This blog looks at two ways in which organisations need to be willing to forego current spending to secure a healthier future – delayed gratification of the financial sort.
A financial strategy is not a list of income and expenditure which, when totalled, equals zero or a small positive number; nor is it the pious statements included in trustee reports about a reserves policy and the management of risk. A financial strategy sets out how you will secure and spend the financial resources of your organisation in support of your core purpose and aims. Designing such a strategy is as much an art as a science. It is an exercise in which you mange the tensions between the urgent (the short term) and the important (the medium/longer term). It is the place in which the hard choices get made. It is always a work in progress.
I have set out below the likely components of a financial strategy for a visual arts organisation. In addition to the brief comments offered, the links will take you to additional ideas, insights and resources.
Funding models within our sector are changing rapidly and they will continue to evolve both in response to macro economic realities and long-term structural changes in the economy and society – the good times are over! Against a background of declining public funding, a sluggish economy, static if not falling real personal incomes for many and increasing funder demands for a more diversified income base, organisations need to understand both their existing funding model and the one they want to move to.
What is your current funding model?
What should your future funding model look like?
Understanding the cost side of the equation is all about where the money goes. If you are going to make the money you have go further (and the alternative is, at best, a smaller programme) it is vital to understand how the resources you are buying deliver the work you do.
How do you want your model to change?
This concludes part one of this three part post: next I will take a look at assets and reserves.
Thank you to Matthew Rowe, Jill Townsley and the team at Towner for providing me with the perfect picture for this post: a beautiful and bewitching new work made from till rolls and, as ever, thanks for reading
I invited my good friend and colleague Dawn Langley (the former Director of Organisational Development at Arts Council) to write a blog about the value of toolkits in re-thinking business models following her great work on the Business Survival Toolkit'. It is, I feel, a particularly timely piece for future NPOs putting together their business plans this summer.
I have, I now realise, many toolkits in my life both abstract and concrete. There are the obvious ones for the car or the house, although the former is now much less used with the advent of automotive technology. I have my camera kit, my jeweller’s tools, and various other collections I have loosely assembled. They all have some things in common…
I have favourite tools, probably beyond their useful life but that are like old friends and constantly useful. Pristine tools that I know I will have a use for someday but in the meantime they will stay neatly wrapped and protected and new discoveries that open up the possibilities. I have bookshelves full of ideas that I see as tools in waiting.
I realise with the Business Survival Toolkit I am in a privileged position. I know how it came about. I know its structure, and the many tools intimately. Simply put, I know how to find exactly the tool I want when I need it. I imagine that coming across it for the first time this could be a daunting task. For some of you just wandering through and clicking on the odd tool will be the best way to explore, for others it may be better to approach it with a clear purpose or question in mind.
The toolkit has a basic framework of four phases – reviewing, visioning, planning and implementing. Like my own toolkits I have tried to include old favourites as well as new thinking. It also has two key messages:
The tools will not tell you what to do but they are designed to help you find new ways of thinking about the future of your business or practice.
However you come across the tool you choose from the toolkit I really encourage you to lift it off the page and make it your own. Adapt it, tweak it, reflect on it, and share it. It is only with use that tools fulfil their purpose. I hope you enjoy trying them out.
If Dawn's piece inspires you to try out some new tools I can recommend the following:
Tools for success from Centre for Charity Effectiveness at Cass Business School
(Dawn also blogs with Jon Treadway at Bad Culture)
Thanks for reading