Situation Analysis with SWOT Analysis
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.
The pro forma data presented in Exhibit 1 is based in part on expectations presented in the case materials about income generation for the Museum in 2003. With respect to expenses, some pro forma reductions were made commensurate with lower expected out flows because of lower membership levels.
As the data presented in Exhibit 1 indicate, the pro forma net loss in 2003 is somewhat lower than the actual loss reported by the Museum in 2002. Still, it reflects a trend that the Museum n...