CGU Drucker School & Arts and Humanities
CGU Arts Management
Finance & Accounting for Non-profit Arts Organizations Course #328
Spring, 2013
Contact Information
Course Instructor: Faith Raiguel
Office: none at CGU
Phone: cell: 323-717-7497 home: 323-662-5722
E-mail: fairai@yahoo.com
In-person Office Hours: by appointment set up through e-mail
Teaching Assistant: none
Course Schedule
Semester start/end dates: 1/22/13 – 5/18/13
Meeting day, time: Wednesday, 7:00 p.m.
Course Location: Burkle 26
Course Description
Objectives of the Course:
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Expand awareness of the similarities and differences between financial management of
profit-seeking firms and not-for profit firms.
Understand the scope and importance of financial management responsibilities within an
arts organization.
Understand the techniques of day-to-day financial management, with particular emphasis
on budgeting, financial statements, internal controls and decision making.
Develop a thorough understanding of funds accounting and of financial analysis.
Provide a useful set of tools for an emerging arts manager, regardless of art form or
professional specialty.
Background Preparations (Prerequisites) - none
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Student Learning Outcomes:
By the end of this course, students will be able to:
1. Understand and communicate fundamental financial and accounting issues for non-profit arts
organizations.
2. Appropriately utilize professional vocabulary in the non-profit field.
3. Interview and oversee finance and accounting staff.
4. Acquire tools for financial planning, budgeting and evaluation.
5. Prepare analysis (numerical) and briefing memos (written summary information) to other staff
and to a board of directors.
6. Appreciate the different organizational roles as they relate to financial decision making,
including involvement of all departments, organizational leadership, board members and
auditors.
7. Assess fiscal health of an organization.
Texts and Other Resources
Required:
Texts:
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“Not-for-Profit Accounting Made Easy,” Ruppel, John Riley & Sons (Abbreviation
“NFP”)
“Good to Great and the Social Sectors,” Collins, Jim Collins
(Abbreviation “Good to Great”), monograph
“Sarbanes-Oxley for Nonprofits,” Jackson and Fogarty, John Riley & Sons
(Abbreviation “SOX”)
Additional materials/activities:
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Case Studies in arts or arts related fields, distributed in class..
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Guest speakers in budgeting, planning, artistic decision making, endowment, audit
function, governance, among others.
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Internet research in arts and government websites.
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ArtsOrg Project
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Additional readings and assignments TBD
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Course Requirements & Assignments:
ArtsOrg Project
The culminating project for the semester is the “ArtsOrg.” You will be asked to select an arts
organization, anywhere in the country that is of interest to you. Pick a back-up organization.
Throughout the course, you will be asked to analyze, discuss or otherwise use materials provided
by your organization as they relate to other class materials and exercises.
1. Visit their website. Find their mission statement on the website. Establish contact with
their CFO or Business Manager
a. Conduct an interview to collect and discuss items below
2. Obtain - Materials
a. Most recent audited statement, last three years
b. Monthly Financial Statement – any one will do, even without numbers
i. Refer to it for its structure (sometimes they will not share)
c. Current Annual Budget (usually they will provide)
d. Most recent 990 (available on Guidestar)
e. Current promotional material
f. Organization chart (if possible)
g. Other material TBD – if possible
i. Articles of incorporation
ii. Bylaws
iii. Tax exemption letter
3. Articulate
a. Mission Statement
b. Product array
i. Be able to articulate what they sell
ii. Detailed list of “other earned revenue sources”
c. External Environment, their stakeholders
d. Internal Environment, organization structure
e. SWOT Analysis, 1-2 items in each category
f. Comparative financial statements, 3 years
i. Income statements
ii. Balance sheets
g. Ratio analysis and discussion of key ratios.
h. Largest Challenge they face in the next five years
i. What steps are they taking to address it?
ii. Are they using a Strategic (Long Range) Planning process?
iii. Is there a Strategic Plan in place?
i. Your assessment of fiscal health and two or three key aspects of the organization
that resonate with you on a fiscal basis.
4. Organize, to turn, in all your material in a 3 ring binder. Include all the material in 3.
above, plus an Executive Summary.
5. Prepare a 5-6 page Highlights of your investigation in a Power point presentation to
present in class, plus 1 hard copy of the presentation.
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14-session course outline
Session
& Date
1
Jan. 23
SESSION THEME, CONTENT AND PREPARATION
Introductions and Orientation to the Field
PREPARATION
Read: “Good to Great”
Prepare for class: Articulate for discussion in class three points of
particular interest in “Good to Great”, agree or disagree with the thesis.
Elements of Financial Management system
• Organization’s Annual “Life Cycle”
• Principles, Systems, People
• Complete Books and Records
Role of the Finance Office
Discuss ArtsOrg Project
2
Jan. 30
Complete Books And Records #1
Key Concepts: COURSE OVERVIEW, Elements of “THE BOOKS”
• Journals, record of transactions
• General Ledger, closing “the books”
• Financial Statements, month-end reporting
ANNUAL OPERATING BUDGET
PREPARATION.
Read: “NFP” Ch 2 portion on Statement of Activities pp 46-56
“SOX” Appendix A
“Governance & Artistic Product” Opera America Article, Winter 2008
Prepare: Select Arts Org Project, Prepare to hand in:
• Name of Arts Org Project
• Primary non-profit purpose
• Mission Statement
• Contact info, name and title of person whom you will connect with
Prepare brief answers to the following 6 questions on The Operating Budget:
1. What is a budget? 2. Why budget?
3. Who is involved? 4. Who cares?
6. When do you do it? 6. How do you use it?
In Class Exercise: Budget Poker
Key Concepts: BUDGET TOOLS
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Feb 6
Budgeting and Introduction to Cash Flow
GUEST SPEAKER – The role of financial management in artistic decisions
PREPARATION
Prepare: CASE #1 Circle Theater
The role of financial planning in artistic decision making.
Using the Operating Budget as keystone for other tools:
• Planning for Cash Flow
• Planning for the Future
Key concepts: BUDGETING, FIXED AND VARIABLE COSTS, P’s & Q’s
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Feb 13
CASH FLOW
FUNDS ACCOUNTING & FINANCIAL STATEMENTS #1
GUEST SPEAKER – cash flow and budgeting
PREPARATION
Read: NFP Chapters, 1,2
Prepare: CASE #2 Shoreline Symphony Part 1
Key Concepts – It’s ACCRUAL World.
Accrual Accounting
• “Cash Basis Bookkeeping”
• “Simplified Accrual Basis Bookkeeping”
• “Full Accrual-Basis Bookkeeping”
Basic Financial Statements
• STATEMENT OF FINANCIAL POSITION: Balance Sheet
• STATEMENT OF ACTIVITIES: Income Statement
• STATEMENT OF CHANGES IN NET ASSETS: Statement of Changes of
Financial Position
• STATEMENT OF CASH FLOWS
• NOTES TO FINANCIAL STATEMENTS
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Feb.20
FUNDS ACCOUNTING & FINANCIAL STATEMENTS #2
BUDGETS AND CASH FLOWS
PREPARATION
Read: NFP Chapters 3,5,7
Prepare: CASE #2 Shoreline Symphony Part 2
EFFECTIVE COMMUNICATION: Board Brief, Executive Summary
UNDERSTANDING THE BALANCE SHEET
Key Concepts: LIQUIDITY, SHORT & LONG TERM
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Feb 27
FINANCING A NON-PROFIT: STRATEGIC PLANNING AND FINANCIAL
MODELING
GUEST SPEAKER – Long Range Planning
PREPARATION
• Read Northfield Academy Case
Read NFP Chapters 4, 6, 8, 9, 10, enough to provide “write-up” below"
Write-up FOR EACH CHAPTER ABOVE IN NFP:
• Define the concept in each chapter
• Is it an asset or liability
• Does it generate income or expense
• Comment on why it is important.
Key Concepts: LEVERAGING RESOURCES:
1.Operations: Creating Revenue Opportunities
• Earned, programmatic, pricing issues
• Earned, ancillary, Role of UBI
• Contributed, realistic goals and strategies
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Mar 6
EVALUATION TOOLS + EFFECTIVE COMMUNICATION
LEVERAGING RESOURCES Role of the Endowment
GUEST SPEAKER – Endowment Funds
PREPARATION
Read: NFP Chapter 11; SOX Chapter 3
Prepare (one copy to turn in): Set up 3 years of Balance Sheets &
Income Statements of your ArtsOrg UNRESTRICTED FUND ONLY
SWOT Analysis for Circle Theater
REVIEW OF THE BALANCE SHEET…again
Ratio analysis, introduction and overview
INTRODUCTION TO BOOKKEEPING
Key Concepts: LEVERAGING RESOURCES:
2,Endowments 3.Debt
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Mar 13
THE BASICS, BOOKKEEPING – putting it all together, keeping it in balance!
Prepare: DEBIT AND CREDIT EXERCISE
CASE #2 Shoreline Symphony Part 3 – bookkeeping
IN CLASS
McLEAN GALLERY DEBIT AND CREDIT EXERCISE
Writing up journal entries Writing up working trial balance
Key concept: Respect for Bookkeeping, DEBITS AND CREDITS
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Mar 20
SPRING BREAK
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Mar 27
ANALYSIS
PREPARATION
Calculate 3 years of ratios for your ArtsOrg, state what is revealed by each
Turn in with 3-years of comparative B/S; I/E statements
Work will be evaluated on completeness and clarity of presentation
Read: SOX Chapter 1
Key Concept: RATIO ANALYSIS, ASSESSMENTS OF HEALTH
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Apr 3
AUDIT ENVIRONMENT AND GOVERNMENT REPORTING
GUEST SPEAKER
PREPARATION
Read: NFP 12; SOX 2, 4, 5
Download: California Nonprofit Integrity Act
not just the legislation but a discussion
Download: New Form 990
Bring Form 990 from your ArtsOrg
Prepare: Inquiry of ArtsOrg on Compliance with SOX & Cal Integrity Act
The increasing demand for accountability. The changing oversight landscape.
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Apr 10
Key Concept: ORGANIZAITONAL INTEGRITY; THE AUDIT FUNCTION
INTERNAL CONTROLS + INTRODUCTION TO GOVERNANCE
GUEST SPEAKER
PREPARATION
Read: SOX Chapter 6,7, 8
Read: LATimes “Bigger, Bolder + Poorer”
E-mail to me three questions for a Board Treasurer by Saturday night, April 6
Assess your Debit and Credit ratio homework, add your evaluation of
each ratio to your work and resubmit.
Complete Books and Records, again
• What to keep and what to throw away.
Internal Controls
• People
• Systems & Reports
• Physical tools
Key concepts:
ORGANIZATIONAL STEWARDSHIP: Roles, Challenges and Rewards.
EFFECTIVE COMMUNICATION
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Ap. 17
GOVERNANCE & INTERNAL CONTROLS CONTINUED
REVIEW – Semester recap
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Ap. 24
PREPARATION
Read: SOX 9,10 Appendices: E, F, G
FINAL MEETING
Presentation of Class Projects
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Ap. 25
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FINAL EXAM
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Grading rubrick
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HOMEWORK
40%
Grading will be weighted for
o EFFORT
o CLARITY
o IMAGINATION
o COMPLETENESS
o TIMELINESS
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CLASS PARTICIPATION
30%
o Including preparation and involvement
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ARTSORG PROJECT
15%
o This will be the foundation for homework as well.
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FINAL EXAM
15%
While each segment does not carry equal weight, it is expected that each student will complete
each segment satisfactorily for full credit in the course.
Grading
Your grade will be calculated using the following scale. Grades with plus or minus designations
are at the professor’s discretion.
Letter Grade Description
Learning Outcome
Grade Point
A
4.0
Complete mastery of course material and additional
Insightful
insight beyond course material
B
3.0
Complete mastery of course material
Proficient
C
2.0
Gaps in mastery of course material; not at level
Developing
expected by the program
U
0
Unsatisfactory
Ineffective
Continual matriculation at CGU requires a minimum grade point average (GPA) of 3.0 in all
coursework taken at CGU. Students may not have more than two incompletes. Details of the
policy are found on the Student Services webpage (http://www.cgu.edu/pages/5081.asp).
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Course Policies:
Attendance
Students are expected to attend all classes. Students who are unable to attend class must seek
permission for an excused absence from the course director or teaching assistant. Unapproved
absences or late attendance for three or more classes may result in a lower grade or an
“incomplete” for the course. If a student has to miss a class, he or she should arrange to get
notes from a fellow student and is strongly encouraged to meet with the teaching assistant to
obtain the missed material. Missed extra-credit quizzes and papers will not be available for retaking.
Homework
Homework is expected to be completed and turned in on time. I would rather see attempted and
incomplete work than no work turned in. Homework is reviewed in class prior to turning it in.
Students may write corrections on their papers during that review. Any homework assignment
may be re-done completely after the first due date.
Scientific and Professional Ethics
The work you do in this course must be your own. Feel free to build on, react to, criticize, and
analyze the ideas of others but, when you do, make it known whose ideas you are working with.
You must explicitly acknowledge when your work builds on someone else's ideas, including
ideas of classmates, professors, and authors you read. If you ever have questions about drawing
the line between others' work and your own, ask the course professor who will give you
guidance. Exams must be completed independently. Any collaboration on answers to exams,
unless expressly permitted, may result in an automatic failing grade and possible expulsion from
the Program. Additional information on CGU academic honesty is available on the Student
Services webpage (http://www.cgu.edu/pages/1132.asp).
Instructor Feedback and Communication
The best way to get in touch with me is by e-mail. I will respond to email or voice messages
within two business days.
Expectations and Logistics
It is expected that preparation be made prior to class, homework assignments completed in hard
copy to be turned in when due. Class materials other than the texts will be e-mailed and posted
in Sakai.
Accommodations for Students with Disabilities
CGU is committed to offering auxiliary aids and services to students with verifiable disabilities,
in compliance with Section 504 of the Rehabilitation Act of 1973 and Title II of the Americans
with Disabilities Act of 1990. To ensure that their individual needs are addressed, students with
special needs are encouraged to contact the Dean of Students Office as early as possible.
Additional resources can be found on the linked page (http://www.cgu.edu/pages/1154.asp).
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