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Shared Management Resources: New Thinking for Publicly Owned/
Privately Managed Nonprofits in the New Economy
Rick Biddle, Vice President
April 2012

In recent years, the organizational shift of cultural institutions from publicly owned and managed to publicly owned and privately managed – the successful public/private partnership concept – has been the trend across the U.S. In most cases, this shift is driven by the need to change or expand the base of financial support and/or to allow the nonprofit institution (whether a zoo, aquarium, museum, nature center or botanical garden), to adapt to the marketplace and audience more quickly than is typically possible in a public decision-making environment.In light of today’s economic realities and visitor expectations, cultural institutions must remain nimble, innovative and relevant in order to ensure their financial viability and sustainability in both the short and long term.

As these public/private partnerships have evolved, the results have been positive for both the institutions and the communities involved, despite the fact that the transitions have usually been motivated by a financial crisis. Primarily because of recent declines in government funding, cultural institutions are exploring new management and financial approaches to the public/private partnership operating model.

The leaders of cultural institutions and their public partners are beginning to embrace the concept of “shared management resources,” which provides a strategic alignment of core operating functions and opportunities among two or more cultural institutions in the areas of marketing, education, research, guest services, technology information, facilities and visitor experiences. This cooperative, integrative model is not new in the for-profit world, where the financial and banking industries have been successful with merger and acquisition strategies that rely on consolidated, shared management resources.

The shared management resource (SMR) concept is the next generation of public/private partnerships. It maximizes funding resources through a centralized operating approach to overhead services and core management/operating functions.

Significant outcomes of the SMR concept are:

• It allows communities to insure that their treasured community resource remains viable, serving as a source of community pride and economic development as well as a destination magnet for residents, tourist and visitors.
• It provides a workable, sustainable business model that supports the future needs of both the audiences/visitors and their communities.

In addition to fulfilling a need in the governance and funding structures of cultural institutions, the shared management resources concept is being embraced as a bold new management tool by both the cultural not-for-profit sector and its corporate and foundation funders. SMR allows them to leverage their consolidated resources and follows “best practices” principles.

Although there are financial reasons for cultural institutions to move forward with a shared resource partnership, the partners need to insure that there is compatibility and collaboration within the respective “institutional values” (core mission, guiding principles, brand and leadership). This promotes a stronger link and synergy among the institutions’ core products – their collections, experiences, research and/or programs.

Cultural institutions collaborating in an integrated shared management approach could see benefits in the following functions:

• levels of management related to visitor services
• education programs including outreach, workshops and adult programs
• design/development of exhibits
• technology/database systems
• marketing including ticketing, website interfaces and social media
• membership programs

Direct and indirect benefits of creating a shared management concept could include: expansion of the visitor experience(s); significant improvement to the institutions’ image and brand; new operating revenue and capital investment programs; and reduction or leveraging of costs currently allocated to “overhead.” This “bold synergy” model provides instant financial return to the respective cultural institutions and allows them to move forward quickly to address any potential institutional and/or financial weaknesses (e.g., under-funded core education programs, new staffing positions and new fee-based revenue-generating opportunities).

The shared management resource concept introduces new thinking into how cultural institutions need to operate and manage in the future. The financial dependences that cultural institutions currently experience will not be eliminated as new challenges, new investments and new opportunities are introduced. However, to continue to be successful, leaders of cultural institutions and their public partners must be bold in their thinking. SMR will provide for the long-term viability and sustainability of cultural institutions with immediate and positive outcomes.

One example of the shared management resource concepts that is currently being implemented is the new partnership between the Academy of Natural Sciences ( Philadelphia) and Drexel University – now known as the Academy of Natural Sciences at Drexel University. Schultz & Williams is providing strategic planning and guidance to the Academy as it transitions and transforms itself within its new partnership with Drexel.

Schultz & Williams is also involved with two other cultural institutions in developing shared management resource concepts; these projects will be announced within the next six months.

Schultz & Williams is a national consulting firm based in Philadelphia providing management, fundraising and marketing consulting for nonprofit organizations, along with full-service direct marketing, database and creative/production services.