jam today or jam tomorrow?
Post on 04-Jun-2018
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Size Matters
prepare to be amazed at justhow different the income
models are for small vs. largeorganisations
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How models change with size:
Income Source (as % of
income)
10m
ACE core grant 47.0 50.1 27.5 38.1 29.4
Other ACE 14.9 15.0 14.0 10.9 3.3
Trusts & Foundations 21.4 8.6 5.9 3.7 4.0
Local Authorities 23.7 10.5 14.5 7.5 7.3
Lottery Funds 9.0 18.5 5.3 0 1.2
Grant in Aid 0 0 26.9 0 37.0
Other Govt Grants 47.3 22.2 10.4 2.2 0
Any other Rev Grants 38.0 9.5 10.4 8.8 11.1
Total Grant Income 78.9 72.7 57.4 52.5 51.2
If we set up ranges and show % income we can
compare small to large organisations meaningfully
As organisations get bigger so their dependence
on ACE core funding reduces
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How models change with size:
Income Source (as % of
income)
10m
ACE core grant 47.0 50.1 27.5 38.1 29.4
Other ACE 14.9 15.0 14.0 10.9 3.3
Trusts & Foundations 21.4 8.6 5.9 3.7 4.0
Local Authorities 23.7 10.5 14.5 7.5 7.3
Lottery Funds 9.0 18.5 5.3 0 1.2
Grant in Aid 0 0 26.9 0 37.0
Other Govt Grants 47.3 22.2 10.4 2.2 0
Any other Rev Grants 38.0 9.5 10.4 8.8 11.1
Total Grant Income 78.9 72.7 57.4 52.5 51.2
Small organisations also rely more heavily on
Trusts & Foundations & Local Authorities
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How models change with size:
Income Source (as % of
income)
10m
ACE core grant 47.0 50.1 27.5 38.1 29.4
Other ACE 14.9 15.0 14.0 10.9 3.3
Trusts & Foundations 21.4 8.6 5.9 3.7 4.0
Local Authorities 23.7 10.5 14.5 7.5 7.3
Lottery Funds 9.0 18.5 5.3 0 1.2
Grant in Aid 0 0 26.9 0 37.0
Other Govt Grants 47.3 22.2 10.4 2.2 0
Any other Rev Grants 38.0 9.5 10.4 8.8 11.1
Total Grant Income 78.9 72.7 57.4 52.5 51.2
This higher level of grant dependence is justifiable
if the organisation is a Deferred Value Creator (DVC)
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Size Matters
when changing businessmodels in the visual arts
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Overview Couple of key models for context
Two types of activity
Key points of difference
Two types of assets
Supply side & demand side income types
The key ideas in Size Matters
Implications of these
1. Large vs. Small
2. Challenge of Monetising
3. Implications of Deferred Value
What is comparative & collective data good for?
What benefits are accruing to those who DO benchmark?
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Emerging Mid-career
EstablishedRetail
innovative
traditional
internationallocal
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Two types of activity
First order:
The creative core Grant funded Not expected to
generate a financialreturn Delivers a cultural &
social return Intrinsically connected to
the expert labour forcein the organisation
Eg - exhibition
Second order:
Takes assets accrued infirst order
Seeks to develop them
into products &services that have acommercial value
Disconnects fromlabour costs and istherefore morescalable
Eg - merchandise
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The trouble is
The pot of funding to pay for first order activitiesis decreasing Less govt money
Private Foundations endowments are worth less
But even in good times it was hard to add value tosupply side cash You only get X% of the cost of delivery
No (profit) margin so dont have spare to pay for new &
speculative
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Two key points of difference
First order
1. Revenue connected tocost of production as
intrinsically linked tolabour costs
2. Grant funding meanslimited by supply sideeconomic factors
Second order
1. Revenue linked to marketdemand
2. Market models meansdriven by demand sideeconomics
Acknowledgements: Proboscis, SCAN, Blast Theory
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Trusts &Foundations
The LUX mix
GrantsProducts& Services
Research
Donors& Patrons1
stOrder 2ndOrder
Policy devt
Artist devt
Commissioning
Education, access & advocacy
Publishing
Preservation, digitisation
& public access
Distribution & loan of works
Product sales
Consultancy & other
services
Licensing/franchising
of the LUX model
Research & Teaching
Org. & Indiv. donors
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How do I
Determine which second order activities are right formy organisation?
Avoid second order activities being seen as a financial
wart on the creative face of the organisation?
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What are my tangible &intangible assets?Tangible Assets:
Buildings
Archives
Collections
Intangible Assets:
Individual & organisationalexpertise & experience
Reputation, brand & goodwill
Intellectual property Research skills
Audience & customer base
Education reputation & resource
Methods & processes
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What income can you derivefrom Tangible assets? Buildings
Caf & catering
Shop & retailing (incl. online)
Tickets & events
Space hire
Archives & collections Products & merchandise - dvds, books, reproductions,
posters etc
Lending fees
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What income can you derivefrom Intangible assets Staff sector knowledge
Consultancy
Contracts (public & private sector)
Products eg publications, films etc
Research (academic & private)
Intellectual property Licensing the use of the IP
Sale of the IP
Spin out of commercial products & services
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What income can you derivefrom Intangible assets Research
Subcontractor fees from HEI based research projects
Share of IP generated
Audience & customer base
A USP that HEIs value re research Donors & members
Education reputation & resource Public sector contracts
Sales of products & services
Brand Sponsorship & partnership
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Grant Based:
Govt & LATrusts &FoundationsEU
Supply Side Demand Side
Arts
Org.
Intangible Asset Based:Products & ServicesResearchPartnership &
SponsorshipContractsDonors & Patrons
Tangible Asset Based:
TicketsCollection LoansRetailingCaf & CateringSpace Hire
Arts Income Types
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Key ideas so far
First vs. second order
Tangible vs. intangible assets
Earned income from intangible assets
Venue vs. non-venue based organisations
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Size Matters key ideas
Deferred Value creation
Lifetime Investment vs. Annual Subsidy
More appropriate metrics
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Questions following on fromthese:1. What is the role of small vs. large organisations in the
contemporary art ecosystem?
2. How can we monetise intangible assets w/oprostituting the organisation?
3. What are the implications of deferred value on thecontemporary art supply chain?
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1. Small vs. Large - howdifferent? Flexibility vs. silos
Early works & mentoring
Fully resolved vs. first showing
Commissioning vs. exhibiting Process vs. output focussed
What grow up to become?
Investment lifecycle vs. annual subsidy
Live for ever?
% dependence on grant funding
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2. Challenge of monetising
How far go?
Not financial wart on creative face how achieve
proper integration?
Digital - content vs. art form
Long term sustainability
Pump priming funding
Mechanisms for keeping integrated
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3. Implications of deferredvalue More than recoupment
Space in the sales ratios
Equity stake in the work
Brand recognition from commissions
Getting larger orgs to include
Getting artists to remember
Contracts Main work vs. editions
Other types of value - social, artistic, cultural
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What is comparative &
collective data good for?Internal goal setting:
Seeing where you are strong (vs. your peers)
Seeing what needs improvement
Diversifying income and/or managing cost
Setting targets that are more than plus a bit/minus a bit
To investors & other stakeholders
Stronger business plans
Stronger investment propositions
Help achieve more buy-in from your bank
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What is comparative &
collective data good for?With trade bodies and professional organisations:
Identifying areas where support or development is required
Monitoring trends and the impact of sector development
activities
For the sector as a whole:
Communication of the overall contribution to GDP (or it would
be if we had a total for the turnover of the sector)
Lobbying to the Treasury by DCMS and others
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What benefits are accruing to
those who DO benchmark? Pragmatic and realistic goal setting for new areas of income
development
Greater clarity on how a business model may change as anorganisation grows e.g. changes from
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Thankyou
sarah@mycake.org
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