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Funding a High-Achieving Arts Sector - A guest blog by Niamh Goggin

22 Oct 2024

Funding a High-Achieving Arts Sector -  A guest blog by Niamh Goggin

 

“And always keep a-hold of Nurse For fear of finding something worse.”

 

Socially Investing in the Arts In August 2015, Arts & Business Northern Ireland and Building Change Trust, a NLCF funded charity, commissioned a report on the opportunities for social investment to strengthen the arts sector in the region. The commission was won by Small Change, with a team comprising Niamh Goggin, Margaret Bolton and Pat McGinn. A key finding from the research was that current funding structures and models did not support organisational stability and impeded organisational development and growth.

Not-for-profit arts and cultural organisations in Northern Ireland were generally:
 small or medium sized
• financially fragile, running at or below breakeven, with stagnant funding and inadequate reserves
• over-stretched, with a lack of time and ‘head space’ for strategic thinking and planning
• dependent on public funding, with a high proportion of their income coming from this source.

“The whole sector was running on fumes!” We concluded that the sector, by and large, was not ready for social investment. Change could only happen in the sector if it was supported by policymakers and funders. We recognised the strength of US models of funder collaboration, supporting resilience and capitalisation strategies for their grantees. We were clear that significant change could only be achieved with the support of the Department for Communities, Arts Council Northern Ireland, local authorities and supportive trusts and foundations. The capacity of arts organisations to develop robust, appropriate funding models for their organisations has been hampered by the rigidity and lack of understanding of public sector funders. They need to understand that VCSE organisations do not benefit from the financial and institutional assets that they enjoy. Like small businesses, they need to make provision for unexpected or unpredictable costs that are not covered by grant funding. For them, there is no magic money tree. Arts organisations need to make surpluses, building reserves and capital for reinvestment, developing new income streams and investing in their employees.

We recommended, and then co-produced with Arts & Business NI, a plan for Blueprint, a new capacity-building scheme that now;
• Offers assistance across the income spectrum
• Supports collaboration
• Provides access to blended finance support - grants and loans
• Offers one-to-one mentoring and support
• Focuses on plans increase income, generate surpluses and build capital.

Understanding and developing business models is a priority for the Blueprint Programme. Traditionally, business planning in the sector has been driven by Arts Council NI’s requirement for an annual business plan. Blueprint helps participating organisations to move away from focusing mainly on ACNI requirements and work out their own strategies. This requires the capacity to understand and develop improved business models.

These need to be appropriate for mission-driven not-for-profit organisations and should support the goal of a thriving arts ecosystem. Peter Drucker defined a business model in five questions;
• What is your mission?
• Who is your customer?
• What does the customer/use value?
• What are our results?
 What is our plan?

“Customers” is a challenging word for grant-funded arts organisation, so perhaps stakeholders might be more useful. Joan Magretta, commenting on Druker’s approach said that business models are “at heart, stories that explain how enterprises work – a logical story explaining who your customers are, what they value and how you will make money in providing that value.”

This can be broken down into;
- The value proposition
- Stakeholder / user / customer segments
- Infrastructure (resources and processes)
- A viable revenue model

The most crucial element of these is the value proposition. For not-for-profit organisations, defining the value proposition is more challenging, because the stakeholder that values what you do may not pay for it. Arts organisation will probably have a very clear idea of what they want to do and who will benefit from it. They then need to work out who would be willing to fund the work and whether your value proposition and the funders’ requirements can be reconciled.

I started this blog with a quote from poem by Hilaire Belloc, about poor Jim who let go of Nurse on a visit to the zoo and was eaten by a lion. The Blueprint journey is not an easy one. The choice is between a “safe” funding environment that stifles ambition, hampers creativity and delivers a Gradgrind employment environment or taking considered and mitigated risks to diversify and grow. Key funders have chosen to back Blueprint because they believe in the creativity and capacity of Northern Ireland’s arts sector. The experience of the programme so far has shown that some organisations are willing, able and enthusiastic about breaking out of confinement. Maybe the lions should beware!

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Arts & Business NI is generously supported by The Arts Council of Northern Ireland.