A camp comes into some money. They don't have a long-range plan based on operating goals, so the director goes to the staff and asks, "What do we need?"
If the staff has been working hard to fill the camp and programs to capacity through their long, long hours in difficult working conditions, you could certainly entertain a suggestion to "improve working conditions" by adding facilities that primarily make the lives of the staff easier.
Things like new or expanded offices, welcome centers, new staff housing, new dining rooms and new maintenance facilities… Each staff person has their own personal priority. All of these things are important and will add to staff satisfaction, retention and performance.
But in what's more often the case, the camp has not made a substantial dent in its deficit because there are still lots of empty beds. The guests still aren't satisfied enough to recommend the camp to their friends because the customer service and basic facility needs are not yet being met. The camp isn't breaking even, let alone generating a contribution to overhead.
That's when the decisions on how and where to spend capital money may actually have life or death consequences to the camp.
So how can getting a donation hurt the bottom line?
Almost every capital expansion (investment in new facilities, property, or major equipment) creates a corresponding yearly operating expense.
Let's look at some common examples, the new annual expenses they generate, and a range of dollar values those expenses can take:
New High Ropes Course or Climbing Tower
-Ropes, harnesses & helmet replacement, annual training, annual inspection and certification
-$2,000 to $5,000 per year (annual inspections, rope replacement, yearly staff training)
New Swimming Pool
-Pool maintenance, electricity, chemicals
-$8,000 to $35,000 or more per year. (chemicals, electricity, staff)
New Dining Hall
-Heat, light, cooling, floor maintenance & cleaning
-$12,000 to $60,000 per year. (heat, lights, supplies, custodial)
-Heat, light, cooling,cleaning, furnishings, staff efficiency in travel from the new site to the main camp area
-2,000 to $12,000 per year (heat, lights, supplies, custodial)
In each example, the new facility looks great. But does it bring in even one additional dollar of revenue? In most cases, no. No additional bed was filled, no new bed was added. What was added was unexpected overhead this first year and every year from now on.
So when the camp is already struggling with income that doesn't cover expenses, new expenses are added on (almost always greater than anticipated) and no income is brought in to cover it.
Instead of things being better, like the staff and volunteers anticipated, the budget for the next year shows even greater losses. And too often no one can figure out how it happened.
Of course it doesn't have to be this way. If the camp were a for-profit business going to a bank to take out a loan for the construction, the director would be required to submit a business plan. The plan would have to include a detailed estimate of not only all the costs of construction, but also every conceivable ongoing expense it might generate.
Then the plan would include marketing, staffing, start-up costs and timing, and a realistic month-by-month schedule of every anticipated expense and how new revenue would be generated to begin paying back the loan.
That's not always the case with camps. We often low-ball the construction expenses, and forget the design costs, permits and costs of meetings. We forget increased staffing to handle more square footage. If we couldn't keep our place clean before, how will we keep it clean when there's even more of it?
Utilities, insurance… And if we had to interrupt existing customers to build our addition, we forget that they might not be so forgiving if our disruption hurt their experience this year.
We assume the new facility will begin generating income immediately, but don't have a plan in place of how that will happen.
If you were building a restaurant you'd have the theme and menu designed before you ever broke ground. You'd build anticipation with advanced marketing; you'd begin hiring staff well in advance so you'd be ready to go on opening day. But you'd realize that it might take months (or years) for the business to break even as you build up positive word-of-mouth from satisfied customers.
There's another scenario where more opportunities are lost… Suppose you plan to build a new dining hall in the same location as the original. (The same concept applies to new camper cabins, and even a new climbing tower.) A building that is currently generating income must be temporarily replaced during construction (disrupting current customers).
When finished, the new building may be more useful and handle more people, but there's not nearly the net gain in usable space as if the new structure was built in a different location, and the old dining hall re-used for serving groups better, serving more groups simultaneously, and serving more kinds of groups.
Let's back up to the original problem: a camp in financial difficulty. What do you need? You need income. Sure there is almost always money to be saved -- often substantial money to be saved -- from cutting expenses.
But the real gains -- and the camp's future success -- are found in searching out increased revenues. And there are two primary areas to look…
First, where do you have excess capacity in programs where fees not only cover the direct costs of the camper's stay, but also contribute to the general overhead of the camp?
Summer camp is the most important place to look, as it has the strongest demand for quality programs, and parents are willing to pay for the value.
Excess capacity can come in the form of actual empty camper beds during the first and last sessions. It's worth the effort to sell hard to fill each and every space. That can mean special contacts (letters, phone calls) to campers already signed up to encourage them to bring a friend.
For the later sessions, it can be as simple as asking the campers near the end of a session, "Who's having a great time?!" (WE ARE!) "Who wants me to call their mom and see if they can stay another week?!" (ME! ME!)
But there are less obvious sources of existing capacity, like cabins that aren't currently being used for campers, but could be. The most common sources are buildings that have been taken over by staff or programs. I've seen the best waterfront locations in camps turned from camper cabins into "staff lounges" or staff residences because someone once thought it was a good idea.
Staff need good facilities, but not in the most valuable income-producing locations. Re-examine everything. I've seen childcare centers, rec-hall stages, and nature centers turned into terrific camper cabins just for the peak weeks of summer.
The second place to find revenue is to ask, "What do we do best? Where do we have a waiting list?" That yields to the follow-up question, "Should we be increasing the rates by a greater percentage each year for that program?"
And the best question of all: "How can we do more of it? How can we serve more kids?" That means adding capacity during those programs, even those specific sessions, that will yield the greatest number of children in life-changing programs, and the greatest additional net revenue.
Don't be seduced by the potentially large gross revenue figures of rental or year-round groups. A bed in a building you have to heat and maintain all year, when you only really need it for eight weeks in the summer, is a net drain on the budget. It's only the net revenue that actually affects the financial success (read survival) of your camp.
Those are the secrets. Fill every bed. Have enough beds when you really need them. And be creative in how you do it.
Gary Forster is the camping specialist for the YMCA of the USA.