Net income.

In studying the 990's of non-profit arts organizations, I hoped to identify trends that help clarify why some arts organizations are financially successful and others struggle. And let's face it, financially struggling means no matter what great work you do, you will not be able to sustain operations and fulfill your mission over the long haul (or even if just until the end of the current fiscal year!). And just because your financially successful doesn't necessary means you are doing great work, but it does give you the opportunity to keep working.

Looking at Presenters 990's one thing is becoming clear, many organizations are in deep trouble. Over half of Presenters reviewed are experiencing negative net income, many in the -20% range.

One metric some of these organizations have in common are marketing efficiency ratio's of less than 10 (10 dollars of revenue for every  dollar of advertising expense). Financially successful organizations have marketing efficiency ratio's of 20 and above. There are exceptions however. In addition, having a high marketing efficiency is no guarantee of financial success. Several organizations have marketing ratios above 20 and still realize negative net income.

Another trend that emerges is that having a high percentage of earned income is one of the components of positive net income. However, having a high percentage of earned income is no guarantee of success either. Revenue per employee is another metric that seems to correspond to positive net income, but you guessed it, there are significant exceptions.

The profitable not for profit presenter represents a system with many components, including the physical plant, marketing, programming, fundraising, and staff productivity, each driven by the community it serves. How these different components work together varies from organization to organization. Each is unique, but the bottom line is still year in, year out, a good indication of where your organization has been and where it might be going.