common practice london size matters

8/6/2019 Common Practice London Size Matters

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1 Size Matters: Notes towards a Better Understanding o the Value, Operation and Potential o Small Visual Arts Organisations

Size

Matters


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Notes towards a Better

Understanding o the Value,Operation and Potential o

Small Visual Arts Organisations

Sarah Thelwall

or Common Practice

July 2011


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Foreword

Executive Summary

Introduction

Methodology

The fnancial dynamics o small visual arts organisations

Small arts organisations and the creation o value

Deerred value creation

Measurement methods vs. needs

Omissions and the ways in which we might address them

Conclusions

Colophon

4

6

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11

14

24

28

31

35

39

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Contents


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Foreword

Size Matters: Notes towards a Better Understanding of the Value, Operation

and Potential of Small Visual Arts Organisationsis written by Sarah Telwall,

commissioned by Common Practice, London with support rom Arts

Council England.

Te paper seeks to articulate the value o small visual arts organisations

within the wider arts ecology. Te paper explores the signicant potential

these organisations have in the present cultural landscape and economy,also detailing the operational and investment challenges they ace in realising

this. Finally, it advocates a reconsideration o present assessment and

investment practices.

Published in July 2011, this paper will be presented in a variety o orums

to stimulate discussion around its core questions, the urgency o which has

increased in recent months. I you are interested in learning more about this

work, please visit www.commonpractice.org.uk or email Common Practice

members via [email protected]

Common Practice, London is an advocacy group working or the recognition

and ostering o the small-scale contemporary visual arts sector in London.Te group aims to promote the value o the sector and its activities, act as a

knowledge base and resource or members and aliated organisations and

develop a dialogue with other visual art organisations at a local, national and

international level. Te groups ounding members are Aterall, Chisenhale

Gallery, Electra, Gasworks, LUX, Matts Gallery, Mute Publishing, Te

Showroom and Studio Voltaire together representing a diverse range

o activities including commissioning, production, publishing, research,

exhibitions, residencies and artists studios.

Sarah Thelwall is a researcher, strategist and consultant in the creative andcultural industries. Her work has resulted in the publishing o new models

and approaches that enable arts organisations to reduce their dependence on

grant unding through increases in earned income. As a result o a decades

work in this eld, she has turned this into an online resource the Culture

Benchmark. Tis symbiosis between the Culture Benchmark and Telwalls

consulting work with clients such as Common Practice is intended not only

to improve sustainability in the arts but also to improve understanding o the

value and role o the arts in the economic terms understood by HM reasury.

www.commonpractice.org.uk


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Agency, Assembly (The Showroom), 2011, Installation view. Photo: Daniel Brooke

The Showroom


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Small visual arts organisations, such as the members o the Common Practice

group,1 ull a crucial role in the arts ecology, commissioning artistic works,

developing new delivery ormats and implementing highly participatory

educational strategies. Teir roles and methods o operation are ocussed

on collaboration and exibility and their approaches are as vital to a healthy

visual art ecosystem as those o larger institutions. An implicit understanding

o the role and value o small organisations, both in the cultural sector andsociety as a whole, has long existed among arts proessionals, yet it remains

at odds with the metrics o government and many unders, whose measures

or audience and income development serve to de-emphasise the potential

o these organisations.

Te nine members o the Common Practice group each have an average

income o 250-300,000 per annum. Extensive nancial analysis shows

their level o dependence on core unding rom Arts Council England to be

around 63 percent. While this may seem high, a comparison with their larger

institutional counterparts (such as members o urning Point London, also

known as the Visual Arts London Strategy group or VALS)2 demonstrates

that the Common Practice members are only 0.9 percent more dependenton public unding.3 Furthermore, it would seem that small organisations act

as an unocial support mechanism or larger organisations, by investing in

risk-taking and the development o work; i the cost o this support were to

be evaluated, the contribution o public unding to large organisations would,

in act, be higher than those to smaller organisations.

Added to this, small organisations have consistently lacked the

investment in tangible assets that has been available to larger organisations.

As a result, ew small organisations with a turnover o less than 1m per

annum achieve any substantial income rom their buildings, archive

or collection. Tose which do so tend to be renting out space to other

organisations. Tey also lack income rom shops or cas and have very

little access to sponsorship and donor income.

An oten unacknowledged resource is to be ound in small organisations

accretion o intangible assets. Tese include: individual and organisational

expertise and experience, intellectual property, research skills, proessional

methods and processes. With judicious investment, these hitherto unexploited

assets which organisations generate naturally as part o core activities could

be converted into earned income, ofering small organisations a potential

saeguard against economic uncertainty.

Te intangible assets generated by small organisations as part o routine

operations ofer signicant promise in this context, making them a ocal pointo this paper. Combined with the tangible assets that even non-building based

organisations possess archives, or example they represent an important,

1 Aterall, Chisenhale Gallery, Electra,Gasworks, LUX, Matts Gallery, Mute Publishing,The Showroom and Studio Voltaire.

2 Like Common Practice, this group has

received Arts Council England (ACE) supportor its knowledge-sharing and strategic activitiesand includes representatives rom larger London-based organisations and agencies, namely ACMEStudios, Artangel, Barbican, British Film Institute,Camden Arts Centre, Cape Farewell, CentralSaint Martins College o Art and Design, Cubitt,Engage, Frieze, Hayward Gallery, Iniva, Instituteor Contemporary Art, Mayors Ofce or Culture,National Portrait Gallery, The PhotographersGallery, Royal Academy o Arts, SerpentineGallery, South London Gallery, Tate, WhitechapelGallery, as well as a changing representative othe Common Practice group.

3 See fg 4 or details.

Executive Summary


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yet under-researched, area o enquiry. Te advent o new digital modes o

distribution, audience engagement and content remuneration increase the

urgency o this project.

A consideration o the expenditure o the small organisations under

discussion reveals spending to be concentrated in programme and stang

costs, which are closely linked to direct organisational outcomes. What this

analysis reveals is the lack o scope or development that exists within small

organisations. Tis reinorces the poverty trap in which many arts workers

are caught, allowing scant possibilities or promotions and pension security.Te remarkably low overheads on which these organisations are run also

militate against their development in the key areas o training, marketing,

research and development and the accumulation o reserves. Tis marks

another key area or uture investment.

In considering the value generated by small organisations beyond the

scal realm, this paper demonstrates that artistic, social and societal value

are oten realised long ater a commission has let the initiating organisation.

By taking examples o the types o commissions made by members o the

Common Practice group and ollowing their trajectory through the art world,

we see that value accrues over the lietime o an object or idea, which is otencapitalised upon by larger institutions and the commercial sector.

However, this research exposes the inapplicability o current metrics to

measuring this deerred value, which means that smaller organisations will

appear less successul, since the majority o the value that they create is not

visible via these metrics. In lacking such points o diferentiation, we also lack

the means to evaluate the relationship between the delivery approaches o

small organisations, the (oten intangible) assets being created in the course

o their work, and the artistic, social and societal contribution they make.

We conclude that we need to develop ways o measuring a wider

variety o types o value being delivered by small visual arts organisations.

In particular, we need approaches that take into consideration the structuresin which a substantial proportion o the value created is deerred until later

in the lie o the work. Tis paper also outlines major growth areas and aims

to identiy ways in which the potential o small organisations could better

be explored. Finally, in keeping with these revisions, this paper argues that

we need to develop a better understanding o the variety o organisations

themselves, articulating investment approaches that support them to maximise

their potential within the system as a whole.


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Ruth Ewan, Dreadnoughts: Dreadnought No.2, Who Owns the City?, 2010, Live perormance. Photo: Davide Manone

Chisenhale Gallery


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Introduction

Te role o small visual arts organisations has long been acknowledged by

experts to be a vital component within the cultural eld, delivering value

to both the sector itsel and to wider society.4 Tis perspective is implicitly

acknowledged by unders and other proessionals, thus ar ensuring that small

organisations continue to be subsidised, promoted and used.

Intuition tells us that there is a diference between the ways in which

large and small organisations commission new work, negotiate relationshipswith artists, develop critical dialogue and ormats or discussion and display.

However, when pushed to express this diference in concrete and measurable

terms, we struggle to reach a point at which both small and large organisations

can agree on the diferent roles they play within the ecosystem. As such, the

implicit consensus on the value delivered by small organisations is oten at

odds with government and unders standard measurements, which tend to

rely on audience gures and diversication o unding as the main indicators

o perormance.

During times o national economic success and relatively abundant

public unding, the gul between qualitative understanding and quantitative

approaches represents a relatively minor issue. But, now that unding cutsare orcing diferentiation to be made, this disparity is a cause or concern,

highlighting the need to nd more appropriate ways o measuring the

contribution o small organisations.

Common Practice, London, has sought to make an intervention into

this situation by commissioning research into key questions associated with

the evaluation and development o small visual arts organisations. As an

anity group comprising Aterall, Chisenhale Gallery, Electra, Gasworks,

LUX, Matts Gallery, Mute Publishing, Te Showroom and Studio Voltaire

Common Practice represents not only the variety o small organisations as

they exist across the UK, but also the leading edge in the commissioning and

dissemination o art, lm and critical thought, with an impact that reaches

ar beyond the capital.

In the process o addressing the value o small arts organisations, this

research seeks to demonstrate the strengths and weaknesses o the current

system. It also identies some immediate changes that could be made,

and urther work that is required i we are to enable small organisations to

maximise their sustainability and contribution to the arts ecosystem and

society at large. While centred on the Common Practice group, the ndings

o this research may be applied to other small arts organisations in the UK

and beyond.

4 For the purposes o this research, smallorganisations are defned as having an annualturnover o below 1m and operating on a non-proft basis.


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Cover o Making Art Global (Part 1): The Third Havana Biennial 1989(London: Aterall Books, 2011),the second title in the Exhibition Historiesseries

Aterall


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Methodology

Building upon earlier work into new income streams in the arts,5 this research

deployed a mixed methodology. Tis involved analysing the management

accounts o participating organisations as well as conducting structured,

one-to-one interviews with Common Practice members and unstructured

conversations with associated experts and proessionals in the visual arts.6

Te rst objective o this research was to dene the value inherent

in the Common Practice organisations and others like them. Tis wasinitially attempted in nancial terms, by analysing the tangible assets o

the organisations under consideration as compared to their (oten larger)

counterparts. Financial data used in this paper spanned our years, ending

2009-10, during which time most participants were Arts Council England

(ACE) Regularly Funded Organisations (RFOs) and approaching the

application process to become National Portolio Organisations (NPOs).7

Te Common Practice group also participated in the pilot o the

Culture Benchmark,8 an online benchmarking system designed to enable arts

organisations to anonymously compare their nancial, audience and other data

within the wider arts sector. Tis allowed us not only to gain an overview o

the nancial position o the Common Practice members but also to comparetheir nances to a broader group o small and medium-sized arts organisations

(23 in total).9 Tese additional organisations were selected on the basis o their

having made a commitment to exploring new earned income streams and

utilising intangible assets. Tis was then extended into a representative group

o larger organisations, specically urning Point London (also known as the

Visual Arts London Strategy group or VALS),10 which provided a good level

o detail, allowing us to make a set o headline comparisons on both income

and expenditure or the year ending March 2009. Tis data is also held in the

Culture Benchmark, enabling comparisons to be made between the Common

Practice group and the VALS group.

Beyond scal value, small organisations were shown to generate

artistic, social and societal value. Tis was expanded upon with reerence

to relevant theory. During prior work into the continuum between intrinsic

and instrumental value on which this paper builds,11 contingent valuation

emerged as a compelling way o gaining more precise quantications o

public provision, including culture.12 But our challenge with this paper has

been more immediate, namely to take the existing consensus on the value

o small organisations, ask how this is generated in practice, what its

nancial underpinnings are, and how activities with the greatest potential

or growth might best be developed and supported. For this reason, nancial

analysis was ollowed by a consideration o the intangible assets reta inedby small organisations and the ways in which these might be converted

into earned income.

5 See Sarah Thelwalls three previous reports:Capitalising Creativity, Cultural Snapshot No. 14,Proboscis, 2007; Cultivating Research, CulturalSnapshot No. 16, Proboscis, 2009; and LeveragingLeadership into Income Growth, LUX, 2010.

6 Aside rom the Common Practice group,senior arts proessionals interviewed during thecourse o this research included Iwona Blazwick(Director, Whitechapel Gallery) and Julie Lomax

(Head o Visual Arts, Arts Council England). Allagreed on the constitutive value represented bythis category o organisations.

7 Until the end o March 2012, ACE willmaintain 900 Regularly Funded Organisations,at which point its new National Portoliowill commence, with 695 National PortolioOrganisations (NPOs) being maintained until2015. Members o the Common Practice grouphave been aected by this contraction.

8 The Culture Benchmark was created tomeet the need or better fnancial managementand assessment o perormance o the non-proftarts and culture sector in the UK. It is availablethrough the fnancial management tool-kit,

MyCake, at www.mycake.org. MyCake wasounded by Sarah Thelwall.

9 While this is a relatively small samplecompared to the total number o organisationsregularly subsidised by ACE, these datanevertheless generate considerable detail withrespect to ratios o income and expenditure. Thispilot group contained a variety o non-proft artsorganisations, most o which were not building-based and had an existing or potential ocus onintangible asset development. A comprehensive listis available at www.mycakefnancialmanagement.co.uk/blog/?p=2459

10 As this group did not directly participatein this research, we were reliant upon the publicly

available accounts o these organisations viathe Charities Commission and/or CompaniesHouse. To re-iterate a note given in the ExecutiveSummary, this group includes representatives romlarger London-based organisations and agencies,namely ACME Studios, Artangel, Barbican,British Film Institute, Camden Arts Centre, CapeFarewell, Central Saint Martins College o Art andDesign, Cubitt, Engage, Frieze, Hayward Gallery,Iniva, Institute or Contemporary Art, Mayorsofce or Culture, National Portrait Gallery,The Photographers Gallery, Royal Academy oArts, Serpentine Gallery, South London Gallery,Tate, Whitechapel Gallery, as well as a changingrepresentative o the Common Practice group.Like Common Practice, this group has receivedACE support or its knowledge-sharing andstrategic activities.


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Tis research seeks to deepen our understanding o the connection

between the practical operation and long-term value creation o small

organisations. Integral to this process was a thorough examination o the

phenomenon o deerred value, whereby the value created by an initiating

organisation is realised long ater a commission has moved beyond its

jurisdiction. By presenting examples o the types o commissions made by

Common Practice members and ollowing their trajectory through the art

world ecosystem and economy, we examined how value accrues over the

lietime o an object or idea and investigated who the beneciaries o thisprocess might be.

Tis necessarily led us into a consideration o the measuring standards

currently being used by public unding bodies such as audience gures, the

ratio o public vs. other income sources and pound per head o audience. For

reasons that will become clear, the concept o deerred value creation emerged

as a central actor in understanding the role small arts organisations play.

11 Representative examples include: JohnHolden, Capturing Cultural Value, Demos, 2004;Kevin F. McCarthy, Elizabeth Heneghan Ondaatje,Laura Zakaras and Arthur Brooks, The Gifts of theMuse, RAND, 2004; Hasan Bakshi, Alan Freemanand Graham Hitchens, Measuring Intrinsic Value,Mission Models Money, 2009; John Knell andMatthew Taylor, Arts Funding, Austerity and the BigSociety, RSA, 2011.

12 Contingent valuation involves determiningthe value o a public service, or example cultural

provision, by surveying its users on how muchthey would be willing to pay or it were it to bewithheld. It is discussed at length in MeasuringIntrinsic Value(Ibid) and has been outlined in HMTreasurys The Green Book, which sets out thecore principles on which public sector economicassessment is based.


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Imogen Stidworthy(.), 2011, Installation view. Photo: Peter White. Courtesy the artist and Matts Gallery London

Matts Gallery


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The fnancial dynamics o smallvisual arts organisations

In order to better understand the nancial models o small organisations

and the extent to which they are currently able to convert assets into

earned income streams, let us begin with a consideration o value as it is

conventionally understood within accounting systems. Tis knowledge will

also help us to identiy current modes o operation and the points at which

investment is required.

During the course o their core artistic activities, arts organisationsmay accumulate:

Tangible assetsBuildings

Archives

Collections

Intangible assetsIndividual and organisational expertise and experience

Reputation, brand and goodwill

Intellectual propertyResearch skills

Audience and customer base

Educational reputation and resources

Methods and processes

Network, partnerships and people

Development o a portolio o tangible assets generally requires substantial

investment in a publicly accessible building, collection or archive. Holding

tangible assets also implies signicant ongoing maintenance costs, which

may seem disproportionate with respect to total turnover. Te challenge or

small organisations is to make the best use o assets without allowing this to

consume all the energy o the team, thus allowing the ocus to remain on the

development and delivery o projects.

Closer analysis o the accounts o smaller organisations, through the

Culture Benchmark, will better illustrate how this is achieved.

4.1 Tangible asset development4.1.1 Data analysis o income fgures rom Common Practice accountsIn the rst place, we collected prot and loss data or all members o Common

Practice (see the blank orm in Appendix 1). Tis demonstrated that the total

income across all nine Common Practice members is in the region o 2.5mper annum according to the ollowing pattern:


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Averages across income lines suggest that, whilst grant dependence is high,

growth in earned income is helping to improve the overall sustainability o

these organisations.15 It is worth noting that these are maximum levels which

may not be achievable every year and vary so much across organisations

that they cannot be set as standards. Closer analysis shows that venue-based

members tend to demonstrate greater income rom tangible assets, leading to

higher overall income and lower grant dependence. For those organisations

that do not have tangible assets rom which to earn income, grant dependence

goes up to around 75 percent, which drives the average level o grant-basedincome up in the above table.

When we look at the data individually, we see that, on the whole,

organisations either have income rom tangible assets or rom intangible

assets but rarely rom both. In the only organisation rom the wider Culture

Benchmark pilot in which substantial income rom both these sources is

achieved, the ratio is approximately 40 percent grant : 50 percent tangible :

10 percent intangible assets.

4.1.2 Data analysis o expenditure fgures rom Common Practice accounts

A closer examination o expenditure shows just how nely balanced thenances o small arts organisations are.

Te largest area o expenditure is split between production costs

(including ees to artists), staf salaries and overheads:

Production and stang costs orm the majority o annual expenditure, with

production budgets ranging between 30 and 40 percent o total turnover. A

salary bill in the region o 30 to 40 percent o total turnover gives a 1:1 ratio

between production and staf costs, which is to be expected in organisations

o this size. As staf numbers are small and the majority o staf intimately

involved in the delivery o exhibitions and publications, these costs might

appropriately be considered integral to the commissioning o work. Tus,

one o the main tensions small organisations ace, is that o maintaining an

appropriate balance in programming costs with respect to staf time.

While the stang bill seems appropriate to levels o engagement, urther

investigation into remuneration across the 23 organisations that participated

in the arts benchmark pilot (o which nine are Common Practice members)

demonstrated that the average directors salary is only 33,135. A salary o this

level is not appropriate to the substantial operational and legal responsibilities,

qualications and experience required to meet the demands o the post. But,

when the directors pay accounts or up to 10 percent o the total running

costs o the organisation, it is clear that there is little room or increase. Tis

compounds the problems, elt within many arts organisations, o low-paid stafand reliance on interns, and it creates ew opportunities or substantial pay

rises within small organisations.

15 We are assuming that the overall trendis one o growth even though the 2009-10 datashow a drop. I 2010-11 data also show a reducedlevel o income rom these intangible assets, thenwe would suggest that this would be an areaworth supporting on the understanding that, as aless mature income stream, it is more sensitive tobroader economic conditions.

Costs average splits 2006 7 2007 8 2008 9 2009 10Production 16 39.6% 35.7% 33.0% 33.2%

Staf 32.8% 31.6% 37.1% 33.5%

Overheads 25.1% 27.4% 25.1% 27.8%

Reserves contribution 5.2% 5.3% 0.5% 8.0%

Figure 3 Average cost allocations as a percentage o total income

16 In the pilot, we did not separate outartists ees rom the costs o producing work,so we are not in a position to comment upon thebreakdown into materials : ees : reelancers :other production costs.


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urning our attention to overheads, we nd that the majority o

expenditure in this area including rent, rates, utilities and insurance

is unlikely to add to the overall value delivered by the organisation. O the

overheads regularly incurred by Common Practice members, the ollowing

could potentially deliver greatest additional value:

Training the average spend on this in 2008 was 0.4 percent o turnover.One o the benets o working or a small organisation is the speed

with which responsibility is acquired. However, i this is not backed upby a degree o ormal training, there is no certainty that bad habits are

not being acquired as quickly as good ones. raining also represents

a demonstrable commitment by the employer to the employee, which

increases loyalty and decreases staf turnover. For these reasons, this level

o investment is too low at present.

Marketing with an average spend in 2008 o 2.8 percent o turnover,this is an area o signicant concern. No organisation can be expected to

maintain and develop its position and reputation in the sector without a

realistic marketing budget (5-10 percent o turnover). Te current gure issimply too low, and it is preventing organisations rom capitalising on the

quality o their outputs, either in the orm o reputational development

or in terms o attracting sponsors, donors and patrons.

Research and Development (R&D) the average spend in 2008 wouldappear to be only 0.6 percent. However, we suspect that the actual

costs o R&D are hidden in production and travel budgets. While

contributions in this area should undoubtedly be increased, it would be

easier to demonstrate the impact and efectiveness o such spend, via both

standard measures and deerred value approaches, i this gure was more

clearly demonstrated by organisations.17

Reserves with an annual contribution in the region o 5 percent, thereis a clear commitment to the accumulation o reserves, which allow

organisations to meet short-term crisis costs or to provide severance

packages in line with legal minimums. However, reserves o this level are

not sucient to enable these organisations to make cash investments into

new ideas, products or services.18

otal expenditure on overheads hovers around 20 percent o turnover, which

is very lean or organisations o this size.19 Tis begs questions as to whether

leanness serves smaller organisations i they are seeking to grow. In studying

overheads, it becomes evident that there is no surplus with which to und new

income-generating initiatives. At current budget levels, there is no obvious

way in which overhead costs could be redirected into these growth areas

without signicant risk to stability and unctionality. It is thus recommended

that unders consider making targeted contributions which permit increased

investment in these areas.

Te gures demonstrate that the members o Common Practice operate

within very tight and nely balanced budgets which are ocussed on the

delivery o activities over the short- to medium-term. All available unds are

necessarily ocussed on achieving a balance between programme costs andstaf salaries. Indeed, the nances are so tight that there is no provision or

staf training, promotions or pensions which are considered normal,

17 It would be worthwhile or smallorganisations to consider itemising researchand development costs as a separate line inthe accounts as they are in important indicatoro commitment to the uture sustainability othe organisation, both in terms o programmingdevelopment and investment in income-generating activities.

18 For examples o how arts organisations areusing unds, such as the Technology Strategy Board(TSB), to make investments in developing newincome streams rom their intangible assets, see:Sarah Thelwall, Leveraging Leadership into Income

Growth, op cit. The TSB operates a series o undsdesigned to support innovation in commercialcontexts and has a specialist Creative Industriesund which has been successully used by anumber o non-proft arts organisations to developintangible asset-based income streams, an exampleo which would be Watersheds iShed venture.

19 While we might expect a larger non-proft organisation, with turnover in the tens omillions, to drop overheads to, say, 15 percent,small organisations could realistically reduce thepercentage o overheads only by increasing theirtotal turnover, and the scale o growth requiredto achieve proportional efciencies is beyond thereach o most small organisations.


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rather than luxury, expenditure in many larger arts organisations and

non-prot sectors.

Te overheads o small organisations are being kept to a minimum

to such an extent that this has a negative impact upon current development

and overall sustainability. Tere is little or no money available or inward

investment in activities which might, in the longer term, make organisations

more sel-sustaining. Strategic short-term investments by public unders in the

areas o training, marketing and R&D would help growth, thus protecting

a vital part o the ecosystem.

4.1.3 Comparisons within the Turning Point London groupBeore elaborating on other ways in which organisations like those o the

Common Practice group might be encouraged to grow, let us turn to a

consideration o how this picture compares to the visual arts organisations

belonging to the urning Point London (also known as the Visual Arts

London Strategy group or VALS). While there are some overlaps between the

two groups, the latter tends to include larger organisations, and comparison

will enable us to identiy diferences in the nancial models employed.

In the above table, we see that VALS members show an approximately

seven percent lower level o core unding than the Common Practice group,

to all broadly in line with the average across the current ACE portolio.

However, i we take account o additional project unding grants made to

the VALS group by ACE, we see a marked increase in income rom ACE

sources. Furthermore, the VALS group receives an average o 6.8 percent

o public unding rom local authorities, urther boosting unding rom

grants in real terms. Also on the subject o grant unding, whilst Common

Practice members are slightly better at securing contributions rom trusts

and oundations, this is balanced by other revenue grants, which sees the

VALS members doing better. 22 It is interesting to note that the average level

o total grant income is remarkably similar or Common Practice and VALS

members. With the exception o local authority unding, Common Practice

members are almost as good at diversiying their non-ACE grant successes

as VALS members. Te relevance o this will become clear when we consider

the metrics that are currently used or measuring the perormance o visual

arts organisations.

Another way in which large organisations might actually be more

dependent on public subsidy than headline gures suggest is through theiruse o the resources or smaller, publicly unded organisations. An article by

Charlotte Higgins or Te Guardian clearly articulates that, without smaller

20 I there are less than three data pointscontributing to an aggregate fgure, then theyare withheld or data confdentiality purposes. Inthis case, then, less than three Common Practicemembers receive local authority unding.

21 None o the members o Common Practicereceive government grants in the orm o grant inaid, which prevents comparison in this area.

Common Practice VALSRegular (core) unding rom ACE 50.0% 43.6%

Other ACE unding 7.40% 17.2%

rusts and oundations 18.0% 12.5%

Local authorities * 20 6.8%

Grant in aid Nil 21 39.5%

Other revenue grants 7.1% 16.3%

otal revenue grant income 63.6% 62.7%

Figure 4 Grant sources as an average percentage o turnover

22 The total over these two sources is 28.8percent or VALS as compared to 25.1 percentor Common Practice. This may simply be due togreater detail on the Common Practice group beingavailable, which leads to fgures or the VALS groupbeing classifed as other when they should beallocated elsewhere.


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organisations, larger organisations would be unable to run on the levels

o public unding they receive.23

urning now to a consideration o earned income, we nd the

ollowing picture:

As already outlined, very ew o the Common Practice members achieve any

income rom their venues. So, whilst the maximum income rom venue-

based sources is some 65.1 percent, the minimum is 3.2 percent, thus skewingaverage gures. Common Practice members tend to achieve any external

income in this area by ocusing on space hire and sales o artworks rather

than maintaining a ca or shop. By comparison, venue-based income is the

norm amongst VALS members alongside ticket sales and retail activity. It

is interesting to note that cas and catering are only worth 3.9 percent on

average across the group, with a 7.7 percent maximum. However, given that

the largest organisations in the group have a turnover o just under 54m,

this is still worth an average o 2.1m in unrestricted income per annum.

Tis table assesses the ability o organisations to leverage corporate and private

giving, which, as we have seen, is dependent on brand values and linked to

marketing. While VALS members oten maintain separate sponsorship and

donations departments, the signicant xed cost associated with this and the

highly variable nature o returns mean that small organisations cannot aford

to dedicate staf in this area.

urning to a consideration o expenditure within the two groups, at

rst glance there seems to be rough parity across stang and direct costs

(exhibitions or the commissioners, agencies and galleries; publications or

the publishers). As we do not have a ull breakdown o the direct and indirect

costs borne by VALS members, it would be rash to assume that these are

allocated in exactly the same way. Tere are, however, a couple o points that

we can draw out. Firstly, we see regular reerences to the pension unds o

VALS members, compared to the negligible provision in this area by CommonPractice members. Secondly, marketing costs amongst VALS members are

unlikely to be less than 5 percent and may rise as high as 13.7 percent o

Common Practice VALSicket sales Nil 14.8%

Shop and retail * 20.5%Catering and ca Nil 3.9%

Space hire * 8.1%

Venue-based income 41.5% 33.3%

Figure 5 Average income rom tangible assets

Common Practice VALSCorporate sponsorship * 6.1%

Private donations 1.7% 5.2%

Other sponsorship and donations 1.0% 12.2%

Figure 6 The value o sponsorship and donations

23 Charlotte Higgins, Cut the Arts at yourPeril, The Guardian, 28 September 2010.


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turnover, which leads to amplied brand recognition that can be converted

into sponsorship income. By contrast, as we have seen, marketing spend or

Common Practice members is, on average, 2.8 percent and only reaches a

maximum o 7.1 percent.

In making comparisons between the nancial models o the VALS group and

Common Practice members, it is the similarities, rather than the diferences,

that strike one immediately. In particular, we note that average revenue grant

unding across all sources is very similar (63.6 percent CP, 62.7 percent VALS).Te data sets begin to demonstrate what many experts have known

intuitively or some time, which is that the nancial models that work or

large building-based and/or ticket-based organisations cannot be set as

universal standards to be adopted by smaller organisations which currently

lack the tangible assets and inrastructure to be able to rely on external

income generation.

While venue hire is relevant to only a handul o the Common

Practice members, VALS members are much more likely to generate

earned income rom tangible assets through a range o commercial

activities and opportunities to attract sponsorship through greaterrecognition o their brand.

4.2 Income diversifcation the imperative o getting beyond grant

undingAs outlined in section 4.1.1, the average total income rom grant unding

(rom both public and private sources) across the Common Practice group

was between 60 and 65 percent rom 2006 to 2010. Organisations in the top

quartile only just manage to obtain more than 50 percent o their income rom

non-grant sources. Indeed, there are organisations, both within the Common

Practice group and the wider pilot, or which grant unding represents in

excess o 95 percent o total income. Anecdotal evidence, based on a widerange o conversations, suggests that, or non-venue based or non-ticket based

organisations, income rom non-grant, non-commission sources in excess o

20 percent is an exception to the rule. As we have seen, there is currently little

scope or smaller organisations to develop other sources o income through

training, research and development and marketing activities.

Te continued dependence o small organisations on grant income goes

against received wisdom, which suggests that arts organisations are achieving

income diversication that has reduced their dependence on grant unding to

below 50 percent o total income. As income diversication is a key measure

o success within current measuring models, this puts pressure on small

organisations to try and achieve the unachievable. With this in mind, let us

turn now to a consideration o the ways in which the intangible assets o small

organisations might better be exploited.

4.2.1 Intangible asset development

As we have seen, small organisations make inormal investments in the

development o their intangible assets, through routes such as the development

o their staf skills base and the processes or the deployment o these skills.

However, on the basis o the sample organisations taking part in the Culture

Benchmark, it would appear that income-generation rom intangible assets

is not yet equal to that being achieved rom tangible assets in either small orlarge arts organisations.


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Whilst successes in the creative industries indicate a growing set o markets

or intangible asset-based products and services, these markets have not yet

received the substantial levels o investment that have been evident

in tangible assets, through capital lottery programmes, to large organisations.

Te challenge or non-prot arts organisations, then, particularly in the

current economic climate, is to capitalise on their intangibleassets in order

to improve their nancial sustainability. For the purposes o this paper, we

will split this point into two parts to ask:

1. How can intangible assets be converted into earned income streams?

2. How can the value created by these organisations be moreappropriately articulated, recognised and measured?

Te rst o these questions is answered below; the second will be covered

in section 7.

4.2.2 Converting intangible assets into earned income streams

Despite the barriers to reducing grant dependency outlined above, smallorganisations, such as the members o Common Practice, demonstrate an

ongoing commitment to delivering earned income rom their intangible assets.

Examples already exist in the development o online resources and apps,

in the wider creative economy (where their assets and skill sets are proving

to be o value in a growing market or consultancy and comparable expert

services) and in the contracts they sign with commissioned artists, which make

provision or recouping unding in commercially successul projects. Judicious

investment in this area, on the part o public sector unders, would enable

small organisations to grow, while providing a unique measure o success

or organisations o this size.

In order to examine how intangible assets might increasingly beconverted into income, we need to distinguish between:

1. First order activities,which are intrinsically connected to the expertlabour orce within the organisation, thus orming the creative core

o activities. Tese are not usually expected to deliver an immediate

nancial return and tend, thereore, to be grant unded. 24

2. Second order activities, which take the assets accrued as a result orst order activities and develop them into products and services that

have commercial value. In so doing, they disconnect these products and

services rom labour costs and create activities which are more scalable.

So, whilst the delivery o an exhibition is a rst order activity, the development

and sale o merchandise is a second order activity; whilst the publication o a

book or magazine o new writing is a rst order activity, a piece o consultancy

surrounding print-on-demand technology used in publishing processes is

second order. For example, Common Practice member, LUX, manages the

loans and distribution o a portolio o artists moving image work, handles

the ees charged to institutions and the resulting monies paid to artists.

A mapping o the activities o LUX, 25 below, indicates how these

activities separate out in practice as well as the income streams attachedto them.

24 This subject is treated at greater length inSarah Thelwall, Capitalising Creativity, CulturalSnapshot No. 14, op cit.

25 This is taken rom a more extensive analysiso LUXs potential growth model in Sarah Thelwall,

Leveraging Leadership into Income Growth, op cit.


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In cases where goods and services have a clear commercial value and

where the sales o these services would not reduce access to the public, such

value may be realised by small organisations.

As the creative industries expand, we can oresee a growth in, and

increased sophistication o, the markets or a wide range o intangible assets.

Whilst these are currently no substitute or revenues derived rom tangible

assets, intangible assets contain a growth potential that might, in the longterm, cause them to outstrip the tangible asset-based income streams which

are necessarily limited by square ootage and ootall they can attract.

The LUX mix

GrantsPolicy development Product sales

Consultancy & other services

Distribution & loan o works

Licensing/ranchising

o the LUX model

Research & Teaching

Org. & Individual donors

Artist development

Commissioning

Education, access & advocacy

Preservation, digitisation

& public access

Publishing

Trusts &Foundations

1st Order 2nd Order

Products& Services

Research

Donors& Patrons


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Catherine Sullivan and Farhad Sharmini, The Last Days of British Honduras. Commissioned by LUX as part o Artists Cinema 2010

LUX


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Small arts organisationsand the creation o value

Beore we can address the main questions raming this research, we need

to be clearer on the concept o value. We are interested in the ollowing

types o value:

Artistic value the intrinsic value o the objects and ideasbeing commissioned.

Social value within the art ecosystem, this reers to the processesthrough which art is evaluated and through which individuals and

organisations subscribe 26 to the art, ideas and artists in the ecosystem;

this process may result in artworks entering the established canon and

in organisations changing place within a hierarchy, depending on the

quality o outputs they produce.

Societal value this reers to broader social value, as made tangible

through audiences, education and participation. Tis value to society

through engagement, experience, critical thinking, etc. overlaps with

what is dened as instrumental value.

Fiscal value this changes over the lietime o an art object, romthe initial cost o its production to its sale value in the primary market

ollowed by its resale value in the secondary market. It could also be

said to encompass the increase in the daily rate charged or an artists or

writers time. Income rom secondary products such as monographs,

editions and other ephemera also plays a role. 27

Te creation o artistic and societal value orms the backbone o the vision

articulated by ACE in November 2010 in its ten-year strategic ramework,

Achieving Great Art for Everyone. Apart rom bringing the core output o

excellence to the largest possible proportion o the public, this document

presents an imperative to build resilient organisations. Furthermore, this is

predicated on the idea that the business models, reach and sustainability o

organisations are developed in active dialogue with the creative industries

and embrace the digital opportunity.

Let us turn now to a consideration o the ways in which the our types

o value apply to the Common Practice group.

In 2005, Studio Voltaire commissioned Spartacus Chetwynd to make

Te Walk to Dover, a seven-day journey on oot rom London to Dover in

which Chetwynd led a small group o urchins to retrace the ctitiouswalk undertaken by Dickenss David Coppereld to the sanctuary o

his aunt, Betsy rotwoods house. Building on the artists earlier work,

26 This perspective on the accrual o value,and, in particular, the notion o subscription toan individual, idea or object, is supported by theworks o academics such as Dominique Sagot-Duvauroux. Her model o subscription is explainedin detail in Dominique Sagot-Duvauroux, 'Le Valeurde LArt', LArt Aujourdhui, 1993.

27 Whilst there are clearly issues with takingthe market price o art objects as the singledefnition o the fscal value o the work, many othe other transactions listed above are even moredifcult to measure and are beyond the remit o

this paper.


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Te Walk to Doverdrew comparisons between Victorian debtors prisons

and our contemporary credit system. A lm, produced and screened by

Studio Voltaire, toured nationally and internationally and was produced as

a limited edition.28As Chetwynds rst of-site commission, Te Walk to Dover

came at a pivotal point in the artists career, leading to a number o large-

scale commissions rom international institutions (Migros Museum, ate

Britain, Creative ime, Frieze Projects), and limited edition lm purchases

by private and public collections (Arts Council Collection, Migros Museum,

Le Consortium). Chetwynd now enjoys commercial representation by SadieColes HQ. Whereas the audience or the original commission and lm was

720, subsequent viewer numbers have exceeded 18,000.

In this example, we see all our types o value at work. Te commission

acilitated the creation o artistic value in the work itsel and had a pivotal

role in increasing the social value o the artist within the art ecosystem.

It also had societal value, as seen in the growth in audience gures, and

it provided an opportunity or the realisation o scal value through

commercial representation.

In 2009, Chisenhale Gallery commissioned Te Last Days of Jack

Shepardby Anja Kirschner and David Panos. Collaboration with the Centreor Contemporary Arts (CCA) in Glasgow involved a contribution o 6,000

to the 25,000 production budget and partnership in an application to the

Henry Moore Foundation.29 Te initial presentation at Chisenhale achieved

an audience o 3,000; inclusion in the rst stage o the British Art Show 2010

increased this to around 300,000, which stands to grow as the exhibition

tours Britain.30

On the strength o this commission, the artists were invited to present

a solo exhibition at Badischer Kunstverein in Karlsruhe, a direct outcome

o which is this venues urther institutional collaboration with Chisenhale

in 2011. Both exhibitions garnered signicant press coverage and the artists

were nominated or the Jarman Award in 2009. Te Last Days of Jack Shepardhelped the artists to make a signicant step change in their careers, also

contributing to their securing a FLAMIN grant rom Film London towards

their next lm, Te Empty Plan (2010), which is currently touring in the UK

and internationally. Increases in both the social and societal value o this

commission are visible here.

Te journey o Electra commission, Reverse Karaoke, by Kim Gordon

and Jutta Koether, again shows comparable traits. Originally part o Electra-

curated group exhibition, Her Noise, at South London Gallery (2005),

it shared audiences o 4,500. Te piece then toured or ve years to nine

diferent international museums and arts centres and was seen by audiences

o over 70,000.

A similar trajectory o re-presentation, increased audiences and

recognition within the sector can be seen in the commissioning o analytical

texts byMuteandAfterall. For example, JJ Charlesworths Crisis at the

ICA: Ekow Eshuns Experiment in De-institutionalisation, published on

Mutes website, Metamute, in February 2010,31 has acquired 23,000 unique

reads since publication, in a recursive process between this specialist journal

and larger circulation entities. Aided by witter and Facebook, its initial

publication on the web led to reerences in the blogs o the New Statesman,

TeGuardian and Frieze, as well as discussion in the mainstream printed

media (Evening Standard, TeGuardian). Te article has since become astandard text on the subject, routinely cited when the topic o the ICAs crisis

is discussed. An increase in the value o this work to the art ecosystem is

31 The text was later also published in print inVolume II, No. 15 o Mute.

28 Venues included White Columns, NewYork (2007); Studio Voltaire/Zoo Art Fair, London(2007); Studio Voltaire/Open Space CologneArt Fair, Cologne (2008); Migros Museum, Zurich(2008); Le Consortium, Dijon (2008); Tate Britain(2009); Whitechapel Gallery, London (2010);CCA, Glasgow (2010), Arnolfni, Bristol (2010);

Duke o Yorks Picturehouse, Brighton (2010) andin Now Showing 2: New Film and Video rom theArts Council Collection, touring ten venues acrossEngland (2010 2011).

29 CCA is unded by Creative Scotlandand other sources. The involvement o this venuein the commission reduced the unding thatChisenhale needed to commit to the project whilestrengthening the application or oundationunding.

30 Based on typical audience fgures.


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evident in this example (the social value o public awareness), as is an increase

in Charlesworths prole (and concomitant scal value).

Examples like these span the members o Common Practice and the

lietimes o their organisations, rom Matts Gallerys commissioning o

20 : 50 by Richard Wilson in 1987 and Chisenhale Gallerys work with Rachel

Whiteread on Ghostin 1990 to the successul co-commissioning o the Otolith

Group by Gasworks and Te Showroom in 2009, which contributed to the

groups nomination or the urner Prize in 2010.

Te wider societal value created by small organisations, such as themembers o Common Practice, can most easily be seen in the approach taken

to education and participation. I we look at the activities o organisations

such as Gasworks, Chisenhale and Te Showroom, we see that they have not

only a strong international reputation within the art world but also a highly

localised reputation as a connected element within, and positive contributor

to, the communities in which they operate. Te integration o educational

activities as a key element in the main programme rather than a parallel,

or minor, activity can be seen in commissioning structures. Over a three-

year period, Gasworks has built up a set o relationships, via their Even Better

ogether scheme (supported by the Big Lottery Fund), which has increasedthe participation o local communities. Tese activities are not limited to the

utilisation o the Gasworks spaces, but also extend to the programming o

a public space run by a tenants association (which would not otherwise have

an events programme).

By presenting its programme o residencies to local community partners

at the start o a year, Gasworks is able to initiate strategic conversations around

artist-led activities that will be relevant or both community and practitioner.

Tis set o very direct relationships, between resident artists and the local

community, has led to the participation o the community in a number o the

artworks produced during residencies and there will be an exhibition o these

outputs in 2011, curated by the local community and totally integrated intothe main programme. We could describe this as an increase in the societal

value o the artists and their work.

What we immediately see rom these descriptions is that value accrues over

the lietime o an object or idea and that it does so in the our areas o artistic,

social, societal and scal value in ways which are hard to separate out; indeed,

it is the act that they are intertwined that is key to understanding how value

accrues in an artwork.


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Gasworks

Mathieu Kleyebe Abonnenc, Foreword to Guns For Banta, 2011. Photo: Kristel Raesaar


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Deerred value creation

As we can see rom the examples given in section 5, signicant value is

contributed by small organisations, both through the communities that

interconnect with them through participatory activities and within the

visual arts ecosystem. However, there is very little in the way o a clearly

dened eedback loop, enabling these organisations to benet directly

rom the value they create as it accrues over the lietime o the work they

commission. Te only return on this investment at the time o productionis a reputational one and even this is limited to whether the publication or

exhibition is interesting and o high quality. Tus, while being skilled creators

o deerred value, small organisations are not realising this value in support

o their long-term sustainability.

Beore continuing, we need to be clear about who realises the value

generated by the Common Practice group and whether there is a connection

to its members.

6.1 In the public sectorJust as the insurance value o an artwork deaults to the cost o production

unless clear market valuation can be proven, so the value o work createdin, by and or small visual arts organisations is evaluated in prot and loss

accounts in terms o its production costs.

Larger public institutions, which develop the ideas or re-exhibit the

works rst commissioned by smaller organisations, are unlikely to have

contributed to these initial production costs, but they are well placed to

realise the deerred value in the work through:

Audience gures, ticket income and associated secondary spend

Larger readership and related advertising income

One solution or smaller organisations would be or them to expand into

larger ones, allowing them to partake in the realisation o value. A handul

o organisations in every generation do, indeed, make this transition,

demonstrating that their contribution to the art ecosystem and societal value

surpasses the interests o the ounding director and any short-term need in the

sector. However, the manner in which small organisations take risks and create

artistic value is not easily extended to a larger scale, meaning that such growth

is oten regarded as antithetical to the organisations ounding mission.

In summary, larger public sector organisations depend on the output o

smaller organisations and these inter-relationships would benet rom beingmuch more clearly dened.


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6.2 In the private sectorWhen artwork has been recognised to a sucient degree as to enable its sale,

scal value is accrued by the author or artist the ormer through urther

commissions or articles and books; the latter through the sale o the original

and related works. Tere may also be related secondary income streams in the

orm o talks, monographs, etc.

In the case o art objects, whilst droit de suite, or artists resale rights, have

a part to play in repeatedly delivering a scal return to the artist, the majority

o the return on the initial investment o small organisations is accrued by asuccession o collectors buying and selling the work, with a cut being taken

by the commercial gallery or auction house acilitating such transactions.

While Chisenhale makes recoupment agreements, based on sales o work, or

every project it produces,32 this way o working rarely generates returns and

has yet to be generalised across the group. Te main method or returning

any o the original investment to the commissioning organisation tends to be

through inormal contributions made by artists, via the donation o works

or undraising purposes, or the meeting o publication or other costs by

commercial galleries. Whilst these are very valuable inputs, they are ar rom

being an assured income stream and are, in the main, linked to direct costsor new productions. Indeed, these types o income are based on old-style

patronage models which rely on the discretion o a beneactor, leaving small

organisations beholden to a git economy.

However, there is another issue here. By ocussing on scal value, we

are, by and large, dependent upon yardsticks determined by the commercial

art market, which nds it easier to attach a price tag to tangible art objects

such as paintings, sculpture, drawings and installations than it does to

the more intangible elements o an artists practice such as perormance,

lm, video and other oten experience-based pieces, o the kind requently

commissioned by the Common Practice group. Furthermore, by making

scal value synonymous with market price, we are giving precedenceto the strand o artistic production that is most easily assimilated into

the commercial art market, which discriminates against more risky, less

immediately saleable, work.

Artworks accumulate value throughout their lietimes in both the public

and private sectors, but the small organisations which originated them are

not the ultimate beneciaries o these processes. In order or the members o

Common Practice and similar small organisations to maximise the processes

o artistic value creation to which they are dedicated, they currently relinquish

much o the value that is eventually realised over the lietime o the work.

In particular, they oreit two o the most measurable types o value created

the realisation o social value through the development o audiences and o

scal value through sales via the art market. Whilst changes are certainly

occurring in the contracts and relationships between these value creators and

larger organisations and artists within the art ecosystem, we need to better

understand how these revised approaches impact on the nancial sustainability

o organisations.

32 These recoupment arrangements varyaccording to the nature o the work, but they are akey element o negotiations with artists. Chisenhaledoes not speculate on the work but actively seeksto ensure that, in the case o sales, recoupmentwould be made according to the organisationsinput. As the gallery tends to work with emergingartists and the work is oten although notalways difcult (e.g. flms or perormances),

recoupment is not oten seen, but it does happen.


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Phyllida Barlow, Bluff, 2010, Mixed media installation.A Studio Voltaire commission. Courtesy o the artist and Hauser & Wirth, London / Zurich / New York

Studio Voltaire


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Measurement methods vs. needs

Te measurement methods currently in use are designed to monitor the

channelling o subsidy rom the public purse into organisations that are

deemed to be valuable to the nation. At present, all organisations in ACEs

portolio complete the same yearly return o data in the orm o their Annual

Submission. Looking at the results o this survey or 2010, we see that the

main areas o measurement are audience-related and nancial via attendance

gures, /head subsidy and annual turnover.With several years o reduced public subsidy or the arts ahead o us,

there is an expectation that organisations which are not considered successul

will see signicant reductions in their unding. Tus, by considering each o

the current metrics in turn, this section aims to investigate the applicability

o current measures to small arts organisations. Te question, thereore, is

how appropriate existing measurement approaches are to the types o value

being delivered and how these might be improved. At the same time, it is

acknowledged that the role o small organisations needs to be measurable

in the here and now, even i the value they create is deerred across a twenty

year period. Having elaborated a crucial and ongoing role or small arts

organisations and outlined the challenges aced by them in maintainingthat role as deerred value creators, we need to devise and dene tools or

measuring this subset o the art ecosystem more careully in order to support

them in a manner more appropriate to their role.

As evidenced by the Annual Submission procedure, measurement

approaches have, until now, been based on a single set o universal metrics

applied across all art orms and sizes o organisation. With the announcement,

in November 2010, o ACEs new ten-year strategic ramework,Achieving

Great Art for Everyone, ve key goals were dened, namely: Excellence, Reach,

Engagement, Diversity and Innovation.33 Although there has not yet been an

indication as to whether the Annual Submissions process will change as part

o the rameworks implementation (or the transition into an NPO, rather

than RFO, ramework), we contend that it will be important or these goals to

become more nuanced in relation to diferent sectors and sizes o organisation

i we are to see improvements in the utility o the metrics and their results.

7.1 Audience fguresOne element o the Annual Survey ocuses on audience numbers. Unlike

the Big Lottery Fund, which takes account o audience experience (return

rates, visits by amilies or local community members, depth o engagement),

the survey ocuses only on the volume o visitors. Whilst this data is used

by the DCMS, reasury and other government departments as a tool orgauging tourism volumes and spending, these metrics do not serve artists,

local communities or small organisations. An alternative or additional set o

33 The ull document, and explanation, oAchieving Great Art for Everyone, including a

lengthier detailing o these goals, is available at:http://www.artscouncil.org.uk/our-work/achieving-great-art-everyone/


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metrics that might be more useul would be those that looked at the depth and

longevity o engagement and ongoing social and societal impact. Furthermore,

or those organisations which have a strong, ongoing connection to research,

particularly those with academic partners, the ability to demonstrate academic

value would be a useul supplement. In addition to this, the roles played by

small arts organisations in developing international critical debate and in

serving highly localised communities both demand appropriate means o

valuation and measurement.

7.2 Ratio o ACE grants to other income sources

As section 4 demonstrated, there is some merit in making nancial comparisons

between organisations income types and cost allocations. However, the

mechanisms currently employed are not granular enough to highlight the

diferent approaches to income diversication demonstrated by small and large

organisations. Problems arise when comparisons are made across a group in

which the diferences are greater than the similarities. Tere would be little

point, or example, in comparing Common Practice members to the whole

ACE portolio, as the business models employed are discipline-specic. By

contrast, there would be some merit in comparing Common Practice membersto other organisations with low tangible asset-based incomes in which the

intangible asset base ofers signicant development opportunities; even better

would be a comparison against best practice in intangible asset exploitation.

O particular concern is the act that our key nding rom section 4

that the average level o total grant income is remarkably similar or Common

Practice and VALS members is not reected in the current metrics.

Similarly, the reliance by larger organisations on the productions o their

smaller counterparts is nowhere reected in existing measurement systems.

7.3 per head ACE unding

While its popularity uctuates, this measure has become something o apragmatic assessment tool or ACE ocers. However, there are a number

o diculties with this approach:

Te method or calculating audience gures changes over the years; most

notably, this has seen the inclusion or exclusion o web-based audiences

and uctuations in their relative value as compared to ootall.

Tere is an assumption that a low spend per audience member is

a desirable target. Tis does not take any account o the depth o

engagement, quality o experience or diversity o audience.

Te target levels o per head are not necessarily set with art orms or

size in mind and, in the case o smaller organisations, tend to be based

on comparisons with much larger institutions which have signicant

marketing budgets and brand awareness.

With the per head measure, there is an expectation that subsidy provided

can be directly translated into benets being delivered to members o

the public using these services. I we simply indexed ACE unding to the

audiences delivered by small organisations, they would appear to be delivering

poor value. But, as we have seen, small organisations aim or the widestpossible audiences in the communities they serve while attempting to engender

the deepest possible engagement. As such, they need continued nancial


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support in achieving this, in recognition o a more holistic way o working

which generates societal value.

Te value o small organisations can and should be measured. Tere are,

however, a number o issues with the measurement methods currently being

employed. Te metric or audiences is limited to the number o audience

members attracted without taking account o the depth o engagement or

the number o repeat visits made. Similarly, ofsetting ratios o ACE grants

to other income sources has been proven to distort reality to the detriment osmaller organisations. At the same time, /head calculations are too crude

and variable to be useul, particularly when comparisons are made across

the whole ACE portolio rather than specic slices o the data set.

Given the signicance o the deerred value being created in small

organisations, we would strongly advise the development o methods that

measure the artistic, social and societal value being created. Tis is not

an argument or exceptionalism. On the contrary, i we were to study the

variety o value being delivered, we would expect to achieve a more nuanced

understanding o the ways in which small organisations contribute so much

rom such scant resources. We would also be in a better position to argueboth the core and additional benets in terms that would carry more weight

than an art or arts sake approach which achieves little traction beyond the

culture sector. ACEs commitment to the ve key goals oAchieving Great

Art for Everyonepresents a clear opportunity or revising and improving

measurement methods.


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Santiago Sierra, DEATH COUNTER, 2009. Commissioned by Electra as part o the Oer & Exchange series

Electra


35/42


Omissions and the ways inwhich we might address them

As we have seen, deerred value creators make an investment in the visual

arts ecosystem that may take up to twenty years to mature. Tis time lag

means that it is not appropriate to seek to balance the public unds provided

against the audiences or income streams being achieved on an immediate

basis. In order to measure the value o small visual arts organisations,

an investmentmodelwould be ar more appropriate as it would allow or

assessments to be made o the:

tangible and intangible assets that have been created,

timerame or the return on these investments to be realised,

likely level o return on investment that could be expected

to be delivered over the lietime o the assets.

While this represents a challenge, particularly when working with emerging

artists, it would nonetheless be possible to establish metrics or the above.

In doing so, the greatest task will be the change o mindset needed, awayrom annual comparisons towards liecycle-based assessments. It is worth

noting that, unlike larger institutions, there is no expectation that small

organisations will continue indenitely or in the same orm. While a shit

rom ounding directors to subsequent generations o directors may extend

the active period o an individual organisation, urther research would be

needed beore we could be clear on the average liecycle o a deerred value-

creating visual arts organisation.

In the short term, there are a number o changes we can make to metrics

and measurement approaches that will aid this overall shit, as outlined here.

8.1 Establishing normsIn the rst instance, we need to set new parameters to dene the operations

o normal small visual arts organisations, ocussing on the creation o

deerred value. By establishing a baseline or this specic sub-sector, we can

distinguish them rom larger organisations with respect to audience and scal

expectations. Tis will allow or the easier identication o organisations

which t into this category than has been possible to date. In agreeing norms,

we can also expect to shit the emphasis o conversations between key unders

and organisations. Instead o operating in a climate o uncertainty, based

on never achieving the same nancial sustainability as larger organisations,

new and more appropriate targets could be agreed or this group, whichwould allow trust and dialogue to be built.


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8.2 Improve usability o data to assist planning and assessmentPresently, the data collected on ACEs portolio o organisations via their

Annual Submission are ed back to the sector in a very limited set o aggregate

results. Tis overview pre-empts the questions that will be asked o the data,

to generate a single set o answers. As such, this uniorm approach prevents

arts organisations rom determining the reerence group against which they

would wish to be compared. By changing the ways in which data are presented

and accessed, we could assist small organisations in their sel-analysis, enabling

them to draw useul conclusions or their own development. By establishingcollaborations between clusters o organisations and key unders, the sector

would be well placed to establish new ways o modelling liecycles and,

thereore, o devising new methods or analysing individual organisations.

Tis exercise would also permit the inclusion o organisations which are either

wholly ununded by ACE or which receive intermittent project grants.

8.3 How a liecycle investment approach might workAs already discussed, we currently lack mechanisms or attaching value to

commissioned work which reects deerred returns. Attempting to develop

metrics in this area may negatively impact upon the deerred value o anartist, writer, object or idea, and care should be taken that these measures,

once developed, are not allowed to inuence the choice o commissioned

artists. Tese organisations rely on risk-taking, and their unpredictability

is a strength.

How, then, might we develop an approach to liecycle investment that

would support curatorial independence whilst better connecting activities

to the lietime value o individuals and collaborative groups? Here are a ew

indications o the ways in which we might develop such an approach:

I we are clearer about what the norms are, then we can more accurately

determine whether an organisation is above or below par.

I we have views on the typical liecycle o a small organisation,

then we can provide investment appropriate to the phase start up,

development, reputational return, intangible asset development, etc.

Whilst organisational paths are individual, it is reasonable to suggest

that there are similarities.

Te type o investment being made by government unders and private

trusts and oundations may vary during the liecycle o the organisation

to reect the changing skills, modes o delivery and leadership.

As the organisation matures, we will be able to discuss the means by

which we determine whether an organisation has ullled the purpose

it was established to achieve (and, thereore, how it might be wound

down). Alternatively, i there is an ongoing reason or the existence

o the organisation, then it will be possible to determine the extent to

which it needs to renew itsel in order to continue creating deerred

value in line with the level o investment.

I we can improve our methods or tracking the ways in which value is

accrued by an object or idea across its lietime, then we can also exploreways in which a return on the investment could be secured, so that there

is a eedback loop which benets commissioners.


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I we can improve measurement tools which determine the value that

audiences and communities place on the work o small organisations,

through new systems such as contingent evaluation, then, along with the

suggestions above, we can develop a more complete picture o non-scal

value created.

Tese are early ideas; they may change radically as they are developed. But the

urgent need is to develop systems o support and measurement which reect

the very diferent way in which small visual arts organisations contribute tothe overall wealth, diversity and value o the visual arts sector.

Work in these areas is likely to take some years to complete; in the

meantime, small visual arts organisations need a route through which they can

grow nancially and improve their sustainability and viability.

8.4 Rebalancing the value types we measureHaving looked at the challenges involved in achieving a more nuanced and

appropriate measurement o scal value, related to the nancial sustainability

o small visual arts organisations, one could be orgiven or thinking that

we are arguing that this is the only type o value with which we shouldconcern ourselves. We are equally interested in improving the articulation o

cultural value, be it artistic and intrinsic or social, societal, instrumental or

institutional. Based on the research interviews conducted or this paper, there

is a strong understanding that small organisations ofer something diferent

rom, and complementary to, that ofered by larger institutions.

It would be possible to articulate the role that small organisations play

in commissioning and supporting new work and in developing the ormats

o display and exhibition. Further, it would be possible to elaborate upon

their role in developing the highly participatory education programmes that

we touched upon in section 5. A desirable goal would be to rebalance our

measurement o value so that, in addition to devising appropriate metrics orscal and audience parameters, we can also measure the artistic, social and

societal value.

We propose that two key changes are required i we are to ully recognise

the value o small visual arts organisations. Firstly, measurement approaches

need to evolve rom their current general ormat into structures that allow or

more nuanced analysis o the diferent roles played, and the diferent business

models used, by small and large visual arts organisations. Te idea o liecycle

investment is one that merits urther development.

Secondly, we need to translate our implicit understanding o the

diferences in the cultural value o small arts organisations into an explicit

articulation, and thence measurement, o the varied modes o value creation

which, where appropriate, distinguishes between the roles o small and

large organisations.


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Mute cover, Volume 3, Issue 1, June 2011

Mute Publishing


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Conclusions

Qualitative interview-based research with sector proessionals continues to

underline the implicit understanding that small visual arts organisations play

a crucial role in the wider art ecosystem. In seeking to establish the value o

small visual arts organisations, it has been necessary to distinguish between

tangible and intangible assets. In the rst category, we nd that buildings,

archives and collections which have substantial income-generating potential

through space hire and sales are generally the result o sustained investmentand conned

common practice london size matters

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