AP144 - Towards a Healthier Arts and Cultural Ecology (Feature 23 Apr 07)

8/9/2019 AP144 - Towards a Healthier Arts and Cultural Ecology (Feature 23 Apr 07)

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For the past two years Mission Models Money, anational action research programme andcampaign for change, has been addressing the

challenges faced by individual arts and culturalorganisations (A&COs) and their funders in

developing mission-led organisationally andfinancially sustainable businesses. The accumulatedevidence highlights many issues that are alreadywell known and some that have barely begun to beunderstood. The headlines make for uncomfortablereading yet show an appetite for radical change.

Surviving, not thrivingTechnological advances, increasing globalinterconnectedness and shifting public interest andconsumer behaviour mean the sector is facingmajor, permanentstructural change.

Hundreds of non profitA&COs, critical to boththe historical andcontemporary culturalcanon, are over-extended and under-capitalised. Often withhigh fixed costs they areincreasingly dependenton annual public sectorgrants to survive as patterns in attendance andearned and fundraised income from the privatesector change. This scenario, whilst allowingsurvival, offers very little scope for the

fundamental transformation of organisations intoresponsive, adaptive, sustainable, mission-ledbusinesses delivering cultural excellence to a widergeneral public. Given the rapidly acceleratingchange in the external environment, this ability totransform has never been so essential.

Technology laggardsMany A&COs are being too slow at respondingeffectively to the rapidly changing externalenvironment, especially the shifts in the way thewider public are engaging with cultural experiencesand threats and opportunities brought about by

new technology.Often small scale and under-capitalised, they haveinsufficient resources to develop and implement aneffective technology strategy. As a result they areunable to meet the high costs of gaining access tonew delivery platforms to innovate and developnew services. They also tend to be poorly informed

of changes in technology, which are happening atan increasingly rapid pace, making it difficult forthem to respond quickly and effectively to thechanges in market conditions and new businessopportunities brought by these changes. Given thatthe strategic understanding and exploitation oftechnology innovation is an increasingly importantfactor in their future viability, it is vital now tobridge the communication and research anddevelopment divide between A&COs and the

technology sectors, and enable them to drive,develop and exploit the potential of newtechnologies.

Knowledge abilityThere are significant knowledge gaps in key areasthat could help some organisations achieve greatersustainability. Relatively few are familiar withmethods of financing which extend beyond themainstays of grants, fundraising, ticket sales andother earned income, or alternative legal structures

and business models thatmay offer a better

environment for thedelivery of mission, orthe role that newtechnology could playboth in back officefunctions and front ofhouse. Some corecompetencies that relateto the existing modusoperandi, such as

governance of a traditional charity model, needserious attention across the sector. Outside therelatively well-resourced albeit small number ofsuper tankers who ply the sectors seas and reign

our commanding heights there are majorcapability issues in key areas such as finance,fundraising and the increasingly diverse andcomplex world of audience and communityengagement. And it is not just in existingframeworks of competence that we need to make astep change. As Graham Leicester1 points out, weneed to develop new competencies to manage theincreasing complexity and rapidly acceleratingchange of our world.

Re-calibrating misalignmentsIt is by no means only A&COs that face chal lenges

of responding to change faster and driving upperformance. The original missions, roles andstructures of the dominant public funding agenciesand some intermediary organisations may not bebest suited to the cultural and political realities ofour time and there is still an insufficientlychallenging public conversation about the

infrastructure and funding environment currentlysupporting the arts. Recent papers by John Knelland Margaret Bolton and David Carrington2 areattempting to raise the temperature around this.

There is a plethora of publicly funded businessdevelopment support on offer in most regions,largely focusing on sole trader, start-up orcommercial creative industries, but not so much onthe business development needs of mature nonprofit A&COs. Quality issues are being raised and

there is confusion about whats on offer. Questionsabout whether primary public funders should bethe ones to deliver capacity building support arebeing asked, and preferences are being expressedfor access to non-partisan sources. Publicly fundedagencies charged with capacity building or acting asintermediaries are not responding to the task fastenough, nor are they employing the people withthe right skills and competencies to do it.

[email protected] ArtsProfessional 23 April 2007 7

M ission, M od els, M oney

With the help of around 270 practitioners, themajority of them volunteers, the MMMinitiative has delivered a seven-stranded

programme involving: the support, investigation and evaluationof seven diverse exemplar projects inorganisations undergoing radical change inworking practices.

seven widely disseminated provocationpapers commissioned to catalyse debate onkey issues.

twelve nationwide road shows ongovernance and developing financialcapacity.

engagement of existing social lenders andarts and cultural organisations in aninvestigation into the potential for greater

use ofnew and alternative financialinstruments in the sector.

nearly thirty case studies giving examples ofhow arts and cultural organisations canmove towards greater organisational andfinancial sustainability.

more than twentyadvocacy anddissemination events on the topics of newtechnologies, intelligent funding, corporatesocial responsibility and the ecology of thearts, and several high profile features inArtsProfessional.

a popular and extensivewebsitesignposting

relevant information, sharingdocumentation as it emerges from theprogramme including leading-edgemanagement tools under a creativecommons licence.

www.missionmodelsmoney.org.uk

As the Mission Models Money programme draws to a close and looks to the future, Clare Cooper and Roanne Dodsreport on the evidence gathered.

Towards a healthier arts and

cultural ecologyClare Cooper andRoanne DodsCo-Directors ofMission, Models, Money

True or False?The publicly funded agencies in my region

offer the services and expertise I need to

develop organisational and financial

sustainability.

Go to www.artsprofessional.co.uk to answer this

and other questions in the MMM consultation.


2/38 ArtsProfessional 23 April 2007 [email protected]


Structural tensionsNew hybrid business models are emerging,demonstrated by a growth in the number offreelancers, facilitators, networkers and producers,but these are not easily corralled into the formsmost often required for recognition by theinfrastructure agencies and funding communities,who continue to take the view that non profit

institutions should be the major beneficiaries ofpublic support. A broader array of institutional andnon-institutional forms could provide wider accessand help build universal recognition of the value ofarts and culture among diverse publics, but there iscurrently too much concentration by funders onsupport for traditional structures. Churchill said,We shape our buildings, and afterwards ourbuildings shape us. In the same way, ourorganisational structures and our financialstructures influence our behaviour, as do our mind-sets. Cultural policy itself defines structures thatdiscourage or encourage certain behaviours andthe ecology of funding has a profound effect on

the ecology of the arts.Jim Collins3 observes that one of the traits that

enables good companies to face adversity andtranscend into great companies is the capacity ofits management team to stoically face the brutalfacts of reality whilst on the other handmaintaining an unwavering faith in the endgameand a commitment to prevail as a great company.Despite the brutal facts our sector faces at thistime we have found a real appetite for radicalchange from within the sector. Route maps are as

yet inadequate, but opportunities for positivetransformation need to be exploited by all the

different players now if we are to design fortransition into a healthier arts and culturalecology.I

Clare Cooper and Roanne Dods are

Co-Directors of Mission Models Money.

e: [email protected]

[email protected]

1 Graham Leicester, Rising to the Occasion: Cultural Leadership

in Powerful Times at www.missionmodelsmoney.org.uk

2John Knell, The Art of Living; and Margaret Bolton and David

Carrington, New and Alternative Financial Instruments, both

at www.missionmodelsmoney.org.uk

3Jim Collins (2001) Good to Great and the Social Sectors,Random House

There are major capability issues relating tothe core competencies currently required todrive up organisational and financial

perfomance. Given that the prevailing mindset in

most organisations identifies training as one ofthe first areas to be cut when budgets are tight,the consequent lack of investment in people andskills development is at the root of many issuesthat dominate the sector.

Some of the solutions certainly lie in up-skilling in key areas such as finance, fundraisingand public engagement activities, and inleadership development; but there also needs tobe a focus on identifying new, emergingcompetencies which will help manage thecomplexity around us. In a wider context, and notonly relating to the arts, research in the workplacesuggests that 60% of positions now require a

range of multiple intelligences that only 30% ofthe population possess. We need to startunderstanding what these might be as there isevidence that ourexisting leadershipgroup is hiring thewrong people withthe wrong talents tothe wrong jobspecifications.

The lack ofsophisticatedfinancial knowledge

and skills withinA&COs at bothexecutive and non executive levels, and indeedamong funders, is a widely recognised feature ofthe sector. We have found that the financialdynamics of non-profits are not well understoodeither at Executive or Trustee levels and there isan urgent need for both A&COs and funders todeepen their understanding of capital structure.Appropriate financial information at a strategiclevel is not often available, and many people insenior positions cannot read a balance sheet.There is often an inability to distinguish betweenbidding for funds and business planning,

especially on capital projects, with both fundersand A&COs colluding on this.

In relation to IT, recent studies reveal belowaverage understanding and engagement with IT atall levels of operation. And this is not onlyaffecting back office functions. Interviews with

artistic directors paint a picture of thwartedaspiration: ideas are not limited by imagination orlack of ambition, but by a lack of inclusion informal strategic documentation; budgets andcapacity planning; and organisationaldevelopment thinking.

Many of the barriers to adapting to thechanging external environment lie at the top endof the food chain with the incumbent ChiefExecutive Officer or equivalent, and with Trustees.This existing leadership group is trapped in oldways of thinking: fixing not transforming. Withregard to governance we have found thatbehaviours generally are not changing fast enough

to reflect the new operating context where thechallenges are of a different order to those in thepast. All too often boards operate in such a

collegiate, consensus-driven manner thatindividuals areuncomfortable inchallenging managementor questioninginconsistencies or thequality of informationthey receive. Trusteesalso need to regularly

revisit the relevance ofthe mission of theirorganisation and become more aware of missioncreep being forced upon them by funders andother stakeholders.

At the same time where best practice doesexist it is not sufficiently shared across the sectorand is very slow to be taken up. For example,relationship-building strategies continue to becompartmentalised internally into audiencedevelopment, fundraising and education, thuspreventing more holistic engagement strategies,and whilst there is a growing willingness for moreeffective horizon planning to manage accelerating

change, there is generally inadequate timeallocated to this. I

Driving up performance

True or False?

I am investing sufficient resources into

developing the relevant financial and

organisational competencies of my team and

the knowledge and skills of my Trustees.



Influence the future:

take part in MMMs final consultation

Go to www.artsprofessional.co.uk to give your response to the key

issues facing the sector


3/[email protected] ArtsProfessional 23 April 2007 9


Financing the future

New methods, new models

Much of the MMM programmehas focused on exploring howA&COs can become more

organisationally and financiallysustainable, and one of theprogrammes most important strandshas concentrated specifically onintelligent funding. To get to the heartof the issue, interviews and focusgroups took place with trusts andfoundations, individual philanthropists,the corporate sector, the public sector,the social investment community,leaders and board members of A&COs,senior development professionalsworking at differing scales, groups ofproducers across all artforms, advocacy

organisations, and policy makers. Threeoverarching concerns emerged: Poor alignment of missions

between funders and A&COs ishelping to drive the over-extensionand under-capitalisation of thesector, stalling healthy growth anddiverting A&COs from beingmission-led.

A&COs are under great pressurethrough funders preferences forfunding programme activity overcore costs and for short-term

funding agreements, their tendency

to penalise reserves, and theirfailure to accept full cost recovery.

The shape, distribution and flow of

financial resources have a dramaticeffect on the behaviour ofindividuals, organisations andcommunities. At a time when thewider voluntary sector isdeveloping new forms of financing,most A&COs remain heavilydependent on grants and incomefrom fundraising.

A few simple changes to fundingpractices could make a big differenceto the sectors chances of achievingfinancial stability. Here are some of thesuggestions made in the MMM

Provocation The Art of Living.1) Just as it is important for A&COs tobe clear and strict on mission focus, sotoo should funders articulate clearlywhy they fund what they fund andrelate this to their decisions. Whenfunders have doubts about the qualityof delivery, they should be prepared tomake rigorous decisions on theallocation of funding.2) They need to encourage thedeepening of organisational andfinancial capacity in the funded, dis-

courage a dependency culture and

encourage autonomy, not penalise it.3) It is essential to fund core operations,not just the marginal costs of

programmes. The price of contractsand value of grants must reflect the fullcosts of delivery, including a legitimateportion of overhead costs.4) Funded organisations or individualsshould be judged on their deliveryagainst a clear mission, and fundingshould be withdrawn or increasedbased on delivery against missionrather than other secondary criteria.5) The complex, fragmented, diverse,multi-relationship nature of thefinancing system, and the cost ofaccessing it, is burdensome and

discouraging for too many people andit takes a heavy toll on our humancapital. Its time to recognise this.

The negative impact of theparent/child relationship betweenpublic funders and those A&COs thatare heavily dependent on public sectorgrants is a problem, and there is littleevidence of a will on either side tochange the dynamic. Funders aresceptical of A&COs ability tounderstand the parameters andboundaries they are working within and

therefore unable to build trust, while

A&COs believe that any challenge theymake to the authority, mission andmethods of their funders will result in areduction or withdrawal of funds. Someof the changes recommended above,

and in other areas of governance andcapacity building, would go a long wayto building trust and renewedconfidence in risk-taking betweenpublic funders and A&COs. It is alsoimportant that more time is devoted toexploring alternative forms of financewhich extend beyond the mainstays ofcontributed and earned income.Scepticism about these, as well as corecapacity issues within A&COs, will needto be addressed if the sector is tosurvive and prosper in an ever more

competitive funding environment.I

You never change things by fighting theexisting reality. To change something, build anew model that makes the existing model

obsolete. R. Buckminster Fullers quote is radical, butwe are living in a time of major permanent structuralchange in our sector driven by the accelerating changeand complexity in our external environment. We needto develop new structures and models to respond to

that changing environment.

The current status quo is insufficiently flexible andadaptive in the contemporary operating environment.

Charitable status, the legal structure almostunquestionably adopted by most non profit A&COs, isrisk averse and fails to promote the spirit of theentrepreneur as it imposes legal limitations thatencourage conservativism. Inevitably this worksagainst the spirit of creativity, artistic risk anddynamism that we need if we are to develop a healthy

arts and cultural ecology. The master/servantdynamic, as it is described by some, lies at the heart ofthe charity model, with Trustees in ultimate authority.This has a tendency to create command and controlstructures which are losing ground in an age whereflatter more networked organisational structures arebecoming the norm.

Pressure is also being brought to bear on our

traditional ways of organising as the boundariesbetween for profit and not for profit creativeindustries blur. Low wage scales, coupled withperceptions that the not for profit sector isinsufficiently open to new ideas and working stylesand lacks technological savvy, mean the sector couldbecome insufficiently attractive to an ever shrinkingtalent pool. Additionally, major fixed assets such asbuildings are becoming increasingly expensive tomaintain, let alone programme, at a time whenpatterns of public and private funding and earnedincome revenues are changing.

New methods of operating are already appearing,

mostly outwith the traditional subsidy framework.With the advent of Community Interest Companies(CIC) in particular there is a possibility for A&COs tooperate commercially and on a non profit distributingbasis. Watershed in Bristol, one of MMMs Exemplarprojects, has been in the process of setting up a CICto operate alongside its trading and charity

structures. New legal structures such as CICs will besuitable for some organisations only at certain pointsin their lifecycles; new ways of working, however,involving strategic alliances, shared services and jointprocurement activities for example, offer broaderpotential for organisations delivering complementaryactivities to work together. Another MMM Exemplarproject involved a group of independent museums inYorkshire working together to raise funding, and there

is interest in such alliances extending to front ofhouse activities as well as back office functions,especially in the education and learning programmeareas. Looser, more adaptive organisational forms,need to be encouraged now by funders andsupported by those agencies responsible fororganisational development.I

True or False?

I feel that the charity model is restricting my

organisations capacity to become more

financially sustainable.



True or False?

My organisation is free to makedecisions without pressure to

conform to the wishes of

funders.

Go to www.artsprofessional.co.uk

to answer this and other questions

in the MMM consultation.

Watershed: exploring the CIC model

Documents

AP144 - Towards a Healthier Arts and Cultural Ecology (Feature 23 Apr 07)