A group of us went to the Cleveland Metroparks Zoo. When I was young, my aunt used to work at a local zoo in my hometown. My best childhood memories lie in those moments in the zoo feeding monkeys and bears, and running after peacocks. Like every zoos in the world, it was always full of tourists, parents with kids. However, it was probably around my middle school years, the land of the zoo was sold to a local university, and the animals were transported to everywhere else.
And today, it was my first time visiting zoo after the many years. And all those childhood memories were flashing in my mind. Walking around the zoo in such a good weather, you just felt the amazingness of nature and universe. Giraffes were strolling right next to you in the field; ostriches were staring at MacDonald box; some birds were dropping poops accidentally right there above you… After dwelling inside cubicles facing concrete walls and thousands of other individuals in your same species forever and ever, I really forgot that there is such a big world outside there that is enjoying its own wonder.
Besides enjoying the nature, luckily, we had a behind-scene opportunity, talking with some of the staff members in the zoo and visiting koalas and some Africa animals, and were able to scratch a giant hippo. It was quite interesting to see the so many trade-offs and balances they have to make in order to keep the zoo sustaining and thriving.
As a zoo, how to balance the limited land area with the demand of having more animals? How to choose which animal to take and how many to keep from billions of species out there? How to fulfill the goal of education, preservation, entertainment, and research? And most importantly, as a non-for-profit organization, how to sustain?
You often hear people arguing that economics is just some tools for people to exploit others, to maximize one’s own private utility, a bourgeois, avaricious product. That could be right, to some extent. Just like religion could lead to world peace and massacre; just like science could modernize daily life and destroy the universe, so is economics. It simply is just a way to decide whom to give to how much given the fact that we only have this limited pie to feed a ton of gluttonous hungry kids. You can give the whole pie to one kid, or you can divide it up to all of them, or you can give this one a larger portion, that one smaller portion, etc. No one can tell you how you should divide. Applying to everyday life, it is an art, a philosophy.
Since we are at the zoo, let’s start with some economics about non-for-profit.
It is hard to combine these two concepts for a lot of people. Since non-for-profit, you are not suppose to think “profit” which i.e. economics to many people. But, if non-for-profit does not think “for profit”, how can it survive? Who can forever fund it for all its operations, and who would like to fund it? Like the zoo in my hometown, it ended up with selling all its land to someone else and dispersing its animals.
First of all, again, all economics activities are to maximize some kind of outcome (utility) under the limited resource (budget constrain). So is non-for-profit. Different from for-profit, they aim at maximizing whatever they are for. Say for the zoo, they maximize their goal of educating public about animal, wildlife, and to preserve wildlife, endangered species, etc.
For a zoo, in order to run successfully, they need money to get animals, to feed and take care of them, to build infrastructures, to put up all kinds of boards, videos, events, shows to attract tourists and to educate them, and they also need to pay for researchers to conduct research in order to better preserve the species. Of course they can not fulfill this goal if they go bankruptcy. However, at the same time, they cannot charge a horribly high fee for admission, because that will turn people away, which obey their goal.
So where are these tremendous need of money come from? Donors, tax payers, foundations, for-profit activities, and admissions. Donors and foundations are always the big source for non-for-profit organizations. However, they funding is often limited to certain activities that only relate to fulfilling the organization’s goals, for zoos, like maintaining animals, doing animal research, etc. What about the rest of the coverage, e.g. administration, management, daily expense, maintenance, etc.? That has to be covered by the organization themselves.
Putting all activities in a chart where horizontally we have “profit” going towards right, and vertically we have “goals” going up. Most of the times, these organizations have goals that can hardly bring back money directly. Animal research may better protect animals in the zoo, but may not add more tourists or higher admission fee. But you always have to pay a lot to researchers and to give them comfortable environment to do research (damn!).
So we can put them as highly related to goals, but highly nonprofitable.
In order to not go bankruptcy, we have to move the dot to the right to get some profit. For zoos, how to do that?
Just walk around the zoo, did you see those little gift shops? Restaurants? Face paints? Carmel ridings? Picture takings? Feeding animals? Or maybe some associated hotels, water parks, golf courts, on the side?
These activities merely relate to the goals of the zoo, but they bring profit (hopefully…). Smart zoo managers have to spread these evenly around the zoo, so that visitors will unintentionally spend money around at these places. Combining the lost from those highly unprofitable but awesome animal research with the “highly profitable” but commercial activities together, we ideally bring the balance of the zoo to equalization, avoiding it to go bankruptcy.
Sounds easy, but it is hard to do. Customers and donors will always complain some non-for-profit organizations are too commercialized, or have too much unrelated activities. That will bring the stars down from positive directions on “goal-axis”. And in reality, a lot of times, gift shops and other associated “for-profit” activities are not really running well and might even bring down the revenue.
And that’s why we need economists planning for the zoo 🙂
Articonomics 