For the last few years the talk around Europe has been gloomy; cuts of more than 25% in public funding for the arts are not uncommon. Some have predicted dire consequences for the health of the cultural sector and whilst these fears may be overblown it is clear that some organisations will close and others will have to find new sources of funds.
For the last few years the talk around Europe has been gloomy; cuts of more than 25% in public funding for the arts are not uncommon. Some have predicted dire consequences for the health of the cultural sector and whilst these fears may be overblown it is clear that some organisations will close and others will have to find new sources of funds. Behind the question of how much money is available – and from where it should come – there is an even more fundamental change taking place. Funders are now asking ‘what do we want to achieve with our funding?’. Some think that this is an odd question; surely funders want their money to help produce and distribute art? That has been the consensus across Europe since 1945 (including in the UK) but, even before the current economic crisis, this consensus was breaking down.
The argument can be stereotyped as ‘art
for art’s sake’ versus ‘instrumentalism’ i.e.
funding art to achieve another purpose such
as economic development, social inclusion,
intercultural understanding, health and wellbeing
benefits and so on.
There is one more fundamental policy
change to add to the mixture. As well as asking
what their money is achieving, cultural funders
in the UK (and in other countries) are also
changing the way they are funding, moving
away from direct funding of the art to funding
of the operational capacity of arts organisations
and away from sole funding to strategic partnerships
with other funders.
The changing status quo
Cultural organisations in the UK gain income
from a wide variety of sources including private
donations, corporate sponsors, ticket sales,
intellectual property rights, catering and hires,
private foundations and public bodies. In fact,
one can say that the UK has a tripartite funding
model: public funding, commercial activities and
philanthropy. In this article I will talk only about
‘funders’ by which I mean public bodies and the
large, institutional foundations (leaving aside
the many small ‘trust funds’ which channel
philanthropic donations from wealthy people).
National government funding in the UK is channelled via the Arts Councils of England,
Scotland, Wales and Northern Ireland (they
are separate bodies) whilst almost all local
government bodies also provide funding for
cultural organisations in their area. The national
lottery also generates funding for culture and
this is administered by the Arts Councils as
well. The UK also has many large foundations
which fund culture such as the Paul Hamlyn
Foundation, Esmée Fairbairn Foundation, the
Rayne Foundation and various foundations
associated with the Sainsbury family. These
are all separate bodies with their own decisionmaking
processes and policies but they are all
very aware of what each other is doing and so
form an informal eco-system of funding.
In fact, the requirement for cultural organisations
in the UK to justify their funding in more
than artistic terms goes back to well before the
current economic crisis. Under the Thatcher
government of the 1980s people began to pay
attention to the economic impact of cultural
funding. The first serious study was done by
John Myerscough in 1988 and it didn’t take
long before almost all funding proposals from
UK cultural bodies included some assessment
of economic impact (often using very dubious
figures!). This has never gone out of fashion and
the Arts Council of England recently published
new guidelines for economic impact measurement
(see Links).
In the 1990s the Blair government added
a new dimension – they noted that cultural
funding seems, in effect, to be a subsidy for the
middle-aged from the wealthier classes and at
the same time as increasing funding for culture
insisted that cultural organisations should take
active steps to increase participation by underrepresented
groups such as ethnic minorities,
lower socio-economic groups, people with
disabilities and young people. It is debatable
whether these initiatives really changed the
profile of cultural participation but it is still the
case that cultural organisations must pay some
attention to broadening access and many have
specific programmes for this.
In the last few years the question of ‘impact’
has spread even wider to include social and
health issues. As far as funders in the UK are
concerned, cultural organisations are not just about the art, they are also very much about
other good outcomes. Life used to be so much
simpler for managers of cultural organisations!
But, set against all this extra work in measuring
impacts comes the good news that this also
opens up completely new sources of funding.
If cultural activity can really improve health
outcome, then surely the National Health
Service and health-related foundations should
help pay for it? If fewer prisoners re-offend
after participating in cultural activities then
surely the Ministry of Justice will be very happy
and will help fund these activities? This is new
territory but initiatives of this kind are already
taking place such as Arts Health and Wellbeing
and some funders are looking specifically
for these kind of impact such as the Forward
Foundation, which has received money from
many foundations for its work with young
people with mental health problems.
Measuring impact
Of course, none of this can move forward
without adequate measurement of these
impacts. A whole new industry has sprung up in
the UK in the last ten years dedicated to measuring
impact – for example New Philanthropy
Capital or the Inspiring Impact Group. Most of
these initiatives relate to the general not-forprofit
sector but the principles apply equally
to cultural organisations. In the UK many are
already getting involved, partly because they
know their funders are moving in this direction
and partly because they genuinely like the idea
that cultural activities can achieve so much.
The largest single funder of culture in the
UK is the Arts Council of England (ACE) and, in
response to almost thirty percent cuts in funding
from the government, has switched almost ten
percent (£100milion over five years) of its now
reduced budget to the Catalyst programme
which aims to build the economic and business
capacity of the cultural sector in England. This
programme is particularly designed to increase
philanthropic fundraising and is similar in some
respects to the programmes announced by the
Ministry of Education, Culture and Science in the
Netherlands to support fundraising training. It is
clear that in both the UK and the Netherlands,
cultural organisations will be expected to
increase their capacity for income generation
from fundraising and from commercial activities.
One other trend which is now well
established in the UK is for several funders to
agree together to fund cultural activities on a
strategic basis. Typically this will include (one
of) the Arts Councils, local government and
some of the larger foundations, perhaps also
with funding from EU sources. A good example is the Collection Fund, a joint initiative of the
Esmée Fairbairn Foundation and the Museum
Association. These strategic funding initiatives
are sometimes built by a single cultural
organisation or a group and each is different.
No cultural organisation in the UK can rely on
a single source of funding so all of them are
engaged in long-term discussions with many
current and potential funders.
I have the impression that, in the Netherlands,
cultural organisations are rather reluctant to
share information and guard their independence
– this was the case in the UK even ten years
ago but it is likely that openness, sharing and
collaboration will become a growing feature in
the Netherlands too.
A trend which is big news in the not-for-profit
sector – and which seems certain to develop
strongly in the cultural sector too – is social
investment and the closely related venture
philanthropy. There are many flavours but the
key factor is that the funding is regarded as
an investment designed to achieve an agreed
outcome over a limited time. At the end of this
time period some funders want their money
back with interest whilst others are content to
let the money stay with the organisation. Some
are simple commercial investments whilst others
are essentially a new form of philanthropy.
In all cases an organisation will be funded
against a strong business plan with a clear set of aims and with measurement of impact built in
from the start.
The United Kingdom Sustainable Investment
and Finance Association gives a good overview
of this territory and shows that some arts
organisations are already in the game – in this
case the Old Vic Theatre and the Albany, both
in London. Interestingly, the UK government is
itself looking to fund ‘by results’ using what it
calls ‘social impact bonds’ which links funding
to outcomes and seeks joint funding on a
commercial basis . If cultural participation really
does reduce criminal re-offending, improve
health and prevent young people from becoming
involved in crime, then somebody will create
a social bond to fund these outcomes soon In conclusion, funders in the UK are
moving strongly towards partnership funding
to achieve specified and measurable outcomes.
The effect on cultural organisations is that
they must become much better at strategic
business planning, working in partnership and
in understanding and measuring the full range
of their impacts. This is a profound change of
culture and many current senior managers of
cultural organisations will struggle to adapt –
new people will be needed.
How much of a place will remain for ‘art for
art’s sake’ in all of this and whether it will be
good or bad for the quality and quantity of art
produced and shown is completely uncertain – preachers of doom have no more evidence than
the sunny optimists do. It will be fascinating to
watch what happens.
