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Wednesday, October 1, 2014 |  Madison, WI: 49.0° F  Overcast
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A tragedy in the making
Madison Theatre Guild stands on the brink of disaster
June's Putting It Together.
June's Putting It Together.

Madison's oldest theater company is in crisis.

Next week Madison Theatre Guild may be kicked out of the shared venue it helped found, the Bartell Community Theatre. The company faces crippling debt; its nonprofit status is at risk; it's in organizational disarray; it's operating in violation of state and federal law and its own bylaws. It is extremely late in announcing its fall season or even contracting for stage space.

Should the Guild's vendors be paid, the company still faces interest, penalties and payment of back taxes totaling at least $14,900.

Guild leadership points proudly to recent artistic successes, and says that every show last season earned enough to cover production costs. But the organization faces some severe tests in the months ahead. The theater, founded in 1946, did not come to this brink suddenly.

"It certainly isn't any secret that the Theatre Guild is in financial trouble," says Guild president Jeanne O'Malley. She refuses to provide numbers.

Board members who served as recently as a year ago report being frustrated when they needed financial information.

For example, the amount owed to costume-shop manager and former artistic director J. Patrick "was never calculated, in large part due to the lack of information about income from both the costume shop and the shows," says John Nicholas Schweitzer, a past Guild president who served as a board member until he resigned in May 2006. All Guild positions are now volunteer.

Louise Uphoff, another former Guild president, refused to serve as corporation treasurer. But as an accountant and a board member she agreed to update the books in 2005.

"There were real questions where we had been told by treasurers that all the tax filings were done. And then to find out they weren't," she says. "I was able to clear all of that up with the IRS, with the State Department of Revenue." Payment plans were made.

After all that, Uphoff found the federal corporate income tax return had not been filed, even though the last treasurer said it was. Other problems came after the October 2005 production of The Miracle Worker. "I needed to know income numbers in order to pay the sales tax," says Uphoff. "And I was not given the information.

"I didn't think I could file a report for a month saying 'no income,' when we had done a show. That's the point where I felt, okay, I'm out. If I can't get cooperation, I can't have my name on this anymore." She resigned afterward.

Today, Madison Theatre Guild faces six delinquent state sales-tax warrants (requests for judicial writs authorizing judgment or seizure) dating back to August 2006. They total $14,915.82. Of that, $3,665.82 is interest and penalties, which continue to mount.

Sarah Whelan-Blake, president of the Bartell Community Theatre and a past Guild president, estimates that the Guild owes the Bartell $5,000 to $7,000. At the Bartell's next board meeting, on July 25, "We anticipate something happening," she says. "I think we have to have some money. We can't carry people forever. I think we've done a great job in trying to help this time."

All these numbers may seem small, but not compared to income. The New York-based Foundation Center tracks filings of nonprofit tax returns. It reports that the Guild had net revenues of $7,620 in 2005 and $1,654 in 2004. The center does not yet show a filing for 2006, but the Guild's fiscal year ended June 30. O'Malley says the Guild grossed around $32,000 in the 2006-07 season.

"Nonprofit organizations have been given a public trust, which is their tax-exempt status," says George Tzougros, executive director of the Wisconsin Arts Board. "To maintain this trust, nonprofits must operate according to their bylaws, and their finances must be transparent. The bylaws are the rules these corporations have established in accordance with state law and are the ones by which they must function. An organization's bylaws are not a list of suggestions."

O'Malley is unwilling or unable to share most records required to be public. For example, of board minutes she says, "I understand that they should be public. I just don't have them together."

Most of the Guild's financial information would be included in the annual report nonprofits are required to file with the state. According to the Wisconsin Department of Financial Institutions, the Guild has not filed a report since 2004. The state has therefore listed it as a "delinquent corporation" since April. If the situation is not remedied, the corporation could be dissolved.

State records also show that the Guild's last "registered agent" - in most nonprofits, a business manager - resigned Jan. 9, and no successor has been named.

It's also uncertain whether the Guild board is legally constituted.

The theater has a dues-paying membership, in which lies ultimate governing authority. Bylaws require an annual general membership meeting, at which officers are elected. The last meeting was in 2005. One may be held this fall. The reason for the delay, O'Malley says, is that "we just don't have very many people who are interested in participating, so our main focus during the year has been that our season be artistically successful." She adds that the Guild currently has only 11 active members.

O'Malley is the only current elected officer. In lieu of a general membership meeting, she has appointed the rest.

The theater's bylaws were revised in 2003, but O'Malley and artistic director Thomas Kasdorf have been unable to find records that they were approved. The corporation is therefore operating under its 1994 bylaws.

The theater's board is required to meet at least four times a year. There was no board meeting from April 2006 until recently, says Schweitzer. The reason, according to Whelan-Blake, is that "they didn't even have a board. They got a board, finally."

O'Malley says that these allegations are untrue, and that the board met in February and June. She admits that two on the board, including the treasurer, resigned the weekend of July 7. No next meeting has been scheduled.

No one will speak on the record about specific reasons for the Guild's crisis. "I don't know how strong the leadership is," says Whalen-Blake. She adds, "It's just an untenable situation. [O'Malley] can't get a board that will stay there, and it has to do with the personnel problem that they have there."

Whalen-Blake will not say more on the record.

Says Tzougros, "There is no reason for an organization to struggle, but they must first realize they have a problem. The Wisconsin Arts Board and Arts Wisconsin [a nonprofit advisory and advocacy group] stand ready to assist organizations facing these types of challenges."

Madison Theatre Guild hopes to yet program three or four shows next season. "We're still evaluating titles," says Kasdorf.

The Guild has arranged for the Bartell to receive donations on its behalf. Checks can be made out to the Bartell with "for Madison Theatre Guild" written in the memo line. Donations should be sent to the Bartell Community Theatre, 113 E. Mifflin St., Madison, WI 53703.

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