with Luminato's debut in 2007, that other arts organizations had fits of jealousy. But now the message from Queen's Park is basically: It's time to rely more heavily on earned revenue and corporate sponsorships. Insiders expect the Ontario government's annual funding for 2018, 2019 and 2020 will drop 40 per cent to $1.5-million.

But Sargent has no intention of making Luminato smaller. His goal is to make it much bigger, with a $15-million budget. Over all, Sargent notes, the 2016 festival was $465,594 more costly than the 2015 edition.

Given that the festival and the Ontario government have different fiscal years, Sargent reveals, "we were able to reallocate some of our multiyear provincial funding to cover that difference, as part of the normal process of updating our budgets as the planning of this unprecedentedly complex festival developed."

Most recently, Queen's Park has given Luminato $2.5-million a year for three years, starting with the 2015 festival and ending with the 2017 edition – given the difference in fiscal years, Sargent refers to the last year of those three years as the 2016/2017 gift.

Translation: To avoid posting a deficit for 2016, Luminato can cover the extra cost of its birthday bash at the Hearn by tapping both the $2.5-million from the second year of that three-year deal, and whatever is needed of the $2.5-million from the third year. (The Hearn is not among the venues Luminato will use for its 2017 festival, but in 2018 and beyond it could be chosen as the venue for one particular event, if the Hearn seems the perfect spot for that piece of the program.)

"Here's the big picture," Sargent told me. "We took the festival to the Hearn. There were people who saw that as a risk and a danger. It was an ambitious thing to do, turning a ruined site into usable space. I'm proud of that and of our precise cost control in what could have been a runaway exercise. Our total cost for 2016 was $11,038,530. The previous year it was $10,573,136."

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Also on the upside, Sargent boasts that earned revenue was well over $3-million – the highest in festival history.

Unfortunately, however, there were fewer than 65,000 people who attended Luminato events at the Hearn. That included about 40,000 ticket buyers; the others attended free events. And the rest of Toronto hardly seemed to be aware there was a festival going on. There were no crowds blissing out at free events in Yonge-Dundas Square, Pecaut Square and Harbourfront Centre as there had been in years past.

Nevertheless, Sargent exudes confidence about Luminato's transformation over the next decade.

"We've had an inspiring three months of dialogue with the province. It gives us a good base to go to the federal government and the city. We've struck a board working group to develop a new business model for the second decade. We have a plan, and we're very happy with it."

Under the new business model, Luminato would start planning events three years in advance so that it could work with other festivals as partners in commissioning shows and work out the best possible deals with venues and artists.

Meanwhile the festival would rely less on government funding, although Sargent notes that every major arts festival in the world has some public funding. (The average is 47 per cent.)

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It would be a big breakthrough to land a corporate partner as wonderful as L'Oréal, the multinational cosmetics company, which was billed as "partner in creativity" and provided millions to Luminato's coffers over eight festivals, from 2007 to 2014.

Sargent's most crucial goal will be to recruit a top fundraiser, following the departure of Tenny Nigoghossian, who recently moved to Toronto radio station Jazz-FM.

"I need a partner," Sargent says, "a VP of advancement."

The search, he notes, is being led by Daniel Weinzweig's firm Searchlight Recruitment. But there is fierce competition for successful fundraisers in not-for-profit organizations (including health and education). At a time when top fundraisers can command salaries of considerably more than $200,000, will Luminato meet the price tag of the best available candidate?

"We will get someone excellent for a fee we both consider reasonable," Sargent vows.

This is the debut column for contributor Martin Knelman, who will be covering arts and culture institutions for The Globe and Mail.

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