Category Archives: Nonprofit

It’s the Most Wonderful Time of the Year!

Rockefeller_Center_christmas_tree

If you are like most Americans, you feel better this year, but there is still a nagging doubt in the back of your mind, “is this as good as it gets?”  True, the economy has picked up, spending is up, the recession is no more, but we are still feeling the pinch.  How shall we shop for Christmas this year?

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We did some digging to find out how much has changed and how much has stayed the same.

The following figures provide some context for the economic growth since before the recession until after, with per capita GDP not yet recovered to pre-2008 levels:

united-states-gdp-per-capita

The gross domestic product increased from $13.3 trillion in 2007 to $15.1 trillion in 2012.

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GAFO retail sales seem to be slowly recovering from the recession, and consumers are spending again.  Consumer confidence is back up to about 73 percent of what it was in 2006, but spending at shopping centers is ACTUALLY DOWN in real constant dollars (adjusted for inflation):

united-states-consumer-confidence 08-12

GAFO retail sales in the nation increased from $968 billion in 2002 to $1,032 billion in 2010,  for a compound average growth rate of 1.1 percent.  However, from 2007 to 2010, compound average growth was  -.03 percent nationally.

As everyone knows, brick-and-mortar stores are in competition with internet retailers for market share.   With the ease of shopping online in the comfort of your home or office, and the ability to compare sale prices amongst retailers, the brick-and-mortar stores have to come up with creative ways to appeal to the consumer as the better way to shop drawing them to their retail store locations.  Some retailers are offering free shipping, extended hours along with other special promotional items available only in stores.

Electronic shopping and mail order retailers suffered only a mild set back during the recession and bounded back with sales for the twelve months through February 2012 accounting for $308 billion.  The overall sales market rose 30 percent since the peak in 2008 as reported in an article, “Retail Sales Recover, Mostly, From Recession”, written in The New York Times, by Floyd Norris.

One of the biggest impacts of the recession on the retail market is the change in the behavior of shoppers.  People are bargain shopping and looking for the biggest bang for their buck.  They are more interested in products or items that are reliable and have lasting value rather than purchasing the latest gadgets.

Consumers are looking to save money where possible, which has increased on-line shopping as well as sales at discount and dollar stores such as Wal-Mart, 99 Cent stores and Target.  Not only are shoppers finding better bargains, they are saving time and money especially when factoring savings of not having to drive with high gas prices.

Target shoppers

The recession has also caused a spike in sales at thrift shops/resale stores,  as  the number of resale shops opened within the last year increased approximately seven percent.

According to comScore.Inc,  holiday retail spending over the four-day Thanksgiving weekend was estimated at $59.1 billion dollars nationally, up nearly 13 percent over last year.   Black Friday online sales exceeded $1 billion, rising 26 percent to $1.04 billion.

How do you feel this year?  Let us know if your pocketbook feels lighter or if you are back to normal.  Have we stabilized at the new normal? We are anxious to hear from you!

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10 STEPS TO DEVELOPING A SUCCESSFUL MUSEUM, THEATER/NONPROFIT PLAN– AND WHY YOU SHOULD CARE

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Many of my readers do not know that a large part of my practice is devoted to consulting to museums, performing arts centers and other cultural and nonprofit venues. There is sometimes a disconnect between developers and nonprofits.  After all, if you are in the business of making money, why would you include a non-money making business in your project?

I once had a client who hired me to do a museum business plan for his very successful consumer product.  When the report was finished and initial schematics presented, he asked, “Why should we build a museum when it won’t return 20% on our investment?”

The arts make good business.  They lead many educated and affluent consumers to our projects and they contribute mightily to the programming and animation of public spaces.  Nonprofits are good citizens.  In a world where developers may be seen as unpopular, including nonprofit spaces in a commercial project is a strong inducement to securing needed entitlements.  Still, many commercial developers do not understand that nonprofits face the same planning and marketing issues as commercial entities.  Until about 50 years ago, nonprofits figured they didn’t have to do business plans because they were just going to lose money anyway.  So why have a plan?

Nonprofits must have a well-articulated carefully planned strategy for capital, operating and future funding or they will not receive ANY funding in the first place – not from friends, government, dispassionate individuals nor foundations!  Nonprofits are businesses, just like any other.  And the last thing you want as a developer is to have a failing tenant in your center.

So here are 10 steps to look for when evaluating a proposal from a nonprofit. Also, for nonprofits, these are the steps you should take before presenting to a developer or planning an expansion or new facility:

  1. Have a realistic and defensible business plan.
  2. Determine the annual operating deficit.
  3. Project attendance and per capita revenue/expense within normal ranges.
  4. Study national comparable museums, including your favorite models.  Know attendance, operating budget, per capitas, other important metrics.
  5. Know your market, including the all-important market area demographics and psychographics.  There are now reputable services that provide these trade area metrics for very little money.
  6. Study 990s.  These are your best friends.  They are the income tax returns that nonprofits must file and they provide you with all financial information for your competitors and comparables.  They are public record!
  7. Take time to study comparables in the local market.  Most important for these comparable studies are annual attendance, budget, and resident trade areas.
  8. Make sure to include changing gallery space in your design.  Return visitation is key to your nonprofit and residents will comprise the majority of your attendance.
  9. Interview executives at the models you envy.  They normally will assist if you are outside their market and they can be a wealth of knowledge.
  10. Finally, get professional help because you are not objective!  A good consultant can save you thousands in mistakes!