Seacoast Science Center - Term Paper Example

? “Seacoast Science Center” Case Analysis and Contents Executive summary 3 Introduction/background 4 SWOT Analysis 4 Strengths 4 Weaknesses 5 Opportunities 6 Threats 6 How should SSC measure success? 7 Financial measurement 7 Donor dependence ratio 8 Non financial measurement 9 Competitive advantages 9 What can the SSC do to overcome the “$50,000 question”? Is this question the real problem facing SSC? 10 Would raising the admission fee negatively affect SSC’s financial situation? Explain. 11 Conclusion and recommendations 12 Executive summary The seacoast science Center is located in the Odiorne Point State Park in Rye, New Hampshire. The center served as an educational center for the local environment and the visitors’ center for the park. Just like for-profit-organizations, not-for-profit organizations operate in internal and external environments, both of which present forces that must be considered in determining the sustainability of the organization. Strengths and weaknesses are the internal factors that can be controlled by the management while opportunities and threats are the external forces that affect the whole industry, and which the organization cannot control. Besides, competitive advantages will be examined – these are the factors that enable the company sell its goods/services despite there being rival organizations’ dealing with similar goods/services. Other issues that will be tackled in this report include: how to measure success, how to address the $50,000 question and the possible impacts of raising admission fees. Introduction/background The facility called Seacoast Science Center was opened in 1992, with Parks as the facility’s owner, Audibon Society of New Hampshire (ASNHH) as the managing sponsor and the Advisory Committee as the governing body. The director of the visiting center was Wendy Lull, who served as the first employee. During the year of starting, the center attracted 65,000 visitors, a number that grew to 100,000 by 1999, which was above its capacity. In November 2001, the Seacoast Science Center, Inc., an independent nonprofit organization took over the management contract for the center. Currently, SCC is grappling with a deficit budget, a problem that is giving Wendy Lull, the organization’s president, an endless headache. One of the options that is being cited to address this problem includes raising of the admission fees, but again it is argued that such a move could keep off the donors and perhaps make it difficult for the visitors to raise the fees, especially because people do not highly value the kind of services offered by perks. This report will analyze the organization’s SWOT, discusses ways of measuring its success, and look at its competitive advantages among other issues. SWOT Analysis Strengths 1. The organization’s programs strength is lying in its ability to track changes over time - through the use of simple technology. 2. SSC has a mix of staff and trained volunteers. The staff is always commended for engagement and commitment. The competence of staff is revealed by Wendy’s remarks that “—we all do visitor programs, we’re out there, you’re teaching people, you’re interacting with them” (Naumes and Lull, 2012: 10). 3. Educational programs are available for all ages, ranging from kindergarten through high school. This makes it easy for SSC to get many clients throughout the year. 4. The programs are very simple; hence, people can get involved without much hassle. 5. The organization has adopted technology including websites, direct mail and press release. These platforms are highly valuable for marketing purposes, which gives the organization a competitive edge. 6. The numbers of visitors are growing rapidly every year. 7. The change in management to SCC Inc. in 2001 allowed the management and staff to focus on the organization’s mission. This offered SSC a financial freedom, including having its own members and donors. 8. The new chairman, Pam Hall, has huge experience with nonprofits and fundraising, which has helped the organization establish priorities such as the introduction of development committee on the board, rather than the erstwhile development task force. As a result of this priority, “a donor came forward who, in addition to an outright gift of $50,000, pledged to match $20,000 a year for three years to cover the salary of a development director” (Naumes and Lull, 2012: 13). In addition to this, the SSC secured a grant of $25,000 for fundraising software from Fidelity Investment. 9. Posts relate the data collected at each post to the lives of the people who live in that area so that the data being collected seems more closely related to the everyday citizen and, thus, worthy the visitors’ contribution. 10. Resourceful – the center is providing distance learning programs, which are broadcasted live from the Learning Studio to the participating schools. The teachers can also be able to offer pre-or post-visit activities because the center has video conferencing capability. This also made it possible to customize any program at an additional cost. Weaknesses 1. The organization lacks enough income to cover all its expenses. 2. Dependence on unpredictable, grants and bequests, to balance the budget. 3. Getting people to actually use the programs is a big hurdle, because while the process of taking a picture set using the posts is simple and hassle-free, uploading the pictures to the online database can often become a hassle itself. Furthermore, the project faces the difficulty of appearing to be unrelated to the common layperson, as the data it collects is often only useful to scientists, and thus not worthy of their interest or involvement. 4. Fundraising, which is SSC major source of income, is not enough to cover its operational expenses. 5. The organization does not have brochures in the state’s centers, and it does not make use of paid advertising. 6. SSC does not have enough volunteers to support its programs, and the revenue of $3 per head is very little. This makes it difficult to get enough funds to do paid advertisements. Opportunities 1. By building the Learning Studio, SSC can do capital campaign to build endowment and at the same time help the organization to raise huge amount of capital. 2. The organization can look for funds to conduct paid advertisement, which can expose its services to a large audience. 3. Due to the great value that the organization is adding to the society, the government could decide to support its initiatives. 4. More doors can be opened if more crucial donors can start supporting its programs. Threats 1. People do not value visiting state parks; hence, it is difficult to raise revenue by increasing the charges per head. This means that people cannot pay what it costs, leaving the organization to rely on fundraising to meet its expenses, which is largely unpredictable. 2. The pressure on schools’ budgets is causing the growth in visitation to increase only slightly. The people nowadays do not get enough money for field trips. 3. There are other organizations that SSC is competing with for donors, some of whom are more valued by long-term local donors such as Strawberry Bank. Some of those they compete for donors are better organized for recruiting and maintaining donors, including UNH and NHCF. 4. The future is tough with the high energy prices and reduced school budgets for travel. 5. Although nonprofits needs people to run the facility as raise money, donors usually prefer finding projects rather than people. How should SSC measure success? SCC, as a nonprofit organization, can use different methods to measure its success. The organization must align its activities with its objectives and achieve the donor accountability, so as to effectively measure the success of different groups. This can be achieved by assessing how well the organization achieves its goals and the efficiency of doing so. Most importantly, the organization must ensure that it is held accountable for its performance and actions. Additionally, SCC must improve performance and facilitate learning. The performance measurement can be both financial and non-financial (Epstein & McFarlan, 2011: 2). Financial measurement Financial statements of SCC can be used to assess the quantitative parameters (Epstein & McFarlan, 2011: 5). These statements can be used by the stakeholders to get an insight on the organization’s financial status, which facilitates in effective monitoring and planning of activities. SCC must be able to justify and clarify to the donors the usage of funds that have been solicited from them, including exhibiting effective utilization of the limited resources. In other words, transparency is an important condition for accountability. In particular, the financial statements can be evaluated for financial sustainability of the organization. Furthermore, the financial statements can be used to assess what it has cost the organization to provide the beneficiaries with services, and the extent to which the community is benefiting from the services. The other aspect that can be evaluated is financial stability. This refers to the long-term support SSC provides for its beneficiaries. For SSC to be considered successful, it must have sufficient funds to carry out its activities today and in the future (Bradach et al., 2008). The efficiency of SSC can be assessed, by measuring the organization’s capability to utilize the resources at the lowest cost to serve as many people as possible. Additionally, the effectiveness of the organization can be measured by its capability of achieving desired results through consistent performance and by managing the limited resources. The most common financial measures include the following: Donor dependence ratio Donor dependence ratio = Donor income/ Total income This ratio evaluates the organization’s donor income in comparison with to total income generated during the year. The donor dependence is high when the ratio is high and low when the ratio is low. The donor dependence ratio for 2007 financial year is calculated as follows: Income Donors income Other income Admissions 64,729 Camps 129,714 Exhibits (grants) 380 Facility rentals 82,449 Fundraising and development 232,265 G&A 0 Membership 77,725 Nature store 125,406 Group Programs 119,479 Park Contract Program Support 50,000 Custodian Support 15,000 Learning Studio Programs 0 Rental 0 Total 232,265 664,502 Donor dependence ratio = 232,265/ 897,147= 0.26 SSC’s donor dependence is 0.26, which means it is very low and, hence, the organization is somewhat successful during this particular year. This implies that SSC is independent as there is less reliance on donors to generate income. Non financial measurement Non financial measurement of success is used to provide a balanced opinion of the organizational performance. SSC should continuously measure the impacts of the efforts and the activities on the individuals and the society and the steps made towards achieving the set goals. SCC has competent staff and tools essential to align with organizational objectives and to drive its strategic goals. Other aspects that could determine its success include the number of new donors obtained during the year, the level of relationship maintained throughout the year, and the number of jobs created during the year, among many others. Competitive advantages SSC occasionally takes its programs to the general public. For example, the organization usually holds informal sciences during the back-to-school shopping season – this strategy helps by adding an educational aspect to their promotion, which is apparently a fun. In addition, this unique program helps the organization to reach people who are not interested in learning about nature, in a way that is not done by any other rival organization. Furthermore, this strategy helps because it is reported that National Science Foundation studies point out that people are more open to science in informal settings such as museums and libraries than in schools. SSC mainly keep and show local species as teaching tools. This separates them from large aquariums that deal with tropical animals and environments from all over. They showcase what is right in their backyard. The CEO reveals the competitiveness of the organization in terms of competent staff by stating “Where else do you go where you can have that much time with a naturalist, that intense personal experience? . . . We always try to make personal connections.” (Naumes and Lull, 2012: 10). No other organization in the seacoast area offered exhibits similar to the SSC. Even though the attendance is coming down, the SSC is still reaching more people than most local organizations. Furthermore, the quality of the live animal exhibits and the experience provided to its clients when they visit the park separates the organization from others (Naumes and Lull, 2012: 16). What can the SSC do to overcome the “$50,000 question”? Is this question the real problem facing SSC? The real problem that the organization is facing is how to cover the deficit in its budget, which is experienced years on end. From the financial statements, it appears that the major expense for SSC is payroll and benefits. This is because the organization has 18 full-time year-round staff, as well as part time and seasonal employees. The $50,000 can, therefore, be addressed by reducing the recurrent expenditure, for example by substituting most of the full-time year-round staff by part timers. This can go a long way to reduce the expenditure on payroll, and utilize the funds that will be preserved on development projects, especially those that are likely to generate more income for the organization. Even though cutting down on payroll could be a good way of reducing the expenses, the question that come to play is how to continue getting the much needed human expertise without monetary motivation. Nevertheless, the management of SCC can think of non-monetary ways of attracting, motivating and retaining competent staff, for example through recognition and awards, just to mention but afew. It is also reported that other significant costs is resulting from lease of the facility from parks, the expenses incurred in special events, and professional fees. These are all expenditures that can be cut-down, to save the organization the much sought after dollar. For example, SSC can build its own facility to avoid incurring the huge expenses every year on lease, and also shelve the less important special events. Additionally, the management can embark on recruitment of staff that is competent in most of the areas that the organization is forced to outsource, and this will help save the money spent on professional fees. It is reported that SCC reduced program expenses by use of volunteers and college students for camp programs. This is a very important strategy that the organization can focus on to plug the deficit, because it helps cut down payroll expenses. The management would want to embark on a more aggressive initiative to recruit more volunteers and college students, to capitalize on payroll cut-down. To overcome the $50,000, SSC should seek ways of covering expenses out of operating income, instead of running operating deficits. Increasing of the admission fee could be the other alternative. This could include finding strategies for expanding the projects which involve getting other organizations to endorse or fund the project or to use the data it provides, especially if these organizations are well-known in their field. The reasoning behind this approach was that if people saw an organization they recognized sponsoring the program, they would feel that the data being collected was being put to use by a legitimate organization and thus that the program would be worthy of their participation. Would raising the admission fee negatively affect SSC’s financial situation? Explain. Increasing of the admission fee would, certainly, affect SSC’s financial situation adversely, because such a move would substantially reduce visitation. Besides, the donors would respond by holding back their funding because they would assume that the organization has averted from its core mission, which requires it not to incline towards profit maximization. Still, other sponsors would think that they can make enough revenue to run their budget; hence, they do not really need assistance. The other big issue is the reduced school budgets for travel. Even if they increased the admission fees, the parents and guardians of the students who visit the park have to make the considerations of cost when deciding whether they can pay for their children (Drucker, 2005: 5). Conclusion and recommendations Seacoast Science Center is a not-for-profit organization whose motive is not to maximize profits, but to ensure the society benefits from its educative activities generally. Nevertheless, the big question of how to deal with the $50,000 deficit is very important - though addressing this problem should not prompt the organization to depart from its mission. Therefore, it would seem inexpedient to raise the admission fee – instead, the management should seek for more innovative alternative ways of generating extra income, including attracting more donors and coming up with more income-generating initiatives (Foster & Bradach, 2005: 6). References Bradach, J.L., Tierney, T.J. & Stone, N. (2008). Delivering on the Promise of Nonprofits. Harvard Business Review, Dec: 88-97. Drucker, F. (2005). Managing the Nonprofit Organization: Principles and Practices. New York: HarperCollins Publishers. Epstein, M. & McFarlan, W. (2011). Nonprofits vs. For-profits bosses: Critical differences. (Online) Available from: < http://www.imanet.org/PDFs/Public/SF/2011_> [accessed 31 May] Foster, W. & Bradach, J. (2005). Should Nonprofits Seek Profits? Harvard Business Review, 83 (2), pp 1-8. Naumes, M. & Lull, W. (2012). ‘Seacoast Science Center: Sailing the Shoals’ Case Research Journal, 32(1), pp. 1-17. Read More