A nonprofit catalog quandary

Sep 01, 1998 9:30 PM  By

Something’s got to change for the nonprofit catalog business of the Windsor, CA-based National Women’s History Project (NWHP).

For the past five years, sales for its Women’s History Catalog of books and other materials for teachers have held flat at $900,000-$1 million, largely due to lack of funds and staffing. The group is now trying to decide whether to sell the catalog or to bring in a catalog professional to grow the business-and either option could create a new set of problems.

If NWHP were to sell the catalog, the taxes the organization would have to pay would likely be substantial, making that option less attractive.

On the other hand, if NWHP were to bring in an experienced catalog pro from the outside, it could run into problems with the Internal Revenue Service. “If, for example, NWHP needed to pay a high salary for a good catalog manager, the IRS might say that paying so much is inconsistent with the public good for an organization of about $1 million in revenue,” says Lee Cassidy, executive director of the Washington-based Nonprofit Mailers Federation.

But NWHP doesn’t want to simply shut down the catalog. Besides, the book accounts for 90% of NWHP’s income. At the same time, however, “we’re not sure we can afford an outside agency to run the catalog,” says publications manager Bonnie Eisenberg. Making matters worse, the group is running out of time: Eisenberg has announced she will be leaving the organization later this year to pursue other interests. At that point, she says, “there won’t be anyone here to run the catalog business.”

A possible solution Cassidy has one suggestion. “It’s not unusual for nonprofit organizations to create for-profit companies to operate such businesses as catalogs.” The for-profit entities are free to sell goods that aren’t necessarily germane to the nonprofit groups’ missions, which can end up raising even more money for the associations. For example, the Minneapolis-based National Public Radio affiliate Minnesota Public Radio in 1987 spun off Rivertown Trading Co., a for-profit multititle catalog company whose main purpose was to raise funds for the station. Since its launch, Rivertown has grown from an $11 million cataloger of two gift-related titles (Signals and Wireless) to the $190 million parent firm of nine catalogs. (In March, Rivertown was sold to retail giant Dayton Hudson for $120 million.)