An Analysis of Not-For-Profit Gardens and Museums Operating For-Profit Subsidiaries

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University of Delaware
Three not-for-profit gardens and museums which are operating wholly-owned for-profit subsidiaries, Callaway Gardens, Pine Mountain, Georgia; Mystic Seaport Museum, Mystic, Connecticut; and the Zoological Society of Philadelphia, Philadelphia, Pennsylvania, were researched to determine the appropriateness, advantages and disadvantages of operating for-profit subsidiaries. The staffs of the not-for-profit organizations and for-profit subsidiaries were interviewed. Analysis of the interviews and organizational documents identified five key areas which should be considered before establishing a for-profit: mission, planning, trustees, management, and expansion. This analysis was extended to two not-for-profit gardens and museums: Longwood Gardens, Kennett Square, Pennsylvania and Winterthur Museum and Gardens, Winterthur, Delaware, which are not operating for-profit subsidiaries. Each was evaluated to see if a for-profit would be suitable to its organization. It was recommended that both organizations not start a for-profit subsidiary at this time because Longwood's current endowment provides strong financial security and Winterthur's leadership is in a period of transition. However, a for-profit may be a viable option for either organization in the future. The recommendations demonstrate that each organization's management team must evaluate their own operations to determine if a for-profit subsidiary would be advantageous. Of the five key areas identified in this thesis, the mission and trustees are the two most critical issues in the establishment of a for-profit subsidiary. It is imperative that the mission of the for-profit subsidiary relate to the mission of the not-for-profit. Trustees of the not-for-profit organization must actively support the formation of a for-profit subsidiary if it is to be successful. A for-profit subsidiary should not be perceived as a panacea, instead, as one option that should be investigated by not-for-profit administrators.
Financial management, For-profit subsidiary