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The Important of Financial Literacy

Updated: Mar 30, 2021

by Lisa Mackay

Among the most daunting topics in the Rozsa Admin Fundamentals Training programs are the financial statements. The participants are tasked with looking through the financial statement of a fictional Youth Orchestra to be presented to the board. While some come to the program with experience in both preparing and reading these documents, many are seeing them for the first time.

“Most RAFT participants express anxiety before we start looking at the financials and are worried about not being great at math,” says Program and Granting Manager Ayla Stephen. “I like to start by reminding folks that we don’t expect them to be accountants after an hour-long session. Our goal is to increase their confidence to ask questions, and to get a sense of an organizations financial health by knowing what the individual statements tell us.”

It is not surprising that many participants come with a limited knowledge of financials in any of our programs. Many arts administrators fall into the profession, coming from either an applied artistic practice or a skills specialty such as marketing or fundraising. They learn the requirements of their job on the job, usually on a need-to-know basis, dealing with issues and projects as they arise.

Many enjoy very successful careers in arts management this way, and sooner or later as they advance in their roles or organizations, financial pieces such as budgets, projections, expenses, and revenue will fall under their purview, and they will add these skills to their many others. However, knowing your way around financials early can help situate the work you are doing in the bigger picture.

“Teaching the fundamentals of finance in our Rozsa Admin Fundamentals Training (RAFT) and Rozsa Arts Management Program (RAMP) programs is essential to building vocabulary, confidence, and skill in managing the finances of an arts organization,” says Arts Leadership Director Geraldine Ysselstein. “It can be challenging to get practical experience in understanding the financial situation of an organization as too often that remains under the purview of the treasurer, bookkeeper, and/or the executive director to manage. However, all board and staff members of an arts organization benefit from understanding how to read and ask questions about the budget, cash flow statements, statement of financial position, and statement of operations. Sharing this information strengthens everyone’s knowledge, allows for more questions to be asked, and allows for more accountability.”

In my experience overseeing marketing departments in several arts companies, knowing all the many components and decisions that go into the creation of an annual budget gives me an accurate idea of the role of my department in the grander scheme of things, as well as the enormous amount of thought, analysis, planning, and number crunching every department head has done before the board even sees the first draft. I always tried to communicate the complexity of this to my team, to help them understand the thought process behind decisions and to see their area of responsibility as an important part of the company as a whole.

Following a recent session of the Rozsa Arts Management Program focused on finances, participants were empowered by the information they learned. “This session gave me a lot of specific financial language I can use to better communicate my work, requests and recommendations to colleagues and supervisors, and clearly defined the importance of the financial planning step of the programming cycle,” said one participant. “A deepened understanding of financial reporting and budgeting is very beneficial to my learning goal of fund development,” wrote another.

We are curious to know what your experience in finances in the arts has been. Do you feel like you have the full financial picture of your company or organization? Have you read the financial statements? How comfortable are you with budgeting and reporting? Do you ever wish you knew more? Drop us a note below!

Find some Financial Literacy resources here.

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