Finance is the backbone of any public library. Library managers need to control the operations as well as monitor and manage the finances of the institution. Public library financial activities involve the job of managing funds, budgeting, and controlling costs. It also involves the growth of assets.
Public libraries can get funds from the following sources −
● National funds that are distributed to states or provinces.
● The municipal corporation gives municipal funds to public library, which were generated from car parking, taxes, and other tools of revenue generation. The librarians need to apply for these funds.
● Private donations, which are given by the charity services and interested individuals.
Sometimes, funds are raised in-house by conducting auctions for sale of knowledge resources.
The following are the functions handled by the finance department of a public library −
● Financial reporting to directors, managers, and staff.
● Budget preparation and allocation
● Managing annual audit
● Managing all receipts
● Preparing taxes and other governmental filings
● Reporting to donors and granting agencies
The finance cycle of a Public Library covers the following general steps −
● Planning − Management team tries to find out what needs to be done in the library, which are incomplete projects and new projects. It then recommends the findings to the directors. Assess upcoming expenses on those projects. Directors and review it and set goals for a specific time period such as a year.
● Budgeting − Consider all incomes and all costs, and the costs required for ongoing operations. Review and analyze income and costs of last year in numbers. Estimate income and costs for new financial/fiscal year.
○ Income Sources − Allocations from government, Friends circles’ contribution, grants, donations, fundraising booksale, fines, and fees.
○ Expenses − Fuel, library material, staff salaries.
● Operating − Execute the scheduled plan.
● Reporting − Produce monthly and annual reports to monitor the progress of the financial activities. It records the opening balance, transaction, and the closing balance for each fund. A balance sheet gives an overall financial picture of the library.
There are various ways the public library managers can mobilize library resources. To know how the resources are mobilized one first needs to know −
It is a collective term used for the process of generating income from different resources as well as readiness of the library to deliver the knowledge resources efficiently and economically to the user.
The library managers need to chalk out an effective resource mobilizing strategy and execute it efficiently to raise funds for the library. The following are some ways of resource mobilization −
● Contacting a donor agency for financial support.
● Conducting fundraising programs and events, inviting guests to attend and request donations for the library.
● Keeping donation boxes at the happening places such as banks, social gatherings, and other public areas to request for donation. This practice generates smaller amount, but it is appreciable.
● Setting collection points for the donations in kind such as furniture, vehicles, stationery, and tools.
● Requesting for volunteer support for library from colleges and schools.
● Fundraising from selling a publication, and offering buying schemes.
Under the limited funds available, a public library must utilize its budget wisely. Cost Effectiveness Analysis (CEA) is a comparative analysis of the costs and effectiveness of services provided by the public libraries. This tool also aids the management to take decisions of allocating budget and determining which all services to provide. It is generated in terms of ratio.
Cost Effective Analysis = (Costs new – Costs old) / (Effect new – Effect old)
Cost Benefit Analysis (CBA) is conducted to determine how poor or how excellent the execution of any plan has turned out. It measures all the positive and the negative outcomes of a program in monetary terms.
CBA is helpful when it comes to decision-making on investment and comparing two or more alternatives.
An alternative is chosen by library managers only when Benefits > Costs.
Total Cost – Total Benefit = Net Benefit
● if the Net Benefit is +ve, then the Cost Benefit is +ve.
● if the Net Benefit is –ve, then the Cost Benefit is -ve.
The annual report of a public library normally contains the following information −
● The statement of mission of the library
● Letter from the chairperson from the board of directors/trustees
● A letter from the CEO of the library
● A couple of testimonials of the patrons
● A couple of testimonials of the subscribers
● Pictorial timeline depicting achieved milestones tagged with short description of achievements
● The numbers and charts depicting revenues generated and funds used during a financial year
● The consolidated statement of activities and financial position
● The list of donors, directors, and library branches