Alternative financing; Annual accounts; Assessment; Assets; Balance sheet; Break-even; Budget; Capital grant; Cash flow; Charity; Constitution, Contributed income; Corporate giving (corporate support); Cost centre; Donation; Earned income; Endowment; Financial projection; Financial statement; Foundation; Government support or funding; Grant; Guarantee; Income; Individual giving; Input(s); Legacy; Liabilities; Mécénat; Non-profit organisation; Ongoing costs; Outcomes; Outputs; Overhead expenditure; Patronage; Payroll giving; Philanthropy; Private income; Project grant; Projection (financial projection(s)); Project proposal; Pump priming grant; Referee; Revenue grant (see also Subsidy); Solvency; Sponsorship; Subsidy; Support in kind; Surplus; Sustainability; Tender; Virement;

Alternative financing
Generic term for sources of support for cultural activity that are not easily categorised under the more usual, traditional headings (such as "grant", "earned income", "donation", "sponsorship", etc.). This is therefore a growing area of "non-government" support, which is also distinct from commercial sponsorship, etc. It can range from "soft" loans from quasi-banking institutions that apply ethical criteria, to barter systems in which goods and/or services of value are exchanged without money changing hands.

Annual accounts
Independently audited or validated statement of annual income and expenditure to prove that an organisation is solvent and complying with all the legal and tax regulations in the country where it operates or is registered. Bodies approached for funding will generally expect applicants to be operating a budget that is in balance (or surplus), and to provide independently validated evidence of this.

Assessment
Grants increasingly have to be justified before approval, and then for payment in full, according to a range of criteria such as:

• Artistic quality and aspirations
• Management effectiveness and reliability of the team/organisation
• Financial feasibility (balanced budget and funding partners)
• Demonstrating public benefit
• Expected results and sustainability
• Meeting all statutory regulations, pay rates, etc.
• Correspondence to funder's policy aims.

Assets
Property and possessions that have a calculable money value, in particular to be set against future commitments, or costs/debts incurred by an organisation. This might be anything from a building that is owned by a cultural organisation to copyrights or reproduction rights on what the organisation has produced.

Balance sheet
A formal written statement of an organisation's assets (cash, the current value of property and equipment, etc.) set alongside its liabilities (money owed). This is generally done to correspond with the financial year. If an organisation's annual income and expenditure accounts show that it is trading in deficit after all income and grants have been received for that year, it could be trading illegally, thereby putting board members and staff at serious risk. However, if there is a "balance sheet surplus" that covers any trading deficit, then legally the company is likely to be treated as "solvent".

Break-even
Term applied to both annual accounting and individual project accounting processes. It simply means that the total costs and the income from all sources are "in balance" – i.e. that there is neither a surplus (profit) nor a loss to be recorded. For a project, there might be "hidden costs" – for example, in staff time that is not allocated specifically to the project itself but is contained within the overall operational costs of the originating organisation (see cost centre).

Budget
Formal statement of annual income and expenditure to which an organisation or company will work in any given year. This will obviously rely to some extent on realistic "projections". An organisation's annual budget will require the formal approval of the board or legally constituted governing body as the main instrument of financial control.

Capital grant
"Capital" refers to goods such as buildings, machinery and equipment that are used in the processes of production. These may form the "assets" of an organisation (on the balance sheet, which might even include bequeathed investments – see Legacy) in contrast with "revenue" or "current" expenditure. Applications for capital grants in relation to construction projects are likely to have to show that all statutory building regulations – including disabled access – have been complied with and the relevant permissions given by the appropriate authorities, as well as a range of competitive quotations for the desired work.

Cash flow
The movement of money (cash) into and out of the bank account of an organisation or company, often used as a measure of profitability in commerce. Sometimes also called "liquidity". It is vitally important for non-profit organisations to ensure that, at any given time in the annual cycle, there is sufficient money in the bank to pay salaries, bills, etc.

Charity
By derivation "love of one’s fellow men" (same as the Greek "philanthropy"), this term was originally applied to voluntary giving to those in need alongside the application of "poor law" by governments, local authorities and the church. By extension, "charity" has come to refer generally to "charitable trusts", i.e. any organisation established legally as a non-profit entity to provide some form of public benefit. Within Europe
this covers the legal status of most cultural organisations in the independent sector, although governments often tend (e.g. in Lottery contexts) to retain a more traditional view of "charity" as being mainly about social welfare and community health.

Constitution
Broadly refers to any organisation’s founding legal document, setting out its objectives and mode of operation. Often more formally described as a "trust deed", "memorandum", or "articles of association". Funders may ask to be supplied with evidence of applicants’ legal status (e.g. official registration number or legal reference).

Contributed income
Money received by non-profit organisations and shown in the budget, which is neither "granted" nor "earned" through trading. This might include sponsorship, donations or tax-efficient giving by individuals or private sector companies.

Corporate giving (corporate support)
Money (or sometimes goods or services "in kind") allocated to external organisations by private sector companies. This might refer either to donations or to sponsorship.

Cost centre
A commercial accounting practice term that is increasingly used in the non-profit cultural sector. Its aim is to provide a much clearer management tool for gauging the true cost of any given activity within the overall picture of work. This might mean apportioning (sometimes referred to as "allocating out") an appropriate share of overhead expenditure to individual productions, concerts or exhibitions. On this basis, income and expenditure accounting will demonstrate within a total annual programme which activities made a "surplus" and which lost money.

Donation
Money (or occasionally goods) given voluntarily, not usually intended to provide any specific benefit in return. Often applied to individual "donors".

Earned income
Money that an organisation makes through its own efforts in trading, selling (or hiring) goods and/or services. This generally covers all the trading activities of cultural organisations – everything from ticket and admission sales to catering, sale of books, catalogues, postcards, records and CDs, videos, costume hire, training, exploitation of rights and copyrights, etc.

Endowment
The bequest or legacy gift of some permanent asset to an individual or institution, usually intended to generate income to support their general purposes.

Financial projection
Estimates of income and expenditure for a particular project or piece of work. May also be the most appropriate way for a new – or relatively new – organisation to illustrate its track record to date.

Financial statement
The income and expenditure account for an organisation, showing the most recent full year (sometimes three-year) picture, independently audited to demonstrate fiscal and legal probity. Possible funders may well also demand to see a balance sheet, showing capital and any other assets, and also accounts for any trust or foundation associated with the organisation that is applying for support.

Foundation
An endowed institution, set up on a permanent basis to support "good causes". In the Anglo-Saxon world, sometimes legally referred to as a "Trust".
Foundations usually rely on a major capital donation from an individual or commercial concern (sometimes even from Lotteries). This is invested to produce an annual income, which is then distributed to good causes. Foundations’ origins and formats can be community, corporate, state, private or family, and according to their individual legal status and the laws and regulations of the countries where they are registered, they may be solely grant-giving, or operational, or a mixture of both.
Foundations are very active in the fields of health, social welfare, education and, to a lesser extent, culture. They mostly have clearly enunciated programmes and categories of beneficiary, which may change from time to time according to decisions of the Trustees (who are legally liable for the conduct and accountability of the foundation). The legal definition of "foundation" varies from country to country, so that by no means all foundations should be regarded as potential givers.

Government support or funding
Generic term for annual subventions of money derived from national taxation by central government (usually through a Ministry of Culture, or its agents such as Arts or Cultural Councils) and/or by regional and local government from their own revenues (locally raised taxes plus their redistributed share of national taxation). As well as "direct" support through providing financial subsidy, governments (and regions in some countries) provide a range of support through legislative measures, and local government also often offers additional "hidden" support to NGOs, etc., through remission on property or other taxes.

Grant
A sum of (usually public or tax-sourced) money given by the State or other public authorities or agencies (e.g. arts or heritage councils) for particular purposes intended to provide general public benefit. Increasingly these publicly accountable bodies are attaching sets of conditions to grants and are demanding those in receipt of them to demonstrate "outcomes" and "outputs" in addition to the normal legal requirements of fiscal accountability.

Guarantee
In relation to arts funding, expressed in full as "guarantee against loss". A last-call grant (most frequently used in the case of touring performing arts), which may be claimed retrospectively – i.e. after an approved event has taken place – up to an agreed limit to cover any budgeted loss or shortfall in earned income. Now less commonly used, mainly due to the fact that funders have found the element of uncertainty difficult to account for precisely at year end, and also to the feeling that cultural organisations will try to manipulate their own accounting processes in order to claim the maximum (i.e. not the same as a "straight" guarantee or surety offered against a loan).

Income
Refers to money (or other assets) received. Generally treated on an annual basis (Income and Expenditure Account) with longer-term "capital" assets likely to be separately listed on a "balance sheet". Income can be sub-divided into "earned" or "contributed" and may derive from sales, trading, investment, donations, sponsorship, etc.

Individual giving
Donations to "good causes" as a matter of personal choice by individual citizens. Sometimes done through intermediary organisations (such as the UK's Charities Aid Foundation) but often directly to named organisations. Usually the national tax system in any given country will encourage this form of giving by offering some tax benefit to the individual and/or the recipient. The amount of tax benefit may vary according to the length of time of a commitment to give (one-off, three-year or seven-year covenant, etc.). Employers may also be legally empowered to assist this process through securing the voluntary agreement of their employees to give through monthly salary deductions to selected "good causes" ("Payroll Giving"). Individual donations to the arts and culture in the USA, where the tax benefits are particularly favourable, constitute the highest proportion of all private giving.

Input(s)
Technical term for the money and any other resources allocated to a particular project or piece of work.

Legacy
A bequest or gift left in a will, which is intended to benefit named individuals or organisations after the death of the person concerned. Forms a more substantial part of the American cultural landscape than the European one, but now regarded as an area of considerable potential. This could be a stipulated cash sum, or a gift of financial shares, or investments made over legally to the beneficiary organisation.

Liabilities
Debts or financial obligations that an organisation has undertaken and is due to pay at some (usually specified) future date. Generally specified in the audited annual accounts and on the Balance Sheet, offset against the Assets as a vital test of solvency.

Mécénat
The generally accepted French term, close to the English use of "sponsorship". Derived from the name of Maecenas, who was a prominent patron of literature under the Roman Emperor Augustus in the late 1st century BC and something of an unofficial diplomat on behalf of the Imperial State. The literal implications of the term as used in modern Latin-based languages are consequently, and rather misleadingly, closer to the personal patronage of wealthy individuals (and external national cultural institutes) than commerce/business as such.

Non-profit organisation
(Sometimes "Not-for-profit".) Organisations legally established for purposes related to public welfare, which confers on them a privileged tax status in return for being "non profit distributing" – i.e. any financial surplus cannot be taken out as "profit" and distributed to shareholders (or stakeholders), but must be applied to those same objectives for which the organisation was legally constituted. In some countries it is, however, legally possible for charities and "non profits" to operate trading subsidiaries whose profit is covenanted back to the originating charity to support its legal "objects".

Ongoing costs
Regular expenditure incurred by an organisation in the course of its normal programme of work. Often excluded from consideration by funders (whether public or private) when focusing on project grants, on which they will wish to know what added value they are contributing to.

Outcomes
Results or noticeable effects of an action or process, which may be assessed in either the short term or longer term. These effects might be artistic, social, economic or any combination of these.

Outputs
The defined results of a process, usually expected to be measurable numerically, or else in some predetermined or "proxy measure" way. These might, for example, be financial – income from tickets sold, or demographic, such as audience/visitor numbers or social reach achieved.

Overhead expenditure
A constituted organisation’s ongoing and inescapable administrative costs – salaries, rent, telephone and postage costs, stationery, insurance, regular travel. Sometimes a problem in application processes, since funders – both public and private –prefer what they are assisting to be identified directly with activity rather than management.

Patronage
Private financial support and encouragement given by a patron (individual or corporate). Originally the term was very much associated with individual philanthropy (see Mécénat), although it is now commonly used in a more general sense.

Payroll giving
Legally sanctioned method of encouraging tax-efficient regular individual donation to charities through deductions by employers of agreed amounts from employees’ regular pay cheques. Usually the employer will seek the voluntary agreement of employees to a limited list of named "good causes".

Philanthropy
Charity, usually on a large or general scale. The term is particularly employed in the USA and North America, where individual and corporate giving (and the tax regimes to encourage it) form a larger element of the fiscal support for culture and heritage than is normally the case in Europe, with its welfare systems developed after the Second World War.

Private income
For a cultural organisation, money that is gained from sources other than grants or self-generated trading (see "contributed" income).

Project grant
Any grant that is given (or applied for) in connection with a specifically defined piece of work or production, i.e. over and above an organisation’s regular ongoing programme of work. From the grant-maker’s point of view, it is likely to be either a one-off or else given in the expectation that the assisted organisation will be able in due course to demonstrate that there has been some identifiable added value.

Projection (financial projection(s))
Forecast or estimate of income and expenditure in any future year or specified timescale (e.g. three-year cycle), normally based on the current "real" financial position, and taking account of present and likely future trends that might affect it. Commercial companies project future years’ profits, while non-profit organisations will be expected to project a surplus or break-even as a minimum requirement.

Project Proposal
The formal written submission of a planned undertaking to a potential partner or funder. This will generally take the form of a description of the scheme or enterprise envisaged, how it will be successfully carried out, what benefits will arise and for whom, etc. It should also clearly set out how what is proposed conforms to your own organisation’s overall aims and objectives, and to those of the potential partner/funder. It is likely to be a limited piece of work that is separately identifiable from an organisation’s ongoing programme. In order to justify their investment, funders will probably want to be reassured that, if appropriate, it will be self-sustaining in the future (see sustainability).

Pump priming grant
A single one-off grant offered in order to kick-start a particular activity or enterprise, usually in the expectation that the applicant organisation will in the future take full responsibility for sustaining and developing that activity without returning for further financial assistance from the donor.

Referee
Sometimes asked for as a counter-signatory in grant applications as a guarantor of the organisation’s financial honesty and track record. This should normally be someone of professional or social standing who has known the work of the organisation concerned for at least one year.

Revenue grant (see also Subsidy)
Grant aid from public authorities as a contribution to balancing the budget of cultural organisations or institutions for their normal regular year-round approved programme of activities (sometimes also referred to as "current" expenditure). This may be regarded either as a regular annual grant until further notice, or else be given for a stated period of time (e.g. three or five years) depending on positive assessment and evaluations and the particular grant régime in the country concerned.

Solvency
The condition of having sufficient money or assets to cover any existing liabilities. This is the fiscal test thatt demonstrates whether or not a constituted organisation is trading legally.

Sponsorship
Technically, the act of supporting charitable activity by pledging an agreed sum of money in advance. In practice it is a two-way beneficial (but not benevolent) "business" deal between commerce and the arts/heritage, designed as part of an individual company’s marketing strategy. The English terminology in relation to the culture and sport contexts largely derives from American, rather than European, practice. It is also worth mentioning that, in the UK, the term itself is now regarded as somewhat passé, having overtones of "patronage" (although it accurately described some practice in the 1980s/90s). The private sector is currently trying to move on from the narrow "sponsorship" legacy and mindset, preferring rather to promote a more dynamic concept of partnership. Cultural organisations need to be confident in what they bring to the (time-limited) deal, and not "sell" what they offer too cheaply under the mistaken belief that they are asking for "charity".

Subsidy
Money contributed by the state, regional/local authorities, or other publicly accountable bodies (e.g. arts or cultural councils). Normally offered to charitable or "non-profit" organisations to ensure the provision of services for the public benefit, or to keep the price of commodities at a reasonable level, and therefore increase access to the arts and cultural provision for all sections of society as a clear policy aim.

Support in kind
Contributions to the activities or running of non-profit cultural organisations (or charities generally) that are made in any form other than cash (e.g. free use of rehearsal space, uncharged advertising, printing or mailing, mentoring, donation of new or second-hand computer or other office or technical equipment). Some grantmakers will accept the inclusion of "in-kind" support as an estimated cash element of a balanced budget, even including an estimated cost applied to voluntary assistance.

Surplus
Any positive balance in the sum of money after break-even has been achieved by a non-profit charitable organisation (i.e. the equivalent of "profit" in a private sector company).

Sustainability
Refers to the ability to continue any given activity into the future within the likely existing resources of an organisation, as part of its ongoing budgetary and management processes. Both public and private funders increasingly ask for reassurances regarding sustainability in order to justify any financial support they are asked to consider. This is done in the belief that if an organisation is genuinely committed to a specific new activity then it should be prepared to "mainstream" it in its future plans.

Tender
A proposal (usually made formally and in writing) to supply goods or services in response to a competitive offer put out by the private or public sector.

Virement
The transfer of items from one financial account (or budgetary allocation) to another. This might be between different headings (e.g. from an overall contingency allocation to a specific production budget), or between one fiscal year and another. Generally speaking, the virement of sums above a modest level in any formally agreed budget will require formal board approval.