Culture Finance

“Challenging times” for the publicly-funded arts in Wales

Over the past 5 years, real-terms public funding of the arts has declined substantially in Wales. The Welsh Government has called on the Arts Council of Wales to “reduce the arts sector's dependence on public subsidy" and for the culture sector to “up its game on fundraising”. But a number of factors make the job of increasing income in arts organisations in Wales particularly tricky.

26 November 2018

Darllenwch yr erthygl yma yn Gymraeg | View this post in Welsh

Over the past 5 years, real-terms public funding of the arts has declined substantially in Wales. The Welsh Government has called on  the Arts Council of Wales to “reduce the arts sector’s dependence on public subsidy” and for the culture sector to “up its game on fundraising”. But a number of factors make the job of increasing income in arts organisations in Wales particularly tricky.

“Challenging times for the publicly funded arts in Wales”

The Arts Council of Wales is an independent charity that funds and develops the arts. It distributes funding from the Welsh Government and National Lottery. The Welsh Government sets out what it would like the Arts Council to do with its funding in an annual remit letter.

The vast majority of the Welsh Government’s budget allocations for the arts are for the Arts Council: £31.2 million revenue out of £31.7 million allocated in this area in the 2017-18 budget. Revenue funding in this area increased by 3.5% in cash terms compared to the 2016-17 revised baseline.

Welsh Government funding of the Arts Council has declined by 18% in real-terms between 2011-12 and 2017-18  ( Calculations based on the UK Government GDP deflators). 2017-18 saw the first increase (cash and real terms) in funding from the Welsh Government since 2010-11. The Arts Council’s share of Lottery proceeds has also decreased very slightly in real terms between 2011-12 and 2017-18.

Local authorities also fund arts organisations. But this is a discretionary area of spending, and has reduced as local authority budgets have tightened in recent years. Local authority funding of the Arts Portfolio Wales (arts organisations that the Arts Council funds annually) has reduced  from £11 million in 2011-12 to £5.1 million in 2016-17.

Arts Council Chief Executive Nick Capaldi describes the “challenging times for the publicly funded arts in Wales” in the Council’s 2017/18 Annual Report. “The arts remain vulnerable”, he says “because continuing economic pressures on public funding are forcing uncomfortable choices about which areas of civic life can advance the most persuasive case for support.”

In March 2018 the Culture, Welsh Language and Communications Committee published its report into non-public funding of the arts. During its inquiry, the Committee heard that arts organisations in Wales face specific challenges to increasing their incomes, based primarily on scale and location.

Business support: focused on larger organisations in “the metropolitan centres”

One difficulty arts organisations in Wales face in attracting business support is the small number of large businesses headquartered in Wales. According to the Arts Council, business sponsorship “tends to be more prevalent in the metropolitan centres and in support of larger, higher profile arts organisations”. Consequently, “a small community-based organisation in a rural area would generally struggle to achieve significant corporate sponsorship”.

Arts and Business Cymru builds relationships between arts and business organisations, and has operated as an independent charity in Wales since 2011. Its public funding has declined over this period, and in 2017 accounted for 27% of its income.

The Arts Council had planned on withdrawing its funding of the organisation in 2016, but extended this to 2019. In his response to the Committee’s inquiry, the Minister for Culture, Sport and Tourism said that, he “will be stressing…the need for it to continue to resource this activity”, though how they deliver business support services is a matter for the Arts Council.

Individual giving: the “constant challenge of demonstrating the arts as a charitable cause”

The comparatively-low number of high-net worth individuals and level of individual prosperity in Wales makes fundraising from individuals difficult. Chapter arts centre also noted the “constant challenge of demonstrating the arts as a charitable cause”. Arts fundraising consultancy Blue Canary agreed, saying that “Arts organisations are trailing behind the enterprise and initiatives that are being seen in income generation across the wider charitable sector”.

Trusts and foundations: “the number and quality of applications remain low”

The current market for funding from trusts and foundations is tough: with grant-giving being restricted in a prolonged period of low interest rates, and lots of competition as arts organisations look to replace lost public funding. Generally, trusts and foundations prefer to fund distinct projects rather than replacing lost public-sector revenue funding.

Arts and Business Cymru feel that, whilst competition for grants is fierce, “many London-based trusts still express a desire to invest more in Wales, stating that the number and quality of applications remain low.” Those organisations that do succeed tend to be larger, with more capacity to direct towards getting funding applications right.

And public-funding begets private funding. Chapter said:

Trusts like the reassurance of seeing public support there, and for funders who are not local, this public support is often the first sign that a project has a local need and should be funded.

As public-funding declines, so does the capacity to seek funding from private sources.

Revenue raising: opportunities increase exponentially with scale

Perhaps the most obvious way an arts organisation can raise money is through selling its goods and services. Alongside the usual ticketed events, cafes and shops, Arts and Business Cymru  explained that there has been a “sharp increase in the number of companies seeking arts-based training to address staff development needs”. Theatre company Hijinx, for example, uses its learning-disabled actors to provide training for companies in communicating with vulnerable people.

Again, scale is important. “The capacity to generate significant earned income”, said gallery G39, “increases exponentially with the scale of an organisation”. And arts organisations receive public funding because they are not judged to be supportable by the market alone. Theatre company Theatr na nÓg explained “our remit as a charity is to provide a service, which … is not of a nature that would gain a return on investment by a commercial company.”

The culture sector needs to “up its game on fundraising”

The Welsh Government has acknowledged that the arts sector needs to adapt to cope with reduced public funding. Its culture strategy, Light Springs Through the Dark, states “there is a clear need for the culture sector to up its game on fundraising, marketing and income generation”, and that “the sector is losing experience and specialist staff, which is putting its professionalism at risk”.

The Arts Council’s Resilience Programme is one attempt to improve the culture sector’s financial sustainability. But this is only open to the Council’s revenue-funded arts organisations. The Committee recommended that the Arts Council considered extending this programme to include arts bodies that aren’t already funded by the Arts Council.

The Committee also thought the Welsh Government should do more. The evidence showed that the smaller, more rural and less well-funded an organisation, the harder they found it to offset public sector cuts with increased private funding.

“It is not enough”, it concluded, “for the Welsh Government to simply call for the arts sector to reduce its dependence on public funding – they also need to back this up with an appropriate level of tailored and informed support”.

Further reading:

Article by Robin Wilkinson, National Assembly for Wales Research Service

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