To gain a competitive edge, the Smithsonian Institution will consolidate its moneymaking ventures under a semi-independent director, the museum announced yesterday.
Museum officials said the business group's first chief executive will be Gary Beer, former president of the Sundance Group, a successful spinoff of the nonprofit independent-film enterprise founded by actor Robert Redford.
Smithsonian Business Ventures, the name of the new organization, will bring together Smithsonian magazine, the museum shops, mail order business, product development and other offices that generate revenue for the Smithsonian. In fiscal 1998, these activities brought the museum $147 million.
In recent years, the Smithsonian has dismantled three units that were losing money: Smithsonian Books, a video unit and the Smithsonian Collection of recordings, home of a much-loved recording label. "They lost gobs of money," said Smithsonian Secretary I. Michael Heyman.
The Smithsonian's regents have approved an unusual framework for the new division, in effect creating a separate company with a separate board of directors. Business officials will direct the profits back to the central offices of the Smithsonian and will report directly to Heyman and the regents.
The Sundance Institute is often viewed as an example of an arts-based nonprofit organization that was able to expand into new moneymaking ventures without deserting its original principles. It was founded in 1981 by the movie star and director as a home for independent filmmakers and a forum for his environmental concerns.
The success of its signature film festival led to a number of entertainment and retail ventures, including a resort, a catalogue company and a cable network. Sundance is now using its brand name to develop a series of movie theaters dedicated to showing independent films.
Sundance has an annual budget of $4 million, with 40 percent of that amount earned from its offshoots and ticket sales. The remaining 60 percent comes from donations.
The catalogue, which offers Western and Third World crafts, textiles and jewelry, has become a highly recognized brand, reaching 3 million households and taking in $45 million in sales last year.
Heyman said Beer was tapped because he was able to start a business group that didn't conflict with the mission of its parent group.
Inside the Smithsonian, debates have erupted over whether partnerships with corporations have sullied the Smithsonian name. "Sundance was a not-for-profit and then it grew this for-profit wing that Gary was able to keep consistent with Robert Redford's vision," Heyman said.
Beer, 48, left Sundance last year but was drawn back into the cultural business world by the Smithsonian because of the largely uncharted opportunity, he said.
"It was the compelling nature of the cultural diversity of the Smithsonian, the content, the educational value and the opportunity to take those resources in business that I have had experience in and love, and apply it to the Smithsonian," he said.
A native of Rhode Island, Beer worked in Washington for the National League of Cities before joining Sundance in 1983.
Heyman says the new push at the Smithsonian was needed because of increased competition from other arts and entertainment centers. Profits from the Smithsonian's businesses have been shrinking as the museum complex struggles with tight budgets and the need to do more.
"Our enterprises have gone down 25 percent in the value of what we net since about 1985. We haven't changed fast enough," Heyman said.
In general, fund-raising has been stable. Heyman predicted that the Smithsonian will raise about $80 million this year, a satisfying sum but somewhat less than last year when the museum received a one-time $20 million gift.
Though the institution isn't floundering, it has a number of growing expenses. Exhibitions have become more expensive to mount. Partnerships with other museums have meant additional costs in personnel hours. Expanding the museum's popular Web site is costly. Underwriting special research and fellowships requires unrestricted underwriting.
"The demand on the outside on us is going to go up, and we have to provide the money for that. You need a fund that can jump-start some of these or pay for them all," Heyman said. "A more productive set of business ventures will allow us to do that."
Beer, who starts his new job in August, said he was interested in solidifying the existing business and "when and where appropriate developing new products and services. I'm a growth-oriented executive."