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Weekly Features (scroll down to find them)
​Function of the Week: Program & Production​
Framework of the Week: Statement of Financial Position
Questions? Ask ArtsManaged

Dear Reader,

It is an annoying but inescapable truth that all capacity comes at a cost. For arts organizations, the capacity to make bigger and more complex work, more consistently and more frequently, requires more people, more money, and more stuff. How we acquire and sustain all three of those "mores" is a central puzzle of Arts Management practice. And the pieces of that puzzle are laid out in the balance sheet.

The balance sheet (aka statement of financial position) is a snapshot of all the things of economic value a business owns, and all the ways it owes resources to others. Put another way, the balance sheet lists the financial resources an organization has rights to, alongside the financial responsibilities it has accumulated over time.

So when you build or buy or renovate a building, for example, you increase the total economic value of what you own. But that economic value had to come from somewhere. Your capacity (the building) came at a cost that was covered by an array of sources (debt, savings, and investments/donations). The balance sheet shares both sides of that story.

Why is the balance sheet such an essential and eternal puzzle for a nonprofit arts organization? Because a nonprofit follows a logic (or perhaps a belief) of mission over money. The entity has a purpose. That purpose requires capacity. And the costs of that capacity cannot or will not be covered by earned revenue or investment (which is why it's a nonprofit). Capacity has a cost in the for-profit world, as well. But the promise or proof of earned revenue generated by that capacity helps cover the bet.

In the nonprofit world, capacity doesn't generate adequate revenue, so donors, debt, and unpaid labor tend to fill the gap. This can make the enterprise (and the balance sheet) weaker over time, manifesting in deferred maintenance, old or faltering equipment, and underpaid, overworked, or under-supported staff.

The climb toward beautiful work is an essential part of a thriving arts organization. But it's the arts manager's job to make sure the road rises to meet you.

Andrew

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Function of the Week: Program & Production​

In Arts Management, program and production involve the assembly of disparate parts into a coherent "offer" – a good or service that might be recognized and valued by an audience. For example, a theater work may have a script and a musical score, but it isn't an arts experience until it becomes a "production" – with the full array of people, money, and stuff required for an audience to experience it.

Framework of the Week: Statement of Financial Position​

The Statement of Financial Position (also known as the Balance Sheet) is one of the three primary financial statements used by (and required for) formally organized business entities in the United States. The Balance Sheet reports a company's Assets, Liabilities, and Net Assets at a specific point in time. In brief, it offers a "snapshot" of what a company owns and what it owes to lenders and investors.

Questions? Ask ArtsManaged

Do you have a puzzle, problem, or persistant concern about Arts Management? Post your question to this online and anonymous form. I’ll select questions to answer in the Field Guide, or in this newsletter, so that we can all learn together about the real-world messes we face.