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Nonprofits Can Provide Brand Name That Sells

The private sector doesn’t have a monopoly on branding power. So, let’s forget about the likes of Coca-Cola, Marlboro and Nike for now and focus on an area often overlooked by entrepreneurs seeking some marketing oomph: nonprofit organizations.

By JEFF BAILEY
Staff Reporter of THE WALL STREET JOURNAL

It works for some big companies. MBNA Corp., for instance, expanded its credit-card business by offering Visa and MasterCards branded with university names. And U.S. banks, lending to inner-city families, in the 1980s and ’90s relied heavily on nonprofit community groups to identify borrowers and complete loan applications.

Branding was on the mind of Sam Mulgrew five years ago when, having designed and built a lovely line of simple wooden caskets, he just couldn’t sell them. In his best year, he sold about 40. "Who wants to buy a casket from Sam Mulgrew in Po-dunk, Iowa?" he concluded.

Yet Mr. Mulgrew knew there was a business opportunity in caskets. The average funeral service costs $4,000 or more in the U.S. Profit margins on casket sales are lush, running 15% to 20% at No. 1 manufacturer Hilldenbrand Industries Inc., and typically more than that when resold by funeral parlors.

What’s more, a Federal Trade Commission rule requires funeral homes to accept caskets that consumers buy elsewhere, opening the market to independent builders. And the Internet is a cheap and potentially effective way to advertise caskets.

Mr. Mulgrew realized he needed a trusted name to appeal to consumers. Fortunately, some neighbors in the greater Dubuque area were long on branding power but short on business ideas: the Trappist monks at the 150-year-old New Melleray Abbey in Peosta, Iowa.

The abbey, on 3,400 rolling acres, has always supported itself by farming. But with low commodity prices and tough competition, says Father Brendan Freeman, the abbot, or chief monk, "We can’t make any money on the farm."

The 30 monks, down from a peak of 150 in 1960, average 70 years old now. And Father Brendan says the retirement and health-care accounts are "seriously underfunded." It costs $480,000 a year to heat the drafty old place, feed the monks and otherwise keep the abbey going.

News of the monks’ predicament made its way to Mr. Mulgrew. And he wrote Father Brendan proposing a deal. They would combine his business with the monks’ good name and labor. He wanted to pay them a royalty and retain ownership of the business.

Here, Mr. Mulgrew learned something that banks and others had already known: nonprofit groups can be tough negotiators when it comes to business. We own it, you run it for us, the monks countered.

Mr. Mulgrew reluctantly agreed. He works for a salary and bonus, but gave up ownership. Is he still an entrepreneur? Sure, he is. He runs Trappist Caskets. His pay — and the monks’ well-being — depend on his decisions. And it’s more than either party could have built separately. Mr. Mulgrew plans to be an owner in his next venture, but is happy for now with this one. Staffed today by a dozen monks and an equal number of local laymen, Trappist Caskets expects 2003 sales of $1 million, roughly double last year, and it’s solidly profitable.

They advertise in local Catholic newspapers and parish newsletters around the country, and pay to have their Web site, http://www.trappistcaskets.com, pop up near the top of a Google search for caskets.

And, the monks will tell you, quite immodestly, the product, priced from $695 to $1,795, sells itself. Mary Valsa of Chicago had handled all of her 97-year-old mother’s wishes for a funeral except this: "She told me she wanted to be buried in a simple wooden casket. I thought, where am I going to get one?"

Mrs. Valsa’s daughter-in-law hopped on the Internet and found Trappist Caskets. They chose the oak model for $1,495 plus shipping and it was delivered to a Chicago funeral home the next day. "They were all saying at the wake," Mrs. Valsa says, " "I’m sorry for your loss, but where did you get that casket?’"

Mr. Mulgrew and Father Brendan are planning an expansion. And they’re working to preserve the monks’ routine, which includes seven sessions of prayer each day beginning at 3:30 a.m., and at the same time maintain the monk labor content in the caskets. These, of course, are the happy problems of growth.

The monks want enough to live on and a little more to fund retirement and health-care reserves, and that’s all. "If you and I ran this," Mr. Mulgrew says, "we’d be saying, what’s the market and how do we capture it?" Without the monks, of course, there wouldn’t be a business.

Many larger companies have hooked up with nonprofits both to perform charitable work and to further business aims. Some accounts of these relationships, which might help entrepreneurs think about working with nonprofits , can be found at http://www.winwinpartner.com. Also, the National Association of Manufacturers, http://www.nam.org, helps companies partner with community groups to find and train workers. "Nobody can do anything alone anymore," NAM’s Phyllis Eisen says.

Write to Jeff Bailey at

Copyright © 2003 Dow Jones & Company, Inc. All Rights Reserved

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