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December 13th, 2005 - OKCBusiness Staff

Taking Cues From Private Sector

Business strategies of some OKC nonprofits

paying off, models for other organizations

um of Art

The first thing to grace the eyes of visitors to the Oklahoma City Museum of Art's Donald W. Reynolds Visual Arts Center is Dale Chihuly's multihued 55-foot tower of 2,100 pieces of hand-blown glass.

Despite the tower's dazzling display of colors, Carolyn Hill, the museum's executive director for the past 11 years, wants to see only one shade when it comes to the bottom line of the museum's financial picture: black.

"Bottom line, I require the museum operate in the black," Hill said. "Our annual budget is zero-based and we require a balanced budget. We operate in the black and have had 11 clean audits. We will not allow for any debt.

"It's our second year of our five-year business plan, and we've already exceeded some goals. Our annual budget is $3.5 million. Last year, our attendance increased from 100,000 visitors to 130,000, while museum membership enrollment increased from 600 in 2002 to almost 4,000 households...and we want to keep steadily growing."

Running a multimillion-dollar museum and its associated businesses can be challenging, Hill admits. But although the museum's five-year business plan is confidential, proof of its success is clear, with the museum garnering a steady stream of endowments, donations, grants and earned income.

Hill credits the museum's solid planning and close monitoring of fiscal health for ensuring if a revenue shortfall were to occur, museum staff would immediately begin to trim costs. In fact, she draws no practical distinction between nonprofits and for-profits.

"Both are businesses," Hill said, "and an arts entity should not be exempt from sound business practices nor feel a sense of entitlement. Excellence in any form as a product takes a tremendous amount of work - there's no substitution. We believe our donations and grants are investments and that donors' investments deserve a return which includes efficiency and stability."

Overbuilding was a temptation, but one the museum avoided, she said. Museum leaders estimated a new building would cost $20 million, but raised 100 percent more through its Legacy Campaign by 2002, which included a $14.5 million Donald W. Reynolds Foundation grant. Today, the three-story, 110,000-square-foot facility stands as a testament to its fiscal accountability, featuring 15 galleries, three education rooms, a library/resource center, a store, a cafe and the 252-seat Noble Theatre.

"We did the most responsible thing and made a pact that for every $1 raised for capital, we would raise $1 for endowment," Hill said. "We needed an endowment to earn interest in order to maintain the building."

Since opening the new facility in 2002, the museum's staff has grown from eight in 1994 to approximately 60. Overall, Hill said she believes in the old adage, that "you have to invest in order to reinvest and you habitually strengthen."

"My personal philosophy is that if you're not going, you're going down," she said, "and you can't grow unless you're growing your product and that takes stability, entrepreneurship and fresh ideas."

Regional Food Bank of Oklahoma

Rodney Bivens, executive director of the Regional Food Bank of Oklahoma, doesn't measure success by the amount of money the nonprofit raises annually. He measures it by the amount of food and other resources the food bank distributes statewide. And, doing that, he said, is mostly about operational efficiency.

"The driving goal of our five-year strategic plan is to keep people out of poverty and to create efficiencies," Bivens said. "It would be contrary to our mission to raise money if we didn't have food to distribute...The difference is the mentality as to how you operate."

One of the goals in the food bank's strategic plan soon will come true. Bivens said after Jan. 1, eight more regional distribution centers will be added to the 28 currently serving 53 counties amd more than 500 charitable feeding programs statewide.

"The regional distribution centers are a fulfillment of our goal that no charitable agency should have to travel more than one hour to pick up food," he said. "We do not believe the money and food donated is ours. We're good stewards of donations and believe in being as efficient as we can."

Bivens said one way the food bank is creating efficiencies is by controlling the distribution center's energy costs by using computers to shut off utility use at 6 p.m. nightly. The University of Oklahoma Industrial Engineering Department also is collaborating with the food bank to help it become more efficient.

"We also have warehouse management systems, bar-coding, inventory control, tracking, just-in-time inventory and we've placed our inventory on our Web site, so that our charitable institutions can order off the Internet," he added. "We have Global Positioning Systems in all our vehicles so we can track where every box of food donated goes and our Geographic Information System discovers gaps and we fill them."

Bivens said net assets at the end of the food bank's last fiscal year (which ended June 30) totaled $14.4 million and the food bank distributed 22.8 million pounds of food. However, the recent announcement that Aubrey and Katie McClendon and Chesapeake Energy Corp. are pledging $500,000 each during the next five years to the organization is especially welcome news. During the past two months, the organization has distributed 200,000 more pounds of food than it has taken in because of hurricane relief.

"We always have a positive inventory, but now the warehouse is starting to have a lot of empty spaces. The high gas prices and the hurricane have driven up the costs of doing business."

While a challenge, the situation also is another opportunity to further improve efficiencies and strategies.

"We're actually going to do some internal brainstorming, partner with different organizations and be more creative in order to bring in more donations," Bivens said.

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