CASE STUDY: MACON MUSEUM OF ART Situation Analys

The Macon Museum of Art is a private not-for-profit corporation located in a major metropolitan area. The Museum has a large endowment and owns its primary facility and site free and clear. Nevertheless, the Museum depends upon membership dues, admissions, and grants from county government to keep its operating budget in the black.

The economic slowdown in 2000 and 2001, the substantial loss of value in the stock markets, and tightening budgets at the county government combined to create problems for the Museum. The membership renewal rate in the lowest membership category is traditionally low. This situation is a problem for the Museum because the large number of members in the lowest category means that the category is a major contributor to the operating budget of the Museum. Further, the uncertain economic environment threatens the membership renewal rates for other membership categories. The county's contribution to the Museum in 2003 also will be lower than prior years. The fall in interest rates means that the Museum's endowment will contribute substantially less money to the operating budget than has been the case in the past.

The projected financial position for the Museum is presented in Exhibit 1, which may be found in the Appendix to this report. Exhibit 1 presents a pro forma income statement for the Museum for 2003 alongside the 2003 income statement provided in the case materials

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Unfortunately, the errors presented above are not the only discrepancies presented in Case Exhibit 4 (p. 567). For 1999, the upper chart in the Exhibit indicates no Director's Club members, but the lower chart in the Exhibit indicates membership dues in the amount of $282,219 paid by Director's Club members. If the Museum has overstated the level of membership revenues each year, the deficits are worse than have been reported. Based on the data presented in the case, however, the chart presented n Exhibit 2, which may be found in the Appendix, shows that in terms of numbers of members, membership levels in the Museum are declining in all categories. Moving average calculations were used to project membership levels for 2003. As indicated in the chart, the trend continues to be downward. Based on the data presented in the case, the chart presented in Exhibit 3, which may be found in the Appendix, shows that the monetary contribution of the relatively small number of Partner- and Director-category members is greater than the contributions of all of the other membership categories combined. The importance of these high paying members to the Museum cannot be over emphasized. A SWOT analysis for the Museum is presented a
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Approximate Word count = 1285
Approximate Pages = 5 (250 words per page)