The Southern Theater will remain in operation after all, but with reduced staff and programming.

Facing a severe financial crisis, the 210-seat venue in Minneapolis had a self-imposed deadline of April 30 to raise $400,000 or close its doors. The theater raised just under a quarter of its goal -- a total of $95,000, including $50,000 at its annual gala last Saturday, said board chair Anne Baker.

Nearly all of its contributions came from about 300 individuals, whose gifts ranged from $15 to $6,000.

The Southern is reaching out to corporate and foundation sources, and has an additional carrot -- a $50,000 matching grant from a New York foundation if it can raise that much in new giving.

Because it did not meet its goal right away -- the deadline has now been extended and is unspecified -- the theater on Wednesday cut five positions, including part-time curators for dance and theater. The Southern also reduced the hours of its remaining employees, so that four people will account for 2.5 full-time jobs.

"Today is a very tough day, and I speak as someone whose own job was eliminated a year ago," Baker, an attorney, said Wednesday.

The Southern, which had a $1 million annual budget, recently canceled a number of scheduled events because of an ongoing money crunch that came into public view three weeks ago. It lost a third of its board in an upheaval.

The Southern also lost its major backer, the McKnight Foundation, after the theater "came clean," in the words of executive director Gary Peterson, about commingling its own operating funds with restricted funds entrusted to it by the foundation for fellowships to dancers and choreographers.

The monies were spent on operations, while individual artists went unpaid.

The theater will have to repay $300,000 to the McKnight, probably over several years. The Southern also owes about $90,000 to vendors, including performers.

"We will be able to take care of some of our payables now," said Baker.

Peterson took over at the Southern in January 2010 after over a dozen years at the James Sewell Ballet. He had a good reputation as a manager. Asked Wednesday why he did not blow the whistle on the commingling of funds that reportedly predated his arrival, he said, "You get into the thing and you think, blow the whistle now and risk blowing it all up, or maybe we can work our way out of this," he said. "I'm going to wonder about that for a long time."

On Wednesday, Baker, who was preparing for a daily conference call with the board, said she would call over to the theater to have the marquee changed from "Help Us Save The Southern, Give Now," to "Our Fundraising Continues, Please Give."

"We're still optimistic about preserving this wonderful community asset for future generations," she said.

Rohan Preston • 612-673-4390