By Joanna L. Johnston, MBA, CPA
RDT Board Treasurer and UACPA Non-Profit Committee Member
This article was originally published in The Journal Entry, a publication of the Utah Association of Certified Public Accountants. Writes Joanna, “Since this article was published in 2014, I’ve learned so much more about Repertory Dance Theatre and the art form. Consequently, I’ve re-upped for another term as a trustee of RDT’s board. This extended stay at America’s premier repertory dance company has given me added insight into the way America’s arts organizations not only survive change but thrive because of it and how accounting professionals can be a critical part of that success.”
In part 1, Joanna, a professional CPA and Repertory Dance Theatre’s current Board Treasurer, talks about the history of modern dance, RDT, and what she feels our art from offers an audience. In this post she talks about the challenges and unique opportunities a dance company faces as it transitions staff members and strives to keep the Company and the art form moving forward.
Like most arts organizations … RDT must compete with other performing arts companies and entertainment outlets for audiences, sponsors and donors. Throughout the last decade of economic downturns, RDT has needed to look for new ways to recruit and retain valuable corporate and foundation sponsorships. In addition, RDT has had to evaluate its financial position and cut expenses without cutting quality. Several years ago the Company reached out to the accounting community through the UACPA [Utah Association of Certified Public Accountants] in an effort to recruit CPAs for its board of trustees. Three CPAs responded, and [as of 2014] two are still serving on the board in executive positions. Having CPAs on the board has proved to be an invaluable asset. Their awareness of current tax laws and GAAP standards have helped the organization obtain refundable small business health care credits, provide assistance with reporting issues, budget and plan for cash flow fluctuations, work with auditors throughout the audit process and act as liaisons with local and state agencies concerning public funding for the arts. The administrative staff for RDT is only five full time employees, and none are accounting professionals, so it is imperative to have CPAs on the board to advise and support the staff on financial and reporting matters.
Recently, RDT has had to confront an unanticipated succession issue. RDT’s bookkeeper for the last 13 years was diagnosed with a terminal illness in June 2013. Even though the position was only part-time, she was responsible for recording all the financial transactions including receivables, payables, payroll and tax payments. She performed reconciliations and prepared financial reports for the administrative staff and the board. She was the only member of the staff who knew how to use the accounting software, print checks and prepare the financial information and reports. When Linda Smith, RDT’s Executive Director, became aware of the bookkeeper’s illness, the Company was challenged and in need of current and accurate financial information for grant proposals and end-of-year reconciliation. There was a struggle to get the books caught up while attempting to advise other members of the staff and board treasurer how to use the software to record transactions, prepare reports and print checks.
RDT wanted to honor a dedicated employee’s years of service while recruiting a new bookkeeper. A smooth transition needed to be created to keep financial continuity in the interim. I was asked as the board treasurer to step in for a two-week period to get invoices recorded, payables paid and travel per diem checks printed for the dancers going out on tour, before another bookkeeper was hired and took over. … RDT’s new bookkeeper … [had] to adjust to new software and accounting methods that function differently. It … [took] some time before the financial process … [was] running smoothly again, but with the help of experienced CPAs on the Board, the succession [was completed.]
This situation has demonstrated to the staff and board the importance of cross-training and information- sharing in a small non-profit organization. Going forward, a plan … [was] created to ensure that more than one person knows how to perform basic financial functions within the Company, and that key personnel feel comfortable sharing those duties with other members of the staff. Currently the board and administrative members of the RDT staff are formulating a strategy that incorporates segregation of duties and contingency planning to ensure accurate financial reporting and financial stability. Meanwhile, the artistic staff continues focusing on the mission of the organization which is still, [now in its 51st year] … dedicated to the creation, preservation, performance and appreciation of modern dance.
Many people confuse the non-profit status of an organization with the organization’s goals to be profitable in order to achieve its mission. Incorporating skilled accounting professionals on the staff and on the board of a non-profit arts organization like Repertory Dance Theater help ensure financial continuity while enabling the artistic staff and performers to provide quality entertainment and educational opportunities to the community.
Joanna L. Johnston, CPA is a Tax Manager at BDO USA, LLP with a passion for non-profit arts organizations. She is the Treasurer for Repertory Dance Theater, Vice-President of Finance for the Utah Wind Symphony, as well as a member of the University of Utah Business Alumni Association Board. She can be reached at firstname.lastname@example.org