The Arts Benchmark pilot

Now that the Capital Matters Consultation draft has closed for comments, while we wait for the full publication, here is a guest post from Sarah Thelwall also on the issue of capitalisation of organisations.

Sarah is the MD of MyCake.org which provides online financial tools for creative entrepreneurs and organisations. Here she talks about the piece of work called the Arts Benchmark, where grant income data for 23 organisations was analysed with regards to whether it related to tangible or intangible assets. A version of this post was published in Arts Professional issue 225. 

The first set of comparisons that we've set up in this benchmark is the split between grant income : income from tangible assets compared to income from intangible assets. Furthermore we're keen to look at not only how these ratios change year on year (e.g. the impact of the recession) but what the differences are between the income splits of a venue based organisation such as TATE, Watershed or Baltic vs an artist led organisation such as MotiRoti, Proboscis or Blast Theory. Below is an extract of the Arts Benchmark data summary:

Across the whole data set we see an average grant funding level of some 65-70% for each of the years 2006-10. This is against a backdrop of general increases in the total income to the organisations.

Typical increases are in the region of some 10-15% over a 3-4 year period (at the extremes we see a 30% drop and indeed a 60% rise). That is to say that these arts organisations are increasing the total amount of grant funding they achieve whilst also growing their earned income streams.

Relatively few of the participating organisations have a public building (gallery, theatre, cinema etc) so there is not yet enough data to comment upon the income achieved from tangible assets and any variations in this across the time period except to say that whilst the average is for some 30-40% of total income, for organisations who are venue based, to be from their tangible assets what this doesn't show is just how large the variation is ... the larger organisations might show a 30% grant : 60% tangible asset : 10% intangible asset ratio whereas the smaller niche venues will at best be showing a 5% income from tangible assets.

For the three years from 2006 to 2009 the data shows an increase in the income achieved from intangible assets from 24.7% to 31.5%. The largest source of intangible asset based income is from commissions - a clear use of the core skills of the organisation.

The sale of products (art works, books, films etc) also registers as sources of >10% of total income for a reasonable number of participating organisations.

Donations & membership, sponsorship (corporate or private), services & consultancy and ticket sales are all worth, on average between 5-10% of total income. We can see from this that non-venue based organisations who have been focussing on the development of new income streams for several years are capable of growing this to around 20-40% of total revenue income.

In only one case amongst all the non-venue based organisations has income from intangible assets regularly exceeded that from grant sources. This is of particular note as there has been much talk in political circles about how every £1 of public money spent is matched by more than £1 from non-public sources. Whilst this is true for venue based organisations it would not appear to ring true for non-venue based arts organisations. More background on the pilot can be found in the slides below:

The Arts Benchmark

Couple of notes on the data:

• The grants applied for figure is not the same as grants successfully achieved but gives an indication of the success rate when looking at this in more detail.
• I'm not making comment on the 2009-10 data yet as there are distinctly fewer data sets (some folks have yet to finish off their accounts) so lets hold fire until we see what that year really looks like