Colonial Williamsburg bears down to raise revenue

rbrauchle@vagazette.com

Editor’s note: This article is the third in a series exploring Colonial Williamsburg finances. Up next: Colonial Williamsburg’s relationship with government.

Joggers and bicyclists emerge as dawn arrives on Duke of Gloucester Street. Their neon clothes and brisk gait stand out against the bucolic colonial-era backdrop.

Many of them will neither buy an admissions ticket to Colonial Williamsburg nor shop in Merchants Square — they are simply attracted to the sites and safety of their surroundings.

Those visitors are a daily reminder for Colonial Williamsburg’s leaders that potential customers are simply striding by without contributing to the organization's cause.

Colonial Williamsburg has watched its paid visitation decline in fits throughout the past three decades. In turn, the organization reached further into its endowment to offset operating deficits.

This year, president and CEO Mitchell Reiss resurfaced a decades-old call to build an enclosure around the Historic Area to, in part, force people to pay to experience Colonial Williamsburg.

The Gazette has combed through publicly available tax records and audits dating back to the early 2000s and reviewed Colonial Williamsburg’s annual reports from as far back as the 1970s to get a clearer picture of how the organization operates and where its financial troubles stem from. During its reporting, the Gazette has spoken to more than a dozen people inside the organization and outside experts.

The investigation found Colonial Williamsburg has, at times, veered outside its core mission as a living history museum to raise revenue in the past 40 years. Two significant sources of revenue — paid visitors and donors — have traveled two very different arcs since the turn of the 21st century.

Colonial Williamsburg relies on gifts and grants as well as the sale of tickets, products, hotel rooms and meals to fund its budget. Those sources produced $158 million in 2016, compared to the $227 million the organization spent. Colonial Williamsburg used $70.9 million from its endowment — close to double the recommended amount — to offset those operating expenses.

The number of visitors has steadily declined since the late 1980s, when 1.2 million tickets were bought, according to a review of annual reports. In the past decades, ticketed visits have decreased from 929,000 in 2000 to 568,932 in 2016.

In turn, admission revenue peaked at $31 million in 2000 before declining to about $18.5 million in 2014. That revenue source then bumped upward to just shy of $19.1 million in 2015, according to the latest available tax records.

The financial quandary is forcing Colonial Williamsburg’s leaders to question how to recapture the organization’s magic without riling a fan base that believes Colonial Williamsburg should remain an open and public place that focuses on colonial history.

Paying for history

Colonial Williamsburg’s leadership prides itself on creating new and innovative ways to draw visitors. New exhibits rotate through the Art Museums of Colonial Williamsburg; seasonal programming brings newer audiences; and upgraded hospitality facilities help usher in crowds more accustomed to creature comforts unavailable to 18th-century colonists.

Those strategies have provided limited success. Colonial Williamsburg cut spending on program services — its core functions of preserving historic structures and artifacts and public education — by 5 percent since 2001, while nearly tripling how much it uses from its endowment to offset operating deficits during that same time period, according to the organization’s publicly available tax records.

Colonial Williamsburg’s hospitality operations date back to the 1930s, when both the Williamsburg Inn and Williamsburg Lodge opened their doors. Those hospitality operations now include the Governor’s Inn, Williamsburg Woodlands, Griffin Hotel and 25 colonial houses. The company also owns Golden Horseshoe Golf Club.

Hospitality operations, however, have lost money every year since at least 2012 — as far back as the Gazette was able to obtain the organization’s audits. In 2016, Colonial Williamsburg lost $3.7 million from its hospitality operations.

“In an ideal world, the commercial side is actually generating income to put back into the endowment or to invest in capital projects so that we can continue to offer memorable experiences,” Reiss said.

During Reiss’ tenure, he has introduced several programs that take colonial history out of the glass exhibit case and bring it to life. Paid visitors can throw axes at a target, shoot colonial-era muskets and make candles through a dipping process. He said he sees success in those new ventures in paid visitation.

“In 2016 we were stable, and I think right now we're up on the year,” he said. “So again, this is encouraging. We still have work to do ... we're rededicating ourselves to the core educational mission, so I think as we do more for folks in the Historic Area, I think that will continue to play well with new visitation numbers.”

Reiss said that despite a summer fall-off in visitation, September’s attendance figures outpaced that month’s 2016 numbers.

Crossing a line

Some critics believe Colonial Williamsburg periodically crosses a line that moves the organization from a historic site to an entertainment venue. That critique has lingered for decades: A 1997 Wall Street Journal article questioned Colonial Williamsburg’s “Disney-style antics.” At the time, Colonial Williamsburg was coordinating a mock riot that burned a British lord in effigy a few times each week during the summer, and planning advertising that reached out to parents “who might consider a Disney-type vacation,” according to the Journal’s report.

Critics point to Reiss’ decisions to create an organization mascot, build an ice skating rink along Duke of Gloucester Street and focus some of its Halloween programming on the “undead” as continuing that push toward entertainment that only vaguely resembles the city’s history.

Reiss introduced Colonial Williamsburg’s first official Halloween celebration in the Historic Area in 2015.

Former Colonial Williamsburg historian Taylor Stoermer said attracting crowds who care about education and history is paramount to the organization’s long-term success.

Stoermer worked at Colonial Williamsburg from 2010-13 and is now the special adviser for immersive experiences and citizenship initiatives at The Walt Disney Company. He is also an instructor of public history at Johns Hopkins University.

If Colonial Williamsburg veers toward becoming an entertainment venue, it will both lose heritage tourists and begin to compete with other entertainment and leisure venues in the region, such as Busch Gardens and the Virginia Beach oceanfront, he said.

“There’s a science to this that I understand,” Stoermer said. “Heritage tourists don’t spend as much as leisure tourists, but they are more loyal. If you’re moving into leisure tourism, then you’re just going to be another competitor.”

Stoermer said he fears Reiss — and by extension, the board of trustees — are moving Colonial Williamsburg away from history and toward entertainment.

“He's taking CW outside of that sphere of heritage tourism,” Stoermer said. “The question is, to what end? … There’ s a way to push the envelope to make sure it's engaging and even entertaining, but always in a way to make sure the educational component isn’ t being hamstrung.”

Reiss said he takes pride in the word-of-mouth excitement about the path Colonial Williamsburg is taking.

He’s also looking forward to Halloween.

“It's going to last longer than it did last year,” Reiss said. “U.S. News and World Report just named us one of the 11 best destinations for Halloween in America, so I think that it's an accumulation of things starting to get some momentum — word of mouth, family friendly, the military, all this stuff I think is helping.”

Finding donors

While stabilizing the organizations’ paid visitation has been a burden during the past three decades, Colonial Williamsburg has found fruit in philanthropists.

In 2016, donors gave a record $16.1 million to the Colonial Williamsburg Fund. The donations are mostly no-strings-attached contributions that allow the foundation to use the money however it sees fit. It was the 15th consecutive year that more than 100,000 people gave to the annual fund.

“We have hit fundraising records from the (Colonial Williamsburg Fund) my first two years, and I think we're exceeding it this year as well,” Reiss said. “People really care about this place, and it's not just the physical place, it's the idea that Colonial Williamsburg represents: a time when politics is toxic, when the political parties are polarized, there is a place here that seems safe, that seems calm, that allows people to reconnect with first principles and our founding values.”

Close to two-and-a-half years ago, Colonial Williamsburg began asking shoppers if they want to donate as they make other transactions at the retail stores, taverns and other point-of-sale locations. The first year the organization raised close to $100,000, and Reiss expects that figure to increase to nearly $200,000 this year.

Colonial Williamsburg has been criticized for the amount of money it spends to raise funds. For every $1 it raises, Colonial Williamsburg spends 24 cents, according to nonprofit watchdog Charity Navigator.

The Jamestown-Yorktown Foundation spends 15 cents for every $1 it raises. The Jefferson Foundation spends 9 cents for every $1 it raises at Monticello.

Colonial Williamsburg spends close to $9 million each year raising funds, a figure that has risen slightly in the past five years and remained relatively flat during the past decade, according to tax records.

The organization solicits donations online and through mailers. In return, donors can receive perks — including discounts, a subscription to its magazine and complimentary passes — that increase in value as their donation increases.

Colonial Williamsburg is also changing the way it reaches some donors.

Several times each year, the organization packs some select artifacts and interpreters (known as Nation Builders) and takes them on road shows to audiences across the country.

At the end of October, Colonial Williamsburg will hold such a show in Los Angeles, where Nation Builders will speak to an audience of 800-1,000 people, Reiss said. A private fundraising event will follow.

“Not everybody has the opportunity to visit us, so we want to provide the opportunity to share what's special about this place with as many people as we can,” he said.

The amount the foundation spends on travel in its fundraising budget has increased 78 percent, from $99,689 in 2010 to $177,480 in 2015, according to tax records. And that figure may continue to increase in coming years.

Colonial Williamsburg will participate in three of those road shows this year. In 2018, Reiss hopes to double that tally to six.

“They're fun, I think people really enjoy themselves,” he said. “They get to learn more about who we are, and hopefully it will also get people to spend time with us, not just make a donation.”

Reiss also travels to solicit donations. He said he was overseas earlier this month speaking to donors, and his decision to hire two new vice presidents this year was to free up more of his time to raise money.

Ultimately, people who spoke to the Gazette along Duke of Gloucester Street said they visit because of what Colonial Williamsburg represents, and many of them have built a relationship with the place over the years.

History is a big draw for Ray and Sharon Stockman, of Delaware, who have visited nearly every year since they were children.

“We like visiting Jamestown, Yorktown and Colonial Williamsburg,” said Sharon Stockman, as the couple sat on a bench along Duke of Gloucester Street earlier this month.

They didn’t buy tickets on that particular day, although they planned to spend a week in their nearby timeshare. The Stockmans said they wanted to take in an evening service at Bruton Parish Episcopal Church.

“We love the history, just knowing Washington and Jefferson were here. It’s something special,” she said.

Catherine and Ron Johnston, of New Jersey, got married at Colonial Williamsburg in the 1980s and have returned every year since.

“Every time we come here, they change a little something, so that makes it interesting,” Catherine Johnston said during a visit earlier this month.

The couple bought tickets that day, although the place they cherish visiting most is the Benjamin Powell House, the site where they were married.

“We take a picture every year,” she said.

Looking ahead

Articles in the coming weeks about Colonial Williamsburg will explore several topics:

A change over time

2012 / 2016 (percentage of change)

Figures in millions of dollars

Expenses

Hospitality operations: $69.03 / $71.32 (3.3 percent)

Exhibitions and historical programs: $51.56 / $48.22 (-6.5 percent)

Fundraising: $10.89 / $12.89 (18 percent)

Revenues

Hospitality operations: $64.53 / $67.65 (4.8 percent)

Exhibitions and Historic Area admissions: $22.33 / $21.83 (-2.2 percent)

Products: $20.33 / $20.18 (-0.7 percent)

- Source: Consolidated annual audits for Colonial Williamsburg Foundation and its subsidiaries

Compiling the numbers

The Gazette’s reporting for this series includes several publicly available documents, including:

  • IRS forms: Nonprofits, such as the Colonial Williamsburg Foundation, must file 990 and 990-T forms with the federal government that focus on how the nonprofit side of the organization raises revenue and spends money. The Gazette used IRS forms from 2001-15 during its reporting; a 2016 form is not yet available.
  • Audits: Some nonprofits must file audits with the federal Office of Budget Management, making them available to the public. The documents are compiled by an independent auditor and detail nonprofit and for-profit operations of the organization. The Gazette used audits from 2012-16 during its reporting.
  • Annual reports: Colonial Williamsburg publishes and distributes annual reports each year that detail the organization's accomplishments and financial results. Unlike IRS documents and audits, these reports are not required by law and take a more subjective look at the organization. The Gazette used reports dating back to the 1970s during its reporting.

Brauchle can be reached by phone at 757-846-4361.

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