“It’s only when the tide goes out that you learn who’s been swimming naked.” –Warren Buffet
It’s been over four months since our profession and the world took a sharp and unexpected turn. During that time, many AZA member organizations have been extremely creative to keep their operations on an even keel. New revenue strategies, appeals for contributed support, expense control measures, and public funding have kept these zoos and aquariums afloat: as of the time of the writing of this article, no AZA member facilities have announced an intention to close permanently. But without the revenue provided by a steady stream of visitors, how long can the center hold? How might organizations need to restructure to ensure long-term sustainability? What new operating models should we be thinking about? How can we continue to effectively deliver on our conservation education missions?
On July 16th, Zoo Advisors convened a panel of industry insiders and outsiders to discuss these and other questions, and to speculate on what the post-COVID world might look like for zoos and aquariums. Click here to watch the recording of the session. Key highlights from the discussion were:
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Some organizations are making bold public appeals for support. Panelist Tara Riemer (President & CEO of Alaska SeaLife Center) shared that her organization made an emergency appeal: they need to raise $2 million by October to stay open. It was a drastic statement, but true. Her advice was to be honest and transparent with your public. She is optimistic that they will meet their goal.
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Consider new operating models. A significant portion of an individual organization’s expenses are associated with non-operating, administrative duties. By looking at conglomerating operations of multiple facilities (in the vein of WCS or Audubon), panelist Frank Steslow (President & CEO of Miami’s Phillip and Patricia Frost Museum of Science) estimated that organizations could realize between 10% and 20% cost savings in this area.
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Mergers are complicated. In traditional for-profit ventures, economic motivations for owners and shareholders make decisions simple. In the nonprofit world, these mergers are extremely complicated given the lack of a clear profit incentive. Stumbling blocks in partnerships, mergers, and acquisitions are often about people, not profit. What happens to boards of governors? Which senior executives run the show? Challenging questions like these have no easy answers.
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Discussions around mergers and partnerships are most successful when they’re facilitated by someone with a stake-holding interest in both organizations–for example, a common board member or major donor. With cultures varying greatly between nonprofit organizations, egos and “language barriers” often get in the way. An individual who can act as a bridge between seemingly disparate organizations can smooth the path forward.
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Large academic institutions can make valuable partners. Zoos and aquariums can provide great outlets for universities, for example as widely accessible faces, or as access to alumni in distant regions. They can also bring to bear significant research resources on behalf of zoological entities and their conservation work.
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Privatization continues to trend upwards. Panelist Chris Davis (Managing Partner of zoOceanarium Group) noted that he’s observed a significant uptick in interest in privatization of zoos and aquariums in the United States. His firm has worked extensively in this area overseas, where privately operated animal facilities have a longer history as anchors for economic development.
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While many organizations are looking to public entities for public support at this moment, cities and counties are among the least prepared bodies to take on the burden of increased financial responsibilities. Privatization can represent another avenue that limits public cost exposure.
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There is no one-size-fits-all approach or solution. Every organization will need to evaluate itself objectively. Nik Dehejia (Executive Vice President of Oakland Zoo) described his two-pronged approach: you need both a microscope and a telescope. His “microscope team” was focused entirely on the short-term: how to re-open and sustain day-to-day operations in the new world. Meanwhile, his “telescope team” peered into the future to plan and prepare for unknowns. It’s difficult if not impossible to do both, and by separating these responsibilities to discrete personnel, he is optimistic about his organization’s preparedness.
While there is reason to be optimistic, ultimately no one knows what the future holds, and that’s why we need to be prepared for any and all eventualities. AZA member organizations have historically been boldly independent, but there’s no time like the present to ask ourselves: might we be stronger together? If you’d like to talk more about what the options are, or need some help guiding your organization in the right direction, drop us a line.
For more reading on these topics, consider the following resources:
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How Many Nonprofits Will Shut Their Doors? (Candid.org; July 2020)
We find ourselves amidst a pandemic-driven recession of uncertain scope and duration. Over the last months, Candid employees have been asked repeatedly, “How many nonprofits are going to go out of business?” -
Think Outside the Box: How Stakeholders Can Help Nonprofits Face the Challenge of COVID-19 (SeaChange; June 2020)
The COVID-19 crisis will drive many nonprofits into insolvency, unable to pay their bills when due or carrying liabilities in excess of their assets. When the crisis abates, those insolvent organizations that have survived will need to recover by finding a path back to effective operations or be recycled, ceasing to exist as independent legal entities while having transferred at least some of their charitable assets (e.g. programs, staff, real estate, financial assets) to mission-aligned organizations able to put them to use. -
Is Your Nonprofit Considering a Strategic Restructuring? (CharityLawyerBlog.com; April 2020)
We’ll spare you the pandemic intro; we know that nonprofits are acutely feeling the effects of the current financial crisis. And uncertainty about COVID-19 virology and what a “new normal” might look like is frustratingly confounding. But now is not the time for “magical thinking.” This article helps readers take stock of how to think strategically when considering a restructuring. -
Making Sense of Uncertainty: Nonprofit Scenario Planning in the COVID-19 Pandemic (Bridgespan Group; May 2020)
Nonprofits can’t be sure how the pandemic will affect society, the economy, or their own field six months or a year from now. But they can navigate the uncertainty with greater confidence by building scenario plans that can help them continue to pursue their missions.
