Pyramid.Inverted@gmail.com
April 4, 2024
Amid swirling organizational instability, Hot Docs' 2023 financials were made public yesterday, and the results are grim at best.
The Festival posted a deficit of $2 million for their 2023 Festival year (June 1, 2022 to May 31, 2023). This effectively wipes out the entire $1.9 million surplus accrued from 2015 to 2022, as Inverted Pyramid posted about just days ago.
Aside from a -$54k deficit in 2018, this is the only year on record since 2015 that Hot Docs has ever posted a deficit, making it a truly precedent-setting moment for the organization.
If there is good news, it would be that according to these CRA Charitable Filings, Hot Docs still has a total of over $5 million in "cash, bank accounts, and short-term investments" as of May 31, 2023, and their assets still outweigh their liabilities.
The numbers are as concerning as they are confusing, considering the organization was still being led by President Chris McDonald and Artistic Director Shane Smith for this period -- a management team that had shown a stellar financial track record, as seen in our records from 2015 to 2022. McDonald and Smith both left Hot Docs shortly after the 2023 fiscal year wrapped up on May 31, 2023. As upper management, McDonald and Smith would have presumably been aware of the financial precarity they were leaving Hot Docs in. We can also see on the financial record that significant pay increases were given to top level staff in 2021-2022, according to CRA filings, which Inverted Pyramid detailed in our prior article.
Another surprise is that in 2023 Hot Docs actually posted their second highest revenues ever, with a total of $9.1 million coming in to the organization. This was only 2.5% lower revenues than their all-time best year in 2019, was 34% higher than their 2015 revenues of $6.8 million, and was stable with their 2022 revenues (a 1% increase of revenues over 2022).
While overall revenues remained stable in 2023, there were some notable shortfalls. As expected, government funding to the festival shrank drastically in 2023 as special COVID funding dried up, something that will come as no surprise to most arts administrators. Government provided $1.65 million of funding to Hot Docs in 2023, a reduction of 59% in comparison to 2022. However, 2023 government revenues still remained 28% above pre-pandemic government funding levels of $1.29 million in 2019.
By level of government, the vast majority of this funding was provided by the Federal Government ($921k). The City of Toronto contributed $410k, while the Provincial Ford Government came in lowest with $319k of funding for North America's largest documentary film festival.
Another point of concern for revenues - as current President Marie Nelson indicated in her interview with the Globe and Mail on March 8 - is the fact that audiences simply aren't engaging with Hot Docs in the same way they were pre-pandemic.
In 2019, Hot Docs generated $4.28 million in revenue from "sales of goods and services", which presumably would mean tickets sales, merchandise and concessions, as well as possibly including memberships and other revenue streams. In 2020, this number sank to $3 million, and hit rock bottom in 2021 and 2022 with $1.4 million and $1.6 million revenue respectively. In the most recent year, 2023 financials show a slight improvement to $2.14 million in revenues for "goods and services", but this is still a 50% decline from the pre-pandemic high water mark of 2019.
While bottom line revenues remained stable overall in 2023, the organization's expenses have ballooned out of control. This is is surprising given the experienced leadership team of McDonald and Smith still in charge of the organization at that time. However, longtime managing director of the Hot Docs Ted Rogers Cinema and director of operations for the Hot Docs Festival Alan Black did leave the organization in 2022, as the fiscal year in question began.
Hot Docs total 2023 expenses ballooned to a record shattering $11.1 million, which marks a 23% increase over the next highest year on record (2019 with expenses at $9.04 million), and a 68% increase over 2015, the earliest year Inverted Pyramid has on record.
Leading the way is increased expenses in staffing costs, but also a drastic increase in the number of full-time staff employed by Hot Docs in 2022/23, according to this filing. This flies in contradiction to the off-the-record reports of current and former staff, who indicate than upwards of 50-60 staff have left in recent years, with many positions not being re-filled.
In 2023, Hot Docs saw staffing costs inflate 21% in a single year, to a total of $4.57 million (up from $3.76 million in 2022, and $2.2 million in 2015). While the rationale for this staffing increase in a moment of increased government and corporate austerity is unclear, the cause in the CRA records appears to be a significant increase in full-time Hot Docs staff for 2022/23. In 2023, Hot Docs full-time staff rose to 84, up 79% from just the year before (47 full-time staff in 2022), and up 265% from 2015 (23 full-time staff).
But it is not just staffing expenses that were significantly heightened in 2023. Nearly every major expense category on record increased significantly in 2022/23, a time when most Canadian arts organizations were starting to reign in expenses due to widely communicated government pullbacks of special COVID funding.
In the 2023 fiscal year, Hot Docs had all time high expenses of $598k for "professional & consulting fees" (24% increase over 2022, the next highest year on record), $312k for "travel and vehicle expenses" (81% increase over 2022, the next highest year on record), $330k for "interest & bank charges" (132% increase over 2019, the next highest year on record) and $553k for "office supplies & expenses" (156% increase over 2021, the next highest year on record). The Festival also spent $977k on "advertising" in 2023, which is an increase of 21% from 2022, and only 2% lower than 2019, the next highest year on record.
Sources who asked to not be named indicated that it seemed like the finances of the organization were in considerable disarray in 2023 and early 2024, leading to uncertainty about how bad things were for the organization until recent months. This all comes at a time when organizational chaos has gripped the Festival after the mass resignation of the programming team, and the separate exodus of the Festival's Artistic Director.
In a statement released by the Documentary Organization of Canada’s National Board of Directors, it is alleged that Hot Docs' Board of Directors has launched a "third party investigation" that is currently underway. This is significant as the Documentary Organization of Canada actually founded Hot Docs and still populates up to 49% of their Board of Directors.
However, the Hot Docs' Board of Directors has not made public any statement or provided any information in response to either the devastating financial predicament the organization faces, nor the serious allegations raised by the Hot Docs' programmers in their statement released on March 26.
Additionally, we can see that 8 out of the 23 Board Directors listed on Hot Docs CRA Return have since left the Board, with only two new members joining. Most notably, this includes Hot Docs Board Treasurer Florence Narine, who was removed from the Festival's Board & Staff page, sometime since the day of the Programmer's exodus: March 25, 2024.
For more on the ideological divide that appears to be at the crux of this moment for Hot Docs, Inverted Pyramid encourages you to check out this insightful article by Ezra Winton: Hot Docs’ corporate-sponsored, U.S.-centric model has failed audiences and staff, via The Breach.
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ADDITIONAL ARTICLES:
The following articles are listed to provide greater context about the recent financial and organizational crisis at Hot Docs Documentary Film Festval.
"Hot docs 'Running out of time' as organization sounds alarm over film festival's future"
The Globe and Mail, 11 Mar 2024, Barry Hertz
“Hot Docs Programmers Resign En Masse (Includes Update)” POV Magazine, 25 Mar 2024, Pat Mullen
"Hot Docs artistic director, programmers quit ahead of 2024 run" CBC, 26 Mar 2024, Saloni Bhugra
"Taking Stock of Hot Docs: The first three decades" POV Magazine, 27 Mar 2024, Ezra Winton
"Hot Docs programmers explain mass exit amid “chaotic, unprofessional, discriminatory environment, fest responds” Screen Daily, 26 Mar 2024, Ben Dalton
"Hot Docs 2024 Press Conference", Hot Docs YouTube Livestream, 26 Mar 2024, Hot Docs
"Hot Docs 2015 to 2022 Financials Revealed", Inverted Pyramid, 2 April 2024, Aaron Zeghers
"DOC Statement About Hot Docs", The Documentary Organization of Canada, 2 April 2024, The Documentary Organization of Canada’s National Board of Directors
"Hot Docs’ corporate-sponsored, U.S.-centric model has failed audiences and staff", The Breach, 3 April 2024, Ezra Winton
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**Please note, all the financial information in this article is sourced from the Canada Revenue Agency's publicly accessible Charitable Tax Returns for "Hot Docs". We have confirmed that Hot Docs Film Festival, Ted Rogers Theatre and Hot Docs Industry programming are all operated through "Hot Docs" registered not-for-profit incorporated charity, from which we got the above financials. However, there are limitations to this information and it is always possible that Hot Docs operates part of it's business through other organizations or registered businesses that are legally separate from "Hot Docs" the not-for-profit charity. For these reasons, the financial details above are not necessarily exhaustive, and they are only what we know from an external, public perspective. Without confirmation from the Board of Directors or upper Executive Management is difficult to know if the financial information presented here is complete.
To access these original reports, you can visit the Hot Docs Registry here, or look up "Hot Docs" in the CRA Charity search here.
Anyone with more information (or to point out any false or misleading information above) is encouraged to contact us at Pyramid.Inverted@gmail.com
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