Tax documents show decreased revenue, leaner Colonial Williamsburg after restructuring

Staff writer

With a dark financial future looming, Colonial Williamsburg embarked on a major restructuring in 2017 in a bid to turn the corner.

And based on recently released tax documents, that effort appears to have resulted in a leaner organization with fewer expenses. However, those same documents show decreases in admission revenue and visitation.

“In 2017, Colonial Williamsburg undertook a critical restructuring that placed the foundation on a path to financial sustainability,” foundation spokeswoman Anna Cordle Harry said in an email.

“The foundation still has financial challenges, similar to many historic sites throughout the U.S. The 2017 restructuring has been successful in helping us address those challenges, but much work remains.”

Lower expenses

In a year defined for the foundation by a large summertime restructuring, total expenses were trimmed from $139 million in 2016 to $132 million, according to the organization’s Form 990 for 2017.

The International Revenue Service requires all nonprofits file 990 Forms with the federal government. Colonial Williamsburg’s document provides insight into the annual spending and earnings of the typically tight-lipped steward of Virginia’s colonial capital.

The foundation’s 2017 Form 990 represents a look at the foundation in a time of transition — in June of that year, Colonial Williamsburg announced a restructuring that included layoffs for 71 employees. Colonial Williamsburg also outsourced golf operations, product and retail management, facilities management and landscaping, which meant the departure of another 262 employees.

The foundation closed the Kimball Theatre, though the College of William and Mary later took over the facility. The foundation made an appeal for tax relief on foundation property in Williamsburg, James City and York, though ultimately the localities didn’t provide it.

Foundation officials framed the moves as a last-ditch effort to save Colonial Williamsburg. The way things were going, the foundation’s endowment of more than $600 million would have a negative balance by 2026.

Harry said the restructuring streamlined Colonial Williamsburg’s operational expenses.

Amid an overall drop in total expenses, program service expenses fell to $100.3 million from $104.3 million, management and general expenses fell to $22.3 million from $24.9 million and fundraising expenses fell to $9.5 million from $9.7 million in 2017 compared to 2016, according to tax documents.

According to the foundation’s tax documents, its most important ventures in 2017 by expenditures were:

» Education, research and historical interpretation, expenses $56.3 million and revenue $20.6 million.

» Taverns and colonial houses, expenses $19.8 million and revenue $16.3 million.

» Collections, conservation and museums, expenses $13.7 million and revenue $168.1 million.

The collections, conservation and museums item replaced the products item that made the top list in previous years’ filings. That’s because product expenses declined with outsourcing, Harry said.

Research and historical interpretation cost more ($58.1 million) and brought in more revenue ($25.1 million) in 2016. Taverns and colonial houses cost less ($19.2 million) and made more money ($17.3 million) in 2016.

The foundation’s endowment fund got a boost, with $12.7 million in contributions made to the fund in 2017. In 2016, $6.8 million in contributions were added to the fund, according to tax documents.

The foundation pulled out $65.4 million (9.8 percent) from its endowment for operational expenses in 2017. The previous year, it used $70.9 million, or 9.9 percent, according to a 2016-2017 audit released late last year. The endowment grew by about $30 million to $693.7 million in 2017.

Colonial Williamsburg has withdrawn more than 5 percent annually from its endowment — some years as much as 12 percent — since 2001. It’s a stark figure, given that in the world of endowment foundations such as Colonial Williamsburg, 5 percent is seen as the appropriate yearly standard. Colonial Williamsburg aims to get its withdrawal down to 5 percent in 2020, Colonial Williamsburg President and CEO Mitchell Reiss said at a Williamsburg Economic Development Authority business roundtable luncheon in September.

The foundation’s total net assets increased about $35 million in 2017, from $1.038 billion to $1.073 billion.

Revenue decrease

In 2017, ticket sales brought in $18.4 million, a decline from the $19.3 million in admission revenue generated in 2016, according to tax documents. Total revenue dropped to $127.3 million in 2017 compared to $148 million the previous year.

Harry attributed the revenue decrease to a variety of factors — a shift from multi-day to single-day ticket purchases, expansion of the military discount program and reduced operating schedules at the taverns.

The foundation reported more than 503,000 ticketed guests in 2017, down from the more than 510,000 ticketed guests reported the previous year.

Compensation

For the folks up top, compensation increased slightly from 2016 to 2017, and there are more people listed as getting more than $100,000 in compensation. For folks in the trenches, compensation dipped year to year, but less so in 2017.

Compensation for the foundation’s top leadership, 22 vice presidents and directors who earned more than $100,000, came to $3.5 million in 2017. That’s a slight increase compared to compensation the previous year, when 21 people who were considered vice presidents and key employees took in $3.4 million.

Reiss received $817,214 in compensation in 2017. He received $802,645 in compensation the previous year. In 2017 he was paid a $100,000 bonus.

“Colonial Williamsburg offers compensation, including performance incentives, that is competitive in order to attract the best personnel. Foundation compensation is also in line with that of similar nonprofit cultural institutions that do not, like Colonial Williamsburg, also operate significant commercial lines of business to support the educational mission,” Harry said.

Colonial Williamsburg’s Board of Trustees aren’t paid by the foundation for their service. But Reiss’ wife, Elisabeth, did get paid by the foundation this year — $36,000 as an independent contractor. She was paid $27,000 in 2016, according to tax forms.

Colin Campbell, Mitchell Reiss’ predecessor, did not receive compensation in 2017. The previous year, he received $136,128 in compensation and nontaxable benefits. Campbell retired in 2014.

The foundation’s rank-and-file were paid $42.6 million in 2017. The previous year, they were paid $48.3 million. The number of employees dropped from 2,091 people to 1,778 people year to year.

A full picture of the impact of the restructuring likely won’t be clear until the foundation files its Form 990 for 2018. That document will depict the first full year of the foundation’s finances after the restructuring.

Colonial Williamsburg Form 990

The foundation’s Form 990 for 2017 can be viewed at history.org/Foundation/Annualrpt17/990.cfm.

Jack Jacobs, 757-298-6007, jojacobs@vagazette.com, @jajacobs_

A previous version of this story misspelled the name of Elisabeth Reiss. Her name was misspelled in Colonial Williamsburg's 2017 Form 990.
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