The USO’s Show Must Go On

Sloan Gibson seeks to build a more sustainable business model at the USO.

For nearly 70 years, the United Service Organizations (USO) has entertained the troops, with shows featuring celebrities from Bob Hope and Marilyn Monroe to Robin Williams and Scarlett Johansson. But the congressionally chartered nonprofit supports the U.S. military in many other ways. Today there are 140 USO centers located around the world, in airports and war zones and near military bases, offering Internet access and prepaid phone cards for some 1.4 million active-duty soldiers and their families, as well as 1.2 million National Guard and Reserve members and their families.

Other morale-boosting efforts by the USO include customized care packages, housing assistance, and support groups, as well as a new program to help wounded soldiers get the appropriate closure from their experience after they return home from battle.

Although its services have changed with the times, the USO continues to rely on old-fashioned funding. With few large, consistent donors or corporate sponsors, the organization depends on one-off direct-response mailings for most of its cash revenues, leading to a lumpy and unpredictable revenue stream. Aiming to stabilize and diversify that revenue base is a former CFO of AmSouth Bank, Sloan Gibson, who is now president and CEO of the USO.

“Whether it’s the grandmother who gives us $35 a year or whether it’s Procter & Gamble, we’re about sustained relationships,” says Gibson. “We’re not interested in doing transactions. If the only reason people give money to us is because of the war, then when the war ends, what happens?”

Gibson, who attended West Point and spent several years in the Army before going into banking, took the helm of the USO in September 2008. One of his goals, he told CFO in a recent interview, is to grow the organization’s revenues from its current $250 million to $1 billion. The following is an edited transcript of the interview.

How do your years as a CFO shape the way you think about the USO?

When I first interviewed for this job, one of the things I heard repeatedly from the search committee was that they were looking for someone to help build a sustainable organization. If you look at the USO over its history, what you will find is perfect correlation between the USO’s financial welfare and the cycle of war and peace. So part of what we’re working on is building a sustainable business model to make sure that for decades and decades to come, the USO is there to support our troops and families, whether we’re at war or at peace.

Sloan Gibson

The USO’s total revenue last year was about $250 million. How do you make money, and what else counts as revenue for you?

If you look at the audited financial statements, the biggest [revenue] category is in-kind donations, and there are two very large components there. One is $70 million or more of donated media value. We don’t really pay for advertising, so if you ever see a USO ad on TV, it’s not something we paid to run, but we’re required to book the imputed revenue that’s associated with that. Another very large chunk there is the value of the celebrities who entertain the troops for us, which in 2009 was about $50 million.

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