Arts & Business Reports on… The Initial Consultation Findings to our Private Sector Policy for the Arts Introduction In March 2010 Arts & Business published our Private Sector Policy for the Arts. This briefing paper reports the early findings from that consultation, and outlines the implications for our suggested policy recommendations. Arts & Business is using the paper to influence the policy direction of the new Government following the announcement of the budget on June 22nd. We will be publishing the final version of the Private Sector Policy for the Arts at the beginning of July. However, the early responses to the paper have already helped us frame two new major initiatives. Firstly, Arts & Business, in partnership with the NCA, has launched Culture Forum, a new forum to represent the UK‟s cultural sector in the debate on how best to reanimate private sector cultural funding in this period of economic difficulty. The members of Culture Forum will be elected by the sector, and will have a powerful influence on how best to shape our cultural funding ecology going forward. In addition, Arts & Business will create a philanthropy taskforce to advise Ministers and work with Trust and Foundations who support culture. Both of these measures reflect one key strand of our consultation findings, which brought to light the need for platforms through which the sector can display a stronger, united and independent voice.
The consultation findings Since publication of our Private Sector Policy for the Arts we have consulted widely with our commercial and cultural partners, speaking directly to the majority of the membership based representative bodies for the arts and culture, and over 70 cultural organisations across the UK; generating over 250 survey returns and online responses, supported by a wider range of in-depth face to face interviews with key arts leaders. As we expected the consultation responses offer important insights into how we might refine our policy action plan and ensure that the arts build from the frontline as a key component of the Big Society. More broadly they offer a vibrant snapshot of the current attitudes of the sector and should be of interest to the new Government as they begin the task of deciding on the right policy mix and focus to reboot and protect the mixed economy of the arts, and to usher in a more profound culture of philanthropic giving and individual support for the arts. Taking the three key sources of private investment in the arts – business investment, individual giving and trusts & foundations funding – the majority of respondents expected all these sources of private Page 1
investment to become increasingly important for them in the future, with individual giving the priority focus. All of which underlines the strong degree to which cultural philanthropy has moved up the arts agenda in recent years. Respondents also recognise that it will be a huge challenge for the arts sector to grow their capacity to develop philanthropic income and the majority identified an urgent need for greater training and development support expanding on the Arts & Business training offer for all executive staff and trustees. As one respondent noted, ‘a culture of giving demands a better culture of asking.‟
Key findings The headline findings of the consultation process are as follows: Strong support for the timeliness and focus of the policy recommendations Widespread recognition, that Arts & Business has a vital role to play in making the government funded pound work harder by helping to generate a bigger multiplier effect in funding and donations from business, individuals and trusts & foundations A concern to ensure that the measures are balanced in terms of encouraging greater giving and support to smaller arts organisations The consultation therefore underlined that a vital issue for both Arts & Business and the Government is how specific interventions may be required to counterbalance the current dominance of large London based arts organisations in securing private sector support: - for example should the matched grant programme exclude larger arts organisations? Policy interventions (for example endowments) that will only deliver in the medium to long term need to be supported by further policy interventions (challenge fund; matching grant programme; legacies) that have the capacity to deliver a more immediate uplift in the scale and scope of philanthropic giving and private sector support to the sector There is a strong appetite for policy innovation – with respondents ranking Arts & Business‟ proposed new matched grant programme and new challenge fund scheme as their top priorities for Arts & Business activity. In the area of endowments, there is a strong desire for Arts & Business to coordinate insights from existing approaches that might work in the arts – for example the Community Foundation model – and to build on the work already underway by major trusts and foundations – who could have a role to play in sharing their skills and / or potentially in managing funds on behalf of others The Arts & Business programme of training and professional development from master-classes to mentoring, delivered by the sector‟s leading fundraising practitioners was thought essential by respondents and its planned expansion welcomed. In response, we will continue to emphasise the importance of 360 degree income planning incorporating as many of these areas as are possible and appropriate for each arts organisation: major gifts, legacies, corporate partnerships, sponsorship, exploitation of intellectual property, individual giving/friends membership schemes, trusts and foundation and trading in addition to any local or national public funding should it be available. The trick is ensuring the staff and trustees of each arts organisation have the knowledge and skills to develop each of the appropriate income streams to their fullest extent over the long term.
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Feedback on specific policy recommendations Tax reform Our tax advisory group is currently reviewing a number of areas where changes in the current tax regime might better serve the arts under the new Government: 1 Revising Gift Aid (including benefit levels) 2 Improving relations between HMRC and Major Donors 3 Gifts of Works of Art (from the living) 4 Light touch private foundations 5 Lifetime legacies 6 A „Creativity‟ Tax Credit We are aware of the Government‟s position on tax reforms, namely that significant new tax breaks for the arts are unlikely in the short term; we will therefore focus our immediate attention on modifications and simplifications and will look to other reforms for the longer term. The sector‟s priorities could not be clearer in our consultation responses – namely a simplification of Gift Aid, including better understanding and easier access for higher rate tax relief and flexibility of donor benefits. The consultation findings have already helped sharpen some of our initial thinking on key areas of tax reform. For example, our firm view is that any introduction of the proposed „composite rate‟ tax relief for Gift Aid donations (30%) would see the arts sector losing out. Not only is there is a general risk that the loss of higher-rate relief may discourage major donors from donating or may lead them to reduce the extent of their donation, but the arts charities would lose out particularly because they have been more successful at developing high net worth donors than many other charity sectors. Furthermore, the total tax retained by HM Treasury under a composite rate would increase dramatically because the difference between the proposed 30% composite rate and the 40% (or indeed 50%) higher rate tax relief would no longer be available and hence retained by HM Treasury; thus creating an impression of a Government which does not support philanthropy. A number of respondents (both regional and major London institutions) suggested that Arts & Business is well placed to pull together all of the relevant umbrella bodies on a regular basis to refine an arts sector view on ongoing tax reform. Respondents also urged Arts & Business to work with government to ensure a uniformity of approach across UK tax offices to tax breaks applicable to the arts. Arts & Business believes the administration of Gift Aid by the HMRC should also be further streamlined as part of a drive for lighter touch government. As many of our respondents made clear, uncertainties about retrospective action and hawkish attitudes within HMRC are one of the principal reasons for take-up being inhibited, even on straight forward donations. Clarity and a common approach across tax offices would appear to be a basic point of departure.
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Many respondents also felt that there was a need for a strong campaigning role for Arts & Business in this area, and would be supportive of a campaign to promote wider understanding of the benefits both strictly financial and in terms of relationship building for Gift Aid. Arts & Business is keen to explore whether Gift Aid has untapped potential for greater public engagement through better publicity and stronger Government endorsement of the brand.
Endowments & Legacies A challenging piece of feedback that has come through the consultation is that respondents were highly sceptical that endowments will offer strong returns in the short to medium term – and that judged within the same time frame legacies are likely to prove more important and will have a bigger impact for arts organisations of all sizes. Our goal, backed by an orchestrated ‘how to’ delivery plan, is that the majority of our arts members who receive private income will create a legacy programme in the next 18 months. As we have already noted, the powerful programme of training support for executive staff and trustees devised by Arts & Business must form a vital part of that delivery plan. In addition, respondents encouraged Arts & Business to develop a leadership role for the sector in this area, pulling together other partners (e.g. Philanthropy UK). Arts & Business believes that clear advocacy campaigns in this area are vital in creating the optimum fundraising environment.
Challenge Fund We have already launched the Big Arts Give with a nationwide briefing programme that has already generated a high degree of interest across the UK In light of the launch and our consultation feedback, we are now confident that the initiative will produce the first dedicated on-line leveraging scheme to encourage new donors and philanthropic giving for the arts. We aim to facilitate £3m of additional philanthropy into the arts by Christmas 2010 We have stated in our Big Arts Give launch events around the country that this programme is a pilot and as such we seek representation from all scales or organisation and from across the UK. It will not be dominated by the larger London-based national cultural institutions; many of these organisations are already well versed in philanthropy and have their own mechanisms for developing new donors. We will not exclude the larger organisations, but we will limit the number that are selected for the programme; plus the fund is capped at £50K per organisation and we will stagger the availability of matching monies throughout the challenge week in December, so as to avoid larger institutions draining the fund of matching money before smaller ones have reached the starting blocks. Furthermore, we have visited every region of the UK to promote the scheme to small and medium sized cultural organisations. Selection for participation in the scheme will be based upon: (i) realism of the fundraising plans/targets submitted; (ii) a spread of scales of cultural organisation; and (iii) upon a wide geographic spread. So applications from larger and national cultural institutions will be assessed together and within regional groupings, not against smaller organisations. We have had most interest expressed by smaller organisations hoping to enter the scheme at the £3,000 trustee fundraising target level.
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Given the pilot status of this programme, we will solicit feedback from arts participants and donors throughout the year so as to inform our future development of a philanthropy challenge scheme for the
arts.
Matching grant programme The consultation has demonstrated very strong support from the sector for the revival of the Arts & Business sponsorship matching scheme, especially a scheme that has simple rules and easy access. We will, therefore, continue to advocate for the revival of this scheme as a priority, however, we do not wish to encourage “stop-gap” fundraising and so will ensure that any such financial incentivizing will have built-in sustainable outcomes for the sector, specifically to address the need to establish ‘…. a better culture of asking.‟ Our proposal to position the incentive scheme within a training programme for professional cultural fundraisers is addressed below, but first let us look at the specifics of the sponsorship matching programme: Similar schemes already operate in Scotland, Wales and Northern Ireland, yielding an average minimum return of £4 for the arts sector for every £1 invested by the respective Culture Departments. We would aim for at least that leveraging ratio from any such fund established for England. Research undertaken by Arts & Business Scotland in 2007, into the outcomes of a similar scheme funded by the Scottish Government, revealed that 84% of new business sponsors of the arts said they were very likely to (63%), or had already committed to (21%), future arts sponsorships as a result of the scheme. Furthermore, 83% of arts respondents reported that the scheme had afforded them greater credibility in approaching and negotiating with new sponsors. It is widely agreed that the private sector will emerge from the recession more quickly than the public sector, but a stimulus will be required to hasten the expansion of arts-business partnerships. Arts & Business believes that the Sponsorship Matching Grant Scheme will provide this necessary stimulus. It is, however, important to consider the sponsorship incentive scheme as existing in tandem with the philanthropy incentive scheme (The Big Arts Give); both are vital levers to bring new and returning philanthropists and businesses to the arts arena. These inducements are critical in order to help raise the profile of cultural giving in a climate where the wider charitable and social issues will be seen as the predominant players. The financial leveraging incentives are, however, only one part of the equation; the further ongoing intervention of training for cultural fundraising professionals to sustain the impact of new private investment relationships will be fundamental to the success of the incentive programmes. That is why we are proposing that any new incentive scheme should be established as part of a tripartite model, where financial incentivization through Government grants is delivered hand-in-hand with fundraising training, supported by „giving‟ advocacy. Access to the incentive schemes would only be available to cultural fundraisers and managers as part of a professional fundraising training programme, which will result in the creation of individual “360 degree” fundraising strategies, a kite mark fundraising standard and the financial pump-priming to get started. Feedback from the consultation suggested that Arts & Business might target the incentive schemes towards small and medium scale organisations; the development of this proposal would chime well with the needs of these particular organisations. While we would not seek to exclude larger arts organisations from the programme (their staff may have development needs too), following the consultation, we would cap the amounts of funds that an individual organisation can apply for in any one year (at say £50,000) and limit the amount of funds
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that are available for national cultural institutions, or those with a turnover in excess of £5M (at say £25,000 per annum). The financial incentive model for higher education, as managed by CASE, in which £200 million was provided for matching private giving in Universities, has proved to be extremely successful. CASE delivers this programme alongside professional training for university fundraisers, which has yielded a step change in private giving to universities across the country. Advocacy is the important third intervention necessary to underpin both the incentivization and training, so as to stimulate the giving environment. The stimulus of campaigns (e.g. a City campaign and legacies campaign) as well as tax reforms all help to create a more attractive giving environment and are equally important ingredients for success. We will work with the new Government and other partners to focus the mission and purpose of this coherent national joined up agenda. One of the three elements could perhaps stand alone, but together the impact, value and sustainability is multiplied significantly.
Campaigns to increase Cultural Philanthropy Our Private Sector Policy for the Arts outlined a number of measures specifically aimed at engaging businesses and their employees. With regard to these business focused recommendations, respondents acknowledged that a City Campaign would be useful, and there was support for the Business Champions model. More broadly, the majority of respondents were keener on a general campaign to raise awareness that most arts organisations are charities, and to focus on individual giving, working to the aspirational target of establishing an „everyday giving’ mindset for the majority of UK citizens. In response, Arts & Business is keen to pursue some innovative approaches here, with the aim of leading the cultural sector‟s contribution to the Big Society, which we aim to do in partnership with the Community Foundation Network. We would like to initiate a RED type campaign for the arts - a campaigning brand umbrella that captures hearts and minds encouraging people to think about the arts as a deserving good cause whilst underlining how important the arts can be in impacting on and transforming everyday lives. Major UK Banks would sponsor a branded „arts card‟ (mirroring the RED campaign – which led to the American Express Red Charity Credit Card) We have opened discussions with the Community Foundation Network with the aim of partnering with them to manage the fund into which the arts card contributes. This would genuinely be a people‟s fund championing cultural activity that impacts on everyday lives and communities. Arts & Business will work with partners to explore whether the fund could further be positioned as a mixed endowment/flow-through fund (increasingly common in CFs), where say 40% of the funds are given out within the year to “Arts for Good” causes and the balance of 60% retained as endowment, or vice versa.
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Conclusion Whilst the economic landscape for the arts has worsened over the last two years, as it has for the broader economy, the consultation responses we have received underline that the arts retain a strong sense of grounded optimism about the future, and a willingness to explore new innovations and approaches to achieve their ambitions. We believe that the desire of the sector for a strong, united and independent voice, to which the Culture Forum is an immediate response, can be channelled to ensure that the Government and the sector work productively together to frame successful sector wider initiatives to protect and foster the UKâ€&#x;s vibrant arts mixed economy. We look forward to working with the Government, Arts Council England, and our commercial and cultural partners, to ensure that the solutions outlined in our Private Sector Policy for the Arts are an effective response to the challenges that lie ahead, making a resounding difference to the resilience and vitality of the arts.
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