By Todd Cohen
Under increasing financial pressure, the Exploris children’s museum in Raleigh is renegotiating an overdue $5 million bank loan and undertaking an $8.5 million capital campaign.
The nonprofit, which has raised more than $50 million from the state, county and city, and from private donors, also faces growing questions about its finances and operations, and the role its board plays.
In the wake of recent news stories about its debt, operating deficit and sluggish admissions, Wake County Manager David Cooke says, Exploris is gearing for changes.
“I’m aware their board has got this right on the top of their table, and it’s important to them” as Exploris tries to raise money, he says. “They’ve got to retire their line of credit.”
Cooke says the county wants Exploris to provide it with more detailed data that segregate and spell out costs and income generated by its various operations, including its museum and the IMAX theater it opened last November with $11.9 million from the county and city.
“We clearly are wanting to know better the relationship to the bottom line of IMAX and Exploris that reflects both the expenditure and revenue data that highlights those different facilities,” Cooke says.
The county, which is giving Exploris $1.4 million this year for operations, plus $750,000 for building maintenance and security, owns the museum and IMAX buildings that Exploris built on land the county leases from the state for $1 and subleases to Exploris.
An immediate task for Exploris is to secure new terms for the $5 million loan from Wachovia Bank in March 2000 that was due March 1.
“We have not begun paying the principal on that yet,” says Anne Bryan, the museum’s co-founder and president.
Rod Brooks, the museum’s vice president for administration, says Exploris is in talks to rewrite its loan, which he says is shared among a consortium of banks.
“The loan has not been called,” he says. “We’re in the process of renegotiating repayment terms.”
James B. Black III, a Wachovia executive and member of Exploris’ board of directors, says the bank has not demanded payment of the principal or sold the loan to other lenders.
“It has not been sold and it has not been called,” he says.
Exploris also is gearing up for the quiet phase of a campaign to raise $8.5 million, Bryan says.
She told the Philanthropy Journal in September 2001 that Exploris hoped later that fall to launch the quiet phase of a campaign to raise $8 million to $10 million.
But she says Exploris decided to put the campaign on hold in the face of the slumping economy, the Sept. 11 terrorist attacks and the IMAX opening.
“A lot has happened over this past year that has changed the environment quite a bit,” she says. “For us, it made sense to step back and get the theater opened, and with this full complex in place to really think how the campaign would proceed.”
In addition to Wachovia loan, Exploris received loans of $395,000 from Gordon Smith III, its co-founder and board chairman, and $495,000 from an anonymous charitable trust, according to the Form 990 information return it filed with the Internal Revenue Service for the tax year ended June 30, 2001.
Including his loan, Smith and his family loaned Exploris $890,000 that year, according to Exploris’ audited financial statement.
The loans by Smith and his family are interest-free and will be treated as a gift if Exploris does not repay them after five years, Byran says.
She says the museum is addressing several issues to boost operations, including making adjustments based on revenue or expenses it had not anticipated initially.
On the plus side, for example, Exploris generated more revenue than it had expected from selling at its retail store hand-carved crafts made in Zanzibar – and now is developing a business importing crafts from developing countries and selling them at wholesale outlets, Bryan says.
On the minus side, wear-and-tear took a heavier toll on exhibits than Exploris had expected, she says, and the museum did not anticipate customers’ demand for changing exhibits and special programming.
“We’ve definitely adjusted to accommodate that,” she says.
The museum also is trying to better position and market “who and what we are, who we’re for and what we’re all about,” she says.
“There are certainly people who come to Exploris expecting to find a science center or children’s museum, and that’s not what they find here,” she says. “We are very clear about what we’re about and that is being an interactive museum about the world.”
She says it will “take time for this to become clearer and part of people’s awareness, but we are trying to speed up this awareness.”