Financial Management for Nonprofit Arts and Cultural Organizations

• Other Authors: Song, Juyeon (author)
• Format: Others
• Language: English; English
• Published: Florida State University
• Subjects: Arts > Management; Public administration; Art > Study and teaching
• Online Access: http://purl.flvc.org/fsu/fd/2018_Sp_Song_fsu_0071E_14381

Financial management is the operational activity with which all organizations to manage their economic resources efficiently in corporate finance. Nonprofit arts and cultural organizations also need to allocate their financial resources for everyday operations. Nonprofits receive benefits from identifying, measuring, monitoring, and utilizing financial indicators for sound financial management because financial management takes the responsibility for effective utilization of funds as well as obtaining funds. However, I found only eight articles that were partially covered financial management topic among the total 1,515 academic articles from seven major arts management journals from the last 10 years. Although 42% of nonprofit arts organizations recorded deficits in 2013, research on financial management has been extremely lacking in the arts and cultural sector. Based on the discrepancy between scholarly research and current problems, this study suggested a conceptual framework for financial management, designed financial performance measurements, and analyzed the proposed measurements with empirical data to examine the applicability of these financial measurements in practices. To suggest financial management tools, four research questions were addressed: (1) Is the degree between the proposed categories (factors) and related variables (indicators) statistically meaningful? (2) What financial categories and indicators do nonprofit arts and cultural organizations use to measure their financial performance? (3) Based on the answers of Research Question 2, what are the statistically exploratory and significant factors (categories) and indicators among applicable measurements? (4) What are the distinctive implications for different types of nonprofit arts and cultural organizations, and what are the distinctive implications for budget sizes based on the value of statistically significant financial measurements? The population of this study was 501(c)(3)s’ performing arts organizations under the category of National Taxonomy of Exempt Entities codes from A60 to A6E. I used the digitized data files from the National Center for Charitable Statistics, regarding the 501(c)(3) arts and cultural organizations’ IRS Form 990 from 2003. To investigate proposed research questions, I conducted data cleaning processes and analyzed data with SPSS. Descriptive statistics were used in the first phase analysis to generate the means for 15 financial measurements. Factor analysis was conducted to find statistically meaningful relationships between the proposed categories and sub-indicators. To determine validation of results from factor analysis in this study, the Kaiser-Meyer-Olkin Measure of Sampling Adequacy and the Bartlett’s Test of Sphericity significance level were measured. Through factor analysis, this study demonstrated that all of the 15 proposed measurements can be used for nonprofit arts and cultural organizations to assess their financial performance. In addition to factor analysis, analysis of variance by arts subsectors suggested that the ratios of contributions to expenses, contributions to revenue, and fundraising expenses to total expenses were not the same between different types of arts organizations. Furthermore, analysis of variance by budget sizes proposed that the means of eight measurements – the saving, contributions to assets, direct supports to assets, revenue to assets, operational margin, management expenses to total expenses, fundraising expenses to total expenses, and direct supports to fundraising expenses – were not the same between different budget sizes in nonprofit arts and cultural organizations. A detailed discussion of the findings, as well as implications and conclusions for future research are included. === A Dissertation submitted to the Department of Art Education in partial fulfillment of the requirements for the degree of Doctor of Philosophy. === Spring Semester 2018. === March 29, 2018. === Art and Cultural Organizations, Financial Measurements, Financial Statement Analysis, IRS Form 990 Analysis, Nonprofit Financial Framework, Nonprofit Financial Management === Includes bibliographical references. === Pat Villeneuve, Professor Directing Dissertation; Patricia Schriefer, University Representative; Jeff Broome, Committee Member; Antonio Cuyler, Committee Member.