Artscape CEO says Launchpad failure caused receivership: Globe and Mail
Why It Matters
Ever since Artscape announced its receivership in September, Toronto’s arts sector has wondered what caused the well-regarded institution’s failure.
The Globe’s investigation reveals that the Daniels Launchpad project caused debt to more than double from the end of 2017 to the end of 2019.
The failure of a flagship development was the primary reason that Toronto arts organization Artscape is entering receivership, the investigation revealed. Artscape declined further comment.
Artscape announced the Daniels Launchpad as an exciting departure from its traditional affordable housing model in 2015. The rentable coworking space cost $31 million, but a lack of interest forced Artscape to list it for sale at $22.5 million earlier this year.
The cost of sustaining Launchpad — which included monthly payments of $70,000 to Toronto Dominion Bank — caused Artscape’s total borrowing to more than double from $17.6 million at the end of 2017 to $37.5 million at the end of 2019. Receivership negotiations officially began this September.
Confronted with The Globe’s analysis of the past decade of Artscape’s finances, including external input from charitable-sector experts, CEO Grace Lee Reynolds admitted that Launchpad was “the primary contributor to the financial challenge.”
Future of Good reported last week that Artscape planned to divvy up its assets before entering receivership. Only units the organization owns will be eligible for sale. Units managed by other owners will change hands to Artscape’s nonprofit housing unit, which will contract out its management services to Toronto’s largest nonprofit housing provider, WoodGreen. Meanwhile, a brand-new nonprofit, ArtHubs Toronto Inc., will run local community cultural hubs.
ArtHubs Toronto Inc. is expected to announce its leadership team soon.
The Globe’s interviews with more than 24 current and former Artscape employees, tenants, and clients revealed concerns about the organization’s shift towards being a developer that long-predated the receivership news.
“This was obviously a situation where vision and ambition had no grounding in reality,” Charity Intelligence’s managing director Kate Bahen told The Globe.
Tim Jones, Artscape’s former CEO who supervised the Launchpad project and left the organization, disagreed and told The Globe that pandemic-related effects were more to blame.
Artscape also claimed that the proposals for Launchpad had been appropriate but would not provide The Globe with any feasibility studies, market research, or a risk analysis completed at the time.
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