Colonial Williamsburg announces financial restructuring, layoffs
- June 29, 2017
The Colonial Williamsburg Foundation is undergoing a financial transformation to secure its future.
Under a plan announced Thursday, Mitchell Reiss, president of the foundation, said it would outsource some of its operations and lay off 71 employees.
In an open letter posted on the foundation’s social media sites, foundation Reiss said, “to be able to continue to tell our story requires us to be financially stable and, sadly, that stability is threatened unless we take decisive action.”
The plan announced Thursday includes outsourcing its golf operations, retail stores, most of the maintenance and facilities operations and commercial real estate management. After what he describes as “tough negotiations,” the vendors have agreed to hire each Colonial Williamsburg employee for at least a year. Employees will receive severance whether or not they agree to take the job with the new employers.
The new vendors include Kemper Sports for golf operations, Aramark for products and retail management, Brightview for landscaping and WFF for facilities management.
Seventy-one employees in other departments will lose their jobs, but those employees will receive a week of severance pay for each year of service in addition to career counseling.
Plans also include closing the historic Kimball Theatre, which was built in 1933 by John D. Rockefeller Jr. The theatre, which offers independent films and some live entertainment, has not made money since 1999, Reiss said, and lost $782,000 last year.
Reiss detailed the foundation’s financial troubles in a presentation. In 2014, the foundation lost $62 million, or $176,000 every day.
Since joining the foundation two-and-a-half years ago, Reiss said the foundation has improved finances by more than $10 million. In 2016, the foundation had an operating loss of $54 million in 2016, or $148,000 per day.
“When I started at the foundation two-and-a-half years ago, we tried new programs and events to cut costs and generate revenue, but without making fundamental changes in the way the foundation did business,” Reiss said. “While this approach has helped, to the tune of more than $10.4 million in financial improvements over the past two years, it is not enough.”
Reiss pointed out that annual visitors at Colonial Williamsburg are half what they were 30 years ago. In 2016, the historic area saw 568,932 visitors. In addition, in the lead up to the Jamestown’s 400th anniversary in 2007, the foundation invested heavily in its facilities. At the end of 2016, the foundation’s debt was $317 million. Repayments for these debts are coming soon, Reiss said.
Reiss said losses have caused the foundation to take a lot of money from its endowment each year.
“While most non-profit organizations withdraw 5 percent annually from their endowment, in 2001 we began to withdraw more than 5 percent, at times reaching as high as 12 percent,” Reiss said. “If we continue at this rate, we could exhaust the endowment available to support our operations, including many related to our core educational mission, in just eight years, and perhaps sooner. That outcome would lead to mission failure.”
The approximate value of the foundation's endowment is about $684 million. In the past decade, the foundation has withdrawn $639.6 million from the endowment.
Reiss also said he is asking Williamsburg and the counties of James City and York for tax relief.
In April 2015, Virginia Business conducted an interview with Reiss.