AIDS Action Committee Has Built Thrift Shops to Help Fund Itself
Boomerangs is now a chain of thrift shops located in Boston and Cambridge.
March 15, 2012 Realizing that it needed to be more entrepreneurial as income from traditional funding sources declined, AIDS Action Committee, a Boston nonprofit that has become a statewide leader in the fight against HIV/AIDS, has created a chain of thrift shops that now provide 18% of its revenues.
In the last 18 months, AIDS Action Committee
opened three of its four low cost, high-yield thrift shops in the Boomerangs chain, which sell everything from clothing and furniture and housewares to eclectic collectibles.
The organization, which provides services to one in six people in the state living with a diagnosis of HIV, now operates three thrift stores in Boston (Jamaica Plain, West Roxbury, and the South End), and one in Cambridge (Central Square).
The decision to open its first store in the late 1990s came directly out of long-term strategic planning by its board of directors. The availability of life-saving medications to treat AIDS coupled with the widespread public belief that the AIDS epidemic was at an end marked the beginning of a steady decline in public funding to treat HIV/AIDS. Meanwhile, the organizations flagship fundraising vehicle, the annual Boston AIDS Walk and 5K Run, dropped from a $3 million a year event to $1 million.
Our plan emphasized long-term stability. We needed to find something that could provide solid income to make up for other losses, because we are in it for the long haul, until our services are no longer needed, said Rebecca Haag, president & CEO of AIDS Action Committee, which was founded in 1983.
For inspiration, AIDS Action looked to AIDS organizations in other major cities, most notably Housing Works in New York and Lifelong AIDS Alliance in Seattle, both of which operate successful thrift shops.
It took us a long time to get it right, Haag said. The organizations first store opened in the North End, but within a year, the state began Big Dig construction and foot traffic dwindled. It didnt just impact sales; ongoing construction also made it difficult for people to drop off donations.
Location and Store Size Matter
The organization learned a few critical lessons about retail sales: location matters and so does size. The costs of operating a 5,000-square-foot store are not that different from running a 1,200-square-foot location, but the larger store can sell more merchandise. To succeed, it also needs a location with great foot traffic and a consistent community of shoppers.
Putting those lessons into practice, AIDS Action closed the North End shop and opened one in Jamaica Plain, which remains successful to this day.
Much of the investment required to operate the Boomerangs chain is scaled from the human resource, internet technology, and management investments the agency already had in place for its program, policy, and service work.
But staffing proved to be a challenge. Simply hiring from other retail operations didnt work.
We tried bringing in regular retail people to run this business and they quickly became overwhelmed, said AIDS Action Vice President of Operations Sue Kelley, who manages the Boomerangs chain. Youre not placing orders, youre not managing inventory, and pricing isnt fixed. Youre dealing with complete and total unknowns and it tends to overwhelm people.
An ability to think on ones fee is a better qualification for work in Boomerangs thrift shops than past retail experience, Kelley said. Ultimately, AIDS Action tries to train and hire from within, with Kelley, whose sole duty used to be managing human resources for the nonprofit, being a prime example.
In 2008, when many nonprofits were hit hard by the recession, Haag, Kelley, and AIDS Actions board of directors saw opportunity.
Thrift stores have become a viable business because of the economy and the recycling movement, Kelley said. Many people dont want to buy new. They want to buy used. Some are motivated by a need to save money, others are motivated because they see us as such a wasteful society and they dont want to contribute to that.
The agency put a strategic plan in place and in relatively short order opened three new stores, income from which has become critical to AIDS Actions ability to provide services to people living with AIDS.
Focus Is on Margins
Boomerangs is run like a business with a sharp focus on margins. Today the stores provide 18% of all agency revenues, up from 13% in 2008. AIDS Actions nonprofit status is not jeopardized by revenues from the thrift shop chain because all items are donated and then resold. If AIDS Action purchased items for resale, it could potentially threaten the agencys nonprofit status.
While its no mean feat for a social services provider to open a successful retail operation, AIDS Action said the lessons it learned can be implemented at other nonprofits seeking creative solutions to funding challenges. Among them:
- Anticipate change. If public funding is decreasing, it will not be made up simply by asking lawmakers to restore it. Nonprofits need to find additional monies from private sources whether they are individuals or foundations.
- Think like an entrepreneur. Utilize existing resources, scale original investments, and know when to cut your losses.
- Be creative. AIDS Action used to sell many of the books that came in from donations at dollar sales. But by monitoring what used books sell for online at Amazon and elsewhere, Kelley said she realized that if she opened a shop on Amazon she could make more money. AIDS Action now sells about $4,000 worth of books online each month.
- Keep the mission in mind. For us, we have to be motivated by better margins, but its not for the sake of making money as it might be in the private sector, Haag said. Its because that money youre making is being used to do social good.