Here’s the latest fact-check from financial analyst Thomas W. Dinsmore:
Chad Smith can’t stop talking about deficits. That’s odd; most nonprofit execs treat deficit news like flatulence at a formal dinner: you want to sneak it out when nobody will notice.
In the past 20 years, the BSO booked 13 surpluses and 7 deficits. Every other Big Seven symphony orchestra booked deficits too, including the Los Angeles Philharmonic, “America’s most innovative orchestra”. The LA Phils booked the two largest deficits in the orchestra’s history under the brief tenure of CEO Chad Smith.
The Fact Checks
“Our business has been running deficits consistently for nearly two decades.” (Boston Globe, March 13)
Smith also cited 20 years of expenses exceeding revenue. (Berkshire Eagle, June 18)
False. BSO revenue exceeded expenses in 13 of the past 20 years. Over this period, the orchestra recorded a cumulative tax accounting surplus of $117 million, and a GAAP accounting surplus of $391 million
As expenses have risen, the BSO has often run operating deficits. (Boston Globe, April 29)
False. There’s no standard definition of “operating deficit” in nonprofit accounting. The BSO does not say how they compute it, or show how it reconciles with GAAP accounting. Topic 958, a publication of the Financial Accounting Standards Board)
The closest GAAP measure is operating cash flow. The BSO booked a surplus on this measure in 11 of the past 15 fiscal years. and Report of Independent Certified Public Accountants)
“I came here knowing full well that the BSO had been in decline for a long time…the business that supports (the musicians) has been so undercapitalized and so compromised over the past 20 years that there is a real concern on the board about viability going forward.” (Berkshire Eagle, June 18)
This paragraph has multiple false claims:
The BSO is not “in decline”. In the past 20 years, BSO revenue increased by $50 million
The BSO is not undercapitalized; it has net assets of $702 million, more capital than any symphony orchestra
The BSO is under no threat to its viability. Grant Thornton, the BSO’s outside audit firm, issued a “clean” opinion four months before Smith said this. and Report of Independent Certified Public Accountants)
The BSO has earned a substantial surplus over the past twenty years; the unrestricted endowment currently stands at just under $66 million; and it has ample liquidity, with $40 million in net current assets
pictured: Boston Federal Court
