Evaluating COVID-19 Impact: Effective Bookkeeping Practices

Your accounting system is your primary tool for capturing and reporting the financial dimension of everything that happens within your organization. This tip sheet will help you consider changes to the structure of your books to enable clear and accurate reporting on the impact of COVID-19. Our view, grounded in accounting principle, is that the permanent account categories should be minimally altered, and that you can achieve your temporary reporting needs through alternatives like “classes” (explained below).

Note that we use QuickBooks as the basis for illustrations; that’s where the term “class” comes from. We endeavour to explain in a way that will work for other accounting apps too.

Need help? Contact us at info@youngassociates.ca. 

For those who’d rather DIY, here’s how. 

The audiences for your accounting reports

It’s useful to think of writing for an audience – or, more commonly, multiple audiences. The readers of your financial statements (staff, board, third parties) make decisions: developing internal strategy, passing a budget revision, awarding a grant, renewing a membership, etc. What information might each stakeholder require, and at what level of detail?

Review the existing account categories in your books. Are they sufficient for the array of COVID-19 related reporting you anticipate? 

It is likely you will need some additional categorization. The following tips will help you achieve your COVID-19 reporting needs efficiently.

Our recommendations

Minimize changes to your chart of accounts.

Utilize reporting by class and other bookkeeping subdivisions to produce COVID-19 impact reports.

Good housekeeping

Skilled bookkeepers think about short- and long-term reporting requirements, bearing in mind the importance of year over year comparability. They have an eye to the relevance of accounting information, and its usefulness in providing feedback (e.g. on the impact of change) and in supporting forecasts of future activity.

We know that COVID-19 reporting will be required in the short-term. No one knows yet what the long-term ramifications may be. We favour a conservative approach to adding account categories.

A good rule of thumb is to add categories that will contain at least 0.5% of your expenses. Thus, for a company with a budget of $1,000,000, the smallest expense lines would contain at least $5,000. Same applies to revenues.

Account categories and financial statements

The account is the basic unit of categorization in your books. When your bookkeeper produces a balance sheet and operating statement (also known as income statement or P&L) from your books, you’re seeing the account categories. One account = one line on the financial statements.

Suggestions for new COVID-19 related accounts

Revenues: The federal wage subsidy may merit its own account, as a unique revenue source, or you might bookkeep it to an existing “Federal – Other” account. Consider any new sources of revenue that might arise from your pandemic response.

Expenses: Same concept. A new category of spending may merit its own account.

Contra accounts:  A contra account has the opposite balance to the normal account. For instance, an organization issuing COVID-related refunds might add a contra-revenue account to capture the refunds. That way, the statements would show 100% of the initial revenue and 100% of the refund, thereby clearly demonstrating the impact of COVID-19.

Balance sheet accounts: New cash accounts, lines of credit and other loans require separate accounts. If you are creating a new fund related to COVID-19 (e.g. a relief fund) you may need a separate net assets account to segregate it properly.

Accounting by nature & by function

Accounting recognizes two broad approaches to revenue and expense information: by nature (what it is; also known as natural category) and by function (what it’s used for; for instance, events, projects, activities, programs, shows, etc.). 

Well-structured books maintain clarity on this point. Make sure that your COVID-19 additions are consistent with your organization’s established practice.

By nature – A gallery might have accounts for Artist Fees, Installation and Marketing

By function – Alternatively, the gallery might create a new expense account for each exhibition. The account would be named for the exhibition, and would capture all associated costs (artist fees, installation, marketing, etc.) in a blended account. We would never advocate for this! (Although we’ve seen it...) We would always recommend using classes - read on!

Additional categorization within accounting software

Accounting apps offer additional ways of aggregating financial detail which may track impact more effectively than new accounts.

Each software package has its own proprietary features – but conceptually many of these features are alike.  We’ll use QuickBooks as an example. 

Classes – Allow you to subdivide accounts by activity, program, event or show. A theatre company might have accounts for Actors, Sets, Advertising and Theatre Rent. These accounts would capture the total spent on each category, but wouldn’t help anyone understand what was spent on each show. By creating a class for each show, and then tagging each entry with a class, the bookkeeper can run a P&L by Class report to produce a statement for each show.

Projects (QuickBooks Online) or Jobs (QuickBooks Desktop) – Allow you to track items by funder. A project (or job) has only one revenue source. In the business world this would be a customer – and in the nonprofit world, a funder. By tagging each entry with a project, the bookkeeper can run a P&L by Customer report to produce a statement for each project.

Departments – Allow you to subdivide accounts by department. Everyone in (say) Marketing, Fundraising, Production and Admin needs office supplies, and each department incurs meeting, travel and other common expenses. By tagging each entry with a department, the bookkeeper can run a P&L by Department report so management can evaluate activity by department.

Locations – Allow you to subdivide accounts for different physical locations. An organization with two offices might run the same programs and have the same departments in both offices. By tagging each entry with a location, the bookkeeper can run a P&L by Location report to produce a statement for each location.

Before you jump in to change the structure of your books, pause for a moment and consider how these options might help you generate the COVID-19 impact reports you will need for your funders, members, donors and other parties – as well as for your own management decision-making.

Suggestions for new COVID-19 related classes

A general COVID-19 related class: Tag all pandemic-related revenues and expenses to this class. 

Sub-classes for projects: You might have a class called “New Play #1” which already contains development and pre-production costs. If New Play #1 has been cancelled, you might create a class called “COVID – New Play #1” to capture costs associated with the cancellation. QuickBooks can roll up the sub-class into the class report to give you a grand total for New Play #1.

Sub-classes for COVID: Alternately, you might attach sub-classes to your general COVID-19 class. Any impacts related to overhead would be booked to the general COVID-19 class. You would create sub-classes for each project, event or activity. QuickBooks can roll up the sub-classes into the class report to give you a grand total for COVID-19 impact.

Naming: Start each new class title with “COVID” to make it easy to identify and roll up class reports.

How Young Associates can assist

A consultation with us may make all the difference to your comfort level and confidence that your accounting system is up to the challenge of the pandemic. 

We can help you identify the stakeholders who will need reporting; prepare to meet their reporting needs; and advise on practical and appropriate changes to the structure of your books.

We’d also be happy to give you a quote for full-service bookkeeping. 

We work on the basis of fixed price agreements, so you’ll know upfront how much our work will cost – and we always offer a money-back guarantee: if you’re not completely delighted with our service, we will, at your option, either refund the price, or accept a portion of said price that reflects your level of satisfaction. 

Contact us: info@youngassociates.ca 

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This tip sheet was created by Heather Young CPB and the Young Associates team based on the best information available as of the date of posting.

The contents of this tip sheet comprise Young Associates’ views. They do not constitute legal or other professional advice. You should consult your professional advisor for advice relevant to your situation.

Founded in 1993, Young Associates provides bookkeeping and financial management services in the charitable sector, with a focus on arts and culture. Young Associates also provides consulting services in the areas of data management, business planning and strategic planning. Heather Young published Finance for the Arts in Canada (2005, 2020), a textbook and self-study guide on accounting and financial management for not-for-profit arts organizations.

Tips for Completing Record of Employment Forms with Respect to COVID-19

The Record of Employment Form (ROE) is the tool employers use to communicate with Employment & Social Development Canada regarding employees’ eligibility for employment insurance benefits when they leave the organization.

One of the key elements of the ROE – and the one that is relevant to COVID-19 – is Block 16, Reason for Issuing this ROE. 

The government has assigned codes to the most common reasons for issuing an ROE. Here is the link to the guide, How to Complete the Record of Employment (ROE) Form, which contains an explanation of each code.

What NOT to do with respect to COVID-19 ROE filings

Code K – Other is to be used only in exceptional circumstances, and you must provide a comment.

This might seem like the obvious code for COVID-19 related issues. But, if you use Code K and provide a comment, the ROE must be reviewed by a Service Canada employee.

To be clear: ROEs with comments are pulled out of the processing stream and may cause significant delay, awaiting an individual review while the government deals with unprecedented volume.

Therefore, DO NOT USE Code K if at all possible.

What to DO with respect to COVID-19 ROE filings

To streamline a high volume of processing, Service Canada has asked employers to use existing codes as follows:

Code	Description	COVID-19 Use
A	Shortage of work	Temporary layoff due to lack of work or funds to pay employees, office closure or event cancellations
D	Illness or injury	Anyone confirmed to have COVID-19, under quarantine being tested for COVID-19 or under quarantine due to returning from international travel
N	Leave of absence	Used for anyone that is in self-isolation under an abundance of caution (including refusal to work), is off caring for children, or is taking care of a loved one confirmed to have COVID-19.

Amending a COVID-19 related ROE for new information

Please note: if someone is in self-isolation or is off on a leave for any reason and they later test positive for COVID-19 then the ROE should be amended to code D.

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This tip sheet was created by Heather Young CPB and Alicia McGuire PCP of Young Associates based on the best information available to us as of the date of posting.

Although every effort has been made to provide complete and accurate information, Young Associates makes no warranties, express or implied, or representations as to the accuracy of content in this tip sheet. Young Associates assumes no liability or responsibility for any error or omissions in the information contained in the tip sheet. 

Founded in 1993, Young Associates provides bookkeeping and financial management services in the charitable sector, with a focus on arts and culture. Young Associates also provides consulting services in the areas of data management, business planning and strategic planning. Heather Young published Finance for the Arts in Canada (2005, 2020), a textbook and self-study guide on accounting and financial management for not-for-profit arts organizations.

UPDATED: How Bill 148 affects your organization

There have been a number of changes to employment standards in Ontario since the passing of Bill 148, the Fair Workplaces, Better Jobs Act, 2017. As there are more changes becoming effective as of next month, it is a good time for organizations to review what’s already changed and what changes are still to come. We have highlighted some significant changes as of November 2017, December 2017, January 2018, April 2018, and upcoming in 2019.

November 2017

As of November 27, 2017, your organization should have already reviewed its classification of employee vs. contractor. We have noticed an uptick in the number of payroll audits among nonprofits. With stricter enforcement around classifications of who is an employee vs. who is an independent contractor (aka freelancer) now in effect with Bill 148, it is important that organizations thoughtfully review their decision-making process around defining an individual as an employee or as a contractor. Organizations should be prepared to  implement necessary changes. 

Factors to consider include:

• Control. An employee is directed by an employer; a contractor has a measure of control over what and how work is done (although they don’t have to exercise that control).
• Tools & Equipment. Employees who use tools and equipment do not own those items. Their employer should provide, maintain, and insure most of those tools. Employers can also reimburse employees for tools and equipment they have acquired for the job. 
• Subcontracting / hiring assistants. An employee cannot subcontract tasks or hire an assistant to do their work. A contractor can subcontract or hire help without approval of the payer.
• Financial risk. An employee’s expenses are reimbursed and generally has no financial risk. A contractor is self-employed and takes on financial risk with each engagement, should the contract go incomplete/unpaid.
• Responsibility for investment and management. An employee does not have a capital investment in the employer’s business. A self employed person generally has an established business, or a capital investment in the payor's business. 
• Opportunity for profit. An employee doesn’t gain profit or incur loss while doing their work, whereas self-employed individuals can take a loss or a profit in the course of a contract. 

Also as of November 2017, your organization should have updated its crime-related child death or disappearance leave. A child is defined as under 18 and can be a step-child or foster child. Employees qualify for this leave after 6 months of employment. It is an unpaid but protected leave of up to 104 weeks.

Employers should note that as of November 2017 the EI waiting period has been reduced from 2 weeks to 1 week, for those who have a reduced EI rate due to an STD (short-term disability) program. The government has provided employers 4 years from January 1, 2017 to have plans to accommodate the reduced wait period or the organization will risk losing the reduced EI rate. 

December 2017

As of December 3, 2017 employers need to have begun preparing to accommodate the following family-related job leaves: employees can now opt to take an extended parental leave (increased by an additional 26 weeks (61 weeks total). This could prove to be a popular option for parents in Ontario, where childcare availability and affordability are a huge challenge, especially for children under 18 months of age. It is important to note that once an employee chooses the parental benefit path (extended or non-extended) they cannot change paths at a later date. Also note that the EI coverage for parental leave is for the same amount, no matter the path chosen. In other words, the recipient will receive the same overall dollar amount whether the leave is 35 weeks or 61 weeks, but their biweekly payments will be more or less respectively. 

Also as of December 1, 2017, women can now take maternity leave up to 12 weeks prior to the birth of a child, and employees who are family caregivers are now able to take up to 15 weeks of unpaid, job protected leave.

January 2018

As of January 1, 2018, several changes related to wages and paid time off have come into effect, as well overtime, job leaves, and holiday pay, and record-keeping obligations. 

Your organization should now be accomodating the following changes related to wages and PTO:

• Minimum wage. Employees have a minimum wage of $14/hour. Student employees have a minimum wage of $13.15 (but if school is in session, they must work less than 28 hours / week to be eligible for this wage). So, if a student is working full time hours while school is in session, they are considered an employee, not a student employee, and are entitled to the full $14/hour minimum wage. The 28 hour per week limit does not apply on school holidays or during summer break.
• Vacation pay. New legislation means that every employee in Ontario is now entitled to 3 weeks (6%) vacation after 5 years of consecutive employment with a single employer.
• Overtime. Overtime pay must be paid out at the rate at which an employee was being paid at the time the overtime occurred. For employers, this means that overtime can no longer be calculated at a blended pay rate, and overtime pay cannot be paid out at, for example, the lower of an employee’s two pay rates. 
• Public holiday pay calculation. To determine the amount of stat holiday pay to pay out to an employee, an employer should now use the single pay period directly prior to the stat holiday to calculate the average daily wage (total gross earnings/number of days worked in that period). Some scenarios require employers to consider some additional factors:
  • For new hires, employers should use the current period to to determine the average daily wage, and pay that. UPDATE: The Ministry of Labour has announced that effective July 1, 2018, the ESA will be reverting back to the former statutory holiday calculation of 1/20 of the prior 4 weeks earnings as an interim measure while the public holiday changes to the ESA continue to be reviewed. This change is due to concerns arising from the Changing Workplaces Review, which found that "public holiday rules were the source of the most complaints under the ESA and needed to be simplified."  More info.
  • For anyone on approved leave in the pay period  prior to the stat, employers should use the pay period in which the individual last worked to determine the average daily wage.
  • When determining average daily wage use the gross earnings before statutory deductions. Do not include overtime pay, termination pay, severance and premium pay, vacation pay, personal emergency leave pay, domestic or sexual violence leave pay or pay for other public holidays.
  • The Statutory Holiday Calculator can be found here.

Employers also, as of January 2018, need to be prepared to provide to eligible employees 10 days of Personal Emergency Leave, the first two of which are paid. Employees are eligible after 1 week of consecutive employment. Employers are no longer allowed to to ask the employee for a physician’s note to validate the leave.

As well, employers should be prepared to accommodate Domestic and Sexual Violence leave to eligible employees. Employees are eligible after 13 weeks of employment. This is a job protected leave of up to 10 individual days, the first 5 of which are paid, and up to 15 weeks per calendar year for employees, or children of employees, who have experienced or been threatened with domestic or sexual violence.

As of January 2017, all organizations are now obliged to follow several new employee-related record-keeping measures. They should record:

• Dates and times employees are scheduled to work and changes to on call schedules
• Dates and times employees worked
• If an employee has two or more pay rates for worked performed in a pay week
• Any cancellations of scheduled days or work or on call periods and dates and times of those cancellations
• Vacation records for 5 years (instead of 3 years)

April 1, 2018

Upcoming as of April 1, 2018, organizations need to be prepared to issue equal pay for equal work. Part-time, casual, temporary, and seasonal employees must be paid the same as full-time permanent employees if they are doing essentially the same job. All organizations, including nonprofits, often with stretched budgets, will need to think carefully about how they rely on these types of workers and what they budget to pay them. A permanent, full-time employee cannot be paid more for the same task or set of tasks. Exceptions exist jobs paying by quantity or quality of work, or for merit or seniority systems, but these systems must be applied consistently. 

Possible changes coming in 2019

Although not yet confirmed by the government, organizations in Ontario should be prepared for the following in 2019:

WSIB review, which is proposed to 

• Update the 34 industry classifications
• Establish premium rates based on the collective experience of employers in the industry classification
• Set an employer’s actual premium based on individual employer experience based on individual company level of risk 

CPP Enhancements

• Starting in 2019 CPP contribution rate will increase each year until 2023 when it reaches 5.95%
• There will also be an additional enhanced earnings percentage of 4% for earnings between the yearly maximum and the new upper earnings beginning in 2024

Scheduling requirements

• Employees can request a location or schedule change after three months of employment, without penalization
• Employees can refuse shifts that an employer requests they take with less than 96 hours notice, without fear of retaliation
  • exceptions are made for dealing with an emergency, remedy, or reducing a threat to public safety, or continued delivery of an essential public service
• Employers must pay 3 hours wages to anyone who
  • regularly works more than 3 hours but has their shift is cut short
  • whose shift is cancelled without 48 hours notice from scheduled start time
  • is scheduled on call and is available to work but does not work at least 3 hours

An exception will be made when any of these situations arises from an event that is out of the employer’s control (eg. power failure, fire,) or if the employee works in a weather-related industry (eg. snow removal).

This tip sheet was created by Alicia McGuire of Young Associates. Founded in 1993, Young Associates delivers technical expertise and advisory services to support operational effectiveness of nonprofit and creative organizations. We invest in transformative technology and expert human capital to provide our customers progressive solutions in financial, data and information management, human resources, and strategic planning.

Disclaimer
 

Choosing Fundraising Software: 7 Things to Consider and a Whack of Great Resources

Sumac Research. February, 2012. 
Co-author: Ye Adam Tian

“After people, data is your most important asset.” This is the first of 10 Nonprofit Technology Commandments outlined by John Kenyon, noted non-profit technology educator and strategist. And it’s true, isn’t it? Data is the key to a non-profits’ success, so you’ve got to take good care of it! But where do you house it? How do you choose the right software? Well this is a good place to start! Here are seven things to consider, along with some fundraising software reviews and resources to help you find the right match for your organization.

7 Things to Consider

Features. Before you even start looking for software, decide what you need the software to do and make a list. What data do you want it to hold? What features do you absolutely need? One of the mistakes in Robert Weiner’s 10 Common Mistakes in Selecting Donor Databases is buying more than you need. Robert Weiner is a popular non-profit technology consultant who has written for every major non-profit technology publication. Some of the other mistakes listed: randomly looking at demos, falling in love with cool features, and prioritizing price above everything else.

Customization. Another thing you may want to consider is how easy the software is to customize. Let’s face it, no two non-profits are alike. You have different programs and different terminology, and you don’t want to build your own database from scratch if you can avoid it, as Robert Weiner explains in Why Building Your Own Database Should Be Your Last Resort. So look for software with easy customization that allows you to tailor the database to your needs.

Usability. Also important to consider is usability. Because this fundraising software is going to be an integral part of your non-profit, you want it to be intuitive and easy to use. To determine just how user-friendly it is, have a look at some demo videos, get a personal demo and ask current users what they think of it.

Cost. Does the software fit into your budget, both now and in the future? In order to determine this, you have to take into account all of the costs associated with owning the software (the “total cost of ownership” or TCO). Direct costs include the software license itself, data conversion, installation, training, and support. Indirect costs include IT staff required to maintain the system, consultants needed, and upgrades to computers needed to run the software.

Security. Since you’re dealing with donor information, security must be a consideration. There are many question that you’ll want to ask. For example: Where is the data stored? Who has direct access and authority? How is the data shared between different people and departments? How is that process managed? Is there any risk of exposure of your data to the online community?

Ability to Get Data In & Out. This one is often overlooked, but it’s so important. You’ll often want to get data into your database – a list of names and addresses for instance. You’ll also want to get data out – for email marketing, accounting or event purposes. So, being able to easily import and export data is very important!

Technical Support. Finally, does the fundraising software come with quality customer support? Really what you want to know is whether you’ll be able to contact someone by phone or email when you really need help, and how quickly they will be able to assist you. You may also be interested in seeing what other kinds of support they offer: frequently asked questions on their website, documentation, training videos, etc.

Reviews

Don’t know where to start looking for fundraising software? Start here:

Low-Cost Fundraising Software Comparison:

Check out NTEN and Idealware’s Consumers Guide to Low Cost Donor Management Systems for an overview of 29 systems — what they do, recommendations for systems based on particular needs, and comparison charts.

Fundraising Software Listing & Reviews:

1. GetApp
2. Capterra
3. SoftScout

Donations

On a tight budget? TechSoup offers donations of fundraising software to registered non-profit organizations all around the world. Here’s a link to available donations in Canada and the United States.

This tip sheet was created by Sumac Research. Sumac is a complete nonprofit software solution that is free for small organizations and includes data conversion and installation for larger organizations. For more information, visit the Sumac website. 

Disclaimer

Top 12 Tips for Setting Prices

Artists and arts organizations need to set prices for tangible goods (e.g. works of art, CDs, publications) and for services (e.g. admissions, registration fees). The considerations for goods vs. services are rather different – as are the circumstances of individuals and organizations.

These tips are offered from a very generic point of view. I have tried to make them applicable in a wide variety of situations. This may make them a challenge to apply specifically! I hope the examples will help to clarify how you might use these ideas to support your personal decision-making.

1. There’s no recipe. Take heart if you feel uncertain about how you are going about setting your prices. My research turned up no ‘correct’ method, in the art world, the not-for-profit world as a whole, or in commercial business. There are, however, some useful guidelines.
    
2. Take your time. Think of this as an iterative or recurring process. You’re going to draft a price list, sleep on it, run it past colleagues and friends, and revise it again before making a final decision.
    
3. Three approaches. Here are three approaches that you might find useful. You can choose the one that works best for you, or you can consider all three, and decide after playing with the options

   A. Cost-based: Figure out your costs, and charge more than that.
   Price = your cost + mark-up
   – e.g. If I’m selling admissions to a concert, I could add up all of the costs, subtract grants and donations, and divide the net cost by my estimate of how many people will attend. Thus, if I expect to spend $12,500 and I have $7,500 in grants and donations, I need to raise $5,000 from ticket sales. If I anticipate that 200 people will attend, I need to charge each person $25. That gives me my break-even price. If I wanted to make a profit, I could then tack on a mark-up of so many dollars.

   Price = a multiple of your cost
   – e.g. Book publishers need to pay for editorial expenses, writer royalties, book production and promotion, as well as their own administration. They often base their book prices on the printing cost, by charging 5 or 6 times cost. So, if a certain book cost $8 to print, the publisher would look at a price between $40 and $48. Experience has shown that a multiple of 5 or 6 generally covers all of their expenses.

   B. Market-based: Charge what everyone else charges
   ‘Everyone else’ should include comparable artists/arts organizations as well as the other options your buyers might consider; for instance:

   – A performing arts organization might compare its prices to what its peers are charging – as well as to the cost of a movie ticket, the cover charge for a band, and other ‘night out’ options

   – A visual artist might look at what their buyers are considering. For instance, if the art in question is usually purchased for its decorative value, buyers may be deciding between buying a picture and another decorative object (e.g. fine craft, furniture, area carpet)

   C. Value-based: What’s it worth to you?
   This is how hotels and airlines do it – not to mention gas stations and ticket scalpers. Today’s rate on a hotel room or an airfare depends on how far in advance you’re booking, plus demand, plus any other factors that affect its desirability. The price a scalper can get before the game is vastly different from what he’ll accept half an hour after the puck drops!
    

4. Know your limits!
   - Floor = your cost (If you sell below cost, you’re losing money!)
   – Ceiling = what the market will bear (You can’t charge more than what people are willing to pay.)
    
5. Consider your environment and how that might affect the prices you can charge.
   - Geography: are you in a large city, a town, a rural community, a remote area?
   – Accessibility/distribution: how easy is it for people to come to you – or for you to get your work to major centres of population?
   – Economy: how’s the local economy doing, how much disposable income do people have?
   – Political framework: what taxes do you have to take into consideration, what public policies affect you (e.g. copyright, availability of government funding)?
   – Local arts community: are there many colleagues/competitors close by, or are you the only game in town?
    
6. Consider how the characteristics/qualities of your art – whether it’s a canvas or an exhibition or production – should affect its price.
   - Artistic merit is definitely a factor in pricing – and one of the hardest to confront. It’s also a factor that’s likely to change over the course of your career. You need to consider the significance of your work in relation to other artists, and the market overall.

   – Popular appeal is also important. It’s easy to see that more people want to buy tickets to mega-musicals and Broadway-style shows than to a lot of other performing arts genres. You must consider the size of your market, and hence the volume of demand for your work. This could push the price up or down! A lower price might make you more attractive. On the other hand, aficionados may be less price-sensitive, and thus willing to pay more for something harder to come by.

   – Use price to send a message about quality and value, and where your work fits in the marketplace. Take coffee shops as an example: relative to your competitors, you need to determine if you’re more of a Starbucks or a Tim Horton’s!
    

7. Uniqueness is not a factor in setting prices in the arts. You’re unique, just like everyone else. Every artwork is one-of-a-kind: the visual art collector, or the performing arts engager, is choosing amongst a number of unique offerings, each of which has its appeal.
    
8. Don’t let the price be an emotional decision! Price your work dispassionately, without reference to your attachment to it.
   – Don’t assume that your personal favourites will fetch a higher price. Your investment of time, effort and angst in the creative process won’t necessarily speak to the buyer or audience. If an artwork is so significant for you that you can’t part with it at your normal price, perhaps it’s not the right time to offer it for sale.

   – By the same token, you may not love a certain piece, and therefore be tempted to underprice it – but don’t assume that others will share your feelings for it.
    

9. Establish your base price according to your most typical art. It may be useful to think about how new cars are priced. Often, there’s a ‘base price’ plus the option to purchase ‘extras’ – or to get the car ‘fully loaded’ In the same way, a visual artist, a performer or an arts organization may be able to identify their price baseline, and what their extras might be, and establish a range of prices for different types of work. For instance:

   – An actor taking a lead role may be able to negotiate a better weekly rate than when he or she accepts a supporting part. A musician may be able to charge more for a soloist engagement than for a sideman gig. The difference is related to the perceived value of the service.

   – A visual artist may charge more for larger or more elaborate works. This might be either a cost-based or a value-based approach.

   – A theatre company may charge more per ticket for the musical it’s offering this year than for its one-hander. This would almost certainly be a cost-based approach related to the number of artists involved and the scope of the production values.
    

10. Stick to your guns! It’s a good policy to keep your prices consistent no matter who the buyer is. This can be especially important for visual artists selling multiples or working with more than one dealer – and for performers hoping to build a client base of repeat customers.

    – If you’re an experienced artist with a track record, document your sales. When you can see how works have sold over time, it’s easier to be consistent about pricing your new pieces.

    – If you’re still building that record, you can achieve consistency by pricing your art like a realtor would price a home for sale: look at comparables in terms of medium and style, as well as in terms of fellow artists at a similar level of accomplishment
     

11. Think carefully before you discount, to make sure the price cut will work for you strategically.

    A. Discounts may be standard in some circumstances, for instance:
    – A commercial gallery may offer a standard 10% discount to arts consultants purchasing on behalf of clients, or to regular customers who purchase a lot of art.
    – Performing arts organizations commonly offer discounts for group purchases, as well as to students and seniors, and for less popular nights.
    – NOTE! Where a range of prices is in effect, you need to be clear on which is The Price. Your regular price is the Saturday night, full price amount . Everything else is a discount.

    B. Discounts may be used to introduce negotiation , so you can close a sale, for instance:
    – You might want to offer an incentive to a good client to buy more
    – You might decide to make it possible for someone to buy the work who loves it but can’t afford the regular price.

    C. You might wish to use discounts to adjust to market conditions, for instance:
    – If tickets are selling poorly, performing arts organizations may consider putting out two-for-one coupons, or offering discounted tickets within the arts community.
    – A gallery in a tourist town might wish to consider special offers in the off-season.

    D. You might be tempted to price lower than your colleagues/competitors to gain an edge. Think seriously about whether this will really work in your favour. For instance:
    – Performing arts patrons definitely react to price points – but not necessarily to relatively small differences. Someone might decide that the current Broadway touring show is too pricey – but if they’ve decided to spend the money to see a local company, they’re more likely to make their choice based on the title, the artists, the reviews, etc., than on a couple of dollars’ difference in price.

    – If all practitioners of a certain discipline charge within the same range, they can create a “going rate” which sets buyer/audience expectations, and helps everyone plan their budgets.
     

12. Don’t forget to raise your prices when it’s appropriate!
    - A useful rule of thumb for visual artists is to contemplate an increase when you’re selling at least 50% of last six months’ output.

    – Another benchmark would be to look at an increase when you’ve experienced six to twelve months of consistent success in your work. Once you’ve established steady demand, it’s time to re-examine your pricing.

This tip sheet was created by Heather Young of Young Associates for the workshop ‘How Much Am I Worth? How Much Do I Charge? – The Secrets of Pricing and Negotiating’ which was presented in March 2006 by the Cultural Careers Council of Ontario. Founded in 1993, Young Associates provides bookkeeping and financial management services in the charitable sector, focused on arts and culture. Young Associates also provides consulting services in the areas of data management, business planning and strategic planning. Heather Young published Finance for the Arts in Canada (2005), a textbook and self-study guide on accounting and financial management for not-for-profit arts organizations.

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Ten Tips for Audit Committees of Not-for-Profit Organizations

KPMG has put together an excellent tip sheet on audit preparation for not-for-profit organizations.

The tips can be found in brief below, but visit the full tip sheet at KPMG’s website to view each “to do” item in detail.

KPMG’s Ten To-Do’s for Audit Committees of Not-for-Profit Organizations

1. Stay focused on the audit committee’s top priority: financial reporting and related internal control risk.
2. Stay on top of the first year audited financial statements applying the accounting framework.
3. Continue to monitor accounting judgments and estimates, and prepare for accounting changes.
4. Consider whether the audit committee has the right mix of talent.
5. Consider whether the financial statements and disclosures tell the organization’s story.
6. Focus risk governance efforts on reviewing reputational risk identification and management efforts.
7. Consider updating policies. In almost all processes, IT developments are leading to rapid increases in electronic transactions.
8. Understand how technology change and innovation are transforming the business landscape – and impacting the organization.
9. Focus on the organization’s plans to grow and innovate.
10. Reassess the organization’s vulnerability to business interruption, and its crisis readiness

Click here to view the full KPMG tip sheet.

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