Funding for the Future

Everybody in the arts is talking about an impending financial crisis, but what can we do about it? In what ways do we need to change to make better use of the funding opportunities available to us, and how could funders better support the arts? I joined an audiences of Newcastle arts organisations for the second in an excellent series of four peer-peer debates organised by ERA 21 and MMM – featuring funders from the UK and USA and chaired by David Carrington.

The speakers were Clara Miller (US Non-Profit Fund), Ben Cameron (Doris Duke Foundation), Penny Fowles (Northern Rock Foundation) and Mark Robinson (soon to be departing ACE North East). A full podcast version will be posted on the MMM site in due course – but here’s my take on the highlights:

Crisis – what crisis?

When compared with the arts sector in the USA, where very few arts organisations receive public subsidy and a very minimal levels, the UK seems in a privileged position. But we are desperately under-capitalised with few organisations having any significant reserves or assets to provide working capital to test out new ideas. As things get tighter – as they are doing – then how well will we fare?

The most interesting view from the other side of the Atlantic was that there isn’t a financial crisis in the arts – so much as a crisis of relevance of the arts to audiences. Ben Cameron spoke of the major challenges facing the performing arts sector in the US in terms of:

• Shifting audience expectations (largely through the internet leading to expectations of greater personalisation and largely free or low cost services).
• The impact of technology – including as competition for leisure time (with sales of video games now out-stripping sales of recorded music and DVDs combined).
• Technology changing the traditional model of authoritative cultural providers and passive consumers.
• The business models in the knowledge economy failing under pressure from online competition – whether that’s bookshops, pop music or newspapers

Clara Miller added that the arts sector in the US was over-built but under-capitalised: which would be said to be equally true of the UK.

Don’t look back

Mark Robinson urged us to prepare for the future, not look to the past or allow the present to preoccupy us. Ben Cameron acknowledged the difficulty of doing this – in his words ‘surviving in the short-term while moving towards transforming the organisation for tomorrow’.

Capital: it’s about building, not buildings

The key – according to Cara Miller – is to see capital and revenue as separate and with very different functions. Capital is for change, revenue for regular activity. Capital is also what you use to develop revenue in the future.

Talking of building – capacity building is essential. Clara Miller spoke of how so many organisations developing facilities in the US under-estimated the need to invest in staff capacity (does that ring any bells for Lottery funded projects in UK?). Ben Cameron explained how the Doris Duke Foundation runs its support programme – and recognises that organisational change takes time and takes a lot of resources (they provide five-year funding in the region of $1 million per organisation). The Non Profit Fund is both a finance provider/funder and capacity builder – offering consultancy, advice and support to develop non-profits. Sadly ACE’s ability to provide capacity building to the arts sector continues to decrease in the UK – and aside from the wonderful MMM – there are few other organisations in this space.

It’s all about mission, mission, mission

Time and again, we came back to mission. Arts organisations are too concerned with what we do and how we do it (our activities) rather than our purpose (or mission). Perhaps there are other ways to achieve our mission than the activities we’ve done in the past and thinking solely in terms of what we do – rather than focussing on why we do it – can be a barrier to finding new solutions.

Risk and innovation

Preserving the ability to take artistic risks was seen as essential. Adrian Ellis’s definition of sustainability was cited in terms of ‘protecting the ongoing organisational ability to take artistic risks’. In a period when organisations are facing all kinds of uncertainty, the key risk we were advised to manage was the risk of not delivering our mission for our public.

The arts and the non-profit sector

Penny Fowles spoke of opportunities for the arts sector to benefit from a closer alliance with the non-profit sector – a view that I strongly endorse and wrote about recently in response to John Tusa’s Hinton Lecture in November. Given the importance of capacity building, and the lack of opportunities in the arts sector, making use of the far greater resources available to the wider non-profit sector (through organisations such as NCVO) seems a no-brainer.

The US picture seemed very different – Clara Miller estimated that 25-30% of the $1 billion her fund had invested in US non-profits had been for arts and cultural institutions – and this is principally in the form of loans. Use of loan finance is far more widespread among US non-profits than in the UK.

So where does this leave us? I’m struck by comments about this not being a financial crisis – it’s about ensuring what we do is still relevant in a rapidly changing world. Sure that involves some difficult financial questions, but they are not the only – or key – challenges facing us. Rather we need to return to focus again on the purpose of our organisations in this changing age, and think about whether – when we will surely have less resources in future than we have in the recent past – there are other ways to do things, and do things better.

I’ll leave you with Ben Cameron’s definition of what innovation entails: ‘new pathways to mission fulfilment, discontinuous from previous practice and resulting I shifts in organisational assumptions. It might not sound like poetry, and I accept we need to find more compelling ways to describe the task ahead – but I think the diagnosis is spot on!