Written evidence submitted by Arts &
Business (arts 75)
"On stage and screen there is a constant
message of imagination, radicalism and challenge to the status
quo. But in the way it runs itself, the arts world is one of the
most unimaginative and conservative industries in Britain."
David Lister, Arts Editor, The Independent, 24 August 2010.
"Arts & Business is the most successful
arts-funding organisation this country has ever known. When it
started, there was barely any private giving to the arts in Britain.
In 2008, the figure was £686.7 million, falling slightly
last year to £654.9 million. By 2016, the figure will be
£1 billion, according to A&B's forecasts." Bryan
Appleyard, Cultural Commentator, The Sunday Times, 29 August
2010.
EXECUTIVE SUMMARY
1.1 With 70% of arts organisations seeing private
investment as more important to them over the next three years,
and with the private sector due to recover faster than the public
sector, the Government has an opportunity and responsibility to
review its strategy on cultural philanthropy and private sector
investment into the arts. The DCMS and the Arts Council need to
consult carefully with their strategic partners and funded bodies
to clearly define objectives, roles and outputs. Only together
can we augment public funding with new and innovative private
sector models.
1.2 We have identified the two priority aims
for government, business and the arts sector in terms of increasing
private sector investment: to expand the earned income base and
increase private giving.
1.3 Arts organisations need to work harder in
innovating new income. Making a greater use of existing intellectual
property rights or the potential of digital engagement with audiences
are tangible examples of how this can be done. Arts & Business
has worked for 34 years to produce some of the most innovative
cultural-business partnerships.
1.4 The way that Arts Council England funds
the arts needs to change. We need to move away from a grant-giving
model to rewarding innovation and diversity in funding over the
2011-14 period. Targets around innovation and private sector investment
must be set in order for the vast amount of organisations which
do not bring in sizable private sector investment to work towards.
Arts Council England must then work with its partner Arts &
Business to raise the sector to the next level.
1.5 Individual giving must be further encouraged
and existing fora used to promote giving (Arts & Business'
Cultural Champions programme is a leading example). There is a
need for further clarity in the existing tax laws, as well as
the preservation of the higher rate of benefit directed to the
donor under the present gift aid system. Also HMRC need to be
more donor-orientated and understanding of the needs and motivations
of giving.
1.6 The arts sector must see itself as part
of the wider third sector where it has a great role to play in
the development of the Big Society.
What impact recent, and future spending cuts from
central and local Government will have on arts and heritage at
a national and local level?
Whether the current system, and structure, of
funding distribution is the right one?
What level of public subsidy for the arts and
heritage is necessary and sustainable?
2.1 Given the proposed public spending cuts
of between 25-40% never before has there been a greater need for
the UK government to adopt a coherent policy to promote private
sector investment into the arts. Arts & Business has 34 year
experience in channelling private sector investment from companies,
foundations and individuals into the arts as well as working with
arts organisations to facilitate, innovate and celebrate initiatives
giving a more entrepreneurial sector. Arts & Business arts
members receive four-fold more private sector income than non-members.
2.2 The Chancellor challenged the nation to
a dialogue on prospective cuts. Arts & Business with the National
Campaign for the Arts responded by creating the Forum for Arts,
Culture & Heritage with our combined arts memberships of over
1,650 cultural bodies, to identify the impact of where cuts might
fall, where growth can come and how we can build a robust and
sustainable cultural sector in the future.
2.3 The Forum notes that very few arts organisations
work on an equal mix of third public, third private and a third
earned income—according to Arts & Business' Private
Investment in Culture 2008-09, the average UK arts organisation
receives around 53% of its income from public funding, 32% from
earned income and 15% from private investment. Most of the larger
publicly funded arts organisations already earn more income than
they receive in public subsidy, but most grassroots organisations
need to expand—if not double—their earned income as
a priority.
For instance Arts & Business research has
recently found that around 40% of the sector currently receives
no private investment and from the organisations that do, only
8% have a legacies programme.
2.4 Generally, organisations outside London
find it harder to raise private income. Arts organisations working
in the public arena such as health and criminal justice rely extensively
on public service contracts and funding. Regional arts organisations
also face a double-whammy in that local authority budgets are
even more vulnerable, as all local authorities face cuts of at
least 25% if not more and they tend to cut culture first.
2.5 What does this mean for private investment?
Arts & Business's recent research into regional private investment
found:[37]
— 50% of business investment in England
goes to the regions outside of London and this £77 million
of business investment received in the regions accounts for 38%
of their overall private income).
— Individual giving continues to rise
in the regions—it increased by 38% in 2007-08—two
years after Arts & Business' individual giving training was
rolled out across the country—and by a further 4% in 2008-09,
rising to £42 million, despite the drop in the UK private
sector investment of 7% overall.
The Forum noted that public sector cuts should
be back-loaded with deeper cuts coming at the end of the 2011-14
spending period.
THE PRIVATE
SECTOR POLICY
FOR THE
ARTS
3.1 Given the threats to public spending in
the arts, Arts & Business believes we have a once in a lifetime
opportunity to rewrite and reboot the arts economy and grow private
sector investment. This is the motivating driver behind the five
initiatives which make up the recently published Arts & Business
Private Sector Policy for the Arts.
3.1.1 Firstly a new Challenge Fund Scheme to
stimulate individual philanthropy for the Arts: we believe Challenge
Funds are as important as tax incentives for promoting greater
giving. Arts & Business has launched a new pilot challenge
fund for the arts with an initial fund of at least £500,000
working with 145 registered arts organisations. In partnership
with UK philanthropist Alec Reed and his Big Give initiative,
Arts & Business has designed The Big Arts Give as a model
dramatically reanimates individual cultural philanthropy in this
period of economic difficulty and looks to raise £3 million
by Christmas 2010.
3.1.2 A Legacy Campaign for the Arts: many arts
bodies with an annual turnover of under £5 million have little
or no knowledge on how to plan fundraising from non-public income
streams over a three year period. Many do not have, or have only
just started to think about, a major gift programme. Furthermore,
according to Arts & Business latest Market Trends survey (August
2010) 68% of respondents don't currently have a Friends/members
scheme. The majority of arts organisations are also under-exploiting
the potential of legacies within their fundraising activity. Out
of 783 arts and cultural organisations that responded to the Arts
& Business "Private Investment in Culture 2008-09"
survey, only 66 reported that they had a legacy scheme from which
they received financial support. The total (extrapolated) value
of this support to the sector was approximately £65 million.
3.1.3 A Matching Fund to encourage corporate
giving to the arts: respondents to the Arts Council's Great Art
for Everyone consultation requested help with identifying alternative
sources of funding and were keen to see brokerage of commercial
sector investment in the arts sector. We do not believe that it
is practicable for a public body to deliver sponsorship brokerage
in the volume required for individual arts organisations, however
we believe that other forms of "brokerage" and incentivizations
are feasible.
The revival of the Arts & Business matching
sponsorship grant scheme was the top recommended activity as voted
for by arts respondents to our survey. Further evidence (from
A&B Scotland research) suggests that matching public funds
drive increased business support. Given the current economic climate,
however, and desire to make every public pound deliver maximum
value for the sector, we propose to deliver a matching fund financed
jointly by government and existing regional business supporters
of the arts, who wish to encourage other new sponsors to follow
their example by offering them a pound for pound matching scheme.
This tried and tested model, run by our Sponsors Club for Arts
& Business in the North East region, has been running successfully
on a regional scale for 10 years. Now with government investment,
we propose the national roll-out of an enhanced model, with upwards
of a minimum initial investment of £250,000; which we would
use to raise an equal sum from regional business to create a matching
fund of £500,000, which is in turn used by arts fundraisers
to develop new or returning sponsorship relationships on a £2
for £1 basis; delivering a leveraging ratio of public investment
of £1:£5. We would welcome partnership working with
ACE on the distribution of such funds.
In our recent consultation with the sector through
our 2010 Have your Say survey, 67% of arts organisations
have chosen one of the two "Matching programmes" outlined
above as their primary priorities for Arts & Business to deliver,
exemplifying the extent to which incentives are seen as important
to encourage more business investment and individual giving.
3.1.4 Greater understanding and reform of
cultural tax incentives to underpin a vibrant arts mixed economy:
over the past two months Arts & Business has worked in partnership
with Ernst & Young to produce clear and definitive recommendations
on tax. Too few people understand gift aid or the present HMRC
rules affecting high donors.
— The composite rate of gift aid is
not adopted. Given that 80% of higher rate gift aid tax relief
is currently claimed the composite rate would destroy this incentive
and therefore much high-level giving. As a counter, we would recommend
that instead light touch steps are introduced to ensure that the
remaining 20% is actively sought out.
— That the system of valuing benefits
within Gift Aid is clarified, possibly through a clearer "split
payment" system or the abolition of the "aggregate value
test."
— That appropriate changes are made
to enable philanthropists to create light touch private foundations
to help facilitate their philanthropy.
— That tax breaks should be introduced
on the gifts of works of art, heritage, or archive items to the
nation.
— That the US model of Lifetime Legacies
(or Charity Gift Annuities) be adapted and then adopted in the
UK.
As the only representative body of the arts
on the Treasury tax group on charitable giving we are proposing
our tax recommendations on behalf of the sector.
What arts organisations can do to work more closely
together in order to reduce duplication of effort and to make
economies of scale?
4.1 Arts & Business argues that there is
a need to increase the final third or earned-income element of
the arts funding ecology. Arts organisations need to work harder
to "sweat their assets" as well as collaborating together
when possible to reduce costs and maximise access to audiences
and new income streams.
4.2 Mergers and acquisitions are just two ways
to reduce duplication and make economies of scale for instance
joining back office functions and structures is a particularly
sound strategy—according to Arts & Business' most recent
Market Trends survey (August 2010) with 250 arts organisations
representative of the whole sector, 32.1% are considering merging/
collaborating with other similar organisations and 13% are already
merging/collaborating with other similar organisations. This exemplifies
that a number of arts organisations are proactive in this area
and are already considering how this can best be done. Two immediate
examples.
4.2.1 The museums model of hub and spoke organisations
in the regions, funded via MLA's "Renaissance in the Regions"
programme.
4.2.2 And joint purchasing models such as the
consortium of London museums which has negotiated a bulk purchase
deal for electricity.
4.3 Underlying this is our need as a sector
to work harder to understand the relationship between public and
private funding. The production of the Woman in Black took £5k
subsidy and turned it into £8 million of Treasury income
after becoming a blockbuster West End hit.
4.4 The best of the arts world is formed through
ongoing partnerships with business which deliver private funding—but
also the business methods, planning and ethos of the private sector.
Bridging the divide between the two has been one of Arts &
Business's key priorities for the past 34 years.
4.5 A further highly commended example of this
partnership in action is that existing between Lanson Communications
and HighTide Theatre Company. Since 2008, Lansons Communications
and HighTide have enjoyed a relationship that is unique between
an arts charity and business. Lansons Communications donate to
HighTide office space, IT support, meeting rooms, and reception
services. What the charity saves annually on administrative overheads
is reallocated towards achieving its charitable aims through the
production of more theatre. Lansons also contribute business planning
and strategy services.
The impact of recent changes to DCMS arm's-length
bodies—in particular the abolition of the UK Film Council
and the Museums, Libraries and Archives Council?
5.1 We believe the concept of so called "arms-length"
bodies should be reviewed. This was a proposition introduced to
prevent political interference in the arts when the Arts Council
of Great Britain was established in 1946.
5.2 Our Forum for Arts, Culture & Heritage
agreed that the swift and stark announcements of the abolition
of the Museums, Archives and Libraries Council (MLA) and the UK
Film Council were decisions taken without an apparent clear plan
for understanding which functions should simply cease and which
should be absorbed by other organisations. Arts & Business
believes in the interests of transparency and accountability more
consultation with the arts and creative industries is need before
decisions like this are taken.
Whether businesses and philanthropists can play
a long-term role in funding arts at a national and local level?
Whether there need to be more Government incentives
to encourage private donations?
6.1 At present individuals give £363 million
to the cultural sector. 48% of this is paid as membership to Friends
schemes and other structured giving programmes. 18% is in the
form of legacies and the remaining 34% are donations. Businesses
currently contribute around £157 million, mostly through
sponsorship, and according to an Arts & Business survey in
November 2009 with key businesses already working with the arts;
by 2013 all respondents expect to either increase or maintain
their levels of business investment to the arts.
6.2 Looking at the UK wide-picture, cultural
organisations outside of London are only raising 20% of income
from philanthropy. We argued in at point that 2.6 that regional
organisations raise 50% of the total business support given to
the arts in this country. This year, cultural organisations outside
of London were responsible for 46% of the nominations for The
Prince of Wales Medal for Arts Philanthropy, which celebrates
cultural philanthropists of national significance.
6.3.1 Arts & Business believes that
this form of support from individuals will be able to play an
increasingly important role in the future funding of the cultural
sector. However, this will only happen if the cultural sector
is seen as a success. Individuals are unlikely to support organisations
seen as failing—even if that failure is solely the result
of a cut of its public funding. Indeed the cultural sector must
become better able at asking for money and maintaining their subsequent
relationships with their donors ("donor care").
6.3.2 Vital parts of this much-heralded
"American style of philanthropy" include effective donor
care, a tax environment that continues to send the important message
that giving money to charity is a good thing and a society which
better encourages and celebrates those who choose to support the
arts at whatever level.
6.3.3 Arts & Business will achieve this
through:
— The Prince of Wales Medal for Arts
Philanthropy given to five nominated couples or individuals this
year.
— Celebrating people across the UK
who support their local cultural organisations through the Cultural
Champions programme.
— Sharing best practice through case
studies and events.
— Training cultural fundraisers in
the skills they need to develop this income (see appendix).
— Ensuring both cultural organisations
and their donors understand—and take—full advantage
of the tax incentives available.
— Undertaking targeted impactful research
to determine how best these organisations can develop income from
individuals.
6.4 "The Arts & Business Cultural Champions
initiative provides not only a real sense of pride for those already
passionately involved and being recognised as champions by the
scheme, it also helps others open their eyes to the big and small
ways they too can support their local arts and cultural organisations.
Whether it's giving their time, money or skills, anything that
gets more people involved, particularly in the current recessionary
environment, is a win for the arts organisations and the communities
they belong to".
Simon Inch, Cultural Champion for the
Tobacco Factory Theatre, Bristol
THE BIG
SOCIETY
"If the Big Society means we aspire to create
more civilised places where humanity prevails, and the individual
spirit thrives, then artistic and cultural activity is not just
indispensible, it must sit at the core, and national and local
government must work together in one cause. Sir Andrew Motion—15
July 2010.
7.1 Arts organisations are great community assets
and place-makers uniquely able to bring together the community
and facilitate social change.
7.2 They also can provide an alternative to
the Big State by providing opportunities for work, commercial
development, the creation of social enterprises using the arts
as a conduit back into education particularly for hard to reach
NEETS and volunteering opportunities for the wider locality.
7.3 Arts centres should be further encouraged
to combine their highly sought after attributes: venue, form,
appeal to wide sections of the community as well as good links
to local businesses and patrons both high net worth and medium
level givers so that they are recognised as key elements of the
Big Society initiative.
What impact recent changes to the distribution
of National Lottery funds will have on arts and heritage organisations?
Whether the policy guidelines for National Lottery
funding need to be reviewed?
8.1 Arts & Business welcomes the recent
consultation on the National Lottery Distribution Fund changes
which will lead to at least £50 million a year extra into
the arts by 2012.
8.2 In fact Arts & Business would support
the proposal to increase the share for the arts to 20% to be made
by 2011 rather than the 18% proposed by DCMS thus bringing in
an additional £50 million a year to the arts in 2011. We
have argued that this funding should be used by the Arts Council—in
partnership with Arts & Business to establish challenge funds
to motivate further regional individual giving around the country—much
in the style of The Big Arts Give.
APPENDIX
A REMINDER OF
ARTS & BUSINESS'
VALUE:
— For every £1 received by A&B,
we help lever between £4 to £6 from the private sector.
— Total private sector income for A&B
arts members is 24% to 30% higher than for non-members.
— Equates to an additional £65
million to £79 million received by A&B arts members over
and above that received by non-members in 2008-09.
— RFO non-A&B arts members generate
only 1/12th of the private sector income of A&B arts members.
ARTS & BUSINESS
KEY FACTS:
As the leading agency training the arts community:
— Arts & Business delivered 965
free advice sessions to the cultural sector in 2009-10, an
increase of +21% on 797 delivered in 2008-09.
— In 2009-10 we ran 197 training sessions
for 2,166 participants; an increase of +185% and +177% respectively
on previous year when we ran 69 sessions for 782 participants—that
equates to an almost three-fold increase in training participants.
— The effectiveness of Arts & Business
training is rated at 93% by participants.
September 2010
37 Arts & Business' Private Investment in Culture
Survey 2008-09. Back
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