Finance for cultural organisations: Things you need to know before you start

Finance for Cultural Organisations

Hi. I am Sarah Thelwall

and I am a strategist and consultant based in the UK.

And my course for you today is

Finance for Cultural Organisations.

Things you need to know before you start.

The purpose of a budget is to work out in advance

what it’s going to cost to deliver to a set of objectives.

The first thing to check therefore

is that you have a clear set of objectives.

This is the difference

between being asked to prepare a budget for an exhibition

and being asked to prepare a budget

for an exhibition in July,

showing the works of five artists

in a mixture of two and three dimensions

in a space that you own

for which you are wishing to attract 2,000 visitors.

So as the person responsible for preparing the budget,

you want as clear an answer as possible

to the question of what are we trying to achieve.

In an ideal world

you would be working with a set of SMART objectives:

specific, measurable,

achievable, realistic, timely.

Is there a general ballpark?

This second question is again to help you focus your time.

The budget for putting on an exhibition of local artists

with the goal of attracting a local audience

is likely to be very different from a budget

for flying in international artists

with the goal of attracting an international audience.

For this reason, there’s obviously no average budget,

and therefore it’s really worth finding out

what a funder is willing to spend

on achieving this set of objectives.

And that’s what I mean by wanting a general ballpark

for the budget that you are going to work on.

There are times when a funder or sponsor

has a sense of the upper limit

of what they will spend on a project.

If this is the case, it’s really worth knowing what that upper limit is,

so that you can deliver the greatest value

for the project, the organisation, and the funder.

Your organisation may or may not be

bidding competitively for the funds.

If you are bidding competitively,

a budget is a key part of demonstrating

that your organisation should win the funds.

In a competitive environment you are looking to demonstrate

that your budget is both cost effective and realistic.

So there are two questions you need to ask here:

‘Is there a ballpark that I should be working within?’

and ‘How risky or risk averse should I be

when putting this to the funder?’

A third question that you could ask at this stage is

‘Have we done this before?’

Because if you have, it’s worth looking at past budgets.

So as you can see here, what we’re trying to do

is prevent you having to start from a blank sheet of paper

or an empty excel sheet.

The final question to ask at this stage

is ‘Has anyone mapped out the project activities

that you are going to develop a budget for?’

By the time you sit down to write the budget

you will, with luck, have acquired

some or all of the following information:

a set of project objectives or goals;

a ballpark

in terms of the total costs you can put to the funder;

past examples

of similar budgets for similar projects;

and a timeline of activities for this project.

This information is important

because it provides a set of boundaries within which you can work

or a set of assumptions that you can use when costing.

So now you can:

work out whether you have

all the documents you need available to you;

work to a pre-agreed timeline;

and understand the level of risk

that your organisation is willing to take.

For each video I’ve prepared a set of extra materials,

reading lists, suggested articles to read.

You will find these below the video.