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Exhibiting Cash Trouble

Corporate sponsors, tax-exempt status could revitalize Laguna Beach's struggling Art-A-Fair Festival.


Months after the Christmas floods in Laguna Beach covered the Art-A-Fair Festival grounds with tons of sticky mud, the $13,000 cleanup tab still looms large on the balance sheet of the artist cooperative.

The bill wiped out the nonprofit organization's chance to stretch its cash through the lean first half of the year, and meant continuation of the unhappy tradition of board members digging into their own pockets to cover expenses in the final, frenzied weeks before the festival's July opening.

Cash is tight in part because sales have dropped dramatically in recent years, despite an improving economy. (The cooperative earns a 15% commission on its artists' festival sales.) Sales last year were off almost 30% from the $838,000 rung up in 1995, the latest year for which the 31-year-old organization has a record of revenue. Aside from the plunge in sales, the lack of financial records is symptomatic of the 150-member group's deeper issue, according to the treasurer.

"Most artists don't know how to run a business," said Treasurer Loretta Alvarado, who left an engineering job at the Jet Propulsion Laboratory in Pasadena to pursue her textile art full time. The fact that sales are down, for instance, "really hasn't been an issue or even brought up, particularly," she said.

Artists Sell Original Works and Reproductions

Art-A-Fair features artists selling their own work--watercolors, oil paintings, drawings, prints, photography, sculpture and some jewelry and ceramics. Half the art on the booth walls has to be original, but most artists also sell lower-cost reproductions. The booth rental fees help pay the bills in the months before the show, which runs July 2 through Aug. 30, when sales commissions begin to trickle in.

If the group just had more money to advertise, Alvarado is convinced the Art-A-Fair Festival could boost sales and escape the shadow of its high-profile neighbors in Laguna Canyon: the Sawdust Festival and the Festival of the Arts. The three groups share the same roots, but the path taken by Art-A-Fair, including its decision to remain a traditional juried show with a focus on fine art rather than crafts, has helped to keep it the smallest.

Consultant Robin L. Cornwall met with Alvarado, president and watercolorist Doreen Abegg and another board member to discuss ways to bolster the outdoor show's profile and strengthen operations.

Cornwall, who has sat on the board of directors at several nonprofits, including the successful Hermosa Beach arts festival, was pleased to see that the Art-A-Fair crew was more open to change than many managers of nonprofits.

"They really want to do something different, they want to make a change, and that's key," said Cornwall, a business analyst at USC's Business Expansion Network, which assists start-ups.

"They need to operate using prudent business practices that make sense for the longevity of the organization, even if that means shaking up some longtime practices," he said.

Restaurant Sublease a Source of Revenue

The group took a big step in that direction last year, he said, when it subleased space to a special events company that will run a restaurant on site during the show, then use the picturesque grounds for weddings and private parties during the rest of the year. The festival will get 6% of Tivoli Too sales and benefit from the site upgrades the company has made, including a 30-foot waterfall built into the hillside. This year the company built a Mediterranean-style facade and walkway that stretches across the front of the grounds and creates a kind of courtyard for the artist booths, said Cornwall. More important, it serves as a visual drawing card for potential festival visitors as they travel down the street to the competing art fairs.

"The whole atmosphere has changed since we took on the sublease," said Abegg, who said some members objected to the commercial aspect of the move, but that overall the group was impressed with the company's professionalism. "Maybe there was a kind of awakening that it's possible to have fun and conduct yourself professionally."

To build on that potential, said Cornwall, the group should first nail down its tax-exempt status so it can apply for grants, attract lucrative corporate sponsorships and benefit from charitable gifts from its members. The festival organizers then should take steps to stabilize the overworked board of directors and increase vital commission revenue.

The festival is incorporated as a nonprofit and a board committee has been exploring ways to secure tax-exempt status in California. That's an importantstep, agreed Cornwall. It would give the festival access to a broad range of outside funds. Companies attracted to the fair's 50,000 upscale visitors might be willing to underwrite all or part of the operating costs, for example.

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