Vernon Ellis recently retired from his position as International Chairman of Accenture where he remains as a Senior Advisor. He is also Chairman of the English National Opera and The Classical Opera Company and is a trustee of several other musical groups and of the Royal College of Music. His involvement in both the arts and business put him in a perfect position to analyze the necessity of sufficient investment in the arts.
The Arts are vital for a healthy society. This is an assertion to which I will return later but let us take it as an opening premise.
Despite all the noise about funding, the arts in the UK are doing well. There is certainly a lot more activity and variety than there was 50 years ago in almost every sector of the performance and visual arts sector. Statistics are published about the decline in Western Classical Music, yet there seem to be more festivals, concert venues and opera houses than ever.
However, there are challenges. Huge swathes of the population have very little or no direct contact with the output of cultural organisations. The public, although seemingly generally supportive of the need for cultural organisations, also regards many of those same organisations as elitist and “not for me”.
On the other side, for many arts organisations, it is a constant struggle to survive. Many bump along on the edge of bankruptcy. The structure of public funding together with funding from foundations and corporations tends either to keep companies just afloat or to promote mission creep. Thus, most organisations remain undercapitalised, with few reserves, unable to cope with downturns and fearful that, unlike in the past, they will not get bailed out by public funds if things do go wrong. Indeed the latest financial settlement from the Arts Council has confirmed this. The result is often a hollowing out of core capabilities and a continued underinvestment in those aspects of the organisation that will contribute to long-term vibrancy.
In the resulting climate of short-termism it is hard to focus the finances strategically. Furthermore, at an overall level, it is difficult to discern the forces that might accelerate a healthy natural evolution.
It is very difficult in this sector to see the equivalent of the dynamic forces for change within the for-profit sector; the result of capital flows seeking the best long-term financial return. There is no equivalent of the “invisible hand” – which is not perfect but society is yet to find a better and more sustainable means for resource allocation.
This is not to imply that the answer is privatisation. In many cultural activities, the cost considerably exceeds the direct market income that can be generated from the primary activities. This is nothing new. Throughout history, artists have had to struggle to get sponsorship in order to cover the costs of what they want to present. In the last century, in most Western countries, a major part of the funding burden was taken on by the state, not least to make art more widely available. In continental Europe, the state has typically shouldered the great majority of the costs. In the US, the state is less involved, except in providing tax relief to private donors. The UK is somewhere in the middle, with significant public funding but also reliance on funding from individuals, trusts and foundations and corporations.
Typically, funding is of two types. Firstly, specific grants for projects, which can lead to mission creep and they are given for marginal costs and not full costs. Secondly, general grants from public and private “funders” which are regarded as “subsidy”.
What is needed is more fundamental investment in organisations that will help build the flexibility and the capability, which will be needed in the future. Over time, capital will flow to those organisations that can make the best case in terms of returns (financial and non-financial) on the investment. There is no silver bullet here but I do believe that arts organisations will need to move away from a subsidy mindset to an investment mindset. From “how can we possibly close the gap between income and cost?” to “what are the core assets of the organisation, intangible as well as tangible, and how can they best be nurtured?”
At the same time, we cannot forget the question of what makes a gift, loan or other financial involvement worthwhile for the donor. In the social and development sectors, over the last five years or so there has emerged a much greater consensus around a common purpose which has allowed a much higher level of partnership between NGOs, private foundations, governments and corporations. This has happened to a much lesser degree in the arts proving we need a better general understanding of the common interest between donors and arts organisations in the context of society.
In recent years, public “funders” have in many cases moved away from a belief in the fundamental value of the art towards an attempt to measure the “instrumental value”, in terms of its impact on measures such as health, education and community involvement. The recently published review by Sir Brian McMaster for DCMS on Supporting Excellence in the Arts signals a welcome shift away from this approach. However, we still need a more articulate and commonly accepted case on why the arts are a vital component of a civilised society and why investment is needed. This is a question not just for public funds but for private benefactors also.
I believe that unless we who are involved in the arts collectively address these questions with more vigour, and not just leave it to the state, then as a sector we risk atrophy and being subsumed within the more commercial end of creative industries. Some would argue that this is tolerable. I would argue that the long-term result of this would be a reduction in the quality and vibrancy of the creative industries, which in many ways feed off the vibrancy of the “mixed economy” arts and cultural sector.
There are two important issues for arts organisations to embrace if they are really to tackle the challenge of widening engagement in the arts. The first is to change the “education” agenda away from traditional outreach, worthy but disconnected, to a much more thoroughgoing programme of participation and engagement around the core offerings of the organisation. This leads to the second issue – technology. The new capabilities of the Internet enable a move from broadcast to true community involvement, thus providing a channel for this kind of involvement. The recent ENO Carmen site on ENO Interactive is exemplary. This is an excellent of the kind of “investment”, necessary to enable arts organisations not only to survive: but to thrive.