progress & profit ap2010
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8/8/2019 Progress & Profit AP2010
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13MANAGEMENT FILE
A benefit of the current economic climate is
that it shows the need for arts organisations to
diversify their income structures beyond public
grant funding and private foundations. The
challenge for non-building-based organisat ions
has been the lack of a strategic framework
within which to explore income generating
options. We have seen substantial support ofand growth in self-generated incomes amongst
organisations with a substantial capital
infrastructure as they develop income from
shops, cafes and space hire. This exploitation
of tangible assets is great if you have a public-
facing building, but it is not an area open to
development by the many arts organisations
(who run operations from offices and studios
and whose public-facing activities use spaces
with which their brand is only temporarily
associated).
Instead the leaders in such organisations
are looking to exploit their core intellectual
assets (i.e. their intangible asset base). This
is a harder road to travel for a number ofreasons – funders struggle to support the
commerciali sation of intangible assets in the
same way they’ve supported commercial
leveraging of tangible assets; the arts funding
system is geared toward support for new
projects rather than extending the potential of
existing projects; there are fewer best practice
models to point to either in the arts or in the
creative industries (which is often the closest fit
in terms of markets and business models); and
the senior management teams are less familiar
with processes of commercialisation and related
funding sources such as the Technology Strategy
Board (TSB).Through my work over the past five years
with arts organisations who have a strong
intangible asset portfolio, I have devised the
model described below to explain how first
order creative activit ies can be developed into
earned income streams from second order
activities. Five income stream types are defined
as follows:
PRODUCTS AND SERVICES
This could be as simple a model as spin-off
books and DVDs or consultancy based on
the core strengths of the organisation. Or it
could involve a research and development(R&D) process simi lar to that seen in the spin-
out activities of universities or the product
development activities of commercial firms. LUX
is an example of an organisation that has grown
product sales and consultancy; Proboscis, SCAN
and iShed are all examples of organisations
investing in R&D with artists to deliver
commercial products.
RESEARCH
By this I mean the framing of the organisation’s
work in a research context and partnering
with other research entities (often universities,
though it could be commercial research too) to
deliver research outputs. The combined annual
budget of the UK Research Councils was some
£3.5bn in 2008. The 2008–11 budget for the
TSB is around £71 1m. To date, there are only
two contemporary visual arts organisations
(Tate and Proboscis) which hold Independent
Research Organisation status which enables
them to bid directly to the research councils.
Approximately 12 arts organisations across the
UK have successfully applied to the TSB. There
is significant potential for arts organisations
to access income from these sources simply by
reframing existing activity.
PARTNERSHIP AND SPONSORSHIP
This is less about traditional sponsorship and
more about brand partnerships so that we can
move away from reliance on access to corporate
social responsibility budgets and instead can
connect to core product R&D, development
and marketing budgets. It is this shift that hashelped a number of arts-driven and technology-
capable organisations to make radical changes
to the ratio of arts funding to commercial
income, the latter being achieved by becoming
subcontractors to advertising agencies, TV
production firms and digital media agencies.
CONTRACTS
There has been a significant push to encourage
third sector organisations of all types to win
public services delivery contracts. Dance United
is an artist-led Regularly Funded Organisat ion,
which has a number of contracts with Youth
Offending Trusts (part of the Ministry of Justice)to deliver dance academies. Its work has been
demonstrated to reduce reoffending rates.
DONORS AND PATRONS
In addition to rounding up a small number of
the great and the good and persuading them to
write cheques, this is also about leveraging the
buy-in from a broad grassroots audience. Might
there be a version of www.pledgemusic.com
that could work across other arts forms to enable
the commissioning of new writing, dance or
art? Birmingham Contemporary Music Group
already runs ‘Sound Investors’ which offers
audiences the chance to invest in the pieces it iscommissioning.
The use of tangible assets simply isn’t
relevant to organisations that do not maintain
public-facing buildings so the focus on
development of returns from intangible assets is
crucial. There is a small but growing community
of arts organisat ions who are successfully
developing revenue streams from one or more
of these areas. Sharing knowledge and good
practice from these pioneers will help to extend
this approach across the arts sector – important
given the ideological shifts with regard to
public expenditure which we can expect for
the next five years at least. The next stage in
my work will be the publication of a pilot study
which is based on a financial analysis of 10–20
organisat ions with intangible asset based
income streams. If you would like to benefit
from the insight that participants in the pilot will
gain, then please get in touch.
Sarah Thelwall outlines clear models on howto develop mixed incomestreams for your organisation
Progress and profit
SARAH THELWALL runs a consultancy
specialising in working with creative
entrepreneurs.
W www.sarahthelwall.co.uk
The challenge for non-building-based organisations has been
the lack of a strategic frameworkwithin which to explore incomegenerating options
www.artsprofessional.co.ukISSUE 225 13 SEPTEMBER 2010