Text: Better Business



Video Title: Big Apple Circus: Sources of Financing

Length: 8:19

Classroom Application: Instructors will find this video helpful in helping students to understand the importance of a feasibility analysis. Specifically, this video addresses the concepts of resource sufficiency and financial feasibility.

Synopsis

Big Apple Circus is a non-profit organization that was founded in 1977. It is a traditional, European circus. The organization operates primarily in the northeast. Big Apple Circus is a small entertainment-based, entrepreneurial company. The organization raises money for charitable entities like Boston Children’s Museum.

Discussion Questions

1. Discuss some of the funding sources available to Big Apple Circus.

Big Apple Circus has many funding sources available to them. They receive funding from governmental agencies such as the National Endowment of the Arts, from individual and corporate donors, from foundations, and from ticket, concession, and merchandise sales.

2. Explain how Big Apple Circus analyzes their attendance for financial feasibility?

Big Apple Circus uses many analytical tools to determine the financial viability of each performance. For example, managers consider how many people will attend each performance and how many of those tickets are paid or are charity/complimentary tickets. They must also determine the appropriate amount of concessions to make. In the video, this discussion centers around how many hot dogs you make for 1700 people. Big Apple Circus only recently recognized the contribution of concessions to their financial bottom line.

3. How does being a non-profit performance company contribute to the financial feasibility of Big Apple Circus?

Since Big Apple Circus is a non-profit performance company they have the option to raise funding from other sources along with production revenue. For example, they receive funding from the National Endowment for the Arts. They may also apply for and receive funding from non-profit grants as well as from corporate and individual donations. The advantage to these additional sources is that they may not be quite so dependent on traditional economic factors. They also help Big Apple Circus balance some of their revenue risk across multiple sources of funding.

Quiz

1. Big Apple Circus currently is a ______________ dollar organization.

a. 23 million

b. 17 million

c. 5 million

d. None of the above

Answer: b

Explanation: Although it used to be a 23 million dollar organization, the recent downturn in the economy has reduced the organizational value to only 17 million.

2. Big Apple Circus partners with many other businesses and organizations. For example, Coca Cola partners with Big Apple Circus and supports them financially by

a. how they price their product.

b. providing advertising dollars.

c. providing and repairing equipment.

d. all of the above.

Answer: d

Explanation: Big Apple Circus’ partnership with Coca Cola benefits the organization in many ways.

3. Which of the following best describes the governance structure of Big Apple Circus?

a. There is no formal governance structure.

b. There is very limited formal governance structure (i.e., only managers involved).

c. There is a formal governance structure including a board of directors.

d. None of the above

Answer: c

Explanation: Big Apple Circus has a formal governance structure including a board of directors.

4. Donations to Big Apple Circus come primarily from which two sources?

a. Foundations and individuals

b. Government and foundations

c. Ticket Sales and concessions

d. None of the above

Answer: a

Explanation: According to the video, donated funds to Big Apple Circus come primarily from foundations and individuals. One of the board of director’s main responsibilities is to help with fundraising.

5. One of the biggest expenses of running the Big Apple Circus production mentioned in the video is

a. porcupine chow.

b. electrical expenses.

c. concessions.

d. performer’s salaries.

Answer: b

Explanation: Electrical expenses are presented as the most significant expense for the production of Big Apple Circus. The General Manager states that these costs can run from $8,000-10,000 per day.

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