Friday, May 21, 2004

If you can't beat 'em, buy 'em

In an unusual strategic move described in the Nonprofit Times, the Woodruff Arts Center in Atlanta, and its Atlanta Symphony Orchestra division, recently purchased a professional telemarketing firm. The $3 million purchase of MKTG Teleservices from Media Services Group, Inc., created in a new subsidiary to the nonprofit, now called SD&A Teleservices. From the story:

ASO's Wade said the organization had several reasons for pursuing the company, but a key factor was the changing business environment for orchestras, which have seen several challenges in recent years.

'Orchestras and performing arts in general are increasingly constrained in tickets they can sell and money they can raise, and the ability to control costs,' he said. 'Part of what led us to this project was trying to be creative and innovative.'

It also seems that the Woodruff Arts Center was already shelling out the cash to the firm before the purchase, with $638,872 in marketing services in a recent fiscal year.

The new iteration of the firm will specialize in fundraising and ticket sales for culture and arts nonprofits. But it seems clear that the ASO and Woodruff see it as a profit-making venture.

The challenges of for-profit ventures owned or operated by nonprofit organizations are vast and various. Chief among them is the potential distraction from the nonprofit's original mission, as the demands (or even the success) of such ventures begin to grow.

The article quotes Kevin Giglinto, vice president of sales and marketing at Chicago Symphony Orchestra, who makes it clear that his organization isn't interested in such for-profit ventures:

'No, we're not getting into the telemarketing business,' said Giglinto, when asked if the Chicago Symphony was looking into any earned income avenues....Instead, Chicago Symphony's focus is on getting more people in the seats through ticket price reductions and packages, and a rush-hour concert series from 6:30 p.m. – 8 p.m. that will launch this fall, he said.

'Our focus is to find new ways to put the product into market,' he said. 'We're looking at ways to break down barriers to entry.'

This one will be worth watching.

posted on Friday, May 21, 2004 | permalink