Park Service: Agency Needs to Better Manage the Increasing Role of Nonprofit Partners
Released: 2003-07-18T00:00:00

Letter

Background

The National Park System is a network of natural, historic, and cultural treasures. The system’s 385 park units include 56 areas that are formally titled “national parks,” as well as many other designations. As the network’s federal manager, the National Park Service is charged with conserving “the scenery and the natural and historic objects and the wild life therein and to provide for the enjoyment of the same in such manner and by such means as will leave them unimpaired for the enjoyment of future generations.” In short, the agency has the difficult task of balancing resource protection with providing for appropriate public use, including meeting the needs of nearly 300 million park visitors each year— responsibilities that entail considerable management and financial challenges.

To manage this diverse system, the 385 park units are arranged within seven regional offices. These offices offer administrative or specialized support not always available at the local parks. However, the true hub of the system’s management is the park superintendent. Superintendents oversee each park unit, and the agency relies heavily on their judgment for most decisions affecting local park operations. For financial support, the Park Service depends primarily upon federal funding. The agency’s fiscal 2003 annual appropriation totaled over $2 billion, supplemented by financial support from admission and user fees collected at park sites, franchise fees paid by over 600 park concessioners, and private donations. Nonetheless, federal funding has not kept pace with increasing responsibilities. Accordingly, the Park Service has launched several initiatives seeking expanded supplemental support, including one promoting increased partnering with nonprofit and other private organizations.

Nonprofit organizations have a long history of partnering with the Park Service. Since the agency was created in 1916, the Park Service has developed partnerships with nonprofit organizations, as well as for-profit concessioners, to help serve its mission. These partners supply important financial and nonfinancial assistance, in effect, supplementing congressionally appropriated funds available for park use. The Park Service is authorized by statute to accept donations and to enter into agreements with nonprofit organizations and other fundraising partners.

The two types of nonprofit partners discussed in this report are cooperating associations and friends groups. Cooperating associations are corporate entities with boards of directors and an executive director responsible for day-to-day management. The Park Service requires that cooperating associations operate as tax-exempt organizations and employs a standardized cooperating association agreement identifying the specific federal statutes (see app. II) and agency policies that govern agency and association responsibilities. There is no specific legal definition or federal statute for friends groups; most are local volunteers organized for a specific purpose or interest in a particular park. The Park Service does not require friends groups to operate as tax-exempt entities or to have formal partnership agreements with the agency, unless these groups raise funds for the parks. Moreover, the Park Service does not have a standard agreement governing friends group operations or specific policy guidance for friends groups. Guidelines for park fund-raising activities are the primary source of park policy covering friends group activities. Although other nonprofit organizations also provide services and conduct commercial activities, such as guided hiking and rafting trips at park sites, these organizations are not included in this review.

Park concessioners are a third type of Park Service partner discussed in this report. Concessioners provide such services as lodging, food, and guided services, and sell merchandise at park stores. Generally, concessioners are private, for-profit entities. Concessioners operate under Park Service contracts or permits that require them to pay a franchise fee to the park where they operate and that specify agency oversight functions and concessioner responsibilities.

Parks’ Reliance on Nonprofits Is Substantial and Increasing

Cooperating associations and friends groups support 90 percent of the nation’s 385 national parks. Parks are increasingly reliant on support from these organizations; contributions from these organizations went from about $27 million in fiscal year 1997 to over $47 million in fiscal year 2001, totaling over $200 million during this period. In addition, cooperating associations and friends groups have accumulated funds and other assets—such as land, buildings, and equipment—worth more than $200 million that could become available for future park donations. Nonprofits also provide considerable nonfinancial assistance such as volunteer services.

Nonprofit Organizations Operate in Most Parks

A cooperating association or a friends group supports park programs and operations in 347 (90 percent) of the nation’s 385 national parks. Of the 347 parks, 136 have both types of nonprofit organizations, 187 have only a cooperating association, and 24 have only a friends group (see table 1).

Thus, cooperating associations support about 84 percent of the nation’s parks and friends groups support about 41 percent.

The Park Service does not maintain an accurate database of friends groups or complete financial information on cooperating associations working with the parks. As a result, we constructed a database using existing Park Service data, tax records that are available on nonprofit organizations, and friends group responses to a GAO survey. Appendix III lists each national park that is affiliated with a cooperating association and/or friends group.

Since 2001, an estimated 215 nonprofit groups—66 cooperating associations and 149 friends groups—have worked with 347 parks across the country. Cooperating associations often serve multiple parks while friends groups are typically associated with a single park. Table 2 shows the number of each type of organization and the number of parks served.

Moreover, much of the support provided by nonprofit organizations is concentrated in a few large cooperating associations that serve many different parks. As table 3 shows, 5 cooperating associations serve about 58 percent of all 385 national parks, or 70 percent—225 of 323—of all parks served by cooperating associations.

One of the key characteristics of these large cooperating associations that serve multiple parks is that they have the ability to serve smaller, less visited park units that might not be able to otherwise provide bookstores or educational services. For example, Eastern National operates some bookstores as an educational service to visitors even though the stores are not profitable. Eastern National can do so because it operates at 127 parks and shares money from its more profitable locations with its less profitable locations. This shared donation approach allows the association to operate bookstores at small locations like the Charles Pinckney National Historic Site (29,272 visitors in 2001) that are not as commercially viable as other parks. On average, as table 4 shows, the five large cooperating associations operate in parks with lower visitation and operating budgets than other associations.

Nonprofit Financial Contributions Have Dramatically Increased

Nonprofit contributions to the park system doubled from fiscal years 1997 through 2000, before dropping in 2001. Specifically, as table 5 shows, the total contributions by cooperating associations and those friends groups for which we were able to obtain data rose from about $27 million in 1997 to about $53 million in 2000, before dropping to about $47 million in 2001. Cumulatively, these contributions are substantial. Cooperating associations and friends groups contributed over $200 million to support park programs and projects from 1997 through 2001. Table 5 also shows that revenues from both types of nonprofit organizations followed a pattern similar to that of contributions, increasing from about $110 million in 1997 to about $178 million in 2000, but dropping to $148 million in 2001. The decrease in contributions and revenues in 2001 may be related to decreased park visitation or other negative commercial effects following the terrorist attacks of September 11, 2001, as agency officials speculate, or to the general economic downturn and corresponding reduction in charitable giving that has occurred across the United States. In addition, during the 1997-2001 fiscal year period, the Golden Gate National Parks Association made large contributions. These varied considerably from year to year and help explain the fluctuation in cooperating association contributions (see app. IV).

Although contributions and revenues from both cooperating associations and friends groups increased considerably over the 5-year period, the increase in friends group contributions and revenues is most dramatic. This increase may be explained by recent increases in the number of friends groups as well as by the relative newness of friends groups compared to cooperating associations. According to Park Service data, the number of cooperating associations changed little from 1996 to 2001, rising from 64 to 66 and then dropping to 65 as 2 associations merged. In contrast, friends groups are recent additions to the park scene and are expanding more rapidly throughout the park system. While the Park Service does not have historical data on friends groups, in the six parks we visited the years of incorporation for friends groups operating in these parks generally ranged from 1988 to 2001, with only one dating to 1959. By comparison, the years of incorporation for cooperating associations ranged from 1923 to 1961 (see table 6). Moreover, while the median date of incorporation for associations also is 1941, the median incorporation date for the friends groups is 1995. Contributing to the establishment of new friends groups is recent legislation that directed the National Park Foundation to design a program fostering fund-raising at individual park units and specified that program implementation include assisting in the creation of local nonprofit groups.

The importance of nonprofit support varied considerably across parks. For example, Golden Gate NP received over $10 million in aid in fiscal year 2001, the highest contribution by a cooperating association that year, while Voyageurs NP received $3,233 from its cooperating association, the lowest financial contribution to a park that year. Similarly, one friends groups affiliated with the Statue of Liberty NM contributed over $8 million to the park, while 34 friends groups reported zero financial contributions to their affiliated parks in fiscal year 2001. Appendixes IV and V provide detailed revenue and contribution information for cooperating associations and friends groups, respectively.

Nonprofits Have Additional Assets That Are Available for Future Donation

In addition to the financial contributions they make to parks each year, cooperating associations and friends groups also hold over $200 million in accumulated net assets that are potentially available for future contributions to parks. According to tax data for 2001, friends groups retained over 60 percent of these accumulated assets. More precisely, the net assets of friends groups totaled $125 million in 2001, according to data collected for over two-thirds of the groups, including the largest friends groups (see app. V). In comparison, net assets held by cooperating associations, according to 2001 tax data, were $78 million (see app. IV). These assets represent the accumulated monetary assets (such as cash, stocks, or bond investments) and nonmonetary assets (such as land, buildings, and equipment) of the organizations. The monetary component of these assets often consists of restricted and unrestricted accounts. Restricted accounts typically represent funds that have been earmarked for specific future projects, such as a park construction project or an endowment to fund future maintenance costs of a capital project. Unrestricted accounts usually represent funds that are currently available for any expenses related to a park project. For example, the friends group associated with Acadia NP has net assets of about $14 million, including $13 million in restricted accounts for 2001. The funds in the restricted accounts are for such things as an endowment to fund future maintenance of the carriage road in Acadia NP and an endowment to support future Acadia Youth Conservation Corps activities in the park. Further, information we obtained based on available tax records from 1998 through 2000 indicates that friends groups are adding substantial amounts to their accumulated assets each year. Specifically, they retain about 40 percent of their revenue or about $20 million annually.

Nonprofit Organizations Provide Nonfinancial Support to Parks

In addition to contributions of funds, buildings, equipment, and other assets, cooperating associations and friends groups also provide volunteer services that are of considerable value. Nonprofit members of both cooperating associations and friends groups recruit and organize volunteers for park projects and promote support for parks in local communities. Some friends groups, such as the Appalachian Trail Conference, make little if any direct financial contributions but have a substantial volunteer base engaged in volunteer stewardship programs at the parks. The Appalachian Trail Conference reported that its 4,500 volunteers contributed 187,475 hours to trail work in fiscal year 2000. The exact number of volunteers for all park-affiliated nonprofit organizations is not known. However, many groups have thousands of members and volunteers. Of these, the Statue of Liberty-Ellis Island Foundation, Inc., is the largest friends group donor within the national park system and has close to 160,000 members; other groups responding to our friends group survey averaged 3,700 members and volunteers. Table 7 provides examples of nonfinancial contributions made by selected nonprofit organizations.

In addition to volunteer service, at least two nonprofit organizations are legislatively authorized to provide operational and management services in parks. Specifically, the Theodore Roosevelt Inaugural Site Foundation was authorized in 1980 to assist the Secretary of the Interior in “the operation, maintenance, management, development and interpretation of the Theodore Roosevelt Inaugural National Historic Site.” More recently, The Island Alliance, a private nonprofit organization, was designated by the Congress as a financial support partner for the Boston Harbor Islands Recreation Area, a unit of the national park system established in 1996.

Revenue-Generating Activities of Cooperating Associations Sometimes Compete with Those of Park Concessioners

The primary revenue-generating activities of cooperating associations are selling educational materials in park bookstores and providing educational services to park visitors. These activities, together with growing association sales of visitor convenience items such as film and disposable cameras, are responsible for 90 percent of association revenue. At many of the parks with cooperating associations, concessioners also provide park-related merchandise for visitor consumption, as well as visitor services and convenience items. Generally, the educational attributes associated with association sales and services distinguish them from concessioner sales and services. However, this is not always the case. In fact, in three of the six parks we visited, competition between cooperating associations and concessioners or local businesses led to conflicts. In contrast, friends groups generally do not compete with concessioners because they rely primarily on donations and membership dues to generate revenue.

Selling Educational Materials and Providing Services Are the Main Revenue-Generating Activities of Cooperating Associations

Cooperating associations exist to support the educational, scientific, historical, and interpretive activities of the National Park Service. Accordingly, association activities are intended to provide the public with educational materials related to the parks and to generate revenue for other association programs and activities that support the agency. Associations support park programs by making direct purchases on behalf of the parks and by providing funds for use by park staff. Typically, each park has a standard agreement with an affiliated cooperating association. This agreement documents and clarifies the association’s scope of responsibility and permitted activities and is often supplemented to address association services specific to a park. Local park managers are responsible for overseeing association activities including ensuring that sales and services are consistent with the terms of the agreement and assuring that association support is appropriately targeted.

Cooperating association activities focus on supporting parks by providing visitors with educational materials and services. The main revenue- generating activity of associations is operating bookstores that sell educational and other merchandise, often at park visitor centers. Cooperating associations reported generating revenue of $109 million in fiscal year 2001. As figure 1 shows, of this amount, 90 percent came from sales and services to park visitors. Over $84 million (78 percent) was raised through the sale of educational materials—primarily books. About $10 million (9 percent) was from educational program services such as audio tours and organized backcountry hiking and camping activities. Association operated “field institutes” frequently provide these educational program services. Field institutes are a part of cooperating associations that focus on providing visitors with active learning experiences within a park. Another $3 million (3 percent) came from sales of visitor convenience items—items that are not educational and that the Park Service describes as necessary for the comfort and convenience of visitors. These items include beverages, aspirin/antacids, insect repellent, sun screen, film, disposable cameras, and stamps. The remaining 10 percent of association revenues came from fund-raising, membership fees, and park donation boxes.

In addition, some associations support the needs of the parks they serve in other, nontraditional ways. For example, associations may act as concessioners, generating income by operating park concession contracts.

This is the case at Mt. Rushmore NM, where the cooperating association has a 20-year concession contract for constructing and operating a parking facility at the site. Under these circumstances, associations are required to report this revenue to the park service as concession contract revenue. As such, these revenues are not included in figure 1. However, these circumstances are exceptional and do not occur frequently.

A description of the sales and services offered by cooperating associations at the six parks we visited will help clarify the revenue-generating activities that occur throughout the system. Associations at each of the six parks operated a bookstore, and five of the six associations also sold merchandise via a park-affiliated Web site. At three parks, a field institute was a significant part of the association’s educational service program. At Grand Canyon NP, for example, the Grand Canyon Field Institute offered exploratory tours where visitors could learn about the canyon’s geology, ecology, and Native American and pioneer history. This institute also provided park-related educational materials to elementary classrooms across the United States. Two of the six associations provided other services—one provided a guided park tour and one operated the park’s wilderness reservation system.

Except for visitor convenience items, we found that the merchandise sold and the services provided at each of the six parks visited were generally related to the educational mission of the cooperating associations and to park themes. Cooperating association bookstores carried a wide variety of park-related publications, maps, videos, and theme-related merchandise intended to enhance visitor understanding, appreciation, and knowledge of parks. For example, at areas managed by Fort Sumter NM staff, the cooperating association operated four bookstores with educational books and items related to Civil War occurrences in the Charleston, South Carolina area. At Yosemite NP, the association sold books, Native American artifacts and jewelry, and CD-ROMs that were generally consistent with its educational mission and park themes. Cooperating association Web sites generally offered the same merchandise as the bookstores. Although our examination of the items being sold at association bookstores and Web sites at the six parks we visited revealed a few items that were not clearly related to the association’s educational mandate, these were low volume and low cost items that were not financially significant. For example, the association sold magnets at Ft. Sumter, and slinkys and hula hoops at the Eisenhower National Historic Site. In commenting on our report, the association’s executive director noted that magnet sales were discontinued at this store. The director stated that hula hoops and slinkys are sold with interpretive text and help connect visitors to the lifestyle of the 1950s, which is a park interpretive goal.

Like merchandise sales, we found that the services provided by cooperating associations at the six parks we visited were educational and consistent with park themes. Some of these services generated substantial revenue for individual parks. For example, at Gettysburg NMP, the local association operates the “Electric Map” and “Cyclorama” mural painting. The Electric Map orients visitors to the park by depicting the progress of the 3-day Gettysburg battle, while the historic mural depicts the cavalry battle known as “Pickett’s Charge” in a 360-degree panorama. In fiscal 2000, these operations generated revenue of $758,183 and $320,475, respectively, of which the association donated about 40 percent to the park. Associations, however, also provide services that generate little or no revenue or profit. At Yosemite NP, for example, the cooperating association operated the park’s backcountry reservation program and worked with concessioners to rent bear-resistant food canisters to visitors having backcountry reservations. All association receipts from this program were used to purchase more canisters. The park received no revenue from this activity.

Revenue-Generating Activities of Cooperating Associations and Concessioners Are Not Always Distinct and Sometimes Lead to Conflicts

Generally, the educational and thematic attributes of association sales items and services distinguish them from concessions sales items and services. However, this is not always the case. Sometimes the sales and services of associations and concessioners as well as other for-profit businesses are in direct competition with one another. At three of the six parks we visited, sales and services by associations and for-profit concessioners and other businesses were not clearly distinguished and this led to conflicts among these organizations. At the other three parks we reviewed, there were no apparent conflicts between associations and concessioners or other for-profit businesses.

At Some Parks Competition between Cooperating Associations and Concessioners Leads to Conflict

The three parks with conflicts were Grand Canyon NP, Fort Sumter NM, and Gettysburg NMP. In each instance, the conflicts resulted from local park managers’ decisions to permit associations to sell goods or services that had been traditionally provided by concessioners or other for-profit businesses. At Grand Canyon and at Fort Sumter, the conflicts involved association and concessioner sales. At Gettysburg, the conflict involved services provided by the association and a local business that, like concessioners, depended on park visitors for its survival.

At Grand Canyon NP, three concessioners operated stores throughout the park that sold, among other things, film, disposable cameras, and a variety of other visitor convenience items to the millions of people that annually visit the park. These items were traditionally sold by the concessioners and were an important part of their business. However, in 2001, park managers began allowing the Grand Canyon Cooperating Association to sell visitor convenience items, including film and disposable cameras, at the association’s new bookstore. As a result, the association’s sales of these items went from zero in 2000 to over $50,000 during a 7-month period in 2001. This change caused considerable concern among park concessioners, whose collective film sales total over $1.5 million. Representatives of each of the three park concessioners believe that park management’s decision allowing association sales of visitor convenience items resulted in unfair competition that would adversely affect their profitability. At the time of our review, each concessioner estimated that film sales had decreased considerably. One concessioner told us that film sales decreased by $140,000 and another stated that, while overall sales declined by 9.5 percent, film sales deceased by 10.5 percent.

The concessioners’ concerns were based on three factors. First, the association’s point of sale is located at the initial gathering place for most park visitors, which provides a marketing advantage that concessioners believe reduces their business. Second, because visitor convenience items are neither educational nor characteristic of a Grand Canyon theme, concessioners view these items as inconsistent with an association’s traditional scope of sales and educational mission. And third, because concessioners could not compete for operating the new bookstore at this location, they believe the association received favorable treatment that placed them at a competitive advantage. On the other hand, park managers and the cooperating association Executive Director pointed out that locating the association bookstore at the visitor center area was consistent with the park’s General Management Plan. Further, park officials told us that bids were not solicited on the bookstore operation because the bookstore was intended to serve an educational purpose—an activity consistent with the association’s mission and its agreement with the Park Service. They also noted that the cooperating association was willing to fund the building’s construction. In commenting on a draft of this report, the new association executive director stated that the conflict with concessioners was overstated and that the association has a strong working relationship with park concessioners.

The situation at Fort Sumter NM is similar to that at Grand Canyon NP. At Fort Sumter there are two locations where merchandise is sold. The largest of these is a bookstore operated by the cooperating association in the recently opened visitor center in Charleston, South Carolina. Because this center is the main departure point for visiting Fort Sumter, it has generated considerable increases in association sales revenue. Moreover, according to park plans, in the future it may be the only commercial location serving Ft. Sumter visitors. The other sales location is a small store at the fort (see fig. 2).

When the bookstore in the Charleston visitor center opened in 2001, the park manager permitted sales of educational and theme-oriented merchandise traditionally sold by associations as well as visitor convenience items. Prior to the opening of the new bookstore, visitor convenience items were sold by the store at the fort. This store was operated by a concessioner during the peak season—March 15th through Labor Day—when the park gets about 65 percent of its visitors, and by the cooperating association during the remaining months. Park plans envisioned this store closing when the new visitor center opened in Charleston and, in August 2000, several months before the new bookstore opened, the park discontinued all concessioner sales operations at the fort. However, the park manager subsequently decided that there was a need for educational and theme-related merchandise at the fort and determined that the association would operate the store at the fort on a year-round basis, including selling visitor convenience items. The concessioner questioned the decision to close the concession store at the fort because the association store remains open there and sells items similar to what the concessioner sold. The concessioner also believed that park officials should have afforded for-profit businesses an opportunity to compete for the bookstore operation in the new visitor center. This situation has contributed to conflict between the concessioner and park management. From park management’s perspective, the decision to have the association provide all of the sales at both the fort and the Charleston visitor center was consistent with the long-term plans for the park and the association’s educational agreement. According to park plans, these decisions were made to de-emphasize commercial activities at the park, to reduce the time spent by staff in supervising concession sales operations, and to focus merchandise sales on the park’s educational and interpretive goals.

Because the conflicts at both the Grand Canyon and Fort Sumter involved increased association sales of visitor convenience items, we examined convenience item sales data for the 323 parks with cooperating associations to determine if the increases at these parks were part of a trend throughout the national park system. As table 8 shows, revenue from the sales of visitor convenience merchandise is expanding more rapidly than other sources of association revenue. These sales increased by 55 percent (from $2.06 to $3.19 million) between 1997 and 2001, while revenue from other sources increased only about half as much—about 21 percent.

These data indicate that this sales trend is occurring nationwide. In addition, five of the seven regional directors in the Park Service told us that cooperating associations were expanding sales of visitor convenience merchandise in their regions.

Table 9 provides some contextual information on the potential scope of conflicts that could occur between cooperating associations and concessioners at the parks. Specifically, the table provides national data on parks where both associations and concessioners sell merchandise to visitors.

Table 9 shows that 84 of 91 parks having at least one concessioner that sells merchandise to visitors also have cooperating associations that sell merchandise and provide services to visitors. The table also shows that merchandise concessioners typically operate in parks with high visitation. Accordingly, competition is more likely in the largest parks. Appendix III provides a complete list of parks that have cooperating associations and merchandise concessioners.

The third park we visited where a conflict was evident was Gettysburg NMP. This conflict involved the cooperating association and a local for-profit business that, like concessioners, derived its revenue from visitors to the park. In contrast to the conflicts at Grand Canyon and Fort Sumter, the conflict involved competition over providing tour bus service, not the sale of merchandise. Specifically, with the approval of park management, the cooperating association initiated a bus tour in 2001 that directly competes with locally operated bus tours. Further, because the association is affiliated with the park, this tour is permitted to pick up and drop off its customers at the park’s main visitor center—unlike the privately run for-profit tours. Neither of the local businesses that provided battlefield tours is permitted to pick up or discharge at the visitor’s center. Instead, their tours operate primarily from their offices in the commercial district of the town of Gettysburg—a few blocks from the visitor center.

One of the local businesses contends that the association-administered bus tour service was unnecessary because similar tour services were already available to visitors. This business owner also was concerned because the association tour originates at the park visitor center and, as a result, has an important competitive advantage. Further, although park officials informally discussed the tour service with this business owner, the owner is concerned because the Park Service did not advertise and solicit bids for this new service and, thus, denied the business the opportunity to bid and compete for providing the service. Finally, this owner asserts that his business has already experienced adverse financial consequences as a result of the association tour, but because of difficulty in isolating the effects of this new service, cannot provide documentation supporting his assertion. In contrast, two other parks we visited, Yellowstone and Fort Sumter, also offered guided tours for visitors. In both instances, the tours were operated by for-profit businesses—concessioners—under contract with the respective parks.

According to the park manager at Gettysburg, the association began operating the tour service at his request in order to enhance the educational and interpretive services offered to park visitors. Park managers told us that they require the cooperating association to use licensed park guides to provide narration and interpretation for customers on these tours and that this arrangement improves the quality of service provided to park visitors. Because park officials believed the tour service was consistent with the association’s agreement with the park, they decided that a concession contract and bid solicitation process was not necessary.

Not All Concessioners Were Concerned about Competition from Cooperating Associations

While conflicts between cooperating associations and concessioners and similar for-profit businesses existed at some of the parks we visited, they did not exist at others. In fact, at two of the six parks we visited—Yosemite NP and Yellowstone NP—these organizations worked collaboratively to enhance visitor service. At a third park, Badlands NP, the association operated a small bookstore. Both association and park officials stated that the concessioner at Badlands had minor concerns about this association’s sales.

Yosemite is a good example of where competing entities work together to serve overall park interests. Although the association and concessioner sometimes sold competing merchandise, officials of these entities agreed that there was a good understanding of their respective roles at the park and there were no noteworthy problems among the entities. In fact, there were a number of coordinated efforts between the association and concessioner. The following activities demonstrate collaborative activities at the park: The concessioner’s chief operating officer is also a member of the cooperating association board of trustees.

The association arranges for artists to provide classes for visitors at an art activity center operated by a concessioner.

At park wilderness centers the association issues permits and sells several visitor convenience items that are useful in the park’s backcountry—backpacking stoves, fuel canisters for the stoves, water filters, and spades. The association buys these items from the concessioner.

The association and the concessioner are involved in providing backcountry visitors with bear-resistant food canisters. Previously, bear- resistant canisters were available only by purchase from a concessioner. The association and concessioner reached an agreement that provides for canister rentals from either the association or the concessioner and allows visitors to return canisters rented at a concession store to locations operated by the association.

According to the association’s Executive Director, the concessioner is the biggest wholesale purchaser of the association’s publications.

Friends Groups Generate Revenue Chiefly by Soliciting Donations

Because soliciting donations from individuals, corporations, and foundations is their chief revenue-generating activity, friends groups typically do not sell goods or services within the national park system. Accordingly, these groups generally do not compete for business with concessioners or other for-profit businesses that serve the parks. However, there are some exceptions where the boundaries distinguishing these two kinds of organizations are indistinct.

Typically, friends groups raise revenue through fund-raising campaigns to support a local park project. To raise funds on behalf of the Park Service, agency policy requires that friends groups have an agreement signed by a local park manager, usually the park superintendent, and the president or chief executive officer of the friends group. Under this policy, national fund-raising campaigns or fund-raising campaigns with a goal of $1 million or more require the approval of the Park Service Director. Fund-raising campaigns also require an approved fund-raising plan detailing techniques, timing, staff needs, strategy, and costs. Park Service policy states that fund- raising plans will not be approved if overhead costs—which include fund- raising and administrative expenses—are projected to exceed 20 percent of revenues over the life of the campaign. The primary sources of friends group revenue are Federal & State Grants The precise proportion of revenue that friends groups derive from these various sources is not known. The Park Service does not collect such data, and available federal tax data do not provide detailed information related to these revenue sources. However, the tax data that are available suggest that fundraising is by far the most important source of friends group revenue. A prominent ongoing fund-raising effort is the National Park Foundation’s Proud Partner of America’s National Parks campaign. The foundation recognizes in numerous publications that five corporations— American Airlines, Discovery Communications, Inc., Ford Motor Company, Kodak, and TIME magazine—are “Proud Partners of the National Parks”. In return, these corporations have committed $85 million in cash and resources over a 3-year period.

Friends group tax reports show that several have received federal or state grants. The Theodore Roosevelt Inaugural Site Foundation, for example, reported a federal grant in connection with its legal mandate to support management functions at the Theodore Roosevelt Inaugural National Historic Site. Similarly, the Friends of the National Parks at Gettysburg received a $1 million grant from the Commonwealth of Pennsylvania to restore a state memorial in Gettysburg. One friends group’s tax report recorded revenue from the sale of personalized state license plates as a government grant.

Park Service policy allows friends groups to sell items within a park with the approval of the cooperating association and park superintendent. Cooperating associations also may sell items on behalf of friend groups. However, such arrangements are infrequent. provide a service in return. More typical of friends group sales are those by the group at the Virgin Islands NP, which offers T-shirts, license plates, and park-related merchandise at its office outside the park, on its Web site, and through local stores in St. John, Virgin Islands. Similarly, the friends group at Great Smoky Mountains NP reported selling items such as hats, T-shirts, specialty license plates, and other merchandise with its logo outside park boundaries, at its offices in Tennessee and North Carolina, through its Web site, and at festivals.

Friends groups also generate revenue membership fees, through special events, and park donation boxes. Many friends groups offer fee-based memberships that provide member benefits. For example, at Yellowstone NP, a friends group offers memberships beginning at $25; it reported having over 8,000 members or volunteers. Paying members receive a free subscription to the group’s biannual newsletter, a copy of the annual report, and have their names displayed in the Yellowstone NP Honor Book at the Old Faithful Visitor Center for 1 year. Special fund-raising events hosted by friends groups usually consist of a one-time entertainment for which attendees are charged a fee. For example, in 2000, a friends group at Great Smoky Mountains NP raised over $133,000 through special events that included dinners, concerts, and hikes. Similarly, at Acadia NP the friends group netted about $250,000 through a special auction held in 2001.

The development of data on friends group revenues is complicated by a blurring of the functional and organizational boundaries between some friends groups and associations. Although both types of organizations work to help the Park Service meet its mission, distinctions between cooperating associations and a friends groups are not always clear as evidenced by several “hybrid” groups that serve the parks. For example, the association at Golden Gate NP combines cooperating association and friends group functions under the same organization. The nonprofit organization at Mt. Rushmore NM created a subsidiary group to allow distinct bookstore and fund-raising and concession contract operations. And at Rocky Mountain NP, one nonprofit organization conducts fund-raising activities and a second operates a bookstore. These distinct nonprofit organizations are administratively linked, however, sharing the same Board of Directors.

Several Factors Contribute to Competition and Potential Conflicts between Associations and Concessioners

Three primary factors contribute to competition and conflicts between cooperating associations and concessioners and other for-profit businesses that serve the parks. First, Park Service policies intended to increase association support for parks lead to expanded association sales and services that compete with for-profit businesses for sales and services. Second, park managers have broad discretion in deciding the scope of park sales and services as well as whether cooperating associations and/or for- profit businesses operate in a park. In some cases, the rationale for expanding cooperating associations’ operations was not clear and contributed to conflicts among park management, cooperating associations, and concessioners. Third, cooperating associations return a higher percentage of their sales and service revenue to the parks compared to for-profit businesses, giving park managers a financial incentive to expand association operations. The Park Service recognizes the balancing act that is needed to manage the roles of cooperating associations and businesses that serve parks visitors, and agency policy encourages park managers to develop and implement plans addressing these roles. Among other things, these plans—called Commercial Services Plans—are intended to reduce conflicts in parks by clarifying the roles and competitive relationships of associations and concessioners and providing a more predictable business environment for them. However, these plans are rarely developed or used.

Policies Encouraging Increased Financial Support from Cooperating Associations Also Promote Increased Competition

Park Service policies and plans encourage park managers to generate increased financial support from cooperating associations and concessioners. The Park Service’s strategic and annual performance plans set programmatic and financial goals designed to substantially increase donations from cooperating associations as well as the amount of franchise fees from concessioners. For cooperating associations to provide increased financial support to parks, they must expand profit-making activities including the sale of merchandise. This promotes increased competition between cooperating associations and concessioners for park visitor dollars.

The Park Service has set a goal of increasing cooperating association support by 35 percent between 1997 and 2005. As table 10 illustrates, between fiscal years 1997 and 2001 revenues increased about 22 percent— from about $89.36 million in fiscal year 1997 to about $108.78 in fiscal year 2001.

Table 10 also shows that $18.37 million (about 95 percent) of this revenue increase has come from activities that are most like those of concessioners—merchandise sales of educational materials and visitor convenience items. Accordingly, this trend contributes to increased competition with concessioners. This trend is likely to continue as the Park Service and cooperating associations try to meet their increased revenue goals for 2005.

Park Service policies and plans also have established goals for increasing revenue from concessioners. Specifically, the agency’s goal is to increase franchise fees paid by concessioners from about 4 percent of gross revenue in fiscal year 2000 to about 10 percent by 2005. While the mechanisms for concessioners achieving this goal are varied and complex, getting this done could involve increased concessioner offerings of their most profitable merchandise to park visitors. To the extent that concessioners and the associations are each vying for visitor dollars or offering similar merchandise, this would lead to increased competition.

Further, the Park Service encourages concessioners to sell merchandise that is educational and consistent with park-related themes. Although there is no agencywide list of preferred merchandise, the Park Service’s Management Policies 2001 encourages concessioners to offer items for sale that foster awareness and understanding of a park. In this regard, the 2001 policy directs each park with a concessioner to have a gift shop mission statement that ensures concessioners sell merchandise reflecting information about the park. For example, at the Grand Canyon, one concessioner’s gift shop mission statement states that “to the greatest extent possible, merchandise will have an identifiable relationship to Grand Canyon National Park” and identifies several park themes, such as the park’s geology and history, that serve as a guide for implementing this objective. While this increased emphasis on concessioners selling more educational and theme-related merchandise may help provide visitors with a better park experience, it also promotes greater competition among associations and concessioners. According to some concession officials at the parks we visited, this emphasis by the Park Service makes concessioner sales venues more like those of cooperating associations. On the other hand, concession officials at other parks we visited stated that this change did not pose serious competitive issues.

In a broader context, the issue of competition between for-profit and nonprofit organizations is a long-standing one that is not limited to the Park Service. As we have previously reported, representatives of for-profit businesses believe that the revenue-generating activities of nonprofit organizations exceed the traditional role of these organizations, and that the nonprofits receive a competitive advantage by virtue of their nonprofit tax status and other benefits. On the other hand, representatives of nonprofits believe certain nontraditional activities further their nonprofit purposes by generating additional revenue to fund these purposes. Although the Congress has attempted to address this issue in the past, it remains contentious.

Park Service policy recognizes that a “delicate balance” exists between associations that have traditionally served an educational mission and concessioners that provide “necessary and appropriate” visitor services. Concessioners at two of the parks we visited, a local business at a park without a merchandising concessioner, and officials from the national organization representing park concessioners, contended that this delicate balance has become unsteady, and expressed concern that cooperating association operations are expanding into areas traditionally served by concessioners or for-profit businesses. They were unsure of the bounds on association sales activity and believed some association merchandise and services duplicated or replaced merchandise and services available in or near parks, were inconsistent with nonprofit educational mandates, and placed for-profits in increased financial jeopardy. Park Service regional directors generally agreed that the roles of both associations and concessioners are changing and that the distinction between what associations and concessioners sell has become less clear.

Park Managers Have Broad Discretion in Deciding to Expand Cooperating Association Sales and Services and Do Not Always Provide Transparent Rationale

In practice, park managers determine whether a cooperating association or concessioner will operate in a park. They also determine the scope, mix, and appropriateness of the sales and services that are provided. In this regard, local managers are also responsible for monitoring nonprofit operations, ensuring that association sales and services do not conflict with the contractual rights of concessioners, and minimizing potential conflicts with concessioners. However, the rationale for decisions on these matters was not always transparent, which contributed to conflicts among park management, cooperating associations, and concessioners.

At each of the three parks we visited where there were conflicts—Grand Canyon, Fort Sumter, and Gettysburg—cooperating associations merchandise sales or services were expanded without concessioners or other local for-profit businesses having an opportunity to compete to provide these operations. Further, in each instance, the sales and services at the center of these conflicts were to be provided at prime locations within each park and the decision was made without providing a transparent rationale. In two cases, park officials decided to allow associations to provide new sales or services without addressing the decision in park plans. The following paragraphs provide a snapshot of the circumstances at each of these three parks.

At the Grand Canyon, park officials requested that the association construct a bookstore adjacent to a new visitors center on the South Rim of the Canyon—by far, the most popular and heavily visited area of the park. The association raised $1.8 million for the project, gave the store property to the Park Service, and assumed responsibility for operating the store. As previously discussed, park managers permitted the association to sell traditional, park-related educational merchandise as well as visitor convenience items. Concessioner officials at the Grand Canyon told us that, in their opinion, providing them an opportunity to compete to operate the bookstore would have been a more balanced approach. Further, the officials told us that a double standard is applied by park managers that is advantageous to the cooperating association. As evidence of this concern, the concessioners cited how signage restrictions are applied differently for concessioners than for the cooperating association. On the south rim of the canyon, a store operated by the concessioner was not permitted to post any outside signage or displays, while an adjacent store operated by the cooperating association was permitted to do so (see figs. 3 and 4). In commenting on these pictures, the current cooperating association executive director stated that the signage outside the association’s bookstore was justified because, unlike the concession store, the bookstore was not visible from the major visitor contact area. However, in our view, this does not justify different signage standards for concessioners and associations. Moreover, these displays do not make the store visible from where it was previously invisible. Finally, the sandwich board displayed outside this store, advertised an association bookstore that is located elsewhere in the park.

At Fort Sumter, the long-term plan for the development of the park specified that the concessioner-operated sales facility at the Fort would be relocated to a new visitor’s center. In a commercial services plan designed to implement the long-term plan, park officials decided that the cooperating association would operate the new sales facility at the visitor’s center, that the cooperating association could sell visitor convenience items as well as educational merchandise, and that no other merchandise facilities would be permitted. In accordance with the park’s commercial services plan, park managers did not provide the existing park concessioner an opportunity to operate the new sales facility. However, although both the long-term and implementation plans envisioned closing the sales facility at the Fort, this has not happened and the association operates two stores—one at the new visitors center and a second at the Fort. The park concessioner believes there should have been a bid solicitation process for operating the new facility—particularly since the cooperating association is selling noneducational visitor convenience items that had been sold by the concessioner.

At Gettysburg, the local park manager permitted the association to manage a new, narrated bus tour for park visitors without giving for-profit businesses an opportunity to compete to provide this service. According to the owner of a competing local for-profit business near the park’s visitor center, the association-managed tour presents unfair competition because there was no public advertisement or discussion of the park’s proposal to initiate the association tours, nor was there a bid solicitation process that afforded for-profit businesses an opportunity to contract to provide this service. According to park officials, their decision to allow the cooperating association to manage a new tour from the visitor’s center instead of a concessioner or other for-profit business was made for several reasons, including their belief that the association would provide the best educational service to visitors; and that associations require less park resources to administer and allow changes that are responsive to the needs of park management.

Financial Incentives Encourage Increased Use of Cooperating Associations by Parks

Cooperating associations can provide a much higher return to parks than concessioners. This ability is not surprising since, as nonprofit organizations, they enjoy a number of important financial advantages over for-profits. Most park officials that we spoke with said that financial advantage was not a factor in deciding whether an association or a concessioner provides sales and services. Rather, they described service to park visitors as the most important criterion. However, park officials at Gettysburg did tell us that associations’ higher financial return to parks was a factor in their decision to allow a cooperating association to operate a new bus tour. In commenting on a draft of this report, nonprofit organizations stated that although associations provide a higher return to the parks, this provides only a minimal incentive for park superintendents to select a cooperating association over a concessioner.

Park Service data show that cooperating associations contribute a considerably higher percentage of total revenue to the parks than concessioners. Over 5 fiscal years, 1997 through 2001, association contributions averaged 26 percent of revenue. In contrast, the concessioners that sold merchandise paid the Park Service an average of about 4 percent of revenue over the same period (see table 11).

For example, the cooperating association at the Grand Canyon NP gave about 36 percent of its gross revenue to the park. The concessioners paid about 4 percent of sales revenue to the park during this period. Also, local parks retain 100 percent of association contributions, but keep only 80 percent of concession payments, consistent with legislation that was enacted in 1998.

Cooperating associations generally provide a higher return to parks than concessioners owing, in large part, to associations’ nonprofit status and charitable mission as well as to park policies that support association operations. The following factors provide associations with a considerable financial advantage when providing sales or services compared with concessioners: All cooperating associations are tax-exempt organizations under the Internal Revenue Code. Thus, they do not pay federal income taxes on funds collected to meet their nonprofit purpose.

In most states, associations that are exempt from federal taxes do not have to pay state income tax on funds collected to meet their nonprofit purpose.

Associations that are exempt from federal taxes may obtain exemptions from state and local sales taxes. Such exemptions apply to the purchases of the association. In a few states, associations also may be exempted from collecting state and local sales taxes on the sale of merchandise.

Association sales and service revenues are substantially enhanced through donations and memberships fees from individuals and organizations wishing to support park activities.

Volunteers often provide association services and may staff bookstore operations, thereby reducing association salary expenses.

Association profits must be used to support the parks and are not shared with stockholders or company owners.

Association Boards of Directors generally are not salaried.

Parks routinely provide free sales areas and other facilities to the associations. For example, the parks provide bookstore space within visitor centers and support association field institutes by providing free facility space for classrooms and for instructor and participant housing.

Parks provide free services that reduce overall association operating costs and overhead expenses. These services may include routine maintenance, garbage collection, interior work, repair services, and such utilities as water, heat, and air conditioning (to the extent these are required for the operation of the building for government purposes).

Park staff sometimes assist in operating association bookstores. This assistance occurs after regular association operating hours, during off- season periods when the association may not have full-time staff, and at locations with low visitation where the association cannot afford to employ full-time staff.

We did not attempt to quantify the value of tax-exempt status and park assistance to associations. However, Park Service, association, and concessioner officials agree that the nonprofit tax-exempt status is an association’s paramount financial advantage.

Although cooperating associations usually enjoy financial advantages in competing with concessions, not all associations are profitable. For example, according to Park Service officials, the cooperating association that serves the 14 Park Service sites in Washington, D.C., has had serious financial problems. This association provides educational materials to visitors at facilities like the Washington Monument and Lincoln Memorial and has estimated debts exceeding $800,000. Further, according to its new executive director, the association lost money in 8 of the past 10 years. While other factors contributed to these losses, the director told us that one reason the association has not made money is that it could not sell many profitable items in its bookstores because Park Service officials viewed the items as competing with the sales of park concessioners.

Park Service Does Not Use Planning Tools Available to Better Define and Manage the Roles of Nonprofits and Concessioners

The Park Service is aware of the competitive tensions and potential conflicts that can exist between cooperating associations and concessioners within a park. To minimize conflicts, help ensure that agency policies are consistently followed, and provide a more systematic basis for making decisions about commercial sales and services in parks, Park Service guidance suggests that individual park managers develop Commercial Services Plans.

Essentially, Commercial Services Plans are publicly available documents that, among other things, are intended to establish a predictable business environment in parks by better defining the roles of cooperating associations, concessioners, and other for-profit businesses in providing sales and services to park visitors. These plans also are intended to clarify what kind of sales and services are to be provided by the various commercial interests in a park. In brief, the plans rationalize a park’s approach to providing visitor sales and services and provide a decision-making framework that is transparent to the public, visitors, and commercial stakeholders at the park. To facilitate the development of this planning tool, the Park Service provides local park managers with guidelines, standards, and assistance.

However, despite agency guidance and the benefits associated with Commercial Services Plans, they are rarely used. Data gathered from Park Service regional offices show that these plans were developed at only 3 of 84 parks (4 percent) where both cooperating associations and concessioners provide sales and services (app. VI has a complete list of these parks and the status of their plans). Moreover, we visited two of the six parks that had developed plans—Fort Sumter and Yosemite—and found that the plans did not meet the agency’s standards. At Yosemite, the plan was more than 10 years old and was based on an outdated management plan for the development of the park. Moreover, the plan did not describe the commercial activities of the cooperating association. The Fort Sumter plan, developed in 2000 and containing considerable detail, did not address the current scope of cooperating association operations because these had expanded beyond what the plan envisioned.

Park Service officials told us that the primary reason Commercial Services Plans were not developed or up to date was because park resources are limited and preparing the plans is not among the agency’s highest priorities. At Yosemite NP, for example, park officials believed an updated plan would be helpful but that the plan also would require an Environmental Impact Statement (EIS). They expected that preparing the EIS would cost extensive park resources and viewed this cost as a major obstacle. Further, Commercial Services Plans must be consistent with the long-term management plans for the parks. These long-term plans—known as General Management Plans—are frequently out of date. In fact, over 25 percent of parks either do not have a General Management Plan or have a plan that is more than 20 years old. As a result, developing or updating Commercial Services Plans could also require that General Management Plans be updated. For example, at two of the six parks we visited the General Management Plans were more than 20 years old and needed updating. Updating and developing these plans would require a major resource commitment by the agency. Appendix VI provides a complete list of the status of General Management Plans.

Park Service Cannot Hold Local Park Managers Accountable for Meeting Contribution Goals

The Park Service does not have an effective process for holding local park managers accountable for meeting nonprofit contribution goals, even though one of the agency’s strategic goals is to increase the amount of contributions it receives from nonprofit organizations. The Park Service’s Strategic Plan FY 2000–FY 2005 establishes contribution goals for cooperating associations and friends groups. The agency has identified these goals as critical to accomplishing the mission of the Park Service. For cooperating associations, the agency’s goal is to increase the amount of donations and services by 35 percent from $19.0 million in the fiscal 1997- baseline year to $25.6 million by 2005. For friends groups and other sources, the goal is to increase cash and in-kind donations from $14.5 million in fiscal 1998 to $50.0 million by 2005. These long-term strategic goals are broken into annual agencywide performance targets and used to establish contribution goals for each park unit.

However, the Park Service does not collect the information needed to determine whether these goals are being met and to accurately measure nonprofit support. For cooperating associations, the Park Service collects only aggregate information on the amount of association contributions. Consequently, agency managers cannot always track contributions on a park-by-park basis because, as discussed previously, cooperating associations usually serve multiple parks. Specifically, about 40 percent of all cooperating associations operate in more than one park and six of the 10 largest revenue-generating cooperating associations operate in more than one park. Table 12 lists the 10 largest associations and the number of parks served.

As table 12 shows, the Eastern National cooperating association serves 127 parks. However, the Park Service collects information only on the total contributions made by Eastern National and not on the amount of contributions made to each of the 127 park units it serves. Accordingly, collecting and reporting only aggregate contribution information for Eastern National and other associations that serve multiple park units precludes the agency from establishing meaningful performance goals, evaluating the performance of local managers against the goals, and holding managers accountable for meeting established contribution goals.

Although the Park Service collects some information on the contributions made by cooperating associations, it does not routinely collect any information on the amount of contributions made to parks by friends groups—either in the aggregate or on a park-by-park basis. In fact, the Park Service does not maintain an accurate, up-to-date list of friends groups currently working with the agency or of the specific parks they serve. Lacking this basic management information, the agency is unable to establish meaningful goals for local park managers or to monitor friends group contributions on an agencywide or park-by-park basis.

According to Park Service and nonprofit officials, more complete information on cooperating associations and friends groups is not collected and reported for two key reasons. First, because nonprofits are voluntary partners in assisting the agency in performing its mission and already must meet a wide range of administrative requirements, both agency and nonprofit officials are reluctant to initiate additional requirements for collecting and reporting information. Second, both agency and nonprofit officials are concerned that collecting and reporting detailed information on the amount of contributions could lead to offsetting reductions in the amount of congressional appropriations made available to the agency.

Conclusions

Between 1997 and 2001 cooperating associations substantially increased their financial support to parks. A major reason for this increased support is the additional revenue that cooperating associations generated from expanded sales of educational materials, services, and visitor convenience items. Friends group contributions also have dramatically increased, in large part because the number of these groups rose as did the scope of their fund-raising activities. These increased nonprofit donations are good news for the Park Service and the national park system because they supplement the appropriated funds provided by the Congress. However, the expanding presence and scope of cooperating association sales and service activities is causing some conflicts at parks where concessioners or other local, for- profit businesses are competing for similar sales and services. Given the conflicts we found at three of six parks we reviewed and the agency’s continuing emphasis on increasing the amount of nonprofit support for the national park system, we believe these conflicts will become more common.

Several other factors add to the likelihood of increased conflict, especially at parks having both association and concessioner sales and services. Specifically, agency policies that encourage concessioner sales and services that are related to park themes, and agency decisions permitting increased visitor convenience item sales by cooperating associations, blur the distinction between concessioner and association activities. Local park managers’ broad discretion in determining whether concessioners or cooperating associations provide needed sales and services and the substantial financial incentive for using cooperating associations also heighten the likelihood of conflict. In light of these circumstances, it is not surprising that park managers are expanding cooperating association roles. In the final analysis, these decisions may be in the best interest of the parks; however, the process for making these decisions does not serve to minimize conflicts because it does not provide a transparent rationale or give concessioners or other local for-profit businesses an opportunity to compete for new sales and services.

The Park Service understands the competitive tensions that exist between concessioners and cooperating associations. To help minimize conflicts, park managers are advised to develop Commercial Services Plans. These plans are intended to provide a logical and consistent basis for decisions, reflect public comments, and provide a more predictable commercial environment in the parks, which would give businesses greater confidence in their long-term decisions. However, these plans are only rarely developed or used. As a result, the basis for park decisions is not always clear, and public accountability is diminished.

Moreover, because the Park Service does not collect accurate or complete information on the contributions it receives from its nonprofit partners— either agencywide and on a park-by-park basis—it cannot hold park managers accountable for meeting strategic contribution goals. Further, without better and more complete information the agency cannot establish meaningful performance goals or monitor progress against these goals.

Recommendations for Executive Action

In order to (1) minimize conflicts among the Park Service, cooperating associations, and concessioners, (2) better ensure that decisions about providing commercial sales and services are made more consistently and that logical criteria are followed, (3) provide a predictable commercial environment in the parks, and (4) enhance public accountability for its decisions, we recommend that the Secretary of the Interior require the Director of the National Park Service to revise its policy regarding Commercial Services Plans so that all parks offering visitor sales and services are required to develop these plans and ensure that Commercial Services Plans include (1) an explanation of the roles and responsibilities of both concessioners and cooperating associations in providing visitor sales and services in a park unit and (2) rationale for decisions that specify associations or other nonprofits will provide new visitor sales or services and that do not afford concessioners and other local, for-profit businesses an opportunity to compete.

To establish meaningful contribution goals and to improve the accountability of park managers in meeting agency goals, we recommend that the Secretary of the Interior require the Director of the National Park Service to develop and maintain an accurate and up-to-date list of friends groups on a park-by-park basis and require cooperating associations and friends groups to report key financial information on a park-by-park basis.

Agency Comments and Our Evaluation

We provided the Department of the Interior, the Association of Partners For Public Lands (representing park cooperating associations and friends groups), and the National Park Hospitality Association (representing park concessioners), with copies of a draft of this report. The Association of Partners For Public Lands and the National Park Hospitality Association generally agreed with the recommendations and contents of this report. The Association of Partners For Public Lands’ comments are included in appendix VII. In addition, the Association provided technical and clarifying comments that we incorporated into the report as appropriate. The National Park Hospitality Association’s comments are in appendix VIII. The association suggested additional recommendations. However, we believe these are not warrented based on the information and analysis in the report. The Department of the Interior did not provide comments on the report.

As agreed with your office, unless you publicly announce its contents earlier, we plan no further distribution of this report until 30 days from the date of this letter. At that time, we will send copies of this report to appropriate congressional committees and other interested parties. We will also make copies available to those who request them. In addition, this report will be available at no charge on the GAO Web site at http://www.gao.gov.

If you or your staff have any questions about this report, please call me or Cliff Fowler at (202) 512-3841. Key contributors to this report were Michael Krafve, Paul Lacey, Peter Oswald, and Mona Sehgal.

Scope and Methodology

We examined activities of two types of nonprofit organizations commonly found at parks: (1) cooperating associations and (2) friends groups. Although other nonprofit organizations also provide services and conduct commercial activities such as guided hiking and rafting trips at park sites, based on the subcommittee’s letter and discussions with subcommittee staff, these organizations were not included in the scope of this review.

To identify the number of parks supported by nonprofit organizations and these organization’s contributions, we obtained annual reports of cooperating association’s aid and revenue from the National Park Service’s Division of Interpretation and Education. We obtained the National Par Service’s most recent directory of friends groups (1998-1999) from the Park Service’s Partnership Office and contacted groups listed in the directory. To determine which groups were active, we telephoned all groups listed in the directory. For groups that could not be reached, we confirmed with the associated parks whether the group was still active. We also obtained organizational information from representatives of nonprofit groups, including the National Park Foundation, and National Park Service officials. We identified 149 friends groups, although it is possible that there are other groups that we were not able to identify. Contribution amounts and other nonprofit financial information used in this report are based on several sources. We received data on cooperating associations for 1997-2001 from the Park Service; these data are based on annual reports that all cooperating associations are required to submit to the Park Service. Tax data for 1998-2000 were purchased from the Urban Institute, which contracts with the Internal Revenue Service to digitize data on tax-exempt organizations; these data were based on tax returns submitted by nonprofit organizations with revenues over $25,000. Tax data were also obtained from the GuideStar Web site operated by Philanthropic Research Inc.; these data consisted of electronically scanned tax reports for friends groups and cooperating associations with revenues over $25,000. We also surveyed identified friends groups, as described below.

We did not verify that information in the annual reports and tax returns was correct. We relied heavily on self-reported donation and tax data from tax- exempt organizations; however, we previously reported that because potential donors look at what percentage of expenses go to the charitable purpose rather than management and fund-raising, nonprofit organizations have an incentive to report management and fund-raising costs as charitable expenses. Thus, there may be some over reporting of charitable contributions and underreporting of management and fund-raising costs. In this regard, we noted significant differences in reported tax information by two of the largest cooperating associations, Eastern National and Parks and History. Eastern National reports that about 20 percent of its expenditures are for charitable purposes and about 80 percent is used to cover the costs of materials, selling, and administrative expenses; Parks and History reports that about 90 percent of its expenditures are charitable expenses.

Data from the Park Service on cooperating associations were not comparable with tax data from the Urban Institute and GuideStar because of differences in reporting periods and accounting practices. We assessed the reliability of the electronic data we received from the Park Service and the Urban Institute through tests to determine obvious problems with completeness or accuracy. We determined that the data were reliable enough for the purposes of this report.

In addition, we conducted a survey of active friends groups regarding their financial information. We mailed the survey to all 149 identified groups in June 2002 and conducted several follow-ups by telephone and e-mail to encourage responses; we completed data collection in November 2002. Of the 149 groups surveyed, 79 returned responses (53 percent). Survey data were supplemented with tax data for an additional 23 groups, resulting in 102 of 149 groups (68 percent) with available financial data. Where possible, survey data were compared to tax data and any discrepancies were resolved through discussion with the groups. Figures presented in this report represent the two-thirds (68 percent) of identified friends groups for which we had either tax data or survey data, and dollar amounts should be considered a minimum estimate of the totals for all friends groups.

To identify the revenue-generating activities of nonprofits in the parks, and factors that contribute to cooperating association and concessioner competition and conflicts, and to assess how park managers are held accountable for meeting park service goals for nonprofit contributions, we (1) reviewed Park Service documents, plans, and policies; (2) obtained information from each of the Park Service’s seven regional offices; and (3) met with National Park Service officials, the Association of Partners For Public Lands the National Park Foundation, the National Park Hospitality Association, and the Friends Alliance. We also met with park, nonprofit, and concessioner officials at Gettysburg NMP, Fort Sumter NM, Grand Canyon NP, Badlands NP, Yosemite NP, and Yellowstone NP and discussed a nonprofit-managed concession contract with park and association officials at Mt. Rushmore NM. We chose to visit Grand Canyon, Yosemite, and Yellowstone national parks because their cooperating association and concession operations were among the largest in the park system; Gettysburg NMP and Fort Sumter NM to explore concessioner and local business concerns about nonprofit activities in these parks; and Badlands NP for perspective on a smaller nonprofit operation. Because these parks were not a random sample, they may not be representative of the system as a whole. We obtained data identifying merchandising concessioners, along with fees paid to the parks, from the Park Service’s Concession Management Division., We conducted our work from October 2001 to April 2003 in accordance with generally accepted government auditing standards.

Statutory Provisions Relating to Cooperating Associations and Friends Group Activities at National Parks

16 U.S.C. § 1

Establishes the National Park Service and the basic mission of the agency: “to conserve the scenery and the natural and historic objects and the wild life therein and to provide for the enjoyment of same in such manner and by such means as will leave them unimpaired for the enjoyment of future generations.”

16 U.S.C. § 1a-2 (g)

Authorizes the Secretary of the Interior to enter into contracts, including cooperative arrangements, with respect to conducting living exhibits, interpretive demonstrations, and park programs.

16 U.S.C. § 1b(5)

Authorizes the Secretary of the Interior to provide, on a reimbursable basis, supplies and equipment to persons that render services or perform functions that facilitate or supplement the activities of the Park Service.

16 U.S.C. § 1g

Authorizes the Park Service to enter into cooperative agreements that involve the transfer of Park Service appropriated funds to state, local and tribal governments, other public entities, educational institutions, and private nonprofit organizations for the public purpose of carrying out National Park Service programs pursuant to 31 U.S.C. § 6305.

16 U.S.C. § 3

Authorizes the Secretary of the Interior to issue rules and regulations for use and management of park areas.

16 U.S.C. § 6

Authorizes the Secretary of the Interior to accept donations of lands, other property, and money for the purposes of the National Park System.

16 U.S.C. § 17j-2(e)

Authorizes the use of Park Service appropriations for the services of field employees in cooperation with nonprofit scientific and historical societies engaged in educational work in the parks.

16 U.S.C. § 18f

Authorizes the Secretary of the Interior to accept donations and bequests of money or other personal property, and use and administer these for the purposes of increasing the public benefits from museums within the National Park System.

16 U.S.C. § 19e

Establishes the National Park Foundation, a charitable and nonprofit corporation, to accept and administer gifts of real and personal property for the benefit of, or in connection with, the National Park Service, its activities, or its services.

16 U.S.C. § 19jj-4

Authorizes the Secretary of the Interior to accept donations of money or services to meet expected, immediate, or ongoing response costs concerning destruction, loss, or injury to park system resources.

16 U.S.C. § 462(e)

Authorizes the Park Service to enter into contracts and cooperative agreements with associations and others to protect, preserve, maintain, or operate any historic or archaeologic building, site, object, or property in the National Park System.

16 U.S.C. § 464

Authorizes the Secretary of the Interior, in administering historic sites, buildings, and objects of national significance, to cooperate with and seek and accept the assistance of any federal, state, or municipal department or agency; any educational or scientific institution; or any patriotic association or individual.

31 U.S.C. § 6305

Authorizes federal agencies to use cooperative agreements when (1) the principal purpose is to transfer a thing of value to the recipient to carry out a public purpose and (2) substantial involvement is expected between the agency and the recipient when carrying out the activity contemplated in the agreement.

National Parks Affiliated with Cooperating Associations, Friends Groups, and/or Merchandise Concessioners

Black Canyon of the Gunnison National Monument

Cooperating Association Revenue, Donations, and Net Assets (1997-2001)

Cooperating association revenue (1997-2001)

Cooperating association Cooperating association donations (1997-2001) and net assets83,785 (166,087)

Friends Group Revenue, Donations, and Net Assets (1997-2001)

Chesapeake and Ohio Canal Association, Inc.

Fire Island Lighthouse Preservation Society, Inc.

Friends of the Chickamauga & Chattanooga NMP (14,511)

Friends of Fort Vancouver National Historic Site Friends of Harpers Ferry National Historical Park Friends of Independence National Historical Park Friends of Perry’s Victory and International Peace Memorial, Inc.

Friends of Stones River National Battlefield Friends of the Claude Moore Colonial Farm at Turkey Run, Inc.

Friends of the Cape Cod National Seashore, Inc.

Friends of the Gateway Parks Foundation, Inc.

Indiana Dunes Environmental Educational Consortium Rocky Mountain National Park Association Statue of Liberty—Ellis Island Foundation, Inc.

Friends group donations (1997-2001) and net assetsChesapeake and Ohio Canal Association, Inc.

Fire Island Lighthouse Preservation Society, Inc. (32,935)

Friends of Fort Vancouver National Historic Site Friends of Great Smokey Mountains National Park Friends of Harpers Ferry National Historical Park Friends of Independence National Historical Park Friends of Perry’s Victory and International Peace Memorial, Inc.

Friends of Stones River National Battlefield Friends of the Claude Moore Colonial Farm at Turkey Run, Inc.

Friends of the Cape Cod National Seashore, Inc.

Friends of the Gateway Parks Foundation, Inc.

Friends of the William Howard Taft Birthplace Indiana Dunes Environmental Educational Consortium Rocky Mountain National Park Association Statue of Liberty—Ellis Island Foundation, Inc.

Voyageurs Region National Park Association (33,809)

Parks with General Management and Commercial Services Plans

General Management Plans (GMP)

Plans (CSP) (complete/due)

Abraham Lincoln Birthplace National Historic Site Alibates Flint Quarries National Monument Allegheny Portage Railroad National Historic Site Appomattox Court House National Historical Park Arlington House – The Robert E. Lee Memorial Big South Fork National River & Recreation Area Black Canyon of the Gunnison National Monument 1997 General Management Plans (GMP)

Plans (CSP) (complete/due)

Boston African American National Historic Site Boston Harbor Islands National Recreation Area Brices Cross Roads National Battlefield Site Brown v. Board of Education National Historic Site Cane River Creole National Historical Park Carl Sandburg Home National Historic Site Castillo de San Marcos National Monument Chattahoochee River National Recreation Area Chesapeake & Ohio Canal National Historical Park 1976 General Management Plans (GMP)

Plans (CSP) (complete/due)

Chickamauga & Chattanooga National Military Park Cuyahoga Valley National Recreation Area Dayton Aviation Heritage National Historical Park Delaware Water Gap National Recreation Area Ebey's Landing National Historical Reserve 1990 General Management Plans (GMP)

Plans (CSP) (complete/due)

Florissant Fossil Beds National Monument Fort McHenry National Monument & Historic Shrine Fort Union Trading Post National Historic Site Frederick Law Olmsted National Historic Site 1983 General Management Plans (GMP)

Plans (CSP) (complete/due)

Fredericksburg & Spotsylvania County Battlefields Memorial National Military Park George Rogers Clark National Historical Park George Washington Birthplace National Monument George Washington Carver National Monument Great Egg Harbor Scenic and Recreational River Hagerman Fossil Beds National Monument 1996 General Management Plans (GMP)

Plans (CSP) (complete/due)

Home of Franklin D. Roosevelt National Historic Site Homestead National Monument of America Hubbell Trading Post National Historic Site Jean Lafitte National Historical Park & Preserve John D. Rockefeller, Jr., Memorial Parkway John Fitzgerald Kennedy National Historic Site 1984 General Management Plans (GMP)

Plans (CSP) (complete/due)

General Management Plans (GMP)

Plans (CSP) (complete/due)

General Management Plans (GMP)

Plans (CSP) (complete/due)

General Management Plans (GMP)

Plans (CSP) (complete/due)

Saint Croix Island International Historic Site Salinas Pueblo Missions National Monument Salt River Bay National Historical Park and Ecological Preserve San Antonio Missions National Historical Park San Francisco Maritime National Historical Park Santa Monica Mountains National Recreation Area Sunset Crater Volcano National Monument Theodore Roosevelt Birthplace National Historic Site Theodore Roosevelt Inaugural National Historic Site 1993 General Management Plans (GMP)

Plans (CSP) (complete/due)

Upper Delaware Scenic and Recreational River Virgin Islands Coral Reef National Monument War In The Pacific National Historical Park Wolf Trap Farm Park for the Performing Arts 1982 General Management Plans (GMP)

Plans (CSP) (complete/due)

Comments from the Association of Partners for Public Lands

The following are GAO’s comments on the Association of Partners for Public Lands’ letter dated June 13, 2003.

GAO Comments

1. We agree that NPS must better manage information on nonprofits, and this is one of our recommendations. We do not agree that the report title should be changed as proposed because the change would not capture another issue that our report and recommendations address -- the need to better manage the increasing role of nonprofits in providing visitor convenience items and services. Problems in these areas led to conflicts at three of the parks we visited. Moreover, our recommendation that parks develop commercial services plans is directed at managing the roles of nonprofits in the parks. 2. The association correctly points out, as we likewise observed in the report, that our observations at six parks cannot be generalized to the system as a whole. However, because association sales of convenience items are growing more rapidly than other association revenue items (table 8), we are concerned that the likelihood of conflicts between associations and concessioners may also increase. Positive relationships between associations and concessioners are discussed in the section “Not All Concessioners Were Concerned about Competition from Cooperating Associations,” on pp. 25 - 26. 3. We agree that cooperating associations provide benefits to visitors that are not measured by the amount of donations to the Park Service. We identified nonfinancial benefits that associations provide in a distinct report section on p. 14 and noted that association activities are focused on providing visitors with educational materials and services on p. 16. In addition, examples of nonfinancial assistance are in table 7. 4. This effort focused on the National Park Service’s role in partnering with nonprofits. We do cite prior GAO efforts that examined IRS oversight of nonprofits. For example, we cite TAX-EXEMPT ORGANIZATIONS: Additional Information on Activities and IRS Oversight, (GAO/T-GGD-95-198), which found compliance and administrative difficulties with Unrelated Business Income Tax reporting (see p. 32). 5. We added the association’s view to the discussion on p. 36. As stated in this section, we believe cooperating associations offer a considerable financial advantage, owing to the associations’ nonprofit status and other park support. However, we did not attempt to quantify the value of these advantages or to measure their effect on park decision makers. 6. We agree that net assets are intended to cover operating reserves and are not held exclusively for future contribution. We added the clarification that these assets are “potentially” available (pp. 3 and 13) and “could become” available (p. 7) for contribution. To the extent that nonprofit assets exceed operating expenses and other liabilities, net assets can only be used for their tax-exempt purpose, which for most of the nonprofits discussed in this report, is solely to benefit national parks. 7. Detailed technical and clarifying comments were incorporated into the report as appropriate.

Comments from the National Park Hospitality Association

The following are GAO’s comments on the National Park Hospitality Association’s letter dated June 18, 2003.

GAO Comments

1. We agree that Commercial Services Plans will require time to develop and implement and that development and implementation may be difficult because of resource constraints or because General Management Plans must first be prepared or updated. In this regard, we note on p. 1 that federal funding for the Park Service has not kept pace with such needs as visitor services and maintenance requirements. On p. 40, we note that Park Service officials told us that Commercial Service Plans were not developed because park resources are limited and there are higher priorities. We also note that Commercial Services Plans must be consistent with long-term plans – General Management Plans – and while the National Parks and Recreation Act of 1978 requires that each park unit maintain an up-to-date General Management Plan, these are frequently out of date. Although progress in developing and implementing Commercial Services Plans is necessarily dependent upon the availability of agency resources and its consideration of other agency priorities, we believe the likelihood that concessioner and nonprofit conflicts will become more common (see p. 42) supports placing greater emphasis on Commercial Services Plans. 2. As is clear from the heading on p. 33, the section “Park Managers Have Broad Discretion in Deciding to Expand Cooperating Association Sales and Services and Do Not Always Provide Transparent Rationale” already discusses the considerable autonomy park managers have at the local level. This was an important factor in our recommending that these managers provide rationale for decisions involving the scope, mix, and appropriateness of association and concessioner sales and services (see p. 44). Because we did not examine the advantages and disadvantages of the Park Service’s decentralized structure, we cannot address the need for increased headquarters’ or regional oversight of park managers. 3. We did not identify instances where the contractual rights of concessioners were not respected. In addition, D.O. # 32 makes reference to the preferential rights of concessioners. The National Parks Omnibus Management Act of 1998 (P. Law 105-391) prohibits the Secretary of the Interior from granting a preferential right to a concessioner for most new contracts or services. Although D.O. # 32 could be updated for consistency with current law, we are not making this recommendation because we did not identify problems related to the outdated wording.

Moreover, the contracts that we examined as part of our work usually did not give concessioners “exclusive” rights to sell or provide services. In fact, contract language in some cases specifies that concessioners are not granted “an exclusive or monopolistic right, to provide public accommodations, facilities, and services.”

The Association correctly points out that the Reference Manual for D.O. # 32 specifies that associations may be authorized to sell visitor convenience items when “concessioners are not presently providing such services”. This same instruction later specifies that a concessioner and an association generally will not carry on duplicative, competitive operations “in the same building.” Although the Park Service may wish to reexamine these provisions, we did not make this recommendation because, in some cases, concessioners and associations may need to provide similar services at a park. For example, prior to the new visitor center facility opening at Fort Sumter NM, the merchandise concessioner chose not to operate its store during the off-season. During this period, the association operated that facility, providing visitor convenience items in addition to interpretive materials. 4. Table 5 notes that association financial contributions include a dollar value assigned to information assistance provided by association staff to visitors and that the Park Service allows associations to claim up to 50 percent of association sales staff salaries. However, we agree that additional detail would provide a clearer picture of the composition of association contributions. We added language to tables 5 and 11 that 25 percent of association contributions were for information assistance. We also added that information assistance is a primary type of park support to the discussion on p. 2. 5. The issues addressed in this report do not provide a basis for making these recommendations. 6. Associations have appointed concessioner officials to their Boards of Directors. This was the case, for example, at Grand Canyon NP and Yellowstone NP. We believe that deciding who should serve on its Board of Directors is a decision best left to the private cooperating association.

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