Jam today or Jam tomorrow?

8/14/2019 Jam today or Jam tomorrow?

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Size Matters

prepare to be amazed at justhow different the income

models are for small vs. largeorganisations


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How models change with size:

Income Source (as % of

income)

10m

ACE core grant 47.0 50.1 27.5 38.1 29.4

Other ACE 14.9 15.0 14.0 10.9 3.3

Trusts & Foundations 21.4 8.6 5.9 3.7 4.0

Local Authorities 23.7 10.5 14.5 7.5 7.3

Lottery Funds 9.0 18.5 5.3 0 1.2

Grant in Aid 0 0 26.9 0 37.0

Other Govt Grants 47.3 22.2 10.4 2.2 0

Any other Rev Grants 38.0 9.5 10.4 8.8 11.1

Total Grant Income 78.9 72.7 57.4 52.5 51.2

If we set up ranges and show % income we can

compare small to large organisations meaningfully

As organisations get bigger so their dependence

on ACE core funding reduces


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income)

10m

ACE core grant 47.0 50.1 27.5 38.1 29.4

Other ACE 14.9 15.0 14.0 10.9 3.3



Lottery Funds 9.0 18.5 5.3 0 1.2

Grant in Aid 0 0 26.9 0 37.0




Small organisations also rely more heavily on

Trusts & Foundations & Local Authorities


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income)

10m

ACE core grant 47.0 50.1 27.5 38.1 29.4

Other ACE 14.9 15.0 14.0 10.9 3.3



Lottery Funds 9.0 18.5 5.3 0 1.2

Grant in Aid 0 0 26.9 0 37.0




This higher level of grant dependence is justifiable

if the organisation is a Deferred Value Creator (DVC)


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Size Matters

when changing businessmodels in the visual arts


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Overview Couple of key models for context

Two types of activity

Key points of difference

Two types of assets

Supply side & demand side income types

The key ideas in Size Matters

Implications of these

1. Large vs. Small

2. Challenge of Monetising

3. Implications of Deferred Value

What is comparative & collective data good for?

What benefits are accruing to those who DO benchmark?


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Emerging Mid-career

EstablishedRetail

innovative

traditional

internationallocal


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Two types of activity

First order:

The creative core Grant funded Not expected to

generate a financialreturn Delivers a cultural &

social return Intrinsically connected to

the expert labour forcein the organisation

Eg - exhibition

Second order:

Takes assets accrued infirst order

Seeks to develop them

into products &services that have acommercial value

Disconnects fromlabour costs and istherefore morescalable

Eg - merchandise


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The trouble is

The pot of funding to pay for first order activitiesis decreasing Less govt money

Private Foundations endowments are worth less

But even in good times it was hard to add value tosupply side cash You only get X% of the cost of delivery

No (profit) margin so dont have spare to pay for new &

speculative


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Two key points of difference

First order

1. Revenue connected tocost of production as

intrinsically linked tolabour costs

2. Grant funding meanslimited by supply sideeconomic factors

Second order

1. Revenue linked to marketdemand

2. Market models meansdriven by demand sideeconomics

Acknowledgements: Proboscis, SCAN, Blast Theory


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Trusts &Foundations

The LUX mix

GrantsProducts& Services

Research

Donors& Patrons1

stOrder 2ndOrder

Policy devt

Artist devt

Commissioning

Education, access & advocacy

Publishing

Preservation, digitisation

& public access

Distribution & loan of works

Product sales

Consultancy & other

services

Licensing/franchising

of the LUX model

Research & Teaching

Org. & Indiv. donors


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How do I

Determine which second order activities are right formy organisation?

Avoid second order activities being seen as a financial

wart on the creative face of the organisation?


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What are my tangible &intangible assets?Tangible Assets:

Buildings

Archives

Collections

Intangible Assets:

Individual & organisationalexpertise & experience

Reputation, brand & goodwill

Intellectual property Research skills

Audience & customer base

Education reputation & resource

Methods & processes


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What income can you derivefrom Tangible assets? Buildings

Caf & catering

Shop & retailing (incl. online)

Tickets & events

Space hire

Archives & collections Products & merchandise - dvds, books, reproductions,

posters etc

Lending fees


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What income can you derivefrom Intangible assets Staff sector knowledge

Consultancy

Contracts (public & private sector)

Products eg publications, films etc

Research (academic & private)

Intellectual property Licensing the use of the IP

Sale of the IP

Spin out of commercial products & services


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What income can you derivefrom Intangible assets Research

Subcontractor fees from HEI based research projects

Share of IP generated

Audience & customer base

A USP that HEIs value re research Donors & members

Education reputation & resource Public sector contracts

Sales of products & services

Brand Sponsorship & partnership


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Grant Based:

Govt & LATrusts &FoundationsEU

Supply Side Demand Side

Arts

Org.

Intangible Asset Based:Products & ServicesResearchPartnership &

SponsorshipContractsDonors & Patrons

Tangible Asset Based:

TicketsCollection LoansRetailingCaf & CateringSpace Hire

Arts Income Types


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Key ideas so far

First vs. second order

Tangible vs. intangible assets

Earned income from intangible assets

Venue vs. non-venue based organisations


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Size Matters key ideas

Deferred Value creation

Lifetime Investment vs. Annual Subsidy

More appropriate metrics


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Questions following on fromthese:1. What is the role of small vs. large organisations in the

contemporary art ecosystem?

2. How can we monetise intangible assets w/oprostituting the organisation?

3. What are the implications of deferred value on thecontemporary art supply chain?


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1. Small vs. Large - howdifferent? Flexibility vs. silos

Early works & mentoring

Fully resolved vs. first showing

Commissioning vs. exhibiting Process vs. output focussed

What grow up to become?

Investment lifecycle vs. annual subsidy

Live for ever?

% dependence on grant funding


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2. Challenge of monetising

How far go?

Not financial wart on creative face how achieve

proper integration?

Digital - content vs. art form

Long term sustainability

Pump priming funding

Mechanisms for keeping integrated


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3. Implications of deferredvalue More than recoupment

Space in the sales ratios

Equity stake in the work

Brand recognition from commissions

Getting larger orgs to include

Getting artists to remember

Contracts Main work vs. editions

Other types of value - social, artistic, cultural


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What is comparative &

collective data good for?Internal goal setting:

Seeing where you are strong (vs. your peers)

Seeing what needs improvement

Diversifying income and/or managing cost

Setting targets that are more than plus a bit/minus a bit

To investors & other stakeholders

Stronger business plans

Stronger investment propositions

Help achieve more buy-in from your bank


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What is comparative &

collective data good for?With trade bodies and professional organisations:

Identifying areas where support or development is required

Monitoring trends and the impact of sector development

activities

For the sector as a whole:

Communication of the overall contribution to GDP (or it would

be if we had a total for the turnover of the sector)

Lobbying to the Treasury by DCMS and others


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What benefits are accruing to

those who DO benchmark? Pragmatic and realistic goal setting for new areas of income

development

Greater clarity on how a business model may change as anorganisation grows e.g. changes from


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Thankyou

[email protected]

Jam today or Jam tomorrow?

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