Making money the old-fashioned way
July 1, 2004 6 minutes read
Special Report: A Role Model for ASOs
Making money the old-fashioned way
Retail enterprises hugely popular in NYC
For those who doubt that a large AIDS service organization (ASO) can succeed financially without big private or government grants, Housing Works is an example of how it can be done.
About one-third of the revenues of Housing Works Inc. of New York City comes from its thrift shops, bookstore, and catering businesses. Another 44% of the revenues are from Medicaid, which is billed by the organization’s health care clinics, the same as any other physician’s office or health care clinic, says Andrew Coamey, chief financial officer and senior vice president for housing development and operations.
Here’s how the businesses work:
- Thrift stores.
Housing Works owns four thrift store boutiques, which receive donations of clothing and other items and then resell them in an environment that more closely mirrors an upscale boutique than a thrift shop, Coamey explains.
"If you walked into our thrift store, it would feel like you were shopping in a designer clothing store or boutique," he says.
The first thrift store lost money in its first year, broke even in its second, and made a nice profit in its third, Coamey adds.
Now the thrift business includes quality children’s clothing, designer men’s and women’s clothing, jewelry, art, shoes, housewares, records, antiques, and furniture. A couple of years ago, actress/singer Bette Midler donated all of her furniture to Housing Works when she redecorated her apartment. The thrift shop held a big fundraising event and sold the items.
"Our motto is to take donations from rich folks and sell the clothing back to rich folks," Coamey says. "We never viewed ourselves as competing with the Salvation Army thrift store or a community-based store — that’s not where our market is."
When the thrift store was started, it received a huge financial boost when popular New York retailer Barney’s donated 200 men’s suits left over from its annual discount sale, he says. "That really put us on the map, because people started walking in and seeing they could buy a Calvin Klein suit for $200 and not $400."
All donations are sorted in Long Island at a processing center where they are steam-cleaned, ironed, and tagged. The items that can’t be sold are donated to another nonprofit or are kept as rags, which are resold in a rag trade, Coamey says.
Each fall and spring, Housing Works holds a fashion event where customers can buy a ticket for $10 to receive access to a preview night at the store’s unveiling of its summer or winter clothing.
The thrift stores had $8.2 million in sales last year and generate about 30% of the total revenue, according to Coamey. After expenses, the thrift stores’ contribution to Housing Works is $1.9 million, he says.
Providing jobs and training to clients
While the stores greatly enhance the nonprofit’s bottom line, they also serve another purpose, since they employ HIV clients who have been through Housing Works’ job training program. The starting salary is $23,000 a year with full health benefits, regardless of their HIV status, plus dental insurance, life insurance, and four weeks of vacation pay, Coamey says.
"We’re actually looking at bumping up our minimum salary, which is a tough wage to live on in New York City — the rent is so high," he adds.
- Bookstore.
The Housing Works Used Bookstore Café is more coffee house than the average bookstore, Coamey says. "It follows the thrift stores in terms of brand with an absolutely gorgeous space. It has a mahogany staircase."
The café serves coffee, tea, sandwiches, salads, soups, beer, and wine. The bookstore, which has 45,000 books, has a small stage that’s used for book-signings, readings, and performances. Recently, the bookstore started a popular music evening fundraiser in which all proceeds from the ticket sales and wine and beer bar went to Housing Works. Singers who’ve performed there include Bryan Adams, Jesse Malin, Roseanne Cash, and Lyle Lovett, Coamey notes.
"We’ve gotten a fair amount of publicity about the bookstore being the space where writers in New York want to read," he says. "While the bookstore doesn’t make a ton of money, it’s good PR and a community place where students can hang out and do their homework."
The bookstore’s total revenues for this past fiscal year were around $700,000, and about $100,000 of that is a profit that will be contributed to the parent company, Coamey says. Book contributions are sorted in the basement, and when books are too beat-up to display, they are contributed to local public schools and hospitals, he says. "We have a lot of first editions."
Housing Works is beginning a program to auction off collectible books and thrift shop items on the Internet, Coamey says. "We will do the auction ourselves, hiring a company to handle it."
- Food service.
Housing Works has two food operations, including an institutional business that supplies all of the food needed for the organization’s different health care programs, and the Works, a catering business.
The institutional program provides 300 meals a day at three different clinics through a contract with the parent company. There also is one outside client for the institutional food service.
The private catering company provides specialty menus and food to weddings, corporate events, and parties. The menus range from hors d’oeuvres to three-course formal dinners. There also are breakfast and lunch catering packages.
"We do some interesting collaborations with the used bookstore, where the bookstore has rented out its space for a wedding or for New York Magazine’s annual staff holiday party," Coamey says. "If you rent the space for a wedding, then you are offered a package deal where we provide the food."
The catering program also has provided food for the annual New York marathon and for the city’s annual Shakespeare in the Park, he explains. "The total food service company projected for this year is $1.1 million in sales with net proceeds to the parent corporation of $200,000. The catering was $300,000 in sales."
- Gotham Assets.
This nonprofit property management division of Housing Works provides property services to clients, including development, management, maintenance, and light renovations on real estate for social service organizations and private property. This division owns and maintains residential properties, including low-income housing.
"Our preferred model is congregate housing," Coamey says. "We buy, renovate, and provide services to tenants on site and give access to health care, and we have three buildings in various stages of development."
Housing Works has plans to expand its business enterprises to better serve its clients. For instance, one goal in a seven-year strategic plan is for the organization to start a credit union where clients and staff could receive free checking and loans for college, housing, and other needs, he says. "We employ our clients who sometimes are people with backgrounds that include criminal records, a history of drug use, and they don’t have good credit," Coamey adds. "They can’t go to the bank and buy a home even if they make $35,000 a year."
Keith Cylar, a co-founder of Housing Works, who died this year of cardiomyopathy after 20 years of living with HIV infection, had dreamed of starting the credit union, Coamey says. "It’s an endeavor that was dear to Keith Cylar because he got frustrated watching our staff line up at check-cashing places and wasting all this money."
For those who doubt that a large AIDS service organization (ASO) can succeed financially without big private or government grants, Housing Works is an example of how it can be done.You have reached your article limit for the month. Subscribe now to access this article plus other member-only content.
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