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FINAL Culture Benchmarking Report For Independent Arts Sector Network Birmingham September 2012
FINAL Culture Benchmarking Report For Independent Arts Sector Network Birmingham September 2012
Prepared for: Birmingham City Council (Culture Commissioning Services) By: Sarah Thelwall Date: Aug 2012 1
Contents
1 2 3 4 Executive Summary ................................................................................................................. 3 Introduction ............................................................................................................................... 3 The Birmingham context ......................................................................................................... 5 3.1 4.1 4.2 4.3 4.4 4.5 5 5.1 5.2 5.3 5.4 5.5 5.6 6 6.1 6.2 7 8 Fundamental questions raised by the proposed changes to funding structures .... 6 Community Comedy Club (Women in Theatre) ......................................................... 8 Creative Apprenticeships (Creative Alliance).............................................................. 8 African Village project (ACE Dance & Music) ............................................................. 9 Makeable (Edgbaston Arts Forum) ................................................................................ 9 Espirito Mundo (Friction Arts) ..................................................................................... 10 Grant dependence .......................................................................................................... 10 Sponsorship & donations .............................................................................................. 11 Income diversification contracts vs. grants ............................................................. 12 Research income ............................................................................................................. 12 Cost structures direct costs, general overhead, marketing budgets & reserves. 12 Using data to demonstrate impact and value?........................................................... 13 Data & evidence challenges the need for new metrics .......................................... 15 Relationship challenges as the business models change .......................................... 15 How are IASN members delivering against BCCs arts goals? ......................................... 6
Key actions and areas of development for IASN, its members & partners .................. 15
1 Executive Summary
Independent Arts Sector Network (IASN) members consistently deliver against a number of Birmingham City Council (BCC) goals year on year. They make an essential contribution to the cultural life of the city by both delivering work of an international standard and by developing a depth of engagement with local Birmingham communities which consistently delivers new audiences to the arts. It is the people who make work who define the uniqueness of the cultural offers of a city. The members of the Independent Arts Sector Network make work that reflects the diverse and enterprising spirit of Birmingham. IASN members work in non-traditional ways and places and are an essential sources of innovation and experimentation. Their business models make them. Data gathered in the course of this project indicates that they are as dependent on grants as larger venue based organisations with less opportunity to diversify their income streams into shops, cafes, venue hire, sponsorship and donations. Some members are particularly good at delivering contracts but this route raises questions about the ability to continue to focus on intrinsic artistic outcomes. These organisations already operate very lean delivery organisations so focussing on cost reduction will not materially improve the sustainability of these organisations. IASN and the Birmingham Arts Partnership (BAP) need to work together if Birmingham is to better measure, articulate and advocate for the value of an arts ecosystem which successfully balances a genuine, long-standing and much valued set of highly engaged local communities with the delivery of artistic products of an international standard.
2 Introduction
This report is the output of a very focussed project that ran between Oct 2011 March 2012 with the core members of the Independent Arts Sector Network (IASN)1. The purpose of these workshops was to elicit both data and narrative on the members in order to better articulate the unique value delivered by these organisations to the arts ecology in Birmingham and to demonstrate the wider benefits being delivered socially and economically. The timing of this project was important as it came immediately after the announcement of the withdrawal of revenue funding from smaller arts organisations and its replacement with a new approach to commissioning services through new project grant funding themed around Culture on your Doorstep, Next Generation and Great International City that they could bid to. It is also worth noting that the change in Local Authority funding compounded a problem being face by several arts organisations who not only lost regular LA funding but also RFO status with the Arts Council England.
IASN Steering Group Members ACE Dance & Music, Big Brum, Craftspace, Creative Alliance, Eastside Projects, Edgbaston Arts Forum, Fluid Space Arts, Fierce Festival, Friction Arts, Sound it Out, , The Playhouse, Women & Theatre
Many organisations were therefore in a state of flux as they worked out whether they could survive these changes to their income models. The IASN was formed by the small to medium sized arts organisations2 to increase the strength of the voice and develop a cohesive message from this section of the arts ecosystem to funders and stakeholders. It is worth noting that the group is very varied in terms of the arts sub-sectors represented by its members, the ways of working, the approach to intrinsic vs. instrumental activities, the assets held and the opportunities to develop new income streams. This makes the development of a joint message far more difficult to develop than if the members were more homogeneous. However there are a number of characteristics that are held in common by many of the members. In particular these include a similar size in terms of turnover (<1m) number of employees (<10 and often <5) a combination of highly local and international reach very wide and deep networks of relationships with audiences, funders, clients and community organisations low levels of reserves limited ability to invest internally in their own new ideas an audience that does not include high net worth individuals (ie donors) and limited brand value for sponsors unique artistic voice that is recognised nationally and internationally
The project consisted of a set of three group workshops and an analysis of the financial data of the IASN members across three years. The data was gathered via the Culture Benchmark which has enabled us to make quite detailed comparisons to other sample groups including the Birmingham Arts Partnership, a sample of non-RFOs, a sample of non-venue based organisations and a sample of organisations with a turnover of less than 400,000 per annum. The goal of the project was to evaluate whether it would be possible to develop a clear articulation of the value and role of small to medium sized arts organisations in Birmingham and therefore to improve the understanding and appreciation of this role in the Local Authority and amongst other funders and policy makers.
defined as being organisations not sole trader/freelancers and with a maximum turnover of approximately 1m per annum.
4. Working with the Next Generation: working with traditional art forms and reaching out to achieve engagement with non-traditional users of that art form and engaging with new and emerging arts practitioners in the city 5. Working in Non-Traditional Spaces: how small organisations successfully deliver in non-traditional spaces (both indoor and outdoor) 6. Working with International Partners: how small organisations leverage the value they deliver into international relationships and how this brings value back to audiences in Birmingham A number of these topics are in essence cross-cutting themes and therefore the ability to demonstrate value will be useful when engaging both with the arts team and other departments. They do however have a direct relation to the ways in which the arts team expects to contract with the members of the IASN in the next one to two years. The type of data and case studies that IASN members could use to demonstrate how they achieve the objectives above includes the following: Audiences and participation data on the volume of audiences is useful in demonstrating achievements in areas 1-4 Financial Profit & Loss data this is valuable in demonstrating how the business models being used enable small organisations to work very flexibly with nontraditional spaces and without the need (or overheads) to run a permanent public venue. Financial data on the sources of grant monies so that we can see a split between local, national and international funds helps demonstrate how UK government money is leveraged to win funds from international sources. Volunteers & placements data not just on the numbers but the roles that volunteers play in the achieving of a financially sustainable model shows the difference between volunteers who invigilate a space as opposed to those who offer advice and expertise at a more senior level (eg board of trustees) Engagement, learning & skills data on staff retention levels, training budgets and the ratio of contract to permanent staff in an organisation.
In the first phase of work in 2011-12 we explored both the data and the narratives of members of the group to determine the strength and robustness of the arguments we could make. Given that the metrics we have available at present are an imperfect match to the value we are trying to measure it will be necessary over the short to medium term to continue to use case studies to add a qualitative understanding of value being delivered to any quantitative summary. The examples below cover a variety of approaches to both intrinsic and instrumental value creation but can all be analysed qualitatively to illustrate how they are delivering against the six identified areas.
were not HE graduates in the main. The programme was also delivered in non-traditional spaces. The programme reached out to new audiences and worked in local communities thus delivering against both of the cultural participation goals.
sources. The national average based on a cohort of some 350 organisations. The average for 2010 is 61.9% of total turnover and the figure for 2011 is 62.2% so IASN members are slightly more grant dependent than the national average. It should also be noted that a high level of grant dependence found across Birmingham is normal amongst smaller or non-venue based organisations (73.4% in a comparison group of organisations with a turnover of less than 400k/annum) but is abnormal in larger ones where overall grant levels are usually under 40% of turnover. It would be foolish to hope that arts funding is likely to improve in the short to medium term so clearly there is work to be done to reduce dependence on arts grants. It is notable that the larger organisations (who make up the Birmingham Arts Partnership) are also very grant dependent (58.2% in 2010 and 72.5% in 2011) and this is, if anything, more worrying both for the members of BAP and for the IASN members. If BAP members cannot generate more earned income to what extent are they competing with IASN members for the same pots of grant funds? If the larger organisations in the Birmingham area cannot reduce their grant dependence are the reasons behind this ones that will hinder the IAS members as they seek to diversify their income?
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5.5 Cost structures direct costs, general overhead, marketing budgets & reserves
The members of IASN already operate very lean organisations with the great majority of their income being channelled straight into delivery projects - 30-35% of turnover is spent on the programming costs with an additional 40-44% spent on staff salaries most of which are delivery focussed. The national average was 42.0% and 39.4% on programming in 2010 and 2011 respectively and 35.5% and 36.6% on staff salaries. Although the balance is slightly different vs. the IASN membership the net result is fairly similar. The figures for organisations with a turnover of <400k are 43.2% and 36.6% respectively.
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The flexibility they maintain by not operating large public spaces works to their advantage both fiscally and operationally. It could be argued that they require relatively small marketing budgets (currently <2.5% of turnover is spent on marketing) in order to communicate with the audiences and participants they engage in their projects however if the members of IAS are to increase their visibility and articulate their impact to clients and stakeholders then a larger budget dedicated to this B2C marketing is probably necessary. By comparison BAP members spend 3.5-5% of turnover on marketing costs (excluding staff) and this is on a par with the spend across the national average, RFO sample and the <400k sample. This suggests that the marketing budgets of IASN members are probably too low across the board. There is very little in the way of contribution to reserves across any of the clusters we looked at. This has implications not only for the overall stability and sustainability of the organisations but impacts their ability to invest in their own new ideas in the early stages.
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6 Key actions and areas of development for IASN, its members & partners
In addition to looking at the potential impact upon the small and medium sized organisations of a greater focus on the instrumental value of the work they deliver and a reduced focus on the intrinsic value (see section 2 Birmingham Context) there are a number of other areas where action will be required by the members of IASN if they are to continue to improve the way they articulate the value they deliver. Based on the case studies and the benchmarking we can see that there are activities whose impact is not evaluated appropriately with the current approach and new metrics are needed. Alongside this is a need to review how the changing relationships with BCC and its various departments will impact IASNs overall ability to communicate the value its members deliver to this broader BCC audience. These topics are also likely to be of interest to the members of the Birmingham Arts Partnership (BAP) as the impact is not limited to the smaller organisations. This presents an opportunity to develop a closer working relationship between IASN and BAP.
6.1 Data & evidence challenges the need for new metrics
The data we collected in the Culture Benchmark is a useful start point in that it enables us to better understand the business models in operation across a range of small to medium sized arts organisations across a variety of creative & cultural sub-sectors. The questions in the benchmark are however not designed to record, measure or analyse the social impact or social value of the work being undertaken by these organisations. This benchmark is therefore not yet fit for purpose for organisations in the Birmingham area and further work is required to clarify how the impact and value are to be measured and any social return on investment calculated. Only then can we start to gather data against these new metrics in a way that will more fully articulate the important role that these organisations play in the city. Action required: working with an expert in impact measurement and social return on investment to identify appropriate metrics
departments. The advantage of a contract based tendering process is that the brief is clearly defined whereas pitching for project funding can feel like a subjective beauty pageant. Furthermore when trust based relationships are disappearing and relationships between arts organisations and funders are limited to functional discussions then it becomes harder to predict which pitches of ideas have a reasonable chance of being funded as there is less visibility of the decision making process as well as the absence of briefs, tenders and contracts to pitch for. Action required: review of the sources of contracts and the variety of departments so that the IASN can work out how it will keep track of contracts they can tender for either individually or together. These shifts in the relationship call for a number of additions to the way that arts organisations communicate with the various teams in the Council, both in the arts team and elsewhere. The IASN has an opportunity to communicate on behalf of the smaller arts organisations the services that its members offer, the ways in which these services deliver to both intrinsic and instrumental goals. The case studies in this report are part of that set of messages as is the benchmark data. Rather than waiting to respond there is an opportunity for the IASN to lead to focus on the key strengths such as the expertise in running events in non-standard arts locations and attracting new audiences and participants. We can see from the case studies that the spaces3 are affordable, unusual and suited to non-traditional work and that in working in these ways offers audiences something very different to the large and sometimes intimidating city centre venues. As relationships with key funders such as Local Authorities change so this has a knock on effect upon other supporters who do not necessarily support the core programme but individual elements of it. Two types of funders often either become more risk averse or seek to change the way in which they provide support. Trusts & Foundations recognise that unless the core of the organisation is stable it is risky to support some of the newer and riskier work or the peripheral activities. In kind support providers e.g. providers of space or alcohol continue to matter to small organisations but this sort of provision is inflexible, that is to say it cant be used to buy other services and this means that the support cant necessarily be channelled in to the places where it is most needed. For example in order to make use of the in-kind support the organisation is having to spend hard cash on the risky parts of commissioning new work rather than being able to use the support, as cash, to pay for the commissions themselves. It is not simply relationships with grant funders and contracting clients that are changing in response to the changes in the economic climate. As small arts organisations struggle to develop sponsorship relationships as their organisations lack the visibility of a large city centre space, their programmes of work are not suited to wining and dining sponsors then
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Including The Edge, ACE Dance & Music, Stans Caf, , Eastside Projects, Fluid Space Arts, Grand Union, Playhouse and Craftspace
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perhaps there is a need to find another way of looking at the challenge of attracting sponsors and relationships with the corporate world? Could such relationships be supported and brokered by the large arts institutions as part of the large arts organisations own CSR activities? If we did this would it help build collaborations between large and small arts organisations and would it help build a clearer message from across the arts to the corporate sponsors in the Birmingham area? Action required: exploration of these options with BAP
founded upon the new models of operation and value creation being developed in smaller organisations i.e. can large organisations be a route to investment and scale up for smaller organisations? How can the relationships and partnerships be seen in the data gathered? Currently this is difficult to do as we only collect data on a per organisation basis, partly because these are the legal entities for which data is required for governmental purposes ie submission to the Charity Commission or Companies House. However if we are to shed light on the additionality of the partnerships we need an alternative or additional view point.
Given that other organisations and individuals such as JABA and Graeme Devlin have been involved in work that connects to these questions it would make sense if the next stage of work brought together these key researchers as well as the IAS and BAP members.
8 Summary
The last twelve months have seen considerable changes in the funding of the members of the IASN. In particular the loss of funding from Birmingham City Council has had a significant impact as it represents not only the loss of a regular source of funds but it is also the loss of a key lever for winning other grants. Based on the available data and anecdotal feedback from IASN members organisations who are in receipt of LA or ACE funds are perceived as more stable. Funds from these sources is also seen as a quality mark? amongst other arts funders. It is not only the members of IASN who are facing substantial challenges and major changes to their business models in ways which would have been unimaginable only two to three years ago. The cuts in revenue funding to the members of BAP are likely to be causing these organisations to consider substantial changes to their business models also. Birmingham arts organisations have previously been known for their leadership in the development of education and participation activities across all demographic groups and all age groups. Funding cuts jeopardise this leadership position and hamper ongoing development of existing areas of expertise such as community centred practice and youth engagement. It is unlikely to be productive to simply try to turn back the tide of funding cuts but is there an opportunity to re-focus on the strengths in collaboration & partnership, a well connected eco-system headed up by skilled professionals and to use this to develop both new approaches to leveraging funding, contracts, investment and earned income whilst improving the metrics for measuring the value being delivered and the impact being achieved?
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