Financial Management in Leisure Organizations Organization of Financial Management

Transcription

1 Financial Management in Leisure Organizations Organization of Financial Management Chapters Financial Management in Multiple Sectors 2

2 Sectors Public Private Not-for-Profit Commercial 3 Comparison of the Sectors Area of Contrast Ownership Legal Authority Mandate Public Usually government, may be partnered Enabling legislation Serve social welfare and needs of citizens Private Notfor-Profit Commercial Private organization Private corporation Enabling legislation & designation of tax status Serve specific social welfare needs or leisure interests of specific population Incorporation (state / federal), government recognition, regulations & protection Realize maximum return on investment - profit 4

3 Comparison of the Sectors Area of Contrast Public Private Notfor-Profit Commercial Source of Funds Taxes, grants, donations, earned income Grants, membership, donations, fundraising, earned income Investors, creditors, earned income Market Management Market limited to geographic/political area. Segmented based on need. Market defined by particular need Market composed of those who can pay Defined by merit Success Indicators Social change Social change, financial viability Profitability, growth, return on investment 5 Comparison of the Sectors Area of Contrast Public Private Notfor-Profit Commercial Opportunities Tax exemption, volunteers, bulk purchasing and discounts Tax exemption, volunteers, public concern Entrepreneurship, support for eliminating financially unsuccessful products Challenges Public accountability and scrutiny Changing political directions Relative uncertainty, reliance on gratuitous income and volunteers, limited qualified staff and leadership Developing and maintaining skills 6

4 Competition Benefits Increased choice for consumers Greater attention to high-quality service Greater ability to respond to increasing demand Greater opportunity to focus on specific market segments 7 Cooperation Benefits Operation efficiency Synergism Coordinated approach to delivery Conversion of competitive energy to service energy 8

5 Public & Not-for-Profit Organizations 9 Organizational Structure: Public Multiple structures: Separate parks and recreation Combined agencies Separate park districts Advisory or policy board 10

6 Operational & Fiscal Authority: Public Policy boards or city / county councils Enabling legislations creates mandates, boundaries, and service focus Fiscal operations codified 11 Financial Objectives: Public Purpose: Improve the quality of life Enhance beauty of community Provide recreation & fitness based programs No profit motive - tax based Major investments viewed as public commodities 12

7 Debt Management: Public Dependent upon tax revenues, fees & charges, & enterprise operations Deficit spending forbidden by law Long-term debt controlled by state and local code Frequently engage in activities commercial organizations can not 13 Financial Reporting: Public Financial reporting typically on a monthly basis Supplemental seasonal reports Program reports at conclusion of each activity 14

8 Performance Evaluation: Public Reporting of goals and objective progress/accomplishment becoming more common Measures of effectiveness & efficiency expected 15 Organizational Structure: Not-for-Profit Multiple structures Determined by incorporating bylaws Policy board Professional executive director to run day to day operations Formal & informal links to public sector 16

9 Financial Objectives: Not-for-Profit Linked to organization s stated purpose Goal: Generate sufficient revenue to cover operations Profit (defined as money returned to owners) not a motive Often dependent upon good will of donors 17 Debt & Account Management: Not-for-Profit Income sources Programs, special events, donors, bequests, government and private grants, United Way & other fundraising joint efforts Endowments common in larger organizations 18

10 Reporting: Not-for-Profit Monthly reporting essential Treasurer s report Annual report Type and effectiveness varies 19 Performance Evaluation: Not-for-Profit Determined by board of directors, leadership, & outside funders Annual report with focus on goals & objectives achievement Effectiveness measures particularly important Efficiency measure must include percent of operating budget spent for administration 20

11 Comparison: Public & Not-for-Profit Sector Public Nonprofit Examples of organizations Revenue Sources State park systems, county systems, municipal systems Primarily taxes Boys & Girls Clubs, YMCA, YWCA, swim club, conservation, etc. Grants, memberships, dues, fundraising, donors, grants Financial Success Measures Fees & charges generated, financial accountability Achievement of goals & objectives & outcomes 21 Boards: Public & Not-for-Profit Independent boards: Set mission, vision, values, general goals & objectives Select, evaluate & replace CEO Provide advice to CEO Approve & monitor programs, services & organizational actions Provide financial management Formulate organizational-level policies Ensure compliance with laws & regulations Public sector independent boards are usually elected Semi-independent boards (public sector only, usually in municipalities) Advisory boards 22

12 For profit organizations 23 Types of for profit organizations Sole proprietorship Partnerships Limited General Corporations C corporation S corporation Limited liability partnerships (LLPs) & limited liability corporations (LLCs) 24

13 Organization of financial management: Functions 25 Functions & Roles Final Decision Maker Owner Clerk Program Managers Financial Administrators Cashier 26

14 Financial Functions Controlling Internally oriented functions Recording, monitoring, & managing financial consequences Acquiring Externally oriented acquiring financial resources and needs 27 Position Types Chief Financial Officer (CFO) / Director of Finance Controller/Comptroller Treasurer Assessor Purchasing Agent (PA) Auditor 28

15 Chief Financial Officer (CFO) / Director of Finance Senior financial manager in organization Oversees activities of finance department Ultimately responsible for timeliness & accuracy of financial reporting compliance with all legal & regulatory requirements compliance with accounting standards Advisor to senior management & decision-making boards 29 Controller / Comptroller Maintains appropriate records of financial transactions, using GAAP Develops & oversees financial MIS Prepares & distributes financial forecasts used by decision-makers Oversees Purchase orders Receipts & disbursements Issuing payments & invoices 30

16 Treasurer Acquisition of funds Collects revenue Oversees Cash flow investment of available funds Recommends pricing strategies designed to achieve revenue objectives 31 Assessor Public sector only Determines (assesses) value of property for tax purposes Analyzes trends in property values, supplies information to public agencies Not part of recreation & park agencies, most often located in county government 32

17 Purchasing Agent Creates procedures & standards for purchasing materials required by an organization Maintains working relationships with vendors to ensure most favorable pricing possible Authorizes purchase of all materials, especially large scale purchases Receives & inspects all materials on delivery to ensure quality & compliance with legal & organizational standards Maintains inventories of supplies & materials 33 Auditor Two types Internal (not member of finance department) External Provides periodic (at least annual) independent, unbiased evaluations of an organization s financial management systems & practices Public recreation & park agencies in Illinois must undergo an independent, external audit annually Results must be reported at a public meeting & be made available to the public 34

18 Organization of financial management: Departmentalization 35 Public Sector Structure Elected Governing Body/ Board Independent Auditor Director Finance Department Controller Treasurer Purchasing Agent Budget Officer Cashier 36

19 Public Sector Fiscal Authority Elected board has governance & policy authority financial decision making authority General manager / director operates under board policy creates administrative rules and processes Finance / business department handles daily operations Independent, external auditor ensures oversight 37 Commercial & Not-for-Profit Structure similar to public organizations Not-for-Profit has elected/appointed Board of Directors Commercial may have Board of Directors or Owner Remaining titles and responsibilities similar Other organization employees probably also involved in handling funds Amount and frequency will vary by agency 38

20 Public sector: Who handles financial resources? Parks & Recreation Director Recreation Manager Administrator Parks Manager Units involved in managing financial resources Shown in shaded blocks 39 Not-for-profit sector: Who handles financial resources? Executive Director Volunteer Coordinator Facility Manager Office Manager Developmen t Program Coordinator Units involved in managing financial resources Shown in shaded blocks 40

21 Hotel/resort: Who handles financial resources? Executive Director Rooms & Guest Srvcs Food & Beverage Human Resources Marketing & Sales Accounting Units involved in managing financial resources Shown in shaded blocks 41