Art’s management

Raimkulova Aktoty

The basic elements of budgeting and financing cultural projects

Keywords:

IFNM – International festival of New music

Synopsis

Proceeding from relationship between costs and selling prices, classification of social projects is given in the article, and also peculiarities of budgeting social non commercial projects have been revealed. List of possible income categories, specifically possible in organization of cultural projects has been considered.

Financial planning and proper financial control are important aspects of organizing any project, even if the project noncommercial, social and it is clear, that the project won’t be profitable, and in the column income probably there would be zero. It is important for managing director to understand not only the relationship between costs and selling prices or income but to have financial information that “loss” (total cost of the project) doesn’t exceed admissible level.

In this aspect we can list the following classification of social projects:

· Profitable projects

· Self supporting projects

· Projects with expected profit

· Nonrevenue –generating project

Consider short characteristics of each project.

Revenue – generating project aimed at earning money. These are commercial projects - concerts, festivals, auctions, sport competitions, conferences and etc.

Self supporting projects - from the beginning , according to the aim of the project, financial benefit isn’t envisaged. In project planning foreseen to bring together the level of costs to the level of project income. In this case good audience regulation qualification is entrance fee which provides presence of interested people. These projects are held with scientific and other professional aim.

Projects with expected profit – expense projects for organizations. Selling of main goods and services ( promoting actions, press conferences festivals, holidays, opening new trading centers and etc.).

Non revenue – generating projects - don’t pursue commercial aims, but nevertheless, organization on certain reasons conduct them: organization jubilee , celebrations, receptions, corporate parties.

It is obvious, that successfully held non commercial, social project which meet organizers expectations will bring non material achievements that is why sometimes payoff. According above mentioned classification, chosen as research object non commercial project of Kazakh national academy of music “International festival of New music “ Nauryz 21”, will be referred to

projects with expected profit .The idea of the given project covers different aspects of culture development program of RK: young talent support, master classes of foreign specialists, introduction of advanced musical technology, propaganda of classical and modern art in the country.

In planning budget it is necessary to set real financial tasks ( to earn, cover expenses, to hold down expenditures on a certain level taking into account the following rules of planning:

- to plan budget flexibly, stipulating several scenario on algorithm “ if -then”;

- planning and approving budget it is necessary to exert all power fulfill it without any changes;

- to envisage unforeseen expenses which are buffers of budget;

- from the beginning approve understandable to all realistic methods of project assessment;

Consider some factors influencing on project budget. In drawing up a budget it is necessary to observe balance of creative and financial planning. Even on the stage of creative planning of ideas and money it is important to correlate with real opportunities. It is necessary to define financial philosophy of organization related to the project, especially important to clear out participation of the organization in it.

Consider the list of possible income categories, possible in organization cultural projects. Category “income” includes the following types.

Registration fee – participators pay for possibility to participate.

Selling tickets on mass events concerts, exhibitions tec. From financial point, in this case uncertainty level high as far as tickets are sold before the event, we can suppose about quantity of sold tickets.

Sponsors help. Sponsorship – is a link between sponsor and event, he sponsors events by cash or other way. Sponsors may be financial, informational and technical, their help or assistance is wide spread, real type of income. Availability of sponsors suppose additional expenses connected with execution of obligations related to them. Fees of technical sponsors considered to income (expense), as saved funds are equivalent to earned ones. To be exact, the level of income is equal to expense which would be produced , if we didn’t work with technical sponsors. The same with informational sponsors.

Advertising revenue. The project can be interesting area for advertising of other companies and it is necessary to sell this opportunity. This might be stand allocation, distribution advertising leaflets, placing advertiser on different medium.

Rent of space - source of income for exhibition organizers, but it can be a source for other projects.

Commissions. Concluding contract about commissions under occurrence of certain conditions. For example, hotel or restaurant, café for placing order there you can have commission or bonus to place an order. Booking hotel rooms, conference halls work to earn commissions.

Second opportunity – if company makes advertising on our project or if outside company trades on territory where project event is held, gets from our participants or clients order. As far as it is difficult to control this , either we trust this company or conclude agent agreement with it.

Barter deals. Barter deals not always technical sponsorship. Sponsorship supposes the whole package of services including sponsor’s advertising , besides barter deal relatively simple operation. We can cut expense part of the budget, providing services in exchange to partner’s product.

Grants, subsidies –financial source in carrying out a project on government order or public organization.

Other incomes. As in an entrepreneurship , other categories of income limited by legislation.

Financial sources of cultural organizations are divided into three groups: attracted funds, state funds and own funds. Charity, sponsor funds, fund subsidies, membership fees refer to attracted financing.

State financing joins direct and indirect government subsidies. Own funds include revenues from the main and commercial activity.1.

Sources of financing of the First festival in 2004 were off-budget, very limited funds of Kazakh national academy of music after Kurmangazy, in 2006 financial sponsor of the Second festival was national company “Kazmunaigaz”, technical sponsors - hotel “Almaty”, restaurants “Aventus”, “Govindas”, informational sponsors – Kazakhstani press club, journals “Guide”, “Camerton”.

Some transport and accommodation expenses of foreign musicians were covered by Embassies of the USA, France, Israel at the First festival, Almaty akimat supported the project and promoted the part of the printing production of the festival.

From above mentioned list of source financing activity of cultural establishments appears the problem of attracting and accumulating funds from different sources for practical management. Technology of its solution interesting. Technology of fund rising is more is not only activity on attracting additional funds to culture, it is one of the parts of new principle of work and existing of culture organizing in the society, their close cooperation with external world, openness and transparency, , partnership and mutual aid.

If the task of fund rising concrete flow of funds on project realization , then this type is called project find rising. This is convenient form of attracting funds. It is explained by availability of clearly defined aims of fund using, possibility to attract financial sources at low expenses on fund rising, and also to receive commercial benefit from project financing.

Understanding project approach, its essence in fund rising activity of public corporation plays an essential role nowadays. Of course, knowing project principles and using it skillfully allows to reach significant results in attraction resources of any type, but project approach plays great role as the way of organization all activity of corporation or initiative group to reach socially important aims. It allows to clarify the main tasks on solving of which resources attracted, to assess efficiency of offered mechanisms for solving tasks and forecast results. Having clear action plan and opportunity to analyze investment “profitability ” , potential source of necessary resources make corresponding solution whether to give money to social organization or not. First of all it refers to authority, taking decision to allocate budget to support organization, charity , taking decision about financing project application or offer.

Corporative sector as additional fund source in culture plays an important role in Kazakhstan. Nowadays for many cultural organizations business sector funds are prevailing and hardly the only source of off – budget financing. To some extent it is explained by lack of information about other sources of financing and absence of skills to work with them. However, the main reason is possibility of business sector compared to other forms of off-budget support , private contributions, subsidies of charity funds or special programs of co financing initiated by government well developed in the west . As far as it is early to say , that charity tradition in Kazakhstan well developed, support of culture and art by individuals is not crucial factor. Majority of charity funds acting on the territory of Kazakhstan, oriented to solving social problems, only a few individuals are ready to support projects in cultural sphere, but it doesn’t mean it isn’t necessary to improve work in this direction, if fund risers have fantasy, enthusiasm , they can invent effective schemes of cooperation. However, from the point of financial resources, corporate sector on the given stage is priority source of non government financing for culture organization, that is why it is important to know it and work with it professionally.

Literature:

1. Tulchinsky G.L., Shekova E.L. Management in sphere of culture. Publishing house “ Lan”, 2007, p.528.

2. Michael W.Newell. Preparing for the project management professional (PMP) exam. Published by AMACOM. New York. 2007. p.112, 218.