2010 Annual Report - Interlochen Center for the Arts

2010
June 1, 2009 – May 31, 2010

Letter from the President, Jeffrey S. Kimpton
I
nterlochen Center for the Arts is unlike any other arts community in the world. What sets
Interlochen apart? Since our first summer in 1928, our purpose has been singular: to ignite a
lifelong passion in the arts.
Every aspect of this institution – Interlochen Arts Camp and our vibrant summer programs;
Interlochen Arts Academy; adult and professional education through the Interlochen College
of Creative Arts; public broadcasting via Interlochen Public Radio; and the region’s most
ambitious performance series, Interlochen Presents – is intended to help those who value the
arts place them at the core of their being.
This report for fiscal year 2010 ( June 1, 2009 – May 31, 2010) will detail a remarkably
successful year – a year in which Interlochen grew in both depth and quality. We grew
programmatically, organizationally and financially. Perhaps more importantly, it was a year in
which we spent a great deal of time thinking about the future, undertaking a year-long visioning
process to ensure that Interlochen remains successful, innovative and secure.
There is no possibility for an organization such as ours to succeed without the vital commitment
of a community of people who support our mission. People like you. It is that depth of
commitment that sustains our spirit and our achievement. We are grateful for what you bring to
Interlochen, for it plays a determining role in what Interlochen brings to the world.
With deep thanks and appreciation,
Jeffrey S. Kimpton
President
2

Fiscal Year 2010 Finances in Review
T
he report of finances for fiscal year 2010 ( June 1, 2009 – May 31, 2010), as developed by our external
auditors, Plante & Moran, P.L.L.C., details a successful year for Interlochen Center for the Arts.
OPERATING BUDGET
Revenue: $31,497,776 (up 6.4% from Fiscal Year 2009)
Expenses: $28,289,358 (down 2.4% from Fiscal Year 2009)
FUNDRAISING
Interlochen Fund: $2,090,924
Interlochen Public Radio: $1,222,064
Total giving, including endowment and capital funds: $4,649,399
Total number of donors: 8,933
STUDENT ENROLLMENT
Interlochen Arts Camp:
2,460 students from 54 U.S. states and territories and 44 countries
Interlochen Arts Academy:
468 students from 48 U.S. states and territories and 25 countries
SCHOLARSHIPS
Interlochen provided a record $8.9 million in financial assistance to Interlochen students
Government Support:
Michigan Council for Arts and Cultural Affairs (General Operating Support): $ 20,000
Corporation for Public Broadcasting (Interlochen Public Radio): $269,058
Comprehensive financial reports may be found on page 8 through12 of this report.
Complete audited financial statements are available online at www.interlochen.org/support
or by calling our advancement office at 231.276.7623.
What Sets Interlochen Apart?
T
he past year has been a successful one for Interlochen Center for the Arts. We met enrollment goals
for Interlochen Arts Camp and Academy. Our performance series generated its highest net revenue in
history, while auxiliary sales (lodging, food, clothing and gifts) remained stable or increased. Ticket sales
and auxiliary income directly support our scholarship program; strong performance in these areas helped
Interlochen meet the increased demand for financial assistance required by families this year. For the
third year in a row, IPR was named “Public Radio Station of the Year” by the Michigan Association of
Broadcasters.
Perhaps most importantly, Interlochen did not reduce or cut any core programs, people or salaries.
Interlochen has remained stable during volatile times because the Interlochen community has remained
stable: families have invested in a world class arts education for their children, and donors have continued
to recognize the importance of our mission in arts education, presentations and broadcasting.
At a time when nonprofit organizations are facing extraordinary challenges, Interlochen has continued
to grow – strengthening our operations and extending our achievements. Several factors have helped us
chart a steady course during times of uncertainty:
Flight to known quality during difficult times.
Research has shown that people are hesitant to invest in
unknown institutions during times of economic turmoil.
As one of the oldest and most respected arts education
programs in the nation, Interlochen has benefited from a
long history of innovation and success.
Significant growth in visibility through web and online
media. Until the early 2000s, Interlochen had no web
presence and limited communications technology.
We have invested significantly in online communications
at precisely the right time. Our national webcasts and
strong web videos help parents, friends and prospective
students recognize the value of an Interlochen education.
Synergy of core programs. We have worked hard to build
strong synergies between Interlochen’s core programs.
Our summer Arts Camp, high school Academy, adult
education, public broadcasting and year-round performance
programs are all related in purpose and intent.
National and international recruiting pool. Interlochen is
fortunate in that we draw from a national and worldwide
pool of students – helping us overcome geographic boundaries
that limit other institutions.
All arts, all ages. While some organizations are specific
to one art form or one age group, Interlochen provides
comprehensive offerings across six disciplines (music,
theatre, dance, visual arts, creative writing and film) and
serves all ages – from 8 to 80 and beyond.
3 4

Highlights
Interlochen Students Earn National Recognition from the NFAA
Thirty-six Interlochen students and alumni were honored by the National Foundation for
Advancement in the Arts during the 2009-10 YoungArts program. Fourteen Interlochen Campers
and Arts Academy students were selected as finalists and 22 received honorable mentions.
IPR named “Public Radio Station of the
Year” AGAIN!
For the third year in a row, Interlochen Public Radio was
named “Public Radio Station of the Year” by the Michigan
Association of Broadcasters. IPR received six individual
Broadcast Excellence Awards, including Best of Category
awards for “Hard News & Current Events,” “Mini-Documentary
or Series,” “Newscast,” “News Special or Public
Affairs Program” and “Community Involvement.”
Mallory-Towsley Center for Arts Leadership
A one million dollar project has transformed the former costume shop into the Mallory-Towsley Center for
Arts Leadership. The completely remodeled 8,000 square-foot conference center serves many purposes,
including housing our adult education programs for the Interlochen College of Creative Arts.
Visual Arts Building Earns Architectural Honor
The Herbert H. and Barbara C. Dow Center for Visual Arts was one of 12 buildings honored by the
American Institute of Architects in Michigan at its 2010 awards program. Designed by Cornerstone
Architects, the 36,000 square foot building houses Interlochen’s visual arts studios, classrooms and
galleries. In their comments, the jury called it “a perfect visual arts space….”
Interlochen hosts policy forum on arts education
In August 2009, Interlochen Center for the Arts partnered with Michigan Youth Arts to convene Michigan’s
first Arts Education Policy Forum. The gathering took place on the Interlochen campus and included
representatives from the Michigan Department of Education, the Michigan Council for Arts and Cultural
Affairs and 18 arts education organizations. The group developed a statewide policy agenda
to advance arts education in Michigan.
Performance Today visits Interlochen Arts Camp
Fred Child, host of the nationally syndicated classical music program Performance Today, visited
Interlochen for the final weekend of the summer 2009 Interlochen Arts Camp. Child produced two
shows at Interlochen, featuring two hours of student and faculty performances, which were broadcast
to more than 1.2 million weekly listeners on 237 public radio stations around the country.
Tenor saxophonist Rachel Mazer of Alamo, California, and guitar major
Max Bowen of Ann Arbor, Michigan were invited onstage to perform with
the Steve Miller Band
Summer Arts Festival draws crowds
More than 90,000 patrons attended an event during
Interlochen’s 2009 Summer Arts Festival season.
Shows exceeding 90 percent capacity included Willie
Nelson; the Steve Miller Band; Paula Poundstone; the
Interlochen Shakespeare Festival production, “The
Taming of the Shrew”; Circo Comedia; and the high
school musical theatre production, “Anything Goes.”
Math and Science Department Receives Grant
Interlochen’s math and science department received a $150,000 grant from the science-focused R.B. Annis
Foundation of Indianapolis, Indiana. The gift increased the Annis Endowment to $400,000, supporting
ongoing program costs including professional development and the purchase of computers, software
and equipment. The gift also provides for the continuation of the Annis Student and Teachers Enrichment
Program (A-STEP,) which promotes learning opportunities outside the classroom.
Theatre Department Hosts Agent Showcase
As the Academy year drew to a close, the theatre department held its first ever agent showcase, inviting
casting professionals from New York City and Los Angeles to Interlochen to meet with students. In
college and conservatory acting programs, such showcases are an important final step for theatre students
as they begin to establish a career – giving students a chance to network and demonstrate their talents in
front of industry professionals.
5 6

Thinking Ahead for an Uncertain Future
Planning ahead is crucial for any organization in today’s world. Between 2005 and 2008, Interlochen
conducted a brand audit, a web communications review and an 18-month-long scenarios planning
project. These efforts positioned us to respond to the increasingly volatile environment of the last
two years, by helping us learn to manage the unpredictable.
The U.S. War College uses the term VUCA to help military and government leaders anticipate and
respond to global crises. The acronym stands for volatility, uncertainty, complexity and ambiguity;
it’s a method of assessing the unpredictable that sheds light on the past year.
Volatility: Recent years have brought a devastating national and global recession, multiple natural
disasters, climate change, a worldwide flu pandemic and an increasingly hostile political environment.
This volatility has created an atmosphere in which both public and private investment in the arts have
withered, causing substantial reductions in staff, programs and marketing at nonprofit organizations
across the nation.
Uncertainty: Approximately 25 percent of Interlochen students travel here from another country. Last
year, several Asian governments reacted to the H1N1 epidemic by banning foreign travel. The recession
continues to hurt many Interlochen families and prospective students. Uncertainty about the future
prevents people from making decisions about their investments in education, the arts, discretionary
spending and philanthropy.
Complexity: The world is interconnected in ways never imagined 83 years ago, and the challenges faced
by organizations today are increasingly complex. Decision making is compounded by highly polarized
attitudes and opinions, by the speed and intensity of communication, by significant increases in new
state and federal rules, and by an intensely litigious society.
Ambiguity: One by-product of the speed of communications technology is that people want to know the
outcomes of their actions immediately. In an increasingly complex, uncertain and volatile world, this is
an expectation that is difficult to fulfill. In the absence of clarity, many in today’s society are tending not
to commit, to wait for the one “clear” answer.
7 8

Statement of Financial Position
The Mallory-Towsley Center for Arts Leadership
At Interlochen, we’ve attempted to counter increasing volatility, uncertainty, complexity and ambiguity
with vision and creativity. We’ve expanded educational opportunities at Interlochen Arts Camp with new
singer-songwriter, recording arts and jazz programs; added a comparative arts major at the Academy; and made
investments in technology that are fueling growth in web communications and social media. Building on a
Board of Trustees initiative, Interlochen enrollments of students of color have increased from 8 to 18%. We’ve
continued to develop our campus with the opening of the Mallory-Towsley Center for Arts Leadership, and
launched a new radio station – 89.7 FM Manistee/Ludington – to meet the growing demand for IPR’s awardwinning
news service.
We also look to the core values that have guided the institution for 83 years. Over the past year, members of
the Interlochen Board of Trustees conducted hundreds of interviews with employees, students, alumni,
parents and friends as they worked to craft a vision for the organization’s future. These sessions have
underscored five enduring traits of Interlochen that are as consistent today as they have been throughout
the last eight decades:
Inspiring • Nurturing • Transformative • Enlightening • Enduring
These core values and the deep commitment
of the Interlochen community give us
strength and stability as we look to the future.
The direction we must provide is clear: our
programs must be strong and of high quality,
our faculty the best, our students safe, well
cared for and nurtured artistically and emotionally
in a caring community. Our work
must ensure that Interlochen continues to
inspire and lead in the decades ahead, so that
what we provide to the world arts community
is right for our mission and right for our
times. With your help, this is just what we
intend to do.
May 31, 2010 May 31, 2009
ASSETS:
Cash and cash equivalents $ 11,337,880 $ 8,819,385
Investments 57,629,904 49,682,276
Accounts receivable, net of allowance of $803,000
in 2010 and $772,000 in 2009 28,658 70,311
Gifts receivable 1,972,345 2,411,153
Prepaid expenses and other receivables 678,885 479,880
Inventories 1,368,216 1,349,092
Land, buildings, and equipment, net 40,541,664 41,320,129
Other assets 1,366,143 1,338,499
TOTAL $ 114,923,695 $ 105,470,725
LIABILITIES:
Accounts payable - Trade $ 569,039 $ 347,782
Accrued liabilities 2,565,625 2,886,656
Tuition deposits and other 8,481,346 8,381,863
Annuities payable 620,230 644,054
Bonds payable 26,300,000 26,300,000
Total liabilities 38,536,240 38,560,355
NET ASSETS:
Unrestricted 51,664,628 43,142,359
Temporarily restricted 3,831,869 2,668,310
Permanently restricted 20,890,958 21,099,701
Total net assets 76,387,455 66,910,370
TOTAL $ 114,923,695 $ 105,470,725
9 10

Statement of Activities and Changes in Net Assets
Unrestricted Temporarily Restricted
Permanently
Restricted
Operating Designated Designated
Funds Restricted Endowment Total Scholarship General Plant Endowment May 31, 2010
Funds Funds Unrestricted Funds Funds Funds Funds Total
REVENUES AND OTHER ADDITIONS:
Gross tuition and student fees $ 30,941,084 $ – $ – $ 30,941,084 $ – $ – $ – $ – $ 30,941,084
Assets released from restrictions –
Operating item–financial aid 2,747,178 (449,575) 2,297,603 (2,292,257) (5,346)
Less financial aid grants (8,896,624) (8,896,624) (8,896,624)
Net tuition and student fees 24,791,638 (449,575) 24,342,063 (2,292,257) (5,346) – – 22,044,460
Ticket sales 1,545,470 1,545,470 1,545,470
Lodging 1,002,727 1,002,727 1,002,727
Retail sales 1,844,549 1,844,549 1,844,549
Contributions and grants 1,222,064 14,852 211,190 1,448,106 2,090,924 193,093 379,964 537,312 4,649,399
Net gain of investments 91,831 910,609 5,087,369 6,089,809 802,939 96,303 120,488 7,109,539
Endowment allocation 359,543 359,543 (359,543)
Other revenues 639,954 16,058 66,992 723,004 (25) 25,183 16,853 765,015
Total revenues and other additions 31,497,776 941,519 4,915,976 37,355,271 242,038 309,233 517,305 537,305 38,961,15 9
COST OF GOODS AND SERVICES:
Artist fees 660,371 660,371 10,000 670,371
Cost of goods sold 1,016,934 1,016,934 1,016,934
Total cost of goods and services 1,677,305 – – 1,677,305 – 10,000 – – 1,687,305
COST OF OPERATIONS:
Salaries, wages and benefits 17,868,977 17,868,977 121,451 17,990,428
Food costs 986,937 986,937 986,937
Contracted services 857,036 600 857,636 2,762 300 860,698
Supplies 1,045,285 255,196 1,300,481 35,711 132,310 1,468,502
Repairs and maintenance 518,480 25,525 544,005 800 1,500 546,305
Leases and rents 196,084 196,084 500 425 197,009
Utilities 733,039 733,039 733,039
Insurance 275,217 1,051 276,268 1,146 277,414
Telephone and postage 419,643 14 419,657 219 419,876
Other operational 20,159 328,979 2,500 351,638 778 2,287 354,703
Total cost of operations 22,920,857 611,365 2,500 23,534,722 – 162,221 137,968 – 23,834,911
GENERAL AND ADMINISTRATIVE:
Marketing 600,846 600,846 33,089 633,935
Travel and entertainment 566,441 8,859 575,300 79,769 4,177 659,246
Professional services 313,102 45,027 358,129 831 358,960
Interest 740 71,846 72,586 72,586
Other 224,258 13,106 237,364 13,958 251,322
Total general and administrative 1,705,387 138,838 1,844, – 126,816 5,008 – 1,976,049
Total expenses before depreciation
and board-designated expenditures 26,303,549 750,203 2,500 27,056,252 – 299,037 142,976 – 27,498,265
INCREASE IN NET ASSETS BEFORE
DEPRECIATION, ASSETS RELEASED
FROM RESTRICTIONS, BOARD-
DESIGNATED EXPENDITURES AND
OTHER ADJUSTMENTS $ 5,194,227 $ 191,316 $ 4,913,476 $ 10,299,019 $ 242,038 $ 10,196 $ 374,329 $ 537,312 $ 11,462,894
BOARD-DESIGNATED EXPENDITURE
INCREASE IN NET ASSETS
BEFORE DEPRECIATION, ASSETS
RELEASED FROM RESTRICTIONS
AND OTHER ADJUSTMENTS 5,194,227 191,316 4,913,576 10,299,019 242,038 10,196 374,329 537,312 11,462,894
DEPRECIATION EXPENSE 1,985,809 1,985,809 1,985,809
ASSETS RELEASED FROM
RESTRICTIONS/TRANSFERS -
Nonoperating items - Capital and other (10,862,853) 5,305,617 5,945,822 388,586 274,875 13,547 69,047 (746,055)
NET (DECREASE) INCREASE IN NET
ASSETS BEFORE CHANGE
IN ACCOUNTING (7,654,435) 5,496,933 10,859,298 8,701,796 516,913 23,743 443,376 (208,743) 9,477,085
CHANGE IN ACCOUNTING (179,527) (179,527) 179,527
NET (DECREASE) INCREASE IN
NET ASSETS (7,654,435 5,496,933 10,679,771 8,522,269 696,440 23,743 443,376 (208,743) 9,477,085
NET ASSETS - Beginning of year 15,399,636 6,110,402 21,632,321 43,142,359 1,299,261 623,087 745,962 21,099,701 66,910,370
NET ASSETS - End of year $ 7,745,202 $ 11,607,335 $ 32,312,092 $ 51,664,628 $ 1,995,701 $ 646,830 $ 1,189,338 $20,890,958 $ 76,387,455

Understanding Our Operations
REVENUE
Net tuition accounted for more than two
thirds of Interlochen’s operating income,
which totaled $31,497,776 in fiscal year
2010. Gifts from donors accounted for
approximately 11% of that total. Annual
giving helps maintain our generous financial
aid program and supports other critical
operations, from performances to
public radio.
INVESTMENTS AND
ENDOWMENT
Investments at the end of fiscal year 2010
were up $7.1 million, recovering more
than 40% of the value lost during the
previous fiscal year. On average, investments
are up 4.7% over the last six years, with
the endowment/funds under management
valued at $57.6 million.
By policy of the Board of Trustees,
4.6% of our endowment was returned
to Interlochen Center for the Arts in
fiscal year 2010 to support the needs of
the institution. The amount allocated
for operations and scholarships totaled
$1,015,797. Along with capital and
restricted donations of $1,110,369, we
were able to invest in capital improvement
projects, preservation of our aging
facilities and new construction.
EXPENSES
In fiscal year 2010, our operational
expenses totaled $28,289,358. This figure
represents a decrease of 2.4% compared
with the previous year. Our investment
in people, the heart of the Interlochen
experience, continues to be our biggest
expense.
The Interlochen fiscal year runs June 1
through May 31. For a copy of our complete
audited financial statements, prepared by
Plante & Moran, P.L.L.C., call our
advancement office at 231.276.7623.
Gifts
10.5%
REVENUE
$31,497,776
Operations
17.9%
Salaries Wages
& Benefits 63.2%
Ticket Sales
4.9%
Net Tuition
70.0%
EXPENSES
$28,289,358
Earned Income
(lodging,
retail sales, other)
11.4%
Endowment Income
for Financial Aid
and Operations
3.2%
Cost of Goods
& Services 5.9%
General &
Administrative
6.0%
Depreciation
7.0%
HOW DO INTERLOCHEN
DONORS DESIGNATE
THEIR GIFTS
Nearly $4.7 million was given to Interlochen
Center for the Arts in fiscal year 2010 by
8,933 individuals, corporations, foundations
and small businesses. 45.0% of that
total was directed to our annual fund
program, the Interlochen Fund, which
provides scholarship assistance to deserving
students from across the globe. Gifts
to our endowment add to the long-term
stability of Interlochen, while gifts to
capital and restricted projects, including
Interlochen Public Radio, help to
strengthen our many programs and the
facilities they rely upon.
SCHOLARSHIPS
$8.9 million was awarded in the form of
scholarship and financial assistance for
deserving students to attend Interlochen
programs in fiscal year 2010. Our high
school Academy students – 77% of
whom receive financial assistance in some
form – come from families with an average
household income of $74,000. With
Academy tuition at around $42,700, our
ability to sustain a diverse, talented and
highly motivated student body depends
upon the generosity of individuals who
support our scholarship program.
WHERE DO INTERLOCHEN
FUND GIFTS COME FROM
4,319 donors contributed a total of
$2,090,924 to The Interlochen Fund in
fiscal year 2010. Over the past decade,
government support has decreased 94%,
underscoring the increasing importance
of giving from alumni, parents and
friends.
Capital, Restricted
& Designated
17.2%
Interlochen
Public Radio
26.3%
Corporations &
Foundations
37.3%
Employees
2.4%
Trustees
7.1%
DONOR GIFT
DESIGNATIONS
Total Giving: $4,649,399
Endowment
11.5%
Interlochen Fund
45.0%
INTERLOCHEN FUND
SOURCES
Interlochen Fund Total
$2,090,924
Government
1.0%
Parents
11.1%
Friends
25.6%
Alumni
15.5%
13 14