Funding of the arts and heritage
Written evidence submitted by The Royal Institution of Cornwall (arts 101)
The RIC is writing as a) an independent museum and charitable organisation and b) the recipient of Renaissance in the Regions funding from DCMS via MLA. This submission is from Hilary Bracegirdle, Director, and Georgia Butters, Head of Development, and has been approved by Peter Stethridge, Chairman Elect, in the absence of the current Chairman on business.
1. Summary
Impact of cuts:
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Renaissance has been transformational and investment should continue so that front line services are maintained.
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Local authorities are unlikely to prioritise museums and may try to sell collections to cover running costs.
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Museums risk being unable to respond to Renaissance and other funding opportunities. We need base-line funding and capital resources to match fund HLF, Knowledge Transfer and other grants.
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Cornwall is heavily dependent on the public sector and already has significant areas of deprivation. The recession will cut deeply and quickly, sponsorship will be harder to secure and all the work we have done to attract hard to reach communities will be at risk.
Partnership working:
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Renaissance has emphasised partnership and given us the profile, confidence and language to enter into partnerships inside and outside our sector.
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Similar, high-level interventions should encourage cost-effective partnerships between libraries, galleries, archives and museums, and with organisations such as English Heritage and the National Trust. But establishing partnerships and changes to the way we work require time and investment.
Level of public subsidy:
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The heritage tourism industry contributes £20.6 billion GDP to the UK economy (HLF). Independent museums contribute £30,000 p.a. to their local economy for every 1,000 visitors (AIM).
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Continued investment from leisure, culture and heritage budgets will support tourism and its ability to help with post-recession recovery.
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Museums need a base core funding of at least 1/3 of turnover to function at a professional level; act strategically; react to funding opportunities and be entrepreneurial. Museums can generate additional income, but not to the level that will replace public subsidy.
Funding distribution:
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The sector would benefit from aligning priorities and funding methods (we have Regularly Funded Organisations (RFOs), project based funding, outcome based funding, arms-length funding proposed for Nationals, strategic commissioning etc). We suggest replacing Renaissance by RFOs and Service Level Agreements, which could be with groups or individual museums.
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We would welcome longer funding cycles and agreements; an emphasis on creating sustainability and on revenue funding; a more appropriate level of monitoring (which balances accountability against freedom for the organisation to decide how it delivers agreed outcomes).
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The Government should recognise the contribution of heritage and the arts to the economy and channel funding accordingly, for example through strategic investment in tourism/heritage projects, education/heritage projects and health/heritage projects, with some investment coming from other Departments.
The impact of the abolition of MLA:
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We welcome the abolition of the MLA but not all its functions.
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We suggest Portable Antiquities scheme BM, Purchase Grant Fund V&A, Accreditation to Museums Association, Export Bar to DCMS. Replace Renaissance by RFOs and Service Level Agreements.
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The immediate move to core museums should be abandoned. Existing hub museums should become RFOs (at existing or reduced levels as necessary) while programmes are completed and the details of future Renaissance priorities and funding are worked out.
Whether businesses and philanthropists can play a long-term role in funding:
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Businesses and philanthropists should play a part. However they and grant-givers will only invest in sustainable organisations. They will look for long-term commitments from public sector funders and/or adequate endowment funds.
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Private investment in the arts is predominantly focussed on London and the major cities.
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Business sponsorship, legacies and private giving all take a long time to mature and can require significant investment up front. Corporate Sponsorship needs servicing; a £100k sponsorship might require £50k to service it.
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Businesses and philanthropists are usually unwilling to support essential back-room activities or core activities.
Government incentives to encourage private donations:
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The Government should implement US-style tax incentives and encourage rural and regional giving.
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Continued public sector investment in heritage and museums is the key incentive for philanthropists to invest in success.
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Independent Museums need to be allowed to recover VAT income. At present admissions are exempt from VAT which results in museums paying VAT across the rest of their functions.
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Government should also ensure that local authorities continue to waive business rates where applicable.
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We welcome proposals to simplify gift aid.
2. Submission
The RIC is writing as a) an independent museum and charitable organisation and b) the recipient of Renaissance in the Regions funding from MLA.
2.1 What impact recent, and future, spending cuts from central and local Government will have on the arts and heritage at a national and local level
2.1.1 Renaissance has been transformational and investment should continue in some form, although we understand the reason for recent and future funding cuts.
2.1.2 We have already had cuts of 30% which were achieved through making one third of our staff redundant, as well as other measures. We need to ensure that the next round of cuts does not undermine the significant achievements that the programme has brought, and does not affect front line services. We must have sufficient funding to be able to respond to Renaissance and other funding opportunities. We must have sufficient capital resources for match funding for HLF, Knowledge Transfer and other grants.
2.1.3 At a local level, Cornwall is an area with significant pockets of deprivation and great pressures on local government spending. Local authorities cannot invest in their heritage and museums at the same level as central government – and as museums are not mandatory, will not do so. There will be increased pressure on local authorities to sell items to pay for services. Indeed, Renaissance has already enabled greater security about our Council grant, because it is predicated on an agreement by the local authority not to cut our grant below its year 1 level.
2.1.4 The whole of Cornwall, and Truro in particular, is heavily dependent on the public sector. We know that already many people within Cornwall cannot afford to travel, afford to pay to participate in culture, or feel excluded. If we have to reintroduce entrance charges, charge more for schools activities, cut our marketing budgets and our exhibitions programmes, and stop our community projects, we will be excluding local people from what is in effect their ‘National’ museum.
2.2 What arts organisations can do to work more closely together in order to reduce duplication of effort and to make economies of scale
2.2.1 Much can be achieved through partnership and the creation of CIOs. Renaissance has transformed the attitude of museums towards partnership working both within and outside the sector. The RIC now has formal and informal partnerships with hub museums; about 40 non-hub museums; national museums and the Royal Collections; national and local charities; Cornwall Council Departments including Libraries, the Record Office, Historic Environment, Adult Social Care, Children and Young People, Cultural Skills; Arts & Business; Schools and universities; and other attractions such as The Eden Project. Further, Renaissance has given us the profile, confidence and language to enter into these partnerships.
2.2.2 However, much could be done at a similarly high level to encourage cost-effective partnerships between libraries, archives and museums, and with organisations such as English Heritage and the National Trust. But establishing partnerships and changes to the way we work requires time and investment.
2.3. What level of public subsidy for the arts and heritage is necessary and sustainable
2.3.1 David Cameron has said Britain should focus on its heritage and move away from a 'Cool Britannia' image in order to become one of the world's top five tourism destinations. We have evidence of the great contribution of the heritage sector to the UK economy via tourism but it requires public investment to enable this to happen.
2.3.2 The Heritage Lottery Fund’s recent report (Investing in success: Heritage and the UK tourism economy) shows that the heritage tourism industry contributes £20.6 billion GDP to the UK economy. The Association of Independent Museums (Babbidge) has shown that independent museums contribute £30,000 p.a. to their local economy for every 1,000 visitors. These findings highlight the importance of continued investment from leisure, culture and heritage budgets in supporting tourism and its ability to help with post-recession recovery.
2.3.3 There is a base level of funding which museums need to function at a professional level; act strategically; react to funding opportunities and service the reporting requirements of its funders; and be entrepreneurial.
2.3.4 Museums can generate additional income, but not to the level that will replace public subsidy. For example, although many museums charge for schools workshops the costs of coach hire and limited parental income means that there is a ceiling on how much a museum can charge a school for a facilitated visit. This does not cover the full cost of delivering that session or developing that service. Museum shops, e commerce and other commercial activities will only ever contribute a relatively small amount towards costs.
2.3.5 We therefore suggest that the minimum required for a well-established, entrepreneurial museum to be of high quality and offer a reasonable range of services, is around 1/3rd of turnover with at least a 3 year commitment. Funding programmes for provision of key services under SLAs with KPIs need to be on top of this.
2.3.6 The transfer of cultural/museum services from LAs to independent trusts is a widespread approach. They can be disastrous or relatively successful. The aims of improving entrepreneurialism and reducing costs are worthy ones and certainly can be achieved but the assumed ‘model’ of a year-on-year decrease in the level of LA investment is flawed. Surely as a museum’s performance and economic/social contribution increases, the LA should ‘invest’ more in it to get maximum value.
2.4. Whether the current system, and structure, of funding distribution is the right one
2.4.1 The sector would benefit from aligning priorities and funding methods. The Arts Council has RFOs. Nationals are promised more arms-length funding. HLF and other funds such as Wolfson/DCMS are project-based. Renaissance has moved from management by expenditure to management by outcomes, but also from a partnership of equals to micromanagement and mistrust. Strategic commissioning is being promoted as the way forward.
2.4.2 We suggest replacing Renaissance with RFOs and Service Level Agreements, which could be with groups or individual museums. Plymouth, Exeter and Cornwall have made a joint approach to MLA on this basis.
2.4.2 We would welcome longer funding cycles and agreements and a move towards an emphasis on creating sustainability and on revenue funding. We would welcome a more appropriate level of monitoring, which balances the need to be accountable against trust and freedom for the organisation to decide how it delivers against agreed outcomes. We do not find quarterly control of budgets, frequent changes of priorities and obsession with detail at all easy to manage and for many projects more time is taken up in reporting than in delivering.
2.4.3 The Government should recognise the contribution of heritage and the arts to the economy and channel funding accordingly, for example through strategic investment in tourism/heritage projects and health/heritage projects, with some investment coming from other Departments. It is a nonsense that in some regions Renaissance was matched £ for £ by the RDA whereas in the South West it was dismissed as part of tourism – not an RDA priority despite being a key economic activity in the region.
2.5 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
No comments
2.6 The impact of recent changes to DCMS arms-length bodies - in particular the abolition of the UK Film Council and Museums, Libraries and Archives Council (MLA)
2.6.1 We welcome the abolition of MLA but not all its functions.
2.6.2 We suggest Portable Antiquities BM, Purchase Grant Fund V&A, Accreditation Museums Association, Export Bar DCMS. Replace Renaissance by RFOs and Service Level Agreements.
2.6.3 We need to stop any immediate changes to Renaissance so that we are given time to finish current projects and to prepare for strategic commissioning (or whatever new form Renaissance takes). The recent underspend on Renaissance resulted from a lack of time for Phase II hubs to gear up, and was shocking, particularly as we had made one third of our staff redundant due to a cut in our Phase I Renaissance budget and had no underspend.
2.6.4 We suggest that the immediate move to core museums be abandoned and that existing hub museums become Regularly Funded Organisations (at existing or reduced levels as necessary) while the details of future Renaissance priorities and funding are worked out.
2.7 Whether businesses and philanthropists can play a long-term role in funding arts at a national and local level
2.7.1 Business and Philanthropy should play a part in funding the arts. However grant-giving bodies (including HLF), businesses and individuals, will only invest in organisations which are sustainable. They want to see long-term commitments from public sector funders and/or adequate endowment funds.
2.7.2 Furthermore, Arts and Business has shown that private investment in the arts is predominantly focussed on London and the major cities. This matches our experience: in Cornwall we were feted by Arts and Business as a huge commercial success for achieving one Corporate sponsor of £10,000 – very minor when compared to the £600,000 we receive in Renaissance funding.
2.7.3 Equally, we have invested in developing philanthropy for the last two years with limited success as it requires contacts with the wealthy – who are predominantly London based. In times of economic downturn it will be even harder to attract wealthy investors and trustees of grant giving foundations to organisations outside London. Both MLA and the Museums Association have accepted that we have taken every possible measure to explore this source of funding and that any legacies or philanthropic giving take a long time to mature.
2.7.4. Businesses and philanthropists are usually unwilling to support back-room activities or core activities.
2.8 Whether there needs to be more Government incentives to encourage private donations
2.8.1 The Government should implement tax incentives such as those in the USA, but even there donations have slowed considerably and are centred on major cities.
2.8.2 The Government should find a mechanism or fund which encourages philanthropists to match its own investment in the arts and heritage which can then be distributed nationally. Likewise it should directly encourage philanthropy in the regions and rural areas. It should recognize that continued investment in heritage and museums is the key incentive for philanthropists to invest in success.
2.8.3 Independent Museums should be allowed to recover VAT income. At present admissions are exempt from VAT which results in museums paying VAT across the rest of their functions. Making admissions fees zero rated rather than exempt would allow museums to recover VAT across the spectrum.
2.8.4 Government should also ensure that local authorities continue to waive business rates where applicable.
2.8.5 We welcome proposals to simplify gift aid.
September 2010
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