Creative Data?

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By Tina

It’s heartening to see in short succession the use of hard stats around private investment in culture. However, there is always more that can be done to complement some of the data and to make it more useful, both for the sector and for policy.

To begin with, Arts Quarter’s ongoing reporting of arts professionals’ attitudes about the recession and its impact on income is useful – however, it would benefit from more regular reporting to show the peaks and troughs and the changes through time, to compare more effectively the difference between stability and uncertainty. The wave-on-wave trends, based on only 4 installments of the survey, were quite reactive in nature (considering when and why they were conducted) and thus reflected the volatility of the time in which they were conducted. This could mean that the findings are slightly skewed, as respondents are influenced by the ‘heat of the moment’ and are likely to be affected by media hype surrounding some of the issues they are being questioned on. More positively, the level of detail is useful and provides an interesting backdrop against which to have any considered debate about the likely growth of private investment in the next three years or so. However, other than the summary, which neatly describes the landscape as it currently seems to stand, the data itself is not provided in a very user-friendly way and the pages of tables means that most people are not only likely to skip through them, but are also therefore likely to miss important trends within the data.

Spotting the differences and assessing why they’re taking place, or trying to predict what might happen next should therefore be made easier through data visualization and interpretation. What would make it even more useful, is triangulating with consumer trends and attitudes about likelihood to donate to the arts. And that’s where the data from We Did This for example, would come in handy, as it adds that all-important perspective of the consumer and profiles the behaviours of the very people that the arts professionals are speculating about. More business intelligence into likelihood for investment in the arts would also help – we are seeing some big businesses have a greater presence in this area lately, but at the same time, we don’t have a sense of the businesses that are opting out or playing safe at the moment. Finally some insight from trusts and foundations on how many arts applications they receive a year and how many are successful for example, would also be helpful in mapping the competitive landscape for the arts and understanding how difficult it is.

The issue here is that in terms of research, much can be said about the gap between what people say and what they do – particularly when it’s what people say about what other people are likely to do. Therefore any such attitudinal research should, in most cases, be considered indicative, though that’s not to say not useful. More research on actual behaviour and giving patterns would therefore helping in bridging some of those gaps and creating a more representative picture of what is happening and what might happen in the future.

The annual Arts & Business survey on Private Investment in Culture should help in answering some of these questions. Though the analysis is retrospective, it is useful and interesting in its own right (and much anticipated I should imagine), but again, could be strengthened with more forward-thinking and market-scoping research.

I know there have been many attempts in getting these projects to speak to each other, to save readers and policy makers from adding this all up themselves, but it seems that there are still other more urgent priorities. The risk with undermining the importance of robust and holistic research is basing recommendations on assumptions, many of which might therefore be misleading or even wrong.


KPIs – an Arts Council response

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by Jon

Dawn and I wrote posts last week on the thorny subject of Arts Council KPIs, a theme then picked up over on Thinking Practice by Mark Robinson, former Executive Director at Arts Council NE.

The Arts Council is keen to engage in the debate and has asked us to host a response, which we are delighted to do. Roddy Gauld, the National Portfolio Director sent us the following:

In the current environment where funders and arts organisations alike need to demonstrate clear results in return for public funding, Key Performance Indicators (KPIs) are way of measuring our collective performance.

The Arts Council doesn’t see KPIs as a pass or fail measure, instead we hope arts organisations can use them as a tool for self-improvement, which allows them measure the extent to which they have achieved their ambitions. Demonstrating achievement, rather than just reporting data, is an exceptionally powerful argument for investment in the arts and our discussions with NPOs are helping us learn the extent to which it’s possible to reflect these achievements.

The majority of the Arts Council’s funding for the portfolio comes from the Treasury – so we need to be able to report convincingly on what our investment will achieve. The Arts Council is looking to National Portfolio organisations (NPOs) to be accountable for the funds they receive, with greater self performance management playing an important role in this.

We do realise the difficulty of standard KPIs, and that putting together one-size-fits-all measures of success for 700 very different organisations is an ambitious and challenging thing to do. Our ongoing conversations with NPOs are revealing areas where the Arts Council knows it will need to be flexible in both the design and the assessment of KPIs.

The finance KPI is a good example. It reflects the Government’s private giving agenda and also challenges NPOs to increase in the proportion of income they generate from non-Arts Council funding. We want these KPIs to be ambitious as we all consider how NPOs can make significant steps towards becoming more resilient. But we know that in some cases organisations will not be able to increase income for other sources, and for others it would be unrealistic to expect a year on year increase. Biennial festivals, for example, would not be expected to increase their non-Arts Council income in the years the festival isn’t running.

That’s why final funding agreements will contain KPIs agreed through discussion and negotiation with NPOs. Final figures should reflect the individual circumstances of organisations and be adapted if these circumstances change during the funding period. This process is based on working with NPOs to reflect our shared goals. It’s the first time the Arts Council has worked in this way and we are learning about how we can best use KPIs for the benefit of both the Arts Council and the organisations we fund.

We will continue to reflect as the process goes on, and we will decide if we need to change or adapt any KPI, or simply improve the explanation and guidance behind it. Whatever we decide, it will be based on the feedback we’re receiving from the discussions we are having with NPOs across the country.

It’ll take more than just a catalyst…

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By Tina

Following on from Jon’s and Dawn’s posts, I have been thinking about growth for smaller arts organisations and the expectation of raising more income from different sources in the next three years, particularly in regards to private investment from businesses, individuals and trusts and foundations.

In theory, encouraging diversifying income sources is a good thing… but in reality smaller arts organisations have three years to achieve some rather difficult targets. Raising £10k or even £5k in a year without any previous experience in, or current budget for, fundraising is not easy to do.

Fundraising takes time and investment, particularly as it requires research, an overarching strategy and plenty of patience, time and perseverance. Results do not happen overnight and relationships have to be cultivated in a sensible and sensitive way. Freelance/ consultant fundraisers can help, but they need to become really involved with the organisation in order to represent it with the conviction and passion required to make the right asks and to the right people.

And boards can and should also help, but how hands on can they be, particularly if their own resources (time, money and networks) are limited? And what about organisations’ audiences? A small touring company, for example, might have numerous loyal fans but not necessarily their contact details, as they come through the venues where they are booked. In which case how will they build a strong database which they can start using for fundraising? And what kind of support can they ask for if these audiences are often the very same underprivileged people they are trying to reach out to and empower through their work? And how will they reach the big sponsors and major philanthropists instead? In most cases, organisations will therefore start by applying to trusts and foundations, which must by now be inundated with applications and which therefore make this a very competitive “market”.

These are amongst the serious challenges which smaller organisations are faced with and which encouragingly the Arts Council seems to recognise. It will therefore in turn, try to address some of these issues by promoting fundraising capacity building through the Catalyst fund. However, I’m not sure how far it will go in equipping organisations in need of support with the appropriate knowledge, skills and expertise to start successfully fundraising from a variety of sources and in a very challenging economic climate.

To begin with, more than half of the money available through the £100m fund (£55m) is ear-marked for large organisations seeking to start or build an endowment. With a maximum of £5m allocated to an individual applicant, there could be a minimum of 11 (large and already successful at fundraising) organisations benefiting from this tier of the fund.

The £30m that will be directed towards fundraising capacity building and matched funding, again is targeted at the more experienced and successful organisations (in terms of fundraising). And though matched funding has proved a useful mechanism to incentivise giving in the past and for other sectors such as education, smaller NPOs with little or no fundraising successes to date (and in many ways those that most urgently need support), will have no access to it. They will only be able to apply for a grant between £15k-£25k in April 2012, and it is not clear if this will be a one-off for one year or if it will be repeated across the three years. I am assuming this would come from a total of £15m (the remainder of the original Catalyst pot), though this is not clear either and therefore it’s hard to estimate how many arts organisations might be able to benefit from this. In the meantime, targets for this financial year need to be met and without any resources or some strategic guidance, this will be hard to do.

Not to mention the fact that, as Dawn pointed out, the economy is likely to continue to have ongoing spill-over effects on sponsorship budgets, endowment yields and disposable income (and ultimately on philanthropy). So how successful will a fundraising gala be?

The strategy for NPOs? Grow

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By Jon

This is a bit more esoteric than other posts you’ll find on BC. Normal service will be resumed when I post next on the value of books, but prompted by Dawn’s post on KPIs a couple of days ago, I thought I’d write something myself.


The funding agreements for Arts Council England’s new National Portfolio Organisations (NPO) contain a number of KPIs, and one in particular has been attracting attention:

Achieve an increase in the proportion of your income generated from non-Arts Council funding of x% in 2011/12 to x% in 2012/13, X% in 2013/14 and x% in 2014/15

I think there are two reasons this KPI is attracting attention.

What does it all mean?

First, the exact scope of the KPI isn’t clear, and NPOs want to understand what they are signing up for.

For example, does the % of funding received from ACE over the period have to decrease year on year, or across the period as a whole? This is important to festivals, organisations with cyclical programmes, and anyone whose three-year plans include a period of increased activity, such as an anniversary year.

Does the % refer only to NPO grants or will it apply to all Arts Council funding? NPOs can no longer apply to Gfta, but many orgs are likely to receive large capital awards or strategic funds at some point over the next few years. If these monies are included in Arts Council funding, you’ll see large spikes in the % in some years. If they are excluded, then receiving a non-NPO award from ACE would actually reduce the % in the relevant year, which would be very odd.

There is a related point to make about grants made to orgs working in partnership, which are increasingly common. Dawn blogged a week or so ago about Common Practice, a group of several small London visual arts organisations. Common Practice has been supported by ACE funds in the past couple of years, but for practical and legal purposes, the money is channelled through the Chisenhale Gallery. As I read the KPI, the grant would greatly distort Chisenhale’s %. Perversely, it will probably making it easier for them to achieve the objective, since their % will drop significantly when Common Practice’s current funding runs out.

I’m also interested in how the %s are to be measured. In all other KPIs, ACE has left the basis for calculation to organisations to suggest, and one might assume that is the case here. But with other KPIs the wording is open to negotiation, so with a KPI mandatory ACE may have a fixed basis in mind. Yet nothing is set out, so while the obvious basis is to take a calculator to the financial statements, I think it’s open to interpretation whether management accounts or ACE’s own annual submission can be used.

Bigger is better?

A lack of detail is one thing – it can and probably will be tidied up in discussions and supplementary guidance. But a second and more significant issue is the message that the KPI sends & the potentially distorting incentive it provides. As Dawn hinted, there is only one strategy NPOs can adopt if they want to achieve the KPI – growth.

Its easy to see why with some numbers.

Let’s assume org x gets 100k NPO grant and 100k from non-NPO funds. The following year it receives 105k in NPO funding (a 5% increase). The organisation needs to raise at least 106k (a 6% increase) from non-NPO sources in year 2 in order to achieve the KPI. Overall, the NPO has to grow by 11k (5.5%)

ACE has awarded a significant majority of NPOs year-on-year uplifts, meaning NPOs must adopt a strategy of increasing non-ACE funding sources by a higher % year on year.

Why bother?

By making this and only this KPI mandatory, ACE have signalled that they attach special significance to growth in NPOs over the next 4 years. This is causing comment for several reasons.

First, it marks a policy shift for ACE. I’m happy to be proved wrong, but I think the KPI represents a greater level of direction for funded organisations than at any time in the past. Yet, NPOs are independent from ACE and both sides rightly cherish this about the relationship. An NPO is run (in most cases) by a Boards of Trustees whose role is to set strategy and secure the organisation’s future. These Trustees may well disagree with strategy the KPI requires.

Second, again as Dawn suggests, growth is very difficult for nations, supermarkets and investment banks at the moment, let alone arts organsiations. Standing still is a significant achievement in the current economic climate, and a contraction may be an organisation’s best strategy. So, it seems odd to include a requirement for all NPOs to grow at this time.

Third, while the KPI reflects the Secretary of State’s priorities and the goals set out in ACE’s 10 year strategy, the wording used means this is not simply a case of ACE passing on requirements from DCMS. The wording of DCMS’s own indicator (see #2) shows this, as it clearly refers only to charitable giving. The assumption is, therefore, that the KPI reflects ACE’s own focus or policy.

Finally, if you play with the numbers a bit more (which I won’t try to do here), it is likely to be harder to achieve for organisations who depend on income from a limited number of sources. Small organisations more often fall into this category, and a drop in (say) local authority funding will require a disproportionately high increase in funding from other sources in order to hit the target.

So, all in all, it’s hard to know what conclusions to draw.

Where once I would have asked for answers on a postcard, do write any thoughts you have in the comments. We have received some private correspondence from readers since Dawn’s post, but it would be nice to share them more widely.

What Fresh Hell…or KPI Madness?

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By Dawn

“Poetry is indispensable…if only I knew what for.” (Cocteau, in Fisher, 1986:1)

Key Performance Inidcators

What fresh hell...

It is true that I am quite exercised at the moment and not in a heart strengthening, fat burning sense. All because of those three little letters – KPI. For those not familiar with Key Performance Indicators they are intended to be measures that enable you to judge organisational performance in the medium and longer term.

If developed appropriately and properly monitored they should be a valuable part of any organisational performance toolkit. Nothing contentious there, in fact, it seems terribly sensible. Is it not right that people should know what they are working towards, what success might look like?

Unfortunately, the term has become widely used and abused and often now relates to anything that can be measured. The Advance Performance Institute talks about the growth of what it calls the ‘ICE’ approach:

  • Identify everything that is easy to measure and count
  • Collect and report the data on everything that is easy to measure and count
  • End up scratching your head thinking “What the heck are we going to do with all this performance data stuff?”

Not only are KPIs often misunderstood, there are darker forces at work, and some funding bodies are currently minded to hand out KPIs to their beneficiaries. In my view the recent mandatory KPI distributed by a certain arts funding body that shows its overall contribution to an organisation’s funding declining over three years seems curiously out of step with the context in which the arts now operate. Not that I don’t respect its right to set expectations around future funding levels by why, oh why, wrap it up as a KPI? Particularly one rooted in financial growth.

Recent retail figures show Tesco is facing its worst returns in 20 years, ONS and the OECD have both downgraded the UK’s economic growth, and George Osborne has made it clear that cuts are the bedrock of the Coalition’s Plan A. Greece is currently held up as the basket case but the UK economy is incredibly fragile and the US has had its credit rating downgraded. Moodys and Standard & Poors, who arguably played their own role in a lot of this mess, are still presiding over rating the world’s economies, need I go on…

Yet it appears that certain agencies believe that the arts (and I can also see it happening in the wider nonprofit sector) can valiantly cast aside these obstacles and look to growth. In trying to unravel this confusion I am struck by Cohen & Pate’s phrase ‘precarious armistice’ in terms of the relationship between government and the arts.

Attempts by government to evaluate arts organisations have not been hugely successful to date and this most recent phase does little to suggest this will change. Just where do people think the growth is going to come from? Apart from this question about practicalities it also seems to me to create further confusion about what could otherwise be a valuable method for understanding organisational performance.

If you are grappling with your KPIs at the moment can I suggest:

  • Setting KPIs for your organisation first then consider wider stakeholder requirements
  • Beware the promises you are making both internally and externally
  • Make sure everyone understands the KPIs (and really make them ‘key’) and that you have systems in place to collect the data you need
  • Then make sure you have the systems and processes to turn that data into knowledge and wisdom
  • Negotiate clearly with your stakeholders about the KPIs that are right for your organisation

“The arts world … is both fickle and self-regarding, and it is difficult to predict the reaction of that world to initiatives which seek to control it.” Cohen & Pate, 1999

If you are undertaking a KPI process at the moment we would really appreciate hearing your experiences.

Size Matters – Matters of Value

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By Dawn

Cropped view of a pear and an apple side by side

Apples & Pears?

Is it possible that in the current economic environment smaller cultural institutions face the most uncertain futures?

There certainly seem to be a number of smaller arts organisations (turnover under £1m) that will have their public funding significantly or completely cut next financial year.

These tend to be organisations that have limited capacity to generate alternative funding streams. They do not have the tangible assets of their larger counterparts and are often unacknowledged for the research and development role they play.

Size Matters,’ the recent report by Common Practice and Sarah Thelwall of MyCake fame, attempts to surface some of these issues. I found it a good read. It is a well-considered and thoughtful piece that genuinely surfaces the concerns I have heard many smaller scale organisations raise. Issues that it seems to me are generally ignored.

There is a lot packed into its 41 pages, probably too much to do it justice in a single blog. It touches on:

  • The inability of many of the standard metrics around visitors, costs per head and earned income to capture the true value of these organisations
  • The misleading mismatch these metrics create in comparing large with small organisations
  • The lack of recognition of intangible assets
  • The lack of scope for development and growth
  • The poverty trap that many arts-workers in smaller organisations become caught in, and so on

Two things in particular caught my attention:

  •  The need to build a more sophisticated understanding of the concept of value
  • The notion of lifecycle assessment/investment

In developing a more nuanced understanding of value Size Matters suggests the need to consider: artistic; social; societal; and fiscal value. Opening up notions of value and measurement is something I very much support, as evidenced in my previous blog on Valuing Culture.

I do have a slight concern over the clarity of social as compared to societal value. I would offer sectoral rather than social, as it seems to refer to value created within the arts system itself. The report refers to this as an ecosystem but I find this metaphor can also be problematic, something for a later blog!

A number of examples are offered from Studio Voltaire, Chisenhale Gallery and Mute Publishing that illuminate the four interlinked values in practice.

“What we immediately see from these descriptions is that value accrues over the lifetime of an object or idea and that it does so in the four areas of artistic, social, societal and fiscal value in ways which are hard to separate out; indeed it is the fact that they are intertwined that is key to understanding how value accrues in an artwork.” (Size Matters: 26)

In laying out this approach to attributing value what follows is the challenging proposition (primarily for traditional funding sources) of deferred value. My understanding of this is that the four elements of value may be realised over different timescales, if at all in the case of fiscal value.

This is a particular challenge for the smaller organisations as they often serve as the catalyst for an artist or artwork but it is others in the system that then gain the full range of value. It is suggested that smaller organisations most often ‘forfeit two of the most measurable types of value created – the realisation of social value through the development of audiences and of fiscal value through sales via the art market.’ (Size Matters: 29)

While in some ways this seems obvious it is really refreshing to have it spelt out so clearly at a time when it definitely needs saying. My experience is that many of these smaller organisations need to build their confidence in order to take more control of how they are measured and understood.

The proposition for a move away from annual comparisons towards lifecycle-based assessments and investments carries with it significant challenges but I do find it persuasive. I hope Common Practice will pursue it further.

Psychic value?

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By Jon

Malcolm Gladwell has written an article about why otherwise sensible business people buy sports teams, and what they get out of it.

Almost in passing, he makes the following remarks:

The best illustration of psychic benefits is the art market. Art collectors buy paintings for two reasons. They are interested in the painting as an investment — the same way they would view buying stock in General Motors. And they are interested in the painting as a painting — as a beautiful object. In a recent paper in Economics Bulletin, the economists Erdal Atukeren and Aylin Seçkin used a variety of clever ways to figure out just how large the second psychic benefit is, and they put it at 28 percent.7 In other words, if you pay $100 million for a Van Gogh, $28 million of that is for the joy of looking at it every morning. If that seems like a lot, it shouldn’t. There aren’t many Van Goghs out there, and they are very beautiful. If you care passionately about art, paying that kind of premium makes perfect sense.

The paper is available here and is interesting throughout.

It reminds me of Bruce Hood’s SuperSense and (the accompanying blog) in which he has written about the physiological and psychological reasons why people come to believe objects have non-physical properties. As a result, the object’s value is often significantly enhanced.

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