Hard times for arts charities

The recent boom in funding looks vulnerable

London Bubble Theatre Company
London Bubble Theatre Company

On the face of it, arts charities are in robust health. In January, the charity Arts and Business released figures showing that donations to arts organisations from business, individuals, trusts and foundations reached a record high of £686m in the year to March 2008 - up by 12 per cent on the previous year. Individual giving rose by an astonishing 25 per cent. Colin Tweedy, the chief executive of Arts and Business, paid tribute to the "remarkable achievement of the UK's arts fundraisers".

But bust may yet follow boom. One inkling of darkening clouds on the horizon came in the guise of a new-year warning from culture secretary Andy Burnham that subsidised arts organisations were not immune from government cuts in the wake of the bank bail-outs and the economic downturn. They should make contingency plans in case funding levels for 2010/11 were revised, he said.

Then there is the news from the US, often thought to be six months ahead of the UK in feeling the recession's impact. The Wall Street Journal reported that donations from business to not-for-profit organisations, including artistic institutions, had dried up. The effects on the US arts sector have ranged from the cancellation of festivals to the selling of art collections and the closure of theatre companies. The fear of arts organisations on both sides of the Atlantic is, in the words of one commentator on the US scene, that "in tough times art collections, poetry festivals and Shakespeare might seem like dispensable luxuries".

Arts charities are not usually among the homelessness, debt counselling or social welfare organisations that are widely thought to be most vital in economically depressed times. "Understandably, the case for those welfare causes is going to be very powerful," says Theresa Lloyd, an independent adviser on philanthropy, "and some arts organisations will find it hard to compete in that environment."

No firm picture of the impact of the downturn in the UK has emerged, apart from stories of some companies cancelling arts sponsorship they had promised. But there is little doubt that hard times are around the corner.
 
Arts and Business has predicted that private sector donations will not pick up again until 2013. "It will be an era of austerity, but it won't be Armageddon," says Tweedy. "It will be tough and certain organisations will find it very difficult."

Business giving to arts charities is significant, amounting to £114m out of the £650m that business gives the charity sector, according to the Directory of Social Change. A large number of supporters have been the banks and financial services companies at the heart of the current turmoil. Tweedy says at least a quarter of business support - mainly corporate hospitality - is under threat. "If people felt it was a nice thing to do but not a necessary thing, that will be cut," he says. "And that's where the danger will be."

But it is in individual giving that the impact of the recession could be most unkind to arts organisations. As the Arts and Business figures demonstrate, personal giving to the arts, concentrated among high-net-worth individuals living in London, rose dramatically during the boom but could dwindle just as fast during the bust.

Lloyd, the author of Why Rich People Give, suggests arts organisations face a massive problem, not because many donors will not be able to afford to give, but because they will feel more insecure. "The research I did for my book showed financial insecurity had a huge impact on how people felt financially, and these feelings of insecurity are unrelated to the actual level of wealth," she says.

What this means, says Lloyd, is that existing arts donors, known to be loyal and committed, will continue to support their favourite institutions as long as they can, but new donors will be hard to attract. "It's going to be really challenging to make the case for somebody to give to an organisation that is new to them," she says. "It's not that they might not give in due course, but to make the case that ‘we really need the money now as opposed to next year when the dust has settled' will be hard, particularly in an environment of increasing demand for the services of social welfare organisations."

Arts organisations will have to adapt to the new climate, and one that is ahead of the game is the London Bubble Theatre Company in Bermondsey, south London. The theatre lost its revenue funding from Arts Council England in March 2008. The loss of the funding, which it had been getting for 30 years, forced the theatre to cut 70 per cent of its jobs. "It's been bloody and horrible, but also interesting," says artistic director Jonathan Petherbridge. "It perhaps forced us to enter into a new financial climate before our peers are going to have to do the same."

The theatre responded to the loss of its core income by hiring out equipment as well as rehearsal and workshop space. It also bolstered its efforts to raise money from trusts, foundations and the Big Lottery Fund. More innovatively, it has attempted to reach out to a new audience through an initiative known as Fan-Funded Theatre. The initiative asks supporters to buy membership that will entitle them to vote for the productions they would like the theatre to stage.

The theatre is also successfully selling its unique skills in other areas. It has secured funding from the London boroughs of Lewisham and Southwark to provide activities for teenagers, establishing a training programme for unemployed young people to teach them how to run theatre workshops for their peers.

According to Tweedy, it is community programmes such as these that arts organisations will have to prioritise if they are to hold their own in the battle for cash during the recession. "Arts organisations are going to be under a massive microscope," he says. "It will raise the question of their value to society, and the arts community has got to shout long and hard about its value to society."

He says up to 30 per cent of the work arts organisations do is education-related, ranging from taking actors and directors into prisons to working with homeless groups or, most commonly, taking arts into schools.

"People often don't know about this work, so arts organisations need to emphasise it more and maybe do more of it," says Tweedy. "We need to remind the public how important the arts are.

It's not just about entertainment; it's about education and giving people a different perspective on things."

While arts charities are being encouraged to reach out to new audiences and beneficiaries, they are also being urged to nurture their traditional supporters. Arts charity fundraisers, whose achievement in raising private investment in the arts was recognised by Tweedy, will have to be flawless in their treatment of donors, says Lloyd.

According to Rory Wardroper, a fundraising consultant for Opera North, art charities need to take steps to make sure corporate and individual donors who are unable to keep giving because of the recession are not lost forever. That means offering small tokens such as free tickets or opportunities to meet performers so that ties are not severed and, once the downturn recedes, they are likely to start giving again.

"We've absolutely got to find ways of retaining the loyalty of our audiences and supporters so we can continue our work," he says. "This isn't about black and white; it's about shades of grey."

Tweedy is confident that arts organisations will not be pulverised by the recession, but says they will be changed.

"Recessions are often very brutal, but they are ways of encouraging or driving institutions to be more commercially realistic," he says. "The arts community has to be less reliant on the public purse and more reliant on its own ingenuity."

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