Question
The Ambitionand Resource Theatre (ART), a fictitious organization, is a non-profit organization in Edmonton. It was formed in 2018 with the general purpose of performing
The Ambitionand Resource Theatre (ART), a fictitious organization, is a non-profit organization in Edmonton. It was formed in 2018 with the general purpose of performing arts. The organization is exempt from income tax in accordance with section 149(1)(l) of the Canadian Income Tax and Section 35 of the Alberta Corporate Income Tax Act.
ART's Vision is"ART that resonates beyond the end of performance". ART's Mission is"ART connects us through performing arts andreminds us of our commonvalues". ART's values include, but are not limited to transparency, mutual respect, integrity, and collaboration.
As for many performing arts organizations, ART's production costs are twice as much as its earned revenue.As a percentage of total expenses, ART's production cost is the highest expense (60%-70%); and it continues to increase.ART's primary source of revenue is from government grants and various private donors. Its ability to continue operations depends on maintaining adequate funding from these sources. It is no secret that it is becoming increasingly more difficult to find donors and attain government grants.
In 2019, ART recognized the following revenue streams:
- 35% donations and sponsorships (including contributions from corporate, foundation and individual donors);
- 27% Government grants (Canada Council, Province of Alberta, Edmonton Arts Council);
- 21%ticket sales;
- 15%special events;
- 2%set rentals.
It is the beginning of 2020 and the Board of Directors defined four main key priorities in its 2021-2026 strategic plan. Management also developed desirable outcomes for each category of key priorities. Please refer to the below.
1. Financial Focus.
To maintain consistent suitable financial capacity through fundraising, ticket sales and other revenue.
- Expenses must be controlled
- Expense increase can only occur if revenue increase is evident
- Increasing fundraising and funding Increasing ticket sales
2. Customer Focus.
To build relevance of performing arts among a diverse audience through community engagement
- Diversity of ART's audience
- Perception of ART's relevance and importance to the Edmonton's community
- Community engagement, including small business
3. Learning and Growth Focus.
To serve Edmontonian's needs in performing arts.
- Quality of performing art forms
- Level of artistic quality
- Programming that resonates with diverse community
4. Internal Process Focus.
To establish effective governance management
- Improved productivity
- Improved quality of performing art forms.
The Board of Directors is very excited to implement its strategic plan. Management has established the strategic plan but have not develop measures to evaluate its success. All what they know is"what you measure is what you get". As a CPA, you were hired to help ART to develop a balanced scorecardwith at least three measures for each category. Your measures must apply specifically to ART and must be effective in dealing with ART's specific circumstances. Recommended measures must be measurable and realistic.(0.5 for each effective balanced scorecard measure,6 points in total).
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