Reprinted with permission from the October 2017 issue of American Cemetery magazine.

as seen in:Building Out America Includes Our Cemeteries

I had mistakenly thought a lateflight would allow me a quick andrelatively uneventful drive fromLogan International Airport to ourcompany’s headquarters as I haddone a hundred times prior.However, the 11 p.m. two-hourdrive turned into almost three-and-a-half hours filled with brake lightsilluminating tree-lined highwayscutting through the Northeastcorridor from Massachusetts toConnecticut. It gave me plenty oftime to think about how, as painfulas it is to spend money on infra-

structure in hard economic times,this type of long-term planning andforesight is essential for maintainingour country’s critical infrastructure.

I’m aware of the stimulus to theeconomy (more jobs, more moneythrough the system, and lowerunemployment – even if temporary)these projects create, but those areshort-term impacts. The long-termvision is something that Dwight D.Eisenhower explained in his presi-dential address to Congress on thestate of the union in January 1955when he stated, “A modern,

efficient highway system is essentialto meet the needs of our growingpopulation, our expandingeconomy, and our nationalsecurity.” Eisenhower saw past theshort-term benefits to the biggerpicture of our country’s futureneeds. Despite how tiring red brakelights are to have glaring in youreyes at 12:30 a.m., it is hard toargue with Eisenhower’s logic.

I was heading back from aMidwest trip where we had met withrepresentatives from a cemetery thatwas operating in the red and wanted

This article originally appeared in the October 2017 issue of American Cemetery & Cremation, published by Kates-Boylston Publications,and is being shared with permission. Visit www.americancemetery.com to subscribe.

FinanceBy Todd D. Mannix

As I sat in single-lane traffic on I-95 South in Connecticut forthe third construction-related traffic jam from Boston toMadison, Connecticut, it was apparent to me that this countryis spending a fair amount of money on infrastructure.

Building Out America

Includes Our

CemeteriesIncludes Our

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to know if there was a path toprofitability. They had a decent-sizedendowment fund, but they werelacking current income from opera-tions. We were able to conduct afinancial health analysis anddiscovered that by using somecreativity to generate a small amountof income, combined with the rightinvestments on their endowmentfund and given their current expendi-tures, they would turn the cornerinto profitability in about 15 years.From a cemetery propertyperspective, 15 years is a blink of aneye. Cemeteries exist for centuries, so15 years in the grand scheme mayseem insignificant. However, if youare a cemetery operator and businessperson, 15 years is a lifetime.

To put this time frame intoperspective, 15 years ago in 2002:Kelly Clarkson won the first seasonof “American Idol;” Apple releasedits second-generation iPod (whichheld a then-whooping 20 GB ofstorage space); the Sanyo SCP-5300

became the first cellphone with abuilt-in camera to be released in theU.S.; the New England Patriots wontheir first Super Bowl ever and wouldthen go on to win a third of all SuperBowls since; and U2 played thehalftime show at that same SuperBowl with a tribute to all those wholost their lives in the 9/11 attacks notsix months prior. Fifteen years canseem like a long time, especially ifyou are running a business in the redfor that long.

Many cemeterians entered into thisbusiness either through their familyor community interests, and theyremain in the business because theyknow they are providing a much-needed service to their communities.Nevertheless, a cemetery (even a not-for-profit) is a business, and thosewho run them still need to earn alivelihood to provide for themselvesand their families. No matter howaltruistic one may be, to absorb aloss for 15 years is just not logicalnor fair for those dedicating

themselves to managing thecemetery. In many cases, this iswhere cemeteries have been turnedover to the local municipalities thatgovern the areas in which they exist.The sad truth however, is that in themajority of cases, municipalities lookat these properties as an additionalburden on the taxpayers and managethem as such. They become one moretask to manage for an already tightlybudgeted parks department. Theendowment fund is either absorbedinto a general fund with parks andrecreation funds or, even if it is keptseparately, it is invested with the onlygoal of not losing the principal.Growth and current income becomesecondary to holding the money.

In many cases, elected officialscome and go, and few people getinvolved in town government for thepurpose of managing the cemeteriesbetter. It’s some other ambition oraltruistic purpose that generallymotivates town officials to getinvolved and run for office, not

This article originally appeared in the October 2017 issue of American Cemetery & Cremation, published by Kates-Boylston Publications,and is being shared with permission. Visit www.americancemetery.com to subscribe.

Finance .qxp_Pg. 00 Ben Franklin 5/10/18 12:43 PM Page 21

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managing the defunct cemetery. Notsurprisingly then, cemeteries fall fardown the list of their responsibil-ities. As such, it is easy tounderstand the “not on my watch”mentality of not investing the carefund properly and only seeking topreserve principal. People who arenot in the industry don’t understandcemetery management and as aresult, the care fund objectives ofgrowth and income are secondary tonot losing the money throughinvesting while they are in office.

Just think about an up-and-coming selectperson with aspirationsof building a new school, or creatingmore greenspace, or helping thehomeless. If these are the reasonsthey get into office, they certainlydon’t want to be derailed in theirpassion if the market has a downyear and the cemetery funds arenegatively impacted. With 24-hourexposure of social media these days,

all it takes is one concerned citizento paint the “negligently managingour town’s cemetery” picture andthe political ambitions of thatperson could be over. So, it’s theeasy path on a “nonessential”function to make sure the invest-ments don’t lose money.

Consequently, the care funds inmany of the municipalities aremanaged conservatively with littlegrowth and nominal income.Obviously, I’m speaking in general-ities, and there are exceptions wehave seen across the country. Thebiggest message to take away here isthat by and large, it’s safe to say thatonce the cemetery is turned over tothe municipality, it ceases to belooked at as a business. This is acritical flaw in the municipality’smindset as the municipality is in aunique position to turn the businessaround and actually benefit thecemetery and the town by doing so.

In order to do this, the municipalitymust have that Eisenhower foresightfar into the future.

What would happen if the munici-pality took the same approach ourfirm did, by instead doing ananalysis as to how to make thecemetery a viable and profitablebusiness? The municipality isalready absorbing a nonperforming(nonprofitable) asset on its books,so why not look at it as an oppor-tunity – rather than a drag on themunicipality’s finances? The keydifference between the cemeteryowner and the municipality is thatthe municipality is capable ofabsorbing a 15-year turnaround.Albeit the municipality is coveringthe costs through the taxpayers, butbecause the cemetery has beenturned over to the municipality, thetaxpayers are going to carry thisburden anyway.

The difference in mindset is

This article originally appeared in the October 2017 issue of American Cemetery & Cremation, published by Kates-Boylston Publications,and is being shared with permission. Visit www.americancemetery.com to subscribe.

Finance .qxp_Pg. 00 Ben Franklin 5/10/18 12:43 PM Page 22

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critical. What we see often is that thenonperforming cemetery becomes atax burden that just becomes part ofthe town’s expense entitlements(things that are already earmarked tospend before a single taxpayer dollarcan go to future town business).

Let’s say for the sake of argumentthat Marcus Lemonis of CNBC’s“The Profit” – which I think is themost educational show on televisionfor small business owners to watch –came into the town and decided thathe could not only eliminate the dragon the town’s coffers, but turn thecemetery into a cash-generatingbusiness in 15 years? The resultwould entail that the care fundswould be managed with the long-term objective of eliminating theburden to the taxpayers. Growthand current income would onceagain be considered importantinvestment objectives along withpreservation of principal.

As with the cemetery we visited, ifmanaged properly (and stillrelatively conservatively I mightadd) the endowment fund couldgrow enough to earn sufficientinterest and dividends to cover itsmaintenance expenses — even afteraccounting for inflation.

Once the cemetery is turnedaround, the municipality can do oneof two things with it. They couldcontinue to manage it and use thecemetery proceeds to furtherbeautify the cemetery as a landmarkin the town. The second optionwould be for the municipality to sellthe cemetery as a private businessand get it off the municipalitiesbooks for a profit.

As with our country’s infra-structure, we know that aninvestment today is going to allowus to continue to utilize theresources we have available to usbecause we have a long-term vision.

We promote this same concept tocemeteries frequently when talkingabout their master plan. There isstill a turnaround story for mostcemeteries that have been followingthe endowment regulations bycontributing to the care fund, eventhough they may not be profitabletoday.

It could actually be a win for themunicipality as in most cases there isno cost (other than running it – andthere is no choice in doing that) intaking the cemetery over in the firstplace, and it could end up being aprofit center if looked at as a long-term business turnaround opportunity.Aside from the financial impacts to themunicipality, the cemetery will onceagain become a beautiful, vibrant, andpeaceful part of the municipality’slandscape. Now imagine the growthof the selectperson who can tout thatturnaround and the positive press itwould create. •

This article originally appeared in the October 2017 issue of American Cemetery & Cremation, published by Kates-Boylston Publications,and is being shared with permission. Visit www.americancemetery.com to subscribe.

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