Financial Sustainability of Clayton County Public Library System in Georgia - Research Paper Example

?How can the Clayton County Public Library system in Georgia diversify funding sources to become more financially sustainable? Introduction Scope of operation of public institutions, such as the Clayton County Public Library System, induces needs for funds generations to meet their objectives. Being formed by legislations means that the organizations’ roles and purpose are outlined under law and failure to deliver to the expectations may amount to legal liabilities. This marks a significant difference from private institutions that may change operations to match financial constraints. Public institutions however need to avail funds to ensure that they meet their objectives and demand for the legal services that they are supposed to offer. Bureaucratic nature of public institutions may also delay receipt of funds from government sources and this identifies the need for diversified sources of funds (Kent State University 2013). This study seeks to investigate ways in which the Clayton County Public Library in Georgia System, a public institution, can diversify its funding sources in order to become more financially sustainable. Background of the study Decision on suitable strategies for raising funds towards financial sustainability requires an understanding of available sources of funds that an institution can exploit. Both short term and long term sources of funds exist that can empower the Clayton County Public Library System towards sustainability. Bank loans and accounts receivables are some of the available short-term sources of finances for the library. The institution can seek loans from the government or private institutions for investments into its services and use derived income to refinance the loans. Tracking and recovering funds that are held up in accounts receivables is another feasible short-term strategy and is beneficial because such sources are the institution’s debtors and therefore demands no repayment (Kontus, 2012). Leveraging service fee is another alternative to expanding sources of finance for the library. Landers identifies this approach to raising funds for the Highway Trust Fund, a public agency, and the rationale for the proposal can help the library to manage deficits and improve its financial base. Charging service fees on the actual amount of rendered services, instead of fixed charges is one of the alternative measures to the strategy and can be applied on selective services (Landers, 2013). Overreliance on government funds for sustainability has proved risky in other sectors and other economies and therefore motivates need for diversified finances. A study of service delivery in Romanian education sector suggests that available government funds are susceptible to fluctuations and reduced funding may lead to poor quality services if a beneficiary institution lacks alternative sources of finance. On the contrary, diversified sources increase public institutions’ degree of freedom and ability to deliver services (Suzana, Dorin & Florin, 2011). Some of the common sources of funds for the public institutions, such as the treasury and other international funds, are also rigid and more flexible alternative measures are necessary (Elena and Danut, 2012). A critical perspective is therefore necessary in determining suitable ways diversifying sources of funds. Sull and Eisenhardt explain that a rule-based approach to selecting strategy can lead to effective decision on the library’s ways of diversifying funding (2012). This perspective relies on experiences from corporate organizations that operate simple guidelines for their complicated frameworks. Evidence based practice is one of the alternatives that organizations have used in making decisions. It relies on developed knowledge on different strategies and associated level of success that the strategies elicited. Though commonly used in decision making for management in the commercial sector, analysis of sources of finance that public institutions have sought, and associated implications can develop insights on viable sources of funds for the Clayton County Public Library System. The approach is particularly effective if rich research exist in the field (Liang and Howard, 2011). A closed loop strategy, as Kumar, Zampogna & Nansen explain, is another strategy that the Clayton County Public Library System can use in diversifying its sources of funds. The approach involves continuous analysis of an organization’s existing alternatives in order to identify limitations of the strategies and to promote their efficiency. Its implementation therefore facilitates identification of most efficient methods that the library can implement (2010). Another decision making model, “Analytical Hierarchical Process-Group Decision Making” is also a way in which the library can identify effective sources of funds for diversification. The model is effective in risk analysis and can help an organization to avoid risky sources of funds and instead focus on the most viable sources. The model is also reliable and realistic in risk analysis (Wu, Kou, Peng & Ergu, 2012). Implementation of decisive leadership is another alternative to ways of diversifying sources of funds through informed decisions (Yates, 2011). Problem statement Existing literature identify the need for diversified funding sources for public institutions such as Clayton County Public Library System. Existence of a legal mandate to service delivery commands the need for financial sustainability in order to meet the obligation. Formal and major sources of funds for the institution are however bureaucratic and may not avail ready finances for service delivery. The library can diversify its sources of funds the many ways that can help in identification and exploration of available sources of funds. Numerous decision making strategies offers the alternatives and this establishes the problem of identification of the most efficient and effective ways that the library can implement in order to diversify its sources of finance. Purpose of the study The study aims at identifying the most viable ways that Clayton County Public Library System can implement through establishing a relationship between decision-making strategies into sources of funds and success in obtaining the funds through sources with favorable conditions. Success in obtaining funds and terms of the funds and applied strategy to identifying sources of funds are the study’s variables. Research questions, research hypotheses, and research variables Applied strategy to diversifying sources of funding and success in sources of funding and terms of the sources are the study’s variables. The study will explore the following research question. Is there a significant difference in effectiveness and efficiencies of strategies to diversifying sources of funding? This leads to the following set of hypothesis. HO: There is no significant difference in effectiveness and efficiencies of strategies to diversifying sources of funding HA: There is a significant difference in effectiveness and efficiencies of strategies to diversifying sources of funding Theoretical framework Austrian theory of efficiency forms the study’s framework. The theory defines efficiency as applications of alternatives that serves a desired objective and offers a basis for developing efficient strategies that the library can use to diversify its sources of funds, sources that are reliable and have favorable terms (Roy, 2007; Cordato, 1980). References Cordato, R. (1980). The Austrian Theory of Efficiency and the role of government. The Jjournal of Libertarian Studies IV(4), 393-403. Elena, R. and Danut, D. (2012). Study on the problems in the stages of filling out the application form and technical-financial reporting encountered by the public institutions in the center region in accessing European Funds. Annals of the University of Oradea, Economic Science Series 21(1), 1059-1065. Kent State University. (2013). Differences between public and private sources of funding. Retrieved from: http://literacy.kent.edu/Oasis/grants/publicVSprivate.html. Kontus, E. (2012). Sources of short-term financing. International Journal of Management Cases 14(4), 1-11. Kumar, S., Zampogna, P. & Nansen, J. (2010). A closed loop outsourcing decision model for developing effective manufacturing strategy. International Journal for Production Research 7(1), 1873-1900. Landers, J. (2013). Reports examine future shortfalls, Funding sources for Highway Trust Fund. Civil Engineering 83(3), 14-15. Liang, Z. and Howard, P. (2011). Evidence-informed managerial decision-making: What evidence counts? Asia Pacific Journal of Health Management 6(2), 12-21. Roy, C. (2007). Efficiency and externalities in an open-ended universe. Ontario, Ludwig von Mises Institute. Sull, D. & Eisenhardt, K. (2012). Simple rules for a complex world: Any strategy is more effective if employees have straightforward guidelines for making critical decisions. Harvard Business Review 90(9), 68-74. Suzana, S., Dorin, C. & Florin, B. (2011). Bases of state superior educational system financing from Romania. Annals of the University of Oradea, Economic Science Series 20(2), 381-385. Wu, W., Kou, G., Peng, Y. & Ergu, D. (2012). Improved AH-Group decision making for investment strategy selection. Technological & Economic Development of Economy 18(2), 299-316. Yates, K. (2011). Decisive leadership: Effective decision-making for management accountants. Financial Management (14719185), 52-53. Read More