The Arts Benchmark

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 Two types of activity
First order:
• The creative core
• Grant funded
• Not expected to generate
a financial return
• Delivers a cultural &
social return
• Intrinsically connected to
the expert labour force in
the organisation
• Eg - exhibition
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Second order:
• Takes assets accrued in
first order
• Seeks to develop them
into products & services
that have a commercial
value
• Disconnects from labour
costs and is therefore
more scalable
• Eg - merchandise
 The trouble is …
• The pot of funding to pay for first order
activities is decreasing
– Less gov’t money
– Private Foundations endowments are worth less
• But even in good times it was hard to add
value to supply side cash
– You only get X% of the cost of delivery
– No (profit) margin so don’t have spare to pay for
new & speculative

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 The LUX mix
Grants
Products
Policy dev’t Product sales
& Services
Artist dev’t Consultancy & other
Publishing services
Commissioning
Distribution & loan of works
Licensing/franchising
Education, access & advocacy
of the LUX model

Research & Teaching

Preservation, digitisation Research
& public access
Org. & Indiv. donors

Donors
Trusts & 1 Order
st
2 Order
nd
& Patrons
Foundations

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 How do I …
• Determine which second order activities
are right for my organisation?

• Avoid second order activities being

seen as a financial wart on the creative
face of the organisation?

sarah@mycake.org
 What are My tangible &
intangible assets?
Tangible Assets: Intangible Assets:
• Buildings • Individual & organisational
expertise & experience
• Archives
• Reputation, brand & goodwill
• Collections
• Intellectual property
• Research skills
• Audience & customer base
• Education reputation &
resource
• Methods & processes

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 Supply Side Demand Side
Tangible Asset Based:
Grant Based: • Tickets
• Gov’t & LA • Collection Loans
• Trusts & • Retailing
Foundations • Café & Catering
• EU • Space Hire
Arts
Org.
Intangible Asset Based:
• Products & Services
• Research
• Partnership &
Arts Income Types Sponsorship
• Contracts
• Donors & Patrons

Acknowledgements: Proboscis, SCAN, Blast Theory

sarah@mycake.org
 How does this translate into the Arts
Benchmark?
Benchmarking of Non-profit Arts Organisations
2006 2007 2008 2009
Avg Avg Avg Avg
Number in sample 17 20 23 11
As a % of Income Avg Avg Avg Avg

Revenue grants applied for (£): 65.4% 76.6% 86.7% 37.2%

Total Capital Income 202.0% 1.7% 4.3%

Total Capital Expenditure 21.4% 2.2% 1.6% 5.2%

Total Revenue Grant Income: 69.6% 64.6% 67.8% 67.1%

Total Tangible Asset Based Income: 38.1% 34.2% 36.3% 22.8%
Total Intangible Asset Based Income: 24.7% 29.2% 31.9% 14.3%
Investment interest 0.7% 1.5% 1.2% 34.5%
Other Income 0.8% 1.4% 1.0% 0.8%
Total Revenue Income: 100.0% 100.0% 100.0% 100.0%

Cost of sales: 40.4% 31.6% 34.0% 32.5%

Total staff 42.7% 37.2% 40.2% 35.5%
Total Other indirect costs 24.5% 28.3% 24.2% 27.0%
Total Revenue expenditure 106.3% 97.2% 92.0% 90.8%

Profit/surplus -6.3% 2.8% 8.0% 9.2%

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 … and in a bit more detail
Benchmarking of Non-profit Arts Organisations
Organisation: Mot iRot i
Type of organisation: All Number in
17
Subgroup m em ber: All sample
Year: 2006-2007
If sample is 3 or less, dat a is suppressed
Income:
Your Data Average Max Min Top Quartile
Employed st aff (F TE) 3 7 1 4
Freelanc e/c ont rac t ed st aff (FTE) 9 20 0 19
Revenue grant s applied for (£): £ 152,354 £ 381,999 £ 18,526 £ 202,370
Revenue grant s applied for (No): 9 27 2 12

Revenue Income:
1. Revenue Grants:
Art s Counc il England £ 162,004 £ 481,998 £ 17,650 £ 62,570
Privat e Trust s & F oundat ions £ 57,993 £ 276,821 £ 3,447 £ 11,000
Loc al Aut horit ies * * * *
Gov't & relat ed organisat ions £ 58,054 £ 180,520 £ 16,500 £ 18,756
Ot her Revenue grant s £ 17,574 £ 84,494 £ 500 £ 1,579
Total Revenue Grant Incom e: £ 225,319 £ 844,590 £ 47,962 £ 68,650
3. Intangible Asset Based Incom e:
Donations & Sponsorship:
Corporat e sponsorship £ 25,636 £ 43,671 £ 5,000 £ 41,507
Privat e donat ions £ 709 £ 1,638 £ 200 £ 795
Ot her sponsorship & donat ions * * * *
Research:
Researc h Counc ils * * * *
Tec hnology St rat egy Board
Ot her Researc h funding
IP Incom e:
Royalt ies
Franc hise, Lic ensing & ot her IP inc ome
Trading:
Produc t sales £ 12,468 £ 70,000 £ 136 £ 14,216
Servic es & c onsult anc y £ 26,382 £ 96,153 £ 100 £ 36,919
Tic ket sales £ 32,690 £ 118,184 £ 806 £ 37,410
Subsc ript ions & membership * * * *
C ontracts & C om m issions:
Delivery c ont rac t s * * * *
Commissions £ 42,786 £ 125,000 £ 9,368 £ 53,462
Total Intangible Asset Based Incom e: £ 66,669 £ 237,876 £ 136 £ 74,839

Invest ment int erest £ 1,935 £ 3,618 £ 355 £ 2,818

Any ot her Inc ome
sarah@mycake.org Total Revenue Incom e:
£
£
2,958
402,679
£ 4,909
£ 2,779,846
£
£
1,759
65,254
£
£
3,366
398,105
 Bleugh, give me headlines!
• Income types fit tangible / intangible model
• 23 participating organisations
– with a bias towards intangibles
• Revenue income ranges from £60k - £3.5m
– the max for non-venue based is approx £1.2m
• National distribution
– but London is dominant

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 And the income distribution?
Best in class:
Large venue (>£2m annual revenue):
30% grant : 60% tangible : 10% intangible

Small venue (<£500k):

45% grant : 40% tangible : 15% intangible

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 BUT …
Small venue - average in 2009
70% grant : 25% tangible : 5% intangible

Non-venue based:
75% grant : 0% tangible : 25% intangible
Where ACE grant is over 50% of total income

sarah@mycake.org
 Tentative conclusions
• At present … Intangible asset income potential
≠Tangible asset income potential

• Reason? Market state + skills gaps in the arts

• Sources of optimism …
– Creative Industries growth = intangible asset exploitation
– Now have a clear & well tested model and method for
assessing an organisations’ options
– In a position to benchmark best in class and help others
achieve this
sarah@mycake.org
 Participating Organisations:
• Proboscis • Mute
• SCAN • Matts Gallery
• Blast Theory • Chisenhale
• LUX • Gasworks
• Furtherfield
• The Showroom
• Workplace Gallery
• Electra
• Snug & Outdoor
• Dance United • Afterall
• A Foundation • Studio Voltaire
• Candoco • Watershed
• Moti Roti • … and a few others
 Developing the Arts
Sustainability Index
Income Indicators: Cost Indicators:
• Regular vs. one-off grants • Staff turnover
• Growth in regular grants vs. • Fixed : variable cost ratios
inflation • Expertise that is free
• Growth in ticket prices vs. – Chiefs - strategic expertise
inflation as in-kind
• Diversification of earned – Indians - No of
income volunteers/£100k t/o
– Tangible asset based
– Intangible asset based
• Reserves
• Patronage, membership,
donations
sarah@mycake.org
 FTE per £1M revenue
Workers, managerial & Pro Bono
strategy
All paid Labour FTE/£1M revenue
Annual Hours Open for Business
% of Total Revenue
Personal & Individual patronage
that is Unrestricted
% Growth
In Regular Funding
In Ticket Price
Weeks of Revenue
Liquid Reserves
% of Total Revenue
Surplus / Deficit
% of Total Revenue
% Non-Core Income
% of Total Revenue
Bloc Funding that is Irregular

sarah@mycake.org
 Things to do next
• Contribute thoughts today on sustainability
index contents
• Benchmark your finances to see what your
current position is
• Get some help assessing your asset portfolio
- moi! ACID (for IP)
• Also consider your attitude to risk and return
and the motivations/definitions of success
that would work for you

sarah@mycake.org
 An Announcement
• MyCake.org will launch an online arts benchmark
• It will contain the ACE RFO data (960 organisations)
+ detailed data from the pilot + other public data
sources
• Coverage:
– National
– Searchable by art form, size of organisation, region etc
– Financial, staff and audience data
• Starting price £250/yr

sarah@mycake.org
 Want to learn more?
www.mycake.org

For background reading see:

http://
www.mycakefinancialmanagement.co.uk/blog/?p
sarah@mycake.org
=2473