Jim Fitzmorris on the recent financial crisis at the French Quarter's Le Petit Theatre, and a rejected offer that has been making waves.

Leave it to Oscar Wilde to sum up today’s column succinctly:

"The public has an insatiable curiosity to know everything except what is worth knowing."

With that in mind, let us talk about the facts surrounding the state of Le Petit Theatre. In particular, let us focus on what is worth knowing. Existing for 95 years, Le Petit Theatre du Vieux Carré is the country’s oldest community theatre, and it has been at its current home on the corner of Chartres and St. Peter Sts. for 89 years. Purely on longevity, both the building and its controlling institution are viewed as part of the historical fabric of New Orleans. Along with its own seasons, it has been host for events as diverse as the Federal Theatre Project, the Tennessee Williams Literary Festival, and Broadway tryouts. Most amateur and professional theatre practitioners from New Orleans have either appeared or desired to appear on one of its two stages, and tens of thousands of this city’s residents can point to Le Petit as the site of their first local theatrical experience. It has survived two world wars, an economic depression and the savage butchery of arts funding that has ensued since the Reagan administration. A fabulous invalid in its own right, Le Petit has been at death’s doorstep more than once over the last 30 years, and has managed to come back from the brink to become the rallying point for mainstream theatrical entertainment in the city. However, the tragedy of Katrina, a sizable mortgage and some ill-considered management decisions have brought it to a perilous point that has caused it to cancel its season and lay off even its skeletal staff.

For the past month, a great deal of emotional nonsense has swirled around the institution’s struggles with finances and management. It has led to bruised feelings, misinformation and has come dangerously close to pointing the finger of malfeasance at more than one undeserving figure. There is a lot of speculation about how the institution has arrived at the sorry state of a $700,000 deficit with no incoming revenue. However, that reality has no bearing on the events of last month, other than being the accelerant for the passion of the situation. A reliance on known facts can put to rest some of the more misinformed claims that have made their way into this conversation. Instead of delving into rumors, assertions or accusations, let us instead evaluate the available numbers, the statements made, and the actual responsibilities as laid out in various documents. Looking closer at the responsibilities of the board as outlined in Le Petit’s bylaws, having a better understanding of how a nonprofit institution works and examining a recent offer made on the theatre will show that a great deal of the emotional hyperbole that has engulfed this issue is just that: emotional hyperbole, and nothing more.

Like any 501(c)(3), Le Petit Theatre Du Vieux Carré has a governing board of directors who are responsible to uphold the charter and bylaws of their organization. They are faced with a staggering deficit and are seeking a long list of remedies, including selling a portion of their greatest asset: the theatrical building itself. It is within their right. A careful look at their bylaws will show their actions are well contained in the parameters of their duties to do so. They are only directly answerable to their larger membership on two specific instances. The first is in the selection of any new board members. Those candidates have to be approved by a majority vote. The second is when they change the bylaws. While initiated by the board, any changes to that document can be overturned by a two-thirds majority vote of the membership. Other than non-binding collegiality and good faith, it is with those two items the board’s responsibility to its larger membership ends.

If regular members’ access to information is limited, the public’s right to disclosure is even less. Despite the assertions of some, Le Petit’s board is under no legal commitment to full disclosure and total transparency. Its only obligation is to full financial disclosure. Any claim to the contrary shows a misunderstanding of federal law. Those disclosure laws were created to compel nonprofit organizations to release information regarding their dealings with the IRS and other taxing entities from which those institutions are exempt. Full disclosure is a financial compulsion, not an open door on minutes, membership or privileged conversation. It is worth noting that most churches and hospitals have nonprofit status. Outside observers do not have any more right to Le Petit’s sensitive or confidential documents than they would with those aforementioned institutions. It is simply a matter of money spent and money received. I know many people have a difficult time accepting this, but it is the law. You are only entitled to the same information the government is. Lack of knowledge of the dealings of an institution you have an emotional investment in might be painful, but it does not make it illegal or improper for that institution to withhold any information that does not involve the IRS.

And now we come to the story that has been at the heart of the tempest in this teapot. Dr. Eric George recently offered $690,000 to assume control of Le Petit. If you read the blog response to me from his CPA Alan Donner, you will see control is the proper word. Once you move past the condescension, fear mongering, and evasion contained in the response, you will see the offer Donner lays out is rather simple. At its most basic level, here is their pitch to the board: we will pay off your mortgage, you will be subject to our direction, and we will create a new institution to run the building in its place. His offer is a new theatre in an old building. If you look at the latest 990 available on Guidestar.org, you will see why the board the rejected Dr. George’s proposal. Le Petit is valued at $1,551,096, and the equipment is valued at $36,711. It places the total value of the building at $1,587,807. Secured Mortgages and Notes Payable are listed at $731,847. That means the building is worth $855,960, and Dr. George offered $690,000, which is just the mortgage. As the board saw it, they would be giving up Le Petit for a song. No one is faulting Dr. George for taking his shot. He had a right to make the offer, and given the powers invested in them through the bylaws, the board had the right to turn him down. That is the end of that particular story.

Or it should have been. Where things go off course is the wild accusations in the aftermath of the rejection. Those representing Dr. George felt it necessary to publicly voice his displeasure through various social and mainstream media outlets. Misinformation began with the story being presented as a good doctor having his no-strings attached donation rejected. This seems to have been more of a misunderstanding than a misrepresentation, but it resulted in the blogs lighting up with calls for greater transparency, accusations of blame, and, finally, the demand for the resignation of the entire board. Once the deal became clearer, many still clung to a narrative of an irresponsible board preventing the theatre from returning to solvency. The cited motivation for the rejection of George’s offer was advanced as nothing more than an act pique by the board due to its unwillingness to relinquish power. This is the story that found its way to both WDSU and WWL-TV.  However, once you cut through the bloviating, all you are left with is the following: Dr. Eric George made an offer, and it was rejected. The only puzzling thing in all of this is Dr. George’s public airing of his grievance. Rather than return with a better offer, he took his ball and went to the press. This does not endear Dr. George’s position, excludes his participation from future involvement, and looks an awful lot like trying to poison the well for any future deals. I am certain it was not the consideration, but he and his associate Donner need to remember Hamlet’s adage about seeming making it so.

What is missing from this discussion is a simple fact: the board is trying to save the institution, not the building. The building is merely a piece of property owned by the nonprofit organization called Le Petit Theatre du Vieux Carré. In the most specific legal terms, it belongs to them, not the membership, the Theatre Guild, or the theatre community-at-large. I know that previous sentence will set off howls of pain, but it is an inescapable truth. If the board is to be faulted in this public relations disaster, it is because it failed to gauge the pain its actions would engender and plan accordingly. Had it done so, it might have articulated all contained in this article. It would have been awkward, painful and more than a little harsh, but it would have stopped this whirligig before it got started. However, its sins of omission pale in the face of the misrepresentation of facts that have caused the passionate feelings coming from the other side. For, you see, too much of this has been about creating a compelling narrative rather than telling the truth. A group of organized aficionados trying to save their beloved theatre from an intractable and petty board is a great story. It is certainly better than one about harsh financial realities, decades of financial mismanagement, and no-win choices being acerbated by emotionalism and unhinged anger. However, it is the second one that is worth knowing, because it is the truth.