Funding of the arts and heritage

Written evidence submitted by VAGA, The Visual Arts and Galleries Association (arts 144)

1. Key issues:

The visual arts economic, social and cultural contribution to the UK depends on a complex and finely balanced mix of public and private investment and earned income.

Galleries are particularly sensitive to cuts in public subsidy; they have the highest percentage of local authority funding and lowest percentage of earned income amongst the artforms.

Proposed public sector cuts and reductions in individual disposable income will create a ‘perfect storm’; with lasting and irreversible impact.

Most visual arts organisations have low levels of unrestricted reserves; cuts in public subsidy will have immediate impact.

Time is needed to marshall collective resources and develop new ways of working.

Severe reductions in levels of funding could foster adverse competitiveness rather than collaboration.

Current levels of public subsidy are essential to maintain provision in the country’s most deprived areas.

The increase in lottery funding for arts and heritage will only in part replace lost government investment.

National Lottery policy guidelines should allow flexibility but should not allow ‘back-door’ replacement of treasury funding.

Abolition of MLA creates potential for joined up strategy, benefiting the visual arts sector as a whole.

There is no one size fits all in investment and subsidy. Organisations emerge and become established in response to specific contexts.

Arts organisations have experienced a 70% downturn in business support during the recession; private sector support is scarce outside London.

The aspiration for philanthropy to play a long-term role in funding the arts nationally and locally is a considerable way from fulfillment.

2. The visual arts sector is an international success story, contributing to tourism, the knowledge economy, our international standing and fuelling the creative industries. Our galleries and promoters are part of a global network that draw increasingly wide audiences from across the world.

3. Galleries, collections, artists studios, public art and artists projects have transformed the fabric of local communities over the last fifteen years. We believe engagement with visual art improves individual well being and aspirations. Research has defined the economic social and cultural impact of the visual arts particularly in regeneration; whilst additional research shows that contact with art and artists raises standards of teaching and learning in schools. 1

4. The sector’sl GVA is £1.9billion, craft and cultural heritage add a further £4.1billion,. In 2006/7 5.2million people visited Tate Modern making it the most visited modern art museum in the world. Frieze Art Fair attracts over 60,000 visitors annually, achieves sales of c £33million and occupies 25,000 hotel beds.

5. 15.8million people visited regional museums in England in 2008/9 including 900,000 school children2. Liverpool Biennial, 2008 had 451,000 visitors over 10 weeks. Nottingham Contemporary welcomed 200,000 visitors within 8 months of opening; it is estimated that local business received an additional £1.5million during the opening exhibition.3 The Banksy exhibition, Bristol City Museum and Art Gallery, 2009 was the 8th most popular contemporary art exhibition in the world.

6. Visual art makes a significant contribution to the ‘Big Society’ - Citizen Power Peterborough, a Royal Society of the Arts, Peterborough City Council and Arts Council England visual arts-led project is, for example, exploring how community action might improve networks, build local participation and public service innovation.

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;

7. The visual arts considerable contribution to the UK depends on a finely balanced mix of public and private investment and earned income - a ‘tripod economy’ where public funding provides the foundations upon which earned income and private investment is built.4 No two visual arts organisations have the same financial profile.

8. Public investment comes, typically from:

Local authority discretionary budgets

Arts Council England Treasury and lottery funding

Higher Education galleries receive Higher Education Funding Council support

9. The majority of organisations are:

Not-for-profit companies with charitable status

Departments of local authorities

Within the Higher Education sector

10. All are vulnerable to public spending cuts, anticipated increases in the cost of living, reductions in disposable personal income and pressure on corporate funding and charitable trusts and foundations. The latter is due to increased competition for grants, low interest rates and market fluctuations. 41% of the top 300 charitable trusts saw a fall in the value of their grant-making in 2008 and a 10% overall drop in net asset value 5.

11. In 2009/10 the visual arts received £7.6million from ACE’s Sustain programme to alleviate immediate impact of the recession. Organisations have already:

Made operational and efficiency savings.

Improved facilities to increase earned income (eg Modern Art Oxford is upgrading its entrance retail spaces to increase foot fall, dwell time and shop income)

Developed mission-led income through service provision

12. ACE regularly funded organisations have managed a 0.5% in-year cut this year, and are now modelling a minimum 10% ACE reduction and range of indicative reductions in local authority and Higher Education investment for 2011/12.

13. Many visual arts organisations own buildings and or collections but largely have:

No unrestricted reserves

Operating reserves of under 3 months

Uneven cash flows

Do not have the capacity to generate an annual surplus

14. Lack of working capital results in vulnerability to sudden income reduction; there is neither the financial cushion to continue trading whilst establishing alternatives nor the ability to invest in income generation.

15. Lack of cash reserves is a barrier to longer-term sustainability (eg. investment in new technology to drive up audiences or carbon reduction )

16. The proposed cuts will, therefore have immediate rather than gradual impact.

17. Some organisations will make savings through reducing the quantity / quality of exhibitions, outreach and education activities, cutting staff, marketing and development budgets and restricting opening hours. The New Art Gallery Walsall will close on Mondays from November 2010 and Sundays from April 2011 and its estimated that attendance figures will drop by 20%.

18. Staff savings are limited, levels and salary costs are at a minimum, pay and recruitment freezes are, for some, already in place. 75% of the sector’s 4,850 businesses employ under five people; 60% of those employed in the sector earn under £18,000 per annum. 6

19. Galleries are largely free to visit. Earned income is based on ancillary trading, eg. catering franchises, shops, corporate hires. In 2008/09 the average amount of earned income achieved by ACE regularly funded visual arts organisations was 34% of turnover, with public subsidy accounting for 55%. Earned income has increased from 27% in 2005/06 but is still significantly lower than all other artforms, e.g. theatre 53% in 2008/09. 7

20. Between March and September 2009 50% of UK museums saw an increase in visitors attracted by free entry8; however ancillary sales decreased by 18% in the same period.9.

21. A number of visual arts organisations have adopted social enterprise models, tendering for contracts to deliver services for local authorities and other public agencies; others are working to ensure that they are procurement ready. The depth of proposed arts cuts and the snowballing impact of cuts across the public sector mean organisations may suffer irreparable damage before realising this potential.

22. There is concern that local authorities are reviewing discretionary rate relief, eg. the London Borough of Camden. If implemented this will add considerably to the running costs of Camden Arts Centre; the venue is also anticipating the impact of Community Transport, Out of School Learning and Youth Services cuts on its community education programme, a proposed 50% cut in revenue funding from the borough and a minimum cut of 10% in revenue funding from ACE. The cumulative effect will be very damaging.

23. The impact of organisational cuts is matched by that on individual artists. Recent data indicates that the value of employment opportunities for professional artists has declined by 27% in the past year. 10 Universities, the ‘top employer’ of artists are set to lose 1 in 6 posts. Artists and public art commissioning agencies saw a sharp decline in work generated by the private sector in 2008/09 as development slowed and developers went into administration. Studio providers are already seeing artists unable to renew leases.

What arts organisations can do to work more closely together in order to reduce duplication of effort and to make economies of scale;

24. The visual arts constituency is already considering how to collaborate and make economies of scale. The Turning Point networks funded via ACE are a mechanism for regional collaboration. Tate is taking a national lead, helping the sector maintain its sense of purpose and ambition and to finds ways of collective working. Ideas include, for example, the development of procurement consortia for utilities, IT, shipping, storage and display equipment and development of ways of pooling patronage and sponsorship income to create greater investment yield.

25. The Whitworth Gallery and Manchester Museum are restructuring to share common functions including visitor services, learning, public engagement, front-of-house services and collections care. This will enable the organisations, who share a parent body in the University of Manchester, to protect the quality and innovation of artistic, educational and outreach programmes. However restructuring requires initial investment; many visual arts organisations lack cash reserves to initiate such work.

26. Time is required to marshall collective resources and find solutions. Rationalisation is easy to advocate but often harder to achieve with differing scales of activity, governance models and growing local accountability. Partnerships take time and effort to work. Severe reductions in funding could foster adverse competitiveness rather than collaboration.

27. Umbrella bodies, given the reduction in ACE’s capacity and the abolition of MLA, are well placed to assume enhanced roles. VAGA occupies a unique position in having a membership that is drawn from both the contemporary visual arts and museums sector and has a national perspective, grounded and informed by the membership.

28. VAGA is part of Visual Arts UK (VAUK) a network of representative bodies and agencies that collectively represents the full spectrum of publicly funded visual arts activity across the UK and has a joint constituency of 60,000 plus organisations and individuals. 11 The VAUK network members provide economies of scale, build capacity and streamline resource by sharing knowledge, providing models of good practice, setting standards, creating connectivity and disseminating information.

What level of public subsidy for the arts and heritage is necessary and sustainable;

29. National funding for the arts currently costs less than 17p per person per week. This small amount of subsidy has enabled world class art to flourish.

30. We need a varied sector with flexible support for artists and arts organisations. There is no one size fits all solution , organisations flourish in response to specific contexts. Small arts organisations and interventions at regional and sub-regional level are vital to artistic development, support learning, social regeneration and public engagement. They are the test beds that keep flagship venues vibrant and relevant.

31. The New Art Gallery Walsall financial modelling indicates that a 25% cut in public subsidy over the next 4 years, followed by 4% annual increases in subsidy will see budgets returning to current levels in 2021/22; this is without an adjustment for inflation. A 30% cut in subsidy over 4 years followed by 2% annual rises means that 2010/11 budget levels will not recover until 2030/31. From this snapshot the venue would, in effect, never recover from a 30% cut without a major additional cash injection. The West Midlands is the English region most badly affected by the economic downturn and opportunities to raise philanthropic donations are virtually non-existent. The Gallery has over 200,000 visitors per annum. This example shows how current levels of public subsidy are necessary to maintain provision in some of the countries most deprived areas.

Whether the current system, and structure, of funding distribution is the right one;

32. The longstanding lack of both an integrated structure through which visual arts funding is distributed and of a joined-up strategy for visual arts development can be argued as being detrimental. The diversity of public subsidy can however also be advantageous, for example local authority investment creates strong local relationships and the ability to partner and lever further support.

33. The discretionary nature of local government funding is concerning. Lack of, or reduction in local authority funding can be seen as lack of local commitment by other funders and undermine confidence in an organisation. This can instigate a domino effect of support withdrawal. Trusts and foundations are keen to ensure that they are not replacing public subsidy and are generally not open to on-going revenue funding. The Charity Commision’s Firm Foundations report notes that trusts and foundations are increasing their scrutiny of recipients viability and use of grants.

34. Nationally the visual arts are split across ACE and MLA, with the National Galleries receiving direct DCMS funding. This has weakened visual arts’ status within ACE and led to historic underinvestment. The Turning Point12 initiative sought to address this but, now at mid-point of the ten year framework substantive change will be curtailed severely by the impending cuts. Visual art receives the highest percentage of income from local authorities compared to other artforms, leading to further fragmentation and greater vulnerability to cuts.13

35. VAGA has previously lobbied for closer alignment between ACE and MLA noting the considerable overlap between many of the aspirations of ‘Turning Point’ and the priorities of ‘Renaissance in the Regions’ managed and funded by MLA, in particular around commissioning, collections, audience development and learning.14

36. VAGA is concerned that:

The arms’ length principle is maintained and ideally strengthened in response to the trend for directive policy from both central government and the NDPBs.

A national strategic overview is maintained that can marry the local with the national and international.

What impact recent changes to the distribution of National Lottery funds will have on arts and heritage organisations;

37. The National Lottery has underpinned total reinvigoration of the visual arts infrastructure supporting significant growth in the number, size and quality of gallery spaces across the UK and creating more equitable provision. Lottery funding has also supported ambitious commissions and a myriad of small projects, delivering art to all sectors of society.

38. ACE distributes approximately £350million per annum to 880 organisations, of which 190 are visual arts. In 2010/11 this amounted to visual arts funding of £44million, prior to the 2010/11 0.5% in-year cut. A 30% reduction in ACE funding to all organisations would be a reduction of £134million pa, which the potential increase in National Lottery funds of c£50million pa will only mitigate partially.

39. Proposed changes to ACE funding programmes will bar those in receipt of either ‘partnership’ or ‘project’ funding from applying for additional support via the lottery ‘Grants for the arts’ programme. Grants for the arts funding has supplemented artistic and education budgets for many organisations and this will have a detriment effect on innovation and developmental provision.

Whether the policy guidelines for National Lottery funding need to be reviewed;

40. Given the reductions in treasury funding ACE Policy Direction 2007 O (a) and HLF Policy Direction 2007 N (a) which restrict lottery funding to time limited projects that have a specific purpose need to allow greater flexibility. However we would be concerned if National Lottery funding became a replacement for, rather than an addition to treasury funding.

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;

41. The abolition of the MLA creates potential for a more joined up approach to visual arts strategy and development to be forged with Arts Council England, benefiting the visual arts sector as a whole.

42. There is widespread concern regarding future delivery of MLA’s development role, particularly with the administration savings that are required from the remaining NDBPs.

43. There is also concern that specialist knowledge should be retained. ACE staff are experts in contemporary visual arts but have limited collections knowledge. It is important to recognise the size and diversity of the museums sector, which is responsible for the preservation of industrial and scientific heritage as well as historical art collections.

Whether businesses and philanthropists can play a long-term role in funding arts at a national and local level;

44. There has been a 70% downturn in business support during the recession and most expect the recession to impact on their fundraising efforts until 2011; the Olympics are cited as a further barrier to securing sponsorship over the next 3 years.15

45. Organisations are now focusing on creating relationships with more businesses for less money, entailing more effort for the same or lower levels of return. Business support is notoriously fickle - mergers and takeovers or dips in profitability can radically alter a company’s willingness to sponsor or donate .. Corporate social responsibility is an area which could benefit from government influence.

46. Private sector support outside London is hard to secure. 3.6% of individual giving in the UK goes to the arts, 78% of this goes to London or national organisations with annual turnovers of £10million plus.. This means that 0.79% in total goes to culture in the regions16. The aspiration for philanthropy to play a long-term role in funding the arts at a national and local level has some considerable way to go to find fulfillment. Visual arts are ill-placed, currently receiving one of the lowest levels of business investment compared to other artforms.

47. Established trusts and foundations report increased demand for support at a time when funds are diminished; the full extent of the market downturn is now being felt and will continue into 2011.17 Legacies are an increasing trend in individual giving, however one in four charities expect to see legacy yields decrease in 2010.

48. Attitudes influence business and philanthropic support. Robert Devereux a high net-worth individual and contemporary art collector states ‘I don’t think philanthropy should be a substitute for government should be a partnership.‘ He also notes ‘it’s difficult as peoples wealth has been damaged as well, which makes it harder for them to consider giving.’18

Whether there needs to be more Government incentives to encourage private donations.

49. VAGA would advocate for Government incentives to encourage both business and private donations, particularly the introduction of life time giving and moves to make gift aid easier for donor and beneficiary.

VAGA , the Visual Arts and Galleries Association is a professional network promoting the visual arts and representing the interests of organisations and individuals working in all aspects of their presentation and development. Our UK-wide membership represents a substantial constituency of professionals and organisations from large local authority museum services to small artist-let project spaces.

September 2010

[1] 2009 Ofsted report ‘Drawing together: art, craft and design in schools’

[2] Cultural Capital, 2010, p3

[3] Arts Council England Annual Review 2009/10 p 36

[4] Arts & Business, Private investment in culture 2008/09, Tina Mermiri published 2010

[5] The Charity Market Monitor 2009

[6] Visual Arts Blueprint, Creative and Cultural Skills, 2009, p 35

[7] Arts Council England Annual Submission Statistics 2008/09 and 2005/06

[8] ArtFund, Autumn 2009 Museums Survey Fact Sheet

[9] Arts & Business Market Trends 2009 Sumer Autumn Edition, Tina Mermiri p5

[10] a-n, The Artists Information Company

[11] The network currently includes: AIR/a-n , Artquest , Axis , The Contemporary Art Society , The Crafts Council , engage The National Association for Gallery Education , International Curators Forum , The National Federation of Artists' Studio Providers and VAGA

[12] Turning Point, Strategy for the contemporary visual arts in England, 2006

[13] Arts Council England, Annual Submission Statistics 2008/09

[14] Renaissance in the Regions 2008 Review, VAGA submission

[15] Arts & Business, Market Trends 2009, Summer/autumn, p5

[16] Arts & Business Funding Decentralisation in the UK Cultural Sector , John Holden, p7

[17] AOL News, Charities facing shrinking incomes, 18 September 2009

[18] Observer , ‘Postwar British masterpieces sold off to fund African artists’, 29/08/2010 p5