The Pride Toronto (PT) audited financial statements have uncovered financial irregularities and significant losses, which have put the festival in serious jeopardy.

The documents were released to Xtra on Jan 25. The PT general meeting is Jan 27 at the Church Street Public School at Church and Wood streets at 6:30pm.

One of the worst years in PT’s history is finishing with a $431,808 budget deficit in 2010. The rainy-day fund of $322,407 knocked it down to $109,409 in the red.

PT board co-chair Francisco Alvarez says the festival is financially viable but its finances suffered from the censorship battle this past year.

“This was as much of a surprise to us,” he admits. “We’ve been very concerned, and we’ve been taking steps to ensure our forecasts for 2011 are more realistic and conservative. We can only do what we can afford to do [going forward].

“It will be a smaller festival in 2011, but we will pay down the deficit entirely over the next three years. There will be some reductions in programming.”

Revenue figures show sponsorship actually went up – from $1,225,044 in 2009 to $1,469,027 in 2010. But Alvarez says much of the increase can be attributed to in-kind donations. “It kind of balances out.”

Alvarez says PT budgeted for much more sponsorship than it received, somewhere around $50,000. He says the controversy surrounding Queers Against Israeli Apartheid and the “political messages” contributed to sponsors backing out at the last moment.

“We didn’t spend more on advertising,” he says. “We just got more free stuff.”

At the AGM in September, former PT treasurer Mark Singh said four major sponsors were lost “directly because of the political messaging issue.” When asked by Xtra for comment Jan 26 on his role in the financial situation, Singh directed Xtra to the current PT chair and hung up the phone.

Still, the audit shows dramatically increased costs in other areas as well, including salaries and benefits; office administration; community outreach, fundraising and bursaries; volunteers; and occupancy, $253,865 more than in 2009.

Contrast that with very little increase in revenue in 2010 – only $39,338.

“We have reduced staff to four people, the minimum we can operate with,” Alvarez says.

And there’s more bad news. The dire economic situation may lower the axe on WorldPride 2014.

Moments before PT released the statements, Xtra got a press release from the Community Advisory Panel. In that release, Metropolitan Community Church pastor Brent Hawkes says controversy and funding cuts have created a “perfect storm” for PT. Now sacrifices must be made.

“WorldPride requires three consecutive stable years locally as a condition of being the host city,” says Hawkes. “We cannot afford another year of instability without running a real risk of losing WorldPride.”

Alvarez says that’s not entirely true. PT has a plan to eliminate the deficit over the next three years. “By the time WorldPride starts, we will have a completely balanced operation.”

Alvarez says bad economic forecasting, particularly with sponsorship, is a big reason for the current situation. But he has no explanation for why beverage sales are “way lower than we projected.”

On the first page of the audit, the chartered accountants admit there are discrepancies. “The completeness of this revenue is not susceptible to satisfactory audit verification,” it states.

“I don’t know how to account for that, but it was unexpected,” he says. “Drink sales were definitely lower per capita than in previous years. Maybe it was the economic situation; people weren’t feeling that flush, maybe trying to live healthier lifestyles. We don’t know. So that was a total surprise to us.”

Another factor is the rejection of Pride's application for $630,000 from the federal Marquee Tourism Events Program, even though Canadian Press reports that PT had qualified for federal cash.

But there are still unanswered questions. Alvarez has no explanation for spending $183,235 in community outreach, fundraising and bursaries. “I can’t really explain that,” he says. He also had no explanation for the $107,868 in volunteer costs. “I don’t know what that is about either. You’ll have to ask Tracey [Sandilands].”

The PT credit line from TD Bank kept the festival afloat. But, a note states, “At year end, the organization was in violation of the bank covenant regarding its net assets requirements.”

Alvarez says the bank can decide if PT is a good risk or a bad risk. “Our bank has indicated there’s a lot of confidence in Pride Toronto,” and the line of credit remains intact.

On page six, the notes state that as a result of the deficit, “the organization’s ability to realize its assets and discharge its liabilities depends on [its] continued ability to refinance its credit line, which amounts to $90,000 and is due on demand.”

“In my recent meetings with the bank, they have total confidence in what we're doing,” he says, adding, to reduce the deficit, PT will rely on the credit line.

But there’s more included in the audit. Executive director Tracey Sandilands’ partner, Janine Marais, gets a note all her own in the package. Xtra could not reach Sandilands for comment on Jan 26.

Marais was employed “through various periods” between April 2009 and November 2010. Singh approved her for the work, as did 2010 co-chair Jim Cullen.

On page nine, under “related party transactions,” the statement shows PT paid $40,317 for the fiscal year in consulting fees to Marais for website updating and newsletter services.

“According to Tracey it’s lower than market rate for those services,” Alvarez says. “That’s just what we were told.”

So why did Marais get the job? Why not someone else with similar skills? “That’s a question for Tracey. She was managing that relationship. We did have other people doing that job, and for whatever reason it didn’t work out.”

Marais wasn’t employed continuously through that time, Alvarez says. “And she was a vendor, not a staff person.” A vendor is anyone who provides a service for a fee without benefits or employee protections, he says.

Alvarez says the current co-chairs were unaware of the arrangement with Marais and assumed she was simply a volunteer.

Sandilands is authorized to approve purchases of up to $50,000 without board approval under the PT purchasing and procurement policy.

A Google search revealed surprisingly little about Marais and her company, MediaWorld. The website is a simple page “under construction.” The Facebook page is also virtually barren, but boasts 291 people who “like” it. LinkedIn lists Marais as a web content manager at MediaWorld.

Six Pride employees were let go because of the financial situation, Alvarez says. So why did Marais keep her job while others lost theirs?

“That’s why we as a board questioned this whole thing,” he says. “We asked Tracey, ‘Why do we still have someone doing the website when we don’t have a finance manager?’

“By the time we learned about it, it had been happening for quite a while,” Alvarez says, adding the co-chairs only became aware of the arrangement on Nov 26, 2010.

Then there’s Singh’s partner, Daniel Chimento of Drago Productions, who submitted a bid following a request for proposals.

“So under that process there’s no conflict of interest,” Alvarez says. “Mark [Singh] abstained from the vote. And [Chimento] had the best proposal at the best price.”

Chimento’s role was to plan the Pride Gala, an event that raised $92,000 at a cost of $110,000. “But that wasn’t because of him,” Alvarez says. “It’s because we didn’t sell enough tickets.”

Alvarez says he expects the full PT board to be at the general meeting Jan 27.

Pride Toronto 2010 audited financials

Pride Toronto executive director Tracey Sandilands resigns

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