Canadian Heritage Perspectives on Trends in the ArtsPresentation by: Robert Hunter, DirectorArts Policy Branch, Department of Canadian Heritage

Arts Consultants Canada/Consultants canadiens en artsOctober 29, 2010

2

SETTING THE STAGE

3

Royal Commission on National Development in the Arts, Letters & Sciences (Massey-Lévesque)

Massey-Lévesque Commission Report

Canada Council for the Arts

First Secretary of State – responsible for the development of arts in Canada

NAC officially opens

First national forum on cultural policy & Department of Communications Act

Cultural Statistics Program and Capital Assistance Program administered by the Secretary of State’s Arts & Culture Branch

• Canada Council Art Bank – investing in visual artists

• Local Initiatives Program

Canada Council Touring Office & Explorations Program

Federal government’s arts & culture programs transferred from the Secretary of State to the Department of Communications

Canadian Arts Council, (Canadian Conference of the Arts)

Broadcasting Act

National Arts Centre Act

• National Museums of Canada Act

• Canadian Film Development Corporation Act

Council for Business & the Arts in Canada

1950 20011960 19801955 1975 19851965 1970 1990 1995

Federal Cultural Policy Review Committee (Applebaum-Hébert)

Federal White Paper on the Copyright Act

Arts representatives at the National Economic Conference

Status of the Artist Act

Cultural Initiatives Program, Department of Communications

Major increase in federal funding for the arts

4

SUPPORTINGTHE ARTS

The Department of Canadian Heritage, along with Canada’s major national cultural

institutions, plays a vital role in the cultural, civic and economic life of

Canadians.

We work together to promote culture, the arts, heritage, official languages, citizenship and

participation, Aboriginal, youth, and sport initiatives.

5

The Government of Canada, like other national governments, focuses its investments on professional not-for-profit artistic activity, mainly through:

Parliament (policies, tax measures & financial investment)

Canada Council for the Arts

Artistic creation & artistic production

Canadian Heritage Arts Policy Branch

Professional arts training, artistic

experiences, arts spaces, community engagement,

responsible & professional management practices

To encourage: excellence in the arts, the creation of original Canadian content, the development of the right skills and capabilities, and competitiveness for a thriving arts sector… …so that Canadians access original Canadian artistic content.

6

The Arts Policy Branch and the Canada Council are two primary federal funding bodies that support the arts sector in complementary but distinct ways

Eligible Recipients Arts Disciplines Ensuring

Canada has artists

Ensuring Canadians have access to arts

& artists have spaces to create

Ensuring arts are sustained over the years

N

ot-

for-

Pro

fit A

rts

Org

ani

zatio

ns

(P

roje

ct &

pro

gra

mm

ing)

No

t-fo

r-P

rofit

Art

s O

rga

niza

tions

(O

pera

tiona

l)

Ind

ivid

ual A

rtis

ts

Mu

nici

palit

ies

Oth

er (

i.e. u

nive

rsiti

es)

Pe

rfor

min

g

Vis

ual

Me

dia

Lite

rary

Pro

fess

iona

l Art

s T

rain

ing

Inst

itutio

ns

to t

rain

art

ists

fo

r na

tiona

l & in

tern

atio

nal

car

eer

s

Pro

fess

iona

l de

velo

pm

ent f

or

indi

vid

ual a

rtis

ts a

t d

iffer

en

t sta

ges

of t

heir

care

ers

Fes

tival

s &

ser

ies

pres

ent

ers

that

offe

r a

var

iety

of

pro

fess

ion

al a

rtis

tic e

xper

ienc

es a

cros

s C

ana

da

Infr

astr

uctu

re p

roje

cts

for

art

s or

gan

izat

ions

(b

uild

ings

, so

und,

ligh

ting,

etc

.

Ind

ivid

ual a

rtis

ts &

art

s or

gani

zatio

ns fo

r re

sea

rch,

cr

eat

ion

, pro

duct

ion

& to

urin

g

Ass

essm

ent

of a

rts

org

aniz

atio

ns in

pa

rt b

ased

on

th

e s

tre

ngth

of b

usin

ess

pra

ctic

es

Fun

ds a

rts

org

ani

zatio

ns th

roug

h in

itiat

ive

s d

esig

ned

to in

cre

ase

org

ani

zatio

nal

& fi

nan

cia

l sup

por

t with

in

Ca

nad

ian

co

mm

uniti

es

Su

ppo

rts

arts

org

aniz

atio

ns in

ad

dres

sing

o

rgan

izat

iona

l cha

lleng

es

Inte

rve

ne q

uic

kly

whe

n pr

ob

lem

s ar

ise

in

org

aniz

atio

ns w

ith h

igh

pote

ntia

l but

low

a

dmin

istr

ativ

e s

kills

Arts Policy Branch Programs

Canada Council for the Arts

Key Policy Areas

7

CULTURE MATTERS

8

3,923 Performing Arts Companies in Canada• 2,915 for-profit

• 1,008 not-for-profit

86% of Canadians attend at least one type of arts or cultural event per year

Canadians spend twice as much on live performing arts as on live sporting events

In 2003, artists and arts organizations contributed $2.51 billion to Canadian GDP

There are 141,000 artists in Canada

Canadians volunteered 74,000,000 hours for arts and cultural organizations

9

THE DESIGN

10

The Arts Policy Branch Key Roles and Responsibilities

• 6 programs with annual budgets ranging from $390,000 to $33.8 million with a total budget of $122.7 M

• Guide policy research on the arts

• Legislative issues related to arts

• Designate National Arts Service Organizations

• Work with the National Arts Centre and the Canada Council for the Arts to realize their legislated mandates

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Three pillars for a competitive arts sector

CreationTraining + Excellence

Primarily the responsibility of the Canada Council, which unlike the Arts Policy Branch regularly assesses artistic merit – is the art good art?

The Arts Policy Branch also supports excellence and diversity through one of its programs, the Canada Arts Training Fund.

Our goal is that Canada’s most promisingartists receive excellent training for nationaland international careers in the arts.

• Funding for arts training organizations• Annual budget: $24.1 million• 36 training programs in disciplines such as

theatre, music, and circus arts• Diverse range of training programs, from

Korean dance to Inuit sculpture to classical European opera

• Funding ranges from $25,000 a year for an Afro-Caribbean dance program to $3.3 million a year for the National Theatre School

AccessPlaces + People

The Arts Policy Branch helps connect peopleand the arts – helps Canadians access the arts– through two of its programs:

Canada Arts Presentation Fund:• Funding for festivals and series presenters• Our goal is that Canadians have more

opportunities to access a wider variety of the arts

• Annual budget: $33.4 million• Over 600 clients presenting festivals and

artistic series in disciplines such as theatre, music, film, dance, and literature

• Over 220 communities reached across Canada, from Toronto and Vancouver to Minnedosa, Manitoba and Dawson City, Yukon

• Funding ranges from $5,000 for smaller festivals to $1 million for the Montreal International Jazz Festival

Canada Cultural Spaces Fund:• Funding for infrastructure: renovating existing

arts buildings, constructing new ones, buying specialized equipment like sound systems or lighting boards, and conducting feasibility studies for proposed projects

• Our goals are that Canadians have greater access to the arts (and to heritage) and that artistic creativity has space within which to flourish

• Annual budget: $30 million• 728 projects in over 250 communities since 2001• Support for theatres, concert halls, art galleries,

museums, heritage parks, arts centres, etc.• Funding ranges from $2,000 to $3,000 for smaller

purchases up to $2-3 million for major building projects.

SustainabilityPartnerships + Business Models + Skills Development + Awards

The Arts Policy Branch helps sustain the arts in Canada through two approaches:

Legislation

Status of the Artist Act, 1992The importance of artists in Canadian society self-employed artists’ right to collective bargaining

Income Tax Act In partnership with the Canada Revenue Agencydesignate national arts service organizations

Program

Our main program for sustaining the arts sector is the Canada Cultural Investment Fund…

THIS PROGRAM WILL BE DISCUSSED IN GREATER DETAIL, BUT FIRST…..

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WHY SUSTAINABILITY?

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Arts organizations require management capacity, outreach capability, financial stability and community roots to support their chosen artistic vision.

This can be challenging – because the Arts have the highest personnel costs of all the Cultural Industries, despite the relatively low earnings of artists.

Percent of expenditures on personnel (salaries, benefits, contract workers, freelance payments):

Source: Statistics Canada, various cultural industries surveys.

Not

-for

-pro

fit P

erfo

rmin

g A

rts

Her

itage

Boo

k P

ublis

hin

g

Film

& V

ide

o P

ost-

prod

uctio

n

Per

iodi

cal

Pub

lish

ing

Sou

nd

Rec

ord

-ing

Mov

ie

The

atre

s

57%53%

38%33% 28%

14% 14%

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Doing business in the arts

The Arts Industries are characterized by a mix of tangible and intangible products, and these products are generally unique, i.e. not mass-produced or mass-distributed.

The commercial model of doing business, where the goal is to make a profit, works best when the cultural product in question can be mass-produced and mass-distributed (Written Media, Film and Video, Sound Recording, Broadcasting). This model is however generally less successful, though not impossible, when the cultural product is unique, cannot be mass-produced, and requires the consumer to come to the product (Heritage, Arts Industries, notably the Performing Arts).

Performing Arts & Festivals

Focus on Production

Consumer comes to the product (the recital, play, or opera)

Revenues in part from ticket sales

Visual Arts & Media Arts

Focus on Creation

Specialized outlets (galleries, artist-run centres)

Revenues from sales to customers

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The Performing Arts in Canada – Revenue Trends

In 2010, Canada was home to 1,008 professional, not-for-profit performing arts companies. They operate using three types of revenues: earned, public and private. From 1991 to 2006, the following was observed:

• Earned revenue has historically hovered around 50% of total revenue

• Over the15 years observed, the overall proportion of funding from all level of governments has decreased from 34% to 26%

• Private funding has increased from 16% to 23%

Revenue Breakdown

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

1991 1993 1995 1997 1999 2001 2003 2006

earned govt private

Source: Statistics Canada Performing Arts Surveys.

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Good news – an indicator of financial health

Between 1991 and 2007, the financial health of Canadian arts organizations generally improved:

•Average deficits got smaller•More Canadian arts organizations accumulated surpluses•Fewer arts organizations posted accumulated deficits

-$200,000

-$150,000

-$100,000

-$50,000

$0

$50,000

$100,000

1991

1992

1993

1994

1995

1996

1997

/199

8

1998

/199

9

1999

/200

0

2000

/200

1

2001

/200

2

2002

/200

3

2003

/200

4

2004

/200

5

2005

/200

6

2006

/200

7

Major Investments in Arts

Source: Business for the Arts, Performing Arts Surveys.

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Impact of the recession on the arts sector

According to Summer 2009 survey data from the Performing Arts Alliance, several detrimental effects were felt by Canadian arts organizations during the recession:

• A majority of arts organizations reported diminished revenue in 2008-2009 from a variety of sources: year-end fundraising, corporate contributions, foundation support, and ticket sales.

• Many organizations are forecasting a year-end deficit and have had to adjust their operations.

From Departmental monitoring and analysis, several trends emerged during the recession:• Subscription sales declined;• Endowment investments provided organizations with little or no return;• Corporate sponsors reduced or withdrew contributions; and• Some arts organizations avoided risky or unproven programming in favour of ‘sure hits’.

Despite these challenges, there is no evidence of closures of professional Canadian arts organizations due to the recession.

Arts organizations could be facing a situation where their endowments and donations continue to be reduced in the short-term. Nevertheless, endowment investments have begun a cautious recovery towards the beginning of 2010.

All cultural industries have been affected at different points of the value chain, to varying degrees of severity.

• Some arts organizations reduced the number of performances or the number of different productions, planned to tour less, or opted for safe programming.

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A MODEL FOR SUSTAINABILITY

19

Financial & Organizational

Health

ArtisticVision

Opportunity for sustainability…requires a balance

between:

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Canadian Arts & Heritage Sustainability Program (2001-2009)

Objective: Strengthen organizational effectiveness, build operational and financial capacity of organizations in the arts and heritage sectors, and celebrating and supporting Canadian communities’ achievements in the arts and

culture.

The program pursued the fulfilment of its mandate mainly through the following components:

Stabilization Projects – Award contributions to private, sector-led, multi-year stabilization projects, whose role is to provide technical assistance, deficit reduction assistance and working capital to arts and heritage organizations.

Capacity Building – Support individual arts and heritage organizations to produce strategic or business plans, develop revenue generation strategies, improve management tools and conduct market studies.

Cultural Capitals of Canada – Communities that have made arts, heritage and culture integral elements of community life are designated Cultural Capitals of Canada.

Endowment Incentives – Match funding from private donors to arts organizations’ endowment funds to a maximum ratio of 1:1.

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IMPACT

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Stabilization Projects Component

Engaging community support – a shared investment Comprehensive, multi-year stabilization projects in 10 geographic areas supported to increase working

capital and shore up business skills of eligible arts and heritage organizations. Over 200 participating organizations. Community leaders contributed time and expertise as trustees on boards of directors as well as invaluable

insight from private sector. Interviews have demonstrated that stabilization create synergies between general manager, the artistic

director and the Board, thereby enabling the arts or heritage organization to move its vision forward.

Success Story

The Creative TrustProject Goal: To support and strengthen Toronto’s mid-size, creation-based performing arts companies by assisting them in developing their planning and financial skills, achieving organizational and financial balance, and acquiring and maintaining a fund of working capital.Duration: 2002-2008

Results after year 1:• 7 companies receiving matching deficit reduction grants or their first working capital awards.• Total revenues of all 11 participating companies increased by 6.3%, from

$14.9 million to $15.9 million.• Of the 6 companies that entered the program with accumulated deficits, total revenues increased by

15%. These same companies reduced their combined deficits by 47%.• All companies combined increased their private sector funding by 14.8% to $3.9 million.

Source: “The Canadian Arts and Heritage Stabilization Experience”, WME Consulting Associates, May 2006.

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Cultural Capitals of Canada

Building sustainability at the local level

Since 2002-2003, there has been a total of 141 eligible applications from communities

of all sizes, and 37 designations have been awarded for a total of $26.2 million in

approved contributions. In recipient communities, many activities

undertaken in the year of designation have

been sustained even after federal support is no longer present.

Municipalities increase involvement in cultural policy development and further

integrate culture in municipal planning.

“You can do an awful lot with $2 million of federal money.

You're not going to build stadiums with that kind of money but you can

build relationships, said John Mahon, executive director of the Edmonton

Arts Council, adding one of the lasting legacies from this city’s

2007 award is the commitment toconnect newcomers to Edmonton's

artists and art institutions.”

Winnipeg Free Press28 August 2009

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Endowment Incentives Component

How it works:

Encourages arts organizations to strengthen their organizational and governance resources

Helps arts organizations build and diversify their financial resources

The resulting ripple effect gives arts organizations the opportunity to focus on their human and physical resources

+

“The Canadian Arts and Heritage Sustainability Program

is enabling us to build on the generosity of our donors to

Increase our endowment to a level which is now substantiallyimpacting the Citadel Theatre’s

operating budget and helping usto remain a strong, vital

organization. We greatly appreciate the opportunity to participate in the Program...”

Penny RitcoExecutive Director,

The Citadel TheatreEdmonton, Alberta

Cultural Affairs Sector2007-2008 Annual Report

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Sources of Endowment Donations from 2004-2005 to 2009-2010

$55 680 921

$22 686 457$20 664 082

$15 094 412

$5 947 429$4 112 211

$0

$10 000 000

$20 000 000

$30 000 000

$40 000 000

$50 000 000

$60 000 000

Individuals Corporations Non-GovernmentalFoundations

Beneficiary ArtsOrganization

Publicly ListedSecurities

Other

Sources of Donation

To

tal A

mo

un

t

A Powerful Partnership

Since 2001-2002, $149 million have been donated by Canadians to arts organizations’ endowment funds*

From 2004-2005**, individuals alone have contributed $55.7 million (34% of total donations)

* Based on eligible applicants

** The program started capturing the information in 2004-2005.

26

In 2009-2010, 66 applications received funding totalling $14.9 million from the program, matching $0.71 for every dollar donated by the private sector.

Despite the global economic recession, the private sector donated close to $21 million to arts applicant organizations’ endowment funds, only 1% less from the previous year.

Nearly half (46% or $9.6 million) was donated by individuals while corporations and non-government foundations donated 23% each ($4.9 million and $4.7 million respectively) – the remainder came from other sources.

This significant financial commitment is a clear indication that Canadians and arts organizations continue to believe in the value of endowments.

Endowment Incentives – coming together even in difficult times

27

Capacity Building Component

Strengthening Business Skills

From 2002-2003, close to 1,300 individual capacity building projects supported improved governance, financial self-sufficiency, marketing and fundraising activities.

Over 70% of these projects were for governance and fundraising. A survey showed that once organizations addressed core areas such as governance or management

practices, they felt better equipped to improve other areas such as financial self-sufficiency and audience development. For “one-off” projects, after working on just one competency, 90% of organizations felt ready to work on another.

The 2009-2010 fiscal year marked the final year of Capacity Building individual project support, with a reduced grants and contributions budget. In 2009-2010, the following was observed:

93 requests for projects were submitted of which 66 were supported. 35 projects for arts organizations and 31 for heritage organizations approved to improve management

practices. Over 41% of supported projects were related to improved governance, 29% to audience and membership

development, 15% to management practices and 15% to financial self-sufficiency. The federal investment in the capacity building of arts and heritage organizations totalled $1,688,286. This

represents 42% of the total project costs. For every $1 invested by CAHSP, $1.40 was invested by the recipient organizations and partners within

their community to undertake organizational capacity building projects.

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Capacity Building Component Number of requests

0

100

200

300

400

2002

-20

03

2003

-20

04

2004

-20

05

2005

-20

06

2006

-20

07

2007

-20

08

2008

-20

09

2009

-20

10

Total Number of Requests

PEAK

Capacity Building Projects – Decrease in Demand

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Moving Forward – Building on Past Accomplishments

The Summative Evaluation of the Canadian Arts and Heritage Sustainability Program concluded that:

The program has successfully stimulated a cross-Canada focus on issues of sustainability and leveraged funds from other levels of government and the private sector.

There is a continuing need for such a program to strengthen the effectiveness, management and financing of arts and heritage organizations, and help them face new challenges.

The vast majority of organizations that were interested and eligible to participate and benefit from the Stabilization Projects component have already done so, as no new projects have appeared in the last four years. There is a general consensus that Stabilization Projects have completed their objectives and are naturally winding down.

The Department should build on the accomplishments of the program and develop a strategy to foster an environment for sustainable arts and heritage organizations collectively.

Source: “Evaluation of Canadian Arts and Heritage Sustainability Program (CAHSP)”, Office of the Chief Audit and Evaluation Executive, Evaluation Services Directorate, February 2009.

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ADAPTING THE MODEL

31

Canada Cultural Investment Fund

The Canada Cultural Investment Fund builds on the success of the earlier program by continuing to help improve the sustainability of the environment in which arts and heritage organizations operate.

The program objectives are to: Help arts and heritage organizations build and diversify their revenue streams; Strengthen their organizational capacity, business skills and competitiveness; Assist them in being better rooted and recognized in their communities.

This will be accomplished through the following main components: Cultural Capitals of Canada Strategic Initiatives (new) Endowment Incentives

32

Capacity Building for individual organizations

Organization A

A

D

C

PCH

B

Organization A

Organization A proposes project X

Various partners involved so that organization A

undertakes project X

Organization A benefits from developing a business

competency thanks to project X

33

Various funding partners involved so that project X is

undertaken

Strategic Initiatives = broader impacts

A

Organizations (a min. of 3) get together to propose

project X

Project X is completed and shared with many organizations

A

D

C

PCH

B

B

C

Project X

34

Community involvement

• Provincial & municipal governments; private/business sectors; community arts organizations; citizens

Cultural Capitals of Canada

Moving to Strategic Initiatives

StabilizationProjects

CapacityBuilding

Business communitycommitment

• Private sector – business leaders

Individual Projects

• Arts & Heritage organizations

Endowment Incentives

Matching grants

• Individuals; corporations; foundations; beneficiary organizations

Cultural Capitals of Canada

StrategicInitiatives

Collective initiatives with

broad impacts

Private sector; public sector;

not-for-profit sector; academia

Multiple partners to undertake

initiatives to strengthen

effectiveness, management and

financing of arts & heritage

organizations, and advance

cultural development at the

local level.

NetworkingInitiatives

Local cultural involvement

• Provincial & municipal organizations; elected officials; municipal professionals

Endowment Incentives

Community involvement

• Provincial & municipal governments; private/business sectors; community arts organizations; citizens

Matching grants

• Individuals; corporations; foundations; beneficiary organizations

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WHY?

36

BECAUSE THE WORLD IS CHANGING FAST

37

Renewal of major arts funding

Renewal of major federal arts funding – a new approach

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

Start of the global economic crisis

Canada on the way to economic recovery

The new millennium – Choices are abundant, audiences are diversifying, the marketplace offers more platforms to reach out to the world, collaborate and further develop relationships.

Canada’s Economic Action Plan

Major new federal funding for the arts

38

96% of Canadians

aged 12 to 17use the internet

87% of Canadian

Internet users connect to

Social networking sites

13 million Canadians

use Facebook

39

Strategic Initiatives Requests - What we have noticed already

2010-2011

45% of eligible projects are to streamline processes and use technology to improve efficiency

2011-2012

25% of eligible projects are to streamline processes and use technology to improve efficiency

40

THE WEEKEND CULTUREOPENED ITS DOORS TO ALL

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Culture Days 2010

In September 2010, thanks to Culture Days, Canadians across Canada were invited to take part in arts and culture activities in their communities.

Over 1,100 organizations and/or partners worked together to open their doors to Canada. Hundreds of thousands of Canadians across Canada celebrated arts and culture in their communities during this first annual edition.

More than 700 Canadian cities and towns opened their doors and offered 4,500 free Culture Days hands-on classes, excursions, tours, demonstrations, seminars, panels and behind-the-scenes experiences, for free.

For the first time, the Department had to means to participate in this innovative, collaborative success. Through Strategic Initiatives, funding was provided to assist the development of a Learning Network, a marketing, communications and public relations campaign, a digital strategy and research on the impact of the initiative.

42

Culture Days – Connections A Mari usque ad Mare

43

‘Thinking’ arts enterprises

deserve

‘thinking’ arts funders

The Arts Policy Branch’s key challenge:

How do we continue to respond to the ongoing challenges of the sector?

Source: Lynn duFort and Kathleen Speakman, “Sustainability & The ‘Thinking’ Organization,”

VAST/APASF Presentation, 4 Nov. 2003