Communication foundation inactive after years of not turning profit

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Editor’s Note: This is one story in a series of features on external UT foundations running through Wednesday.

When UT set out to offer students a way into Austin’s independent film scene in 2003, it was easy for administrators to get swept up in Hollywood ambition. They formed a public-private partnership that resulted in four feature films that flopped financially, but offered students a glimpse into how a traditionally funded project operates.  

Creating a financial and legal framework to allow private investment in UT-affiliated films meant forming the UT Communication Foundation, said Jeff Graves, UT associate vice president for legal affairs. Since UT cannot legally own a for-profit company, the foundation was formed and owned nine corporations that produced the movies, Graves said. The parent production corporation was called Burnt Orange Productions, LLC

When it comes to measuring the success of the company’s four years of filmmaking, opinions vary depending on who is asked and what metric is used.

University officials, investors, students and filmmakers agree that establishing the foundation to fund feature films — possibly a first by a public university — provided opportunities to work in a professional environment that otherwise would have been inaccessible to students.

Hart said it was also a learning experience for the administrators. 

“It’s like taking a course, you know,” he said. “You got a C on that first exam, but you’re hoping on getting a B on the second exam. We always had hope. Now we weren’t stupid. After a while we said, ‘I’ve had enough. Thank you very much.’ We’re not going to invest any more college money even though it was modest.”

The endeavor was a sinkhole for public and private money. 

The foundation’s company received $3.35 million from 14 private investors, according to Securities and Exchange Commission documents. The University also contributed money for the company’s buildings and University staff that worked on the projects, said radio-television-film professor Thomas Schatz. 

The University was unable to provide records of expenditures related to Burnt Orange Productions although The Daily Texan submitted a public information request for that information in February. Since none of the films turned a profit, the foundation registered a consistent negative balance of more than $760,000 on its tax forms since filmmaking ended in 2007.

By writing off its losses, the foundation registered a positive balance on its 2012 tax return of $22,000, but how those funds will be spent and whether or not the organization has any potential as a vehicle for funding at the University of Texas remains to be seen, Graves said. 

“The foundation is a non-profit set up to support the University, just as all the other foundations are,” Graves said. “So it could be used for other purposes, although I don’t think that was ever contemplated.”  

While the foundation has been inactive since 2007, College of Communication dean Roderick Hart said he still spends $15,000 each year from his dean’s discretionary fund to cover insurance costs related to the project.

“I don’t like paying that, but if there were any lawsuits to come at us, we’d need it,” Hart said. Hart inherited the foundation from his predecessor Ellen Wartella in 2004. 

Wartella said she spent part of her time as dean soliciting investments for the project and she had hoped it would make enough money to continue production with the college.  

It may not have taken a blockbuster, but some commercial success would have been necessary to keep Burnt Orange Productions going, Hart said. 

Investor Eddie Safady said he and the others who invested in the project had more philanthropic goals in mind than profits.

“It wasn’t a good financial investment because everyone lost money, but most of the investors, including myself, went into it not ever thinking they were going to make money,” Safady said. “I think it was a great exercise for those who got to participate. We shouldn’t have started without having a lot more money dedicated to the project up front.”

Documents filed with the SEC indicate the organization had an $8 million fundraising goal, but Hart said raising that much money proved more difficult and time consuming than anticipated. 

Making the Films

Once the company formed, the University hired Carolyn Pfeiffer, an established independent-film producer, as CEO and rented a warehouse downtown on Fifth Street for the project. 

Scripts for films that could be made on budgets ranging from $500,000 to more than $2 million poured in, said Gregory Kirr, development director for the movies. Kirr said he cataloged and read between 400 and 500 scripts, chose the best ones and forwarded them to Pfeiffer. 

UT administrators on the foundation’s board of directors had final approval on content, Hart said. Vice president for legal affairs Patricia Ohlendorf and vice president and chief financial officer Kevin Hegarty and Hart were on the board of directors.

“We would listen to them, and I think if anybody had suggested something crazy, people like Patti and I would listen and step in if we had to,” Hart said. “We wouldn’t have wanted anything that was too risque. We wouldn’t want that associated with the college.” 

Ultimately, administrators decided to cease production after the films generated little financial or critical success, Hart said. 

Each film had a crew of students and professionals and more than 200 students, including 2005 radio-television-film alumnae Kate Ridgway, worked on the films. Ridgway, who has built a career in television and film in Los Angeles, said her experience working for Burnt Orange on the set of “The Quiet” as a post-production assistant jump-started her Hollywood career. 

“Actually working on a film that wasn’t just a school thing was a really important experience,” Ridgway said. “To be able to cope with some of those real-world issues like data security and to have a budget — I’ve never seen a student system like the one we worked on at Burnt Orange. Man, it was crazy.”

Librado Lozano, another 2005 alumnus who worked for Burnt Orange, said he still uses some of the work he produced with the company when meeting with
potential employers. 

“The main long-term benefit I received was working with high quality material,” Lozano said. “Some of my Burnt Orange stuff is still on my demo that I still use.”

Overall, Lozano said his time at Burnt Orange met expectations. 

“I didn’t go into it thinking I was going to work on a really big blockbuster,” Lozano said. “I did go into it thinking I was going to get hands-on experience in films.” 

The most financially successful film the company had any involvement in was not one that students worked on or that was produced by the company. Schatz said the company likely received a “couple thousand dollars” for allowing the crew of the 2006 film “A Mighty Heart” to use its offices for a couple of days to film in Austin. By using Burnt Orange, the film could bypass the process of filing more paperwork to get tax incentives for filming in Austin, Schatz said. The film starred Angelina Jolie and was produced by Brad Pitt. It grossed more than $9 million domestically.

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