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Albert Schultz, former artistic director of Soulpepper Theatre, at the Young Centre for the Performing Arts in Toronto on Jan. 12, 2011.Kevin Van Paassen/The Globe and Mail

The Canada Council for the Arts is reviewing its funding of Soulpepper in the wake of allegations of sexual harassment and assault levelled against the Toronto theatre company's former artistic director Albert Schultz, The Globe and Mail has learned.

Simon Brault, chief executive of the arm's-length federal agency, said Soulpepper was immediately placed under "concerned status," a Canada Council category for arts organizations facing "huge difficulties," in early January. This was after civil lawsuits were filed by four female actors against both Mr Schultz and the theatre he co-founded, alleging he is a "serial sexual predator" and seeking damages totalling $7.85-million.

"They are serious allegations, there is substance to those allegations – and it's clear that Canada Council will not ignore that situation and act as if it was business as usual," Mr. Brault said. "What is happening now is serious enough to ask the question: Are you delivering your mandate? Can you deliver it under those conditions?"

Soulpepper's board of directors, which has said it had no knowledge of any complaints of harassment against Mr. Schultz before the lawsuits were filed, released a statement on Wednesday. "We are working closely with the Canada Council for the Arts to address its concerns as an investor and to demonstrate our commitment to renewal and to achieving our artistic mandate," it said. "We are thankful to see that artists, patrons and our donor community are rallying around Soulpepper and a continued strong future for the company."

Mr. Schultz, who has resigned at the board's request, has vowed to "vigorously defend" himself against the allegations in the lawsuits, which have not been proven in court.

The Canada Council revealed that Soulpepper was being reassessed in advance of its public posting of the results of the agency's first core-funding competitions since the Liberal government pledged to double its budget over five years.

As of January, the arts-funding agency has received 40 per cent of that promised new money – allowing for the allocation of $25-million more in stable, multiyear funding to arts organizations in 2017-18 than in 2016-17.

Soulpepper had been "very well assessed" this fall, Mr Brault said, and was one of many arts organizations in line to see a long-sought increase to its multiyear funding. But the allegations against Mr. Schultz and the theatre board's subsequent "severing" of ties with executive director Leslie Lester, who is married to Mr. Schultz, along with the cancellation of its season-opening production, led the agency to reassess it. In the list of grants that will be made public on Thursday, Soulpepper's will appear as "under review."

"When we learned what the situation was, clearly it was quite obvious that there were issues that nobody knew, that the [Canada Council] assessors for their field were not aware of," Mr. Brault said. "We thought it was important to ask the questions and get answers [rather than] just maintaining the relationship as if nothing happened before."

In recent years, Soulpepper has received just $184,500 a year from the Canada Council in core funding – which represents less than 2 per cent of its annual $12-million budget.

That's less money than smaller Toronto theatre companies such as Factory Theatre and Theatre Passe Muraille get – and reflects, in part, the fact that Soulpepper was only founded in 1998, at a time when the federal budget for the arts was not growing.

The Liberal government's infusion of funds into the Canada Council has created a rare opportunity for some Canadian arts institutions to access multiyear grants for the first time – and others to catch up with their older, more established counterparts.

Thursday's announcement will reveal that 110 dance troupes, theatre companies, visual-arts organization and circus troupes have accessed core funding for the first time this year. "We would need to dig in to the history of the council to find such a big opening of our doors," Mr. Brault said.

These new clients of the Canada Council reveal the agency's shifting priorities – with many Indigenous, Deaf and Disability Arts and diversity-focused organizations accessing stable funding for the first time.

Toronto's Musical Stage Company's new three-year funding, meanwhile, shows the Canada Council is taking the country's musical-theatre renaissance seriously. Clowns and acrobats are also big winners in this new round of funding – with Montreal's Cirque Éloize, the En piste circus-arts network and Montreal's TOHU physical-theatre venue all getting core funding for the first time, and Les 7 Doigts de la Main seeing theirs more than double over the next two cycles to $100,000 a year.

No Canada Council arts organizations saw their core funding cut this time around – but 34 per cent will see no increase to it. Certain artist-driven organizations will have their funding grow by leaps and bounds. For example, Kidd Pivot, the Vancouver-based company of superstar choreographer Crystal Pite, will have its annual grant double to $190,000 from $95,000 by 2018-19, while Ex Machina, internationally renowed director Robert Lepage's company, will likewise see its support increase to $470,000 a year from $370,000 over the next two years as it prepares to move into its new Le Diamant building in Quebec City.

"We needed to move the needle and make sure that we support the top performers – and open the system to new voices," Mr. Brault said.

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