Monday, November 30, 2009

Putting the Profit in Nonprofit

As we've said before, one of the huge issues with museums being able to pay their staff is that there just isn't enough money to go around. "But museums are NONPROFITS," you say. "They aren't supposed to make a profit, right?"


This misconception is at the heart of the problem, in my opinion. A nonprofit is not a business that doesn't make a profit. Instead, a nonprofit is a business that is unable to distribute profits to owners or shareholders. It has to reinvest its profits back into furthering its mission. There is no legal limit on how much money a nonprofit (in our case, a museum) can make.

So museums need to start thinking more like for-profit businesses, right? I had a conversation last night with a friend who remarked that the consumer-driven model can't work for museums. If it's all about making money, why don't museums just join with movie theaters and offer blockbuster hits inside (some museums do this with their IMAX screens, in fact)? Wouldn't that get people in the doors?

Sure it would, but then are people actually learning anything? Is the museum furthering its mission? Not really.

The important thing to know about nonprofits is they have a dual bottom-line:

1 – make money

2 – further the stated mission


Yes, museums must learn to do both, not one or the other.

Here's the challenge: how can museums (and museos) make money enough to pay salaries while furthering their mission? "If you build it, they will come" is not working. We need to do more. Any ideas on how we can put the profit back in nonprofit?


  1. I think a better label for museums would be "not-for-profit." Brinckerhoff uses this term in his book "Mission-based Management." While it's more cumbersome, it does imply that museums can make money to further their mission.

    In terms of how to make more money, I think we should look at how we use membership in our institutions. What does being a member mean? What kind of benefits are involved in membership? Members often get into the museum for free, but is this the best benefit that we can give them? And what kinds of benefits can we offer to make membership more appealing?

  2. Hi Erin,
    Thanks for the comment. I really like the term "not-for-profit" because that completely sums it up.

    I think that as a part of museums furthering their mission, they need to pay their people good money... this will help the industry retain the best and brightest, and to attract new, creative, smart people to it as well.

    I like the idea of using membership. Obviously, museum members are our core audience. That brings up the question though: should we keep hitting up the same people for money, or should we try to expand our "fan base"? Museums should offer those core fans much much more. Maybe museums should pair with other institutions/places/events... restaurant discounts? (A curator can give a lecture for members during a dinner at the restaurant). Maybe special membership pins or badges or something else to identify them? A business center on-site for members? Access to the "backstage" area at the museum with appointment?

    Any more ideas?