Financial Management for Decision-Making in the Arts

Abstract

Sunil is the Artists' Services Coordinator at Capital City Arts Organization, a mid-sized, nonprofit organization that offers live performances, exhibitions, classes, and lectures to the community. The approach of this chapter is to help cultural managers, like Sunil, develop basic vocabularies, fundamental skills, and the understanding of how activities of a nonprofit arts organization translate into numbers, recorded in financial reports, which then form the basis of sound decision-making. Taking Vera's advice, Sunil set about to learn more about five key reports: the organizational budget, and financial statements showing financial position, financial activities, functional expenses, and organizational cash flow. The chapter follows Sunil on his learning journey. A nonprofit arts organization will regularly prepare several financial reports that, with the annual budget, are essential for the financial management of the organization. They provide a complete picture of the organization's activities, financial health, and its potential for sustainability over time.