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IQALUIT - After being on the brink of bankruptcy, The Nunavut Arts and Crafts Association (NACA) is working toward a recovery plan.

A situation audit completed on the agency's activities has shed light on its financial condition and some of the problems it was facing organizationally, said Jerry Ell, the association's chair.

"There's still very strong support from the government for the association to be continuing," he said. "We are working very closely with Economic Development to make sure the association stays afloat and also to reassure all the artists out there that everything that can be done is being done."

The audit identified more than $300,000 of debt to a variety of funding partners, including money to be repaid to the territorial and federal governments.

To free up some cash, NACA has recently moved to a less expensive location, sold off its art inventory and is holding off on hiring a new executive director until its financial situation improves.

"Right now our focus will be on reestablishing our credibility and reestablishing our financial house," said Ell.

The Department of Economic Development and Transportation, which froze funding to NACA several months ago, has now released $100,000 of $200,000 in annual core funding.

Steve Hannah, director of community economic development for EDT, said if the arts organization follows through with its recovery plan, the department will release the remaining $100,000 prior to year end.

"We want to see NACA supported," he said. "The fact that we've released some of the held-back funds they had, speaks well that they've met some of the requirements."

Reflecting back, Ell attributes some of NACA's difficulties to trying "to accomplish too much in too many different areas."

"We have to get back to our initial mandate - to support the artists in Nunavut," he said. "As an organization, we were spreading ourselves thin."

While it will take some time to get back on track, Ell is confident the Nunavut Arts Festival will continue as planned, though it may be held outside of Iqaluit to give other communities an opportunity to host the event.

"It will go ahead based on the information I have today," he said. "We're going to be having a very strong and close look at our mandate and review again the initial mandate to be moving between the three regions of Nunavut. If we're to support art from across Nunavut equally, then we should be representing all three regions equally."