Report of Initial Findings from the work with the Independent Arts Sector Network (IASN)

Prepared for: Birmingham City Council (Culture Commissioning Services) By: Sarah Thelwall Date: Aug 2012 1

Contents
1 2 3 4 Executive Summary ................................................................................................................. 3 Introduction ............................................................................................................................... 3 The Birmingham context ......................................................................................................... 5 3.1 4.1 4.2 4.3 4.4 4.5 5 5.1 5.2 5.3 5.4 5.5 5.6 6 6.1 6.2 7 8 Fundamental questions raised by the proposed changes to funding structures .... 6 Community Comedy Club (Women in Theatre) ......................................................... 8 Creative Apprenticeships (Creative Alliance).............................................................. 8 African Village project (ACE Dance & Music) ............................................................. 9 Makeable (Edgbaston Arts Forum) ................................................................................ 9 Espirito Mundo (Friction Arts) ..................................................................................... 10 Grant dependence .......................................................................................................... 10 Sponsorship & donations .............................................................................................. 11 Income diversification contracts vs. grants ............................................................. 12 Research income ............................................................................................................. 12 Cost structures direct costs, general overhead, marketing budgets & reserves. 12 Using data to demonstrate impact and value?........................................................... 13 Data & evidence challenges the need for new metrics .......................................... 15 Relationship challenges as the business models change .......................................... 15 How are IASN members delivering against BCCs arts goals? ......................................... 6

Benchmark analysis & questions arising from it ............................................................... 10

Key actions and areas of development for IASN, its members & partners .................. 15

The second stage of the project ............................................................................................. 17 Summary.................................................................................................................................. 18

1 Executive Summary
Independent Arts Sector Network (IASN) members consistently deliver against a number of Birmingham City Council (BCC) goals year on year. They make an essential contribution to the cultural life of the city by both delivering work of an international standard and by developing a depth of engagement with local Birmingham communities which consistently delivers new audiences to the arts. It is the people who make work who define the uniqueness of the cultural offers of a city. The members of the Independent Arts Sector Network make work that reflects the diverse and enterprising spirit of Birmingham. IASN members work in non-traditional ways and places and are an essential sources of innovation and experimentation. Their business models make them. Data gathered in the course of this project indicates that they are as dependent on grants as larger venue based organisations with less opportunity to diversify their income streams into shops, cafes, venue hire, sponsorship and donations. Some members are particularly good at delivering contracts but this route raises questions about the ability to continue to focus on intrinsic artistic outcomes. These organisations already operate very lean delivery organisations so focussing on cost reduction will not materially improve the sustainability of these organisations. IASN and the Birmingham Arts Partnership (BAP) need to work together if Birmingham is to better measure, articulate and advocate for the value of an arts ecosystem which successfully balances a genuine, long-standing and much valued set of highly engaged local communities with the delivery of artistic products of an international standard.

2 Introduction
This report is the output of a very focussed project that ran between Oct 2011 March 2012 with the core members of the Independent Arts Sector Network (IASN)1. The purpose of these workshops was to elicit both data and narrative on the members in order to better articulate the unique value delivered by these organisations to the arts ecology in Birmingham and to demonstrate the wider benefits being delivered socially and economically. The timing of this project was important as it came immediately after the announcement of the withdrawal of revenue funding from smaller arts organisations and its replacement with a new approach to commissioning services through new project grant funding themed around Culture on your Doorstep, Next Generation and Great International City that they could bid to. It is also worth noting that the change in Local Authority funding compounded a problem being face by several arts organisations who not only lost regular LA funding but also RFO status with the Arts Council England.

IASN Steering Group Members ACE Dance & Music, Big Brum, Craftspace, Creative Alliance, Eastside Projects, Edgbaston Arts Forum, Fluid Space Arts, Fierce Festival, Friction Arts, Sound it Out, , The Playhouse, Women & Theatre

Many organisations were therefore in a state of flux as they worked out whether they could survive these changes to their income models. The IASN was formed by the small to medium sized arts organisations2 to increase the strength of the voice and develop a cohesive message from this section of the arts ecosystem to funders and stakeholders. It is worth noting that the group is very varied in terms of the arts sub-sectors represented by its members, the ways of working, the approach to intrinsic vs. instrumental activities, the assets held and the opportunities to develop new income streams. This makes the development of a joint message far more difficult to develop than if the members were more homogeneous. However there are a number of characteristics that are held in common by many of the members. In particular these include a similar size in terms of turnover (<1m) number of employees (<10 and often <5) a combination of highly local and international reach very wide and deep networks of relationships with audiences, funders, clients and community organisations low levels of reserves limited ability to invest internally in their own new ideas an audience that does not include high net worth individuals (ie donors) and limited brand value for sponsors unique artistic voice that is recognised nationally and internationally

The project consisted of a set of three group workshops and an analysis of the financial data of the IASN members across three years. The data was gathered via the Culture Benchmark which has enabled us to make quite detailed comparisons to other sample groups including the Birmingham Arts Partnership, a sample of non-RFOs, a sample of non-venue based organisations and a sample of organisations with a turnover of less than 400,000 per annum. The goal of the project was to evaluate whether it would be possible to develop a clear articulation of the value and role of small to medium sized arts organisations in Birmingham and therefore to improve the understanding and appreciation of this role in the Local Authority and amongst other funders and policy makers.

defined as being organisations not sole trader/freelancers and with a maximum turnover of approximately 1m per annum.

3 The Birmingham context

The small and medium sized non-profit arts organisations in Birmingham have been very hard hit by the changes in funding that were made in 2011-12. Several have not achieved NPO status despite previous RFO status with the Arts Council England, several more have been hit by the loss of revenue funding from Birmingham City Council. The total turnover of the arts organisations who were regularly funded in 2011-12 by BCC is close to 53m per annum. Delivering programmes which encourage participation from Birminghams youth is important to the city given that 37% of the population is under 24 years old. This is a particular focus for the small and medium sized arts organisations most of whom now receive funding from BCC as project funding rather than annual revenue funding. There is increasing pressure on this project budget as other sources of funds previously available e.g. RDA monies have been reduced or have disappeared entirely. BCC is also forecasting a cut in overall arts funding through to 2015 and is working with the 10 large organisations (members of the Birmingham Arts Partnership BAP) to attempt to minimise the impact of this upon arts provision in the city. For now at least however the project funds to which the small and medium sized organisations can bid would appear to be small but stable. BCC recognises the vital role that these organisations play. BCC strategy documents indicate that to offset reductions in arts funding arts organisations should be reaching out beyond relationships with the BCC arts department and bidding for contracts to deliver work for other BCC departments such as health, education, community cohesion etc. How might this work? As it is not practical to suggest that small organisations will have the resources to keep their radar tuned to a plethora of policy development and implementation groups there would need to be a mechanism for both representing the IASN members when policy is being developed and for collating and disseminating opportunities to bid for contracts as they come up. As the breadth of sources of contracts increases so the need for robust evaluation of the value being delivered by projects increases. The work of JABA Associates as delivered an in-depth evaluation toolkit which sets out how to measure the impact from input to outcome through the development of human, social and cultural capital. We should assume that if the arts team will demand more strongly evidenced arguments then the demands of other departments less familiar with the value of an arts based approach will set the bar even higher. It may also be expected that BCC is not the only organisation who will require a more strongly evidenced set of arguments as to the impact and value of the arts.

3.1 Fundamental questions raised by the proposed changes to funding structures

These actual and forecasted changes in the way in which the arts is funded in Birmingham raise a number of fundamental questions about the role of small arts organisations in the ecosystem and infrastructure of Birmingham. The most important of these is whether the role of SME arts should be intrinsic or instrumental? If SME arts organisations are to bid to departments other than the arts & culture department then we should expect that the contracts they are tendering for will be based on instrumental activities whereas to date both revenue and project funds from the arts team have been supporting a mixture of intrinsic and instrumental uses and value of the arts. If this path towards a more instrumental role was taken by the smaller arts organisations would we, in five years time, see a divergence in the roles of larger organisations with a brief to deliver to an intrinsic brief and with smaller organisations almost entirely focussed on an instrumental role? How would this change the arts ecosystem in Birmingham and would it be beneficial overall? How would this change the contribution that IASN bring to unique cultural identify of Birmingham? The potential impact of these changes in the funding and support structures for smaller arts organisations needs to be explored more thoroughly; meanwhile the members of IASN need to better articulate both the qualitative and quantitative messages as to how these non-profit SME arts organisations deliver value and contribute to the achievement of BCCs targets in both the arts and elsewhere.

4 How are IASN members delivering against BCCs arts goals?

The members of IASN contribute to the arts ecosystem in Birmingham in ways that are very different to the contribution of the large venue based organisations in the city. Whilst they face a series of significant challenges to their business models they consistently deliver new audiences and new modes of engagement on very small budgets and with very low overheads and staffing costs. IASN members deliver against BCCs objectives in six key ways: 1. Cultural participation (Culture on your doorstep): how small scale organisations create work that reaches out to new audiences and creates participants, creators, audiences and new leaders 2. Cultural product creation: how they take a cultural process to local communities and engage with residents in both creating work and engaging with cultural works created by others 3. Priority Neighbourhood Engagement: how small organisations enter and engage in deprived areas of the city with target groups to overcome some of the barriers to participation

4. Working with the Next Generation: working with traditional art forms and reaching out to achieve engagement with non-traditional users of that art form and engaging with new and emerging arts practitioners in the city 5. Working in Non-Traditional Spaces: how small organisations successfully deliver in non-traditional spaces (both indoor and outdoor) 6. Working with International Partners: how small organisations leverage the value they deliver into international relationships and how this brings value back to audiences in Birmingham A number of these topics are in essence cross-cutting themes and therefore the ability to demonstrate value will be useful when engaging both with the arts team and other departments. They do however have a direct relation to the ways in which the arts team expects to contract with the members of the IASN in the next one to two years. The type of data and case studies that IASN members could use to demonstrate how they achieve the objectives above includes the following: Audiences and participation data on the volume of audiences is useful in demonstrating achievements in areas 1-4 Financial Profit & Loss data this is valuable in demonstrating how the business models being used enable small organisations to work very flexibly with nontraditional spaces and without the need (or overheads) to run a permanent public venue. Financial data on the sources of grant monies so that we can see a split between local, national and international funds helps demonstrate how UK government money is leveraged to win funds from international sources. Volunteers & placements data not just on the numbers but the roles that volunteers play in the achieving of a financially sustainable model shows the difference between volunteers who invigilate a space as opposed to those who offer advice and expertise at a more senior level (eg board of trustees) Engagement, learning & skills data on staff retention levels, training budgets and the ratio of contract to permanent staff in an organisation.

In the first phase of work in 2011-12 we explored both the data and the narratives of members of the group to determine the strength and robustness of the arguments we could make. Given that the metrics we have available at present are an imperfect match to the value we are trying to measure it will be necessary over the short to medium term to continue to use case studies to add a qualitative understanding of value being delivered to any quantitative summary. The examples below cover a variety of approaches to both intrinsic and instrumental value creation but can all be analysed qualitatively to illustrate how they are delivering against the six identified areas.

4.1 Community Comedy Club (Women in Theatre)

W&T collaborated with Stanhope Community Centre over the course of twelve months to deliver a set of four comedy courses to separate cohorts of women, men and young people. The premise was based on research evidence that demonstrates how having a laugh can make people feel better. The goal for the courses was therefore to help raise peoples confidence and self-esteem in areas (Highgate, Digbeth and St Andrews) where 65.1% of people live in social housing, where over 35% of those claiming benefit are claiming incapacity benefit and of those claiming 55% have been doing so for over five years and 43.2% are claiming for mental health reasons. The project leveraged the existing skills of W&T and specifically the director Janice Connollys national reputation as a stand up comedienne. The Community Comedy evenings offered a performance opportunity to those whod taken the course and demonstrated the local support from the rest of the community through engaged audiences and great feedback. Participants were invited to perform at mac and at other W&T events. The project received substantial positive media coverage and has subsequently won further investment from national as well as local sources with the annual budget growing from 14k to over 40k. This project delivered against 5 out of 6 of the areas identified by BCC as they worked in three areas of high deprivation (Highgate, Digbeth and St Andrews) and created participants, creators, audiences and leaders. They reached non-traditional users of the art form by working in non-traditional spaces and theyve created a series of pathways for development for participants which have lead to ongoing income for at least two of the new comediennes. The demonstrable success of the first set of four courses has enabled W&T to build on this for the second year and to raise additional investment so that they can deliver 6 courses.

4.2 Creative Apprenticeships (Creative Alliance)

Youth unemployment a key issue in Birmingham & the West Midlands. It is particularly tough to enter and progress in the creative industries given that the sector is less well paid than others, there is a huge over supply of graduates and self-employment levels are higher than in other sectors. The problem is exacerbated if you are not white, middle-class and a graduate. Creative Alliance faced not only a sectoral challenge in addressing this employment issue but also faced a series of barriers in terms of the mindsets of employers, young people and agencies. Over the course of the last three years and 100 apprentices Creative Alliance have honed their messaging and demonstrated the benefit of apprenticeships to employers in particular the benefits of workforce diversity, the return on the investment in terms of business growth and the improvement of staff retention levels. Over half of the apprentices have continued to work in the sector following completion of their apprenticeship and almost a quarter have moved on to further education courses. This programme delivered against four of the areas identified by BCC as they worked with the next generation by reaching out to SMEs who are non-traditional sources of apprenticeships and the apprentices often came from non-traditional sources in that they 8

were not HE graduates in the main. The programme was also delivered in non-traditional spaces. The programme reached out to new audiences and worked in local communities thus delivering against both of the cultural participation goals.

4.3 African Village project (ACE Dance & Music)

The African Village Project was a cross-arts project involving story telling, visual arts and music and was aimed at nursery and reception aged children in Birmingham in eight cold spot areas of the city. The artists led workshops to introduce the Ghanaian legend of the Golden Stool and explored movement and created costumes and props for the final week performance. The dance artists led workshops to enable the children to create their own movements for the telling of the story. Staff, family and friends attended the final performance. Feedback from the schools demonstrated that this final performance experience surpassed all their expectations. It was so successful that it was delivered to a further eight nursery schools in the following year. This project addressed five of the areas identified by BCC in that ACE Dance & Music worked with the next generation in non-traditional spaces and therefore engaged with a wide array of participants, creators, audiences and leaders in the development and delivery of the work. The work was embedded in local communities many of which are priority neighbourhoods in deprived areas. It should be noted that other projects such as Dance = Desir deliver against BCCs sixth goal of working with international partners and there is of course a cross-fertilisation between all ACE projects. ACE Youth have a national role to play in developing international youth dance links with international partners in Switzerland & Netherlands and have hosted international forums in Birmingham with support from ACE & BCC.

4.4 Makeable (Edgbaston Arts Forum)

Makeable was an international partnership linking Cerebral Palsy Midlands with similar organisations in five countries and used creative and cultural experiences to explore and share the implications of a citizen model of disability. The focus on creative activities built trust and connections between participants, the cultural experiences helped to increase understanding of the similarities and differences in culture which connected to discussions about how people with disabilities are regarded in different countries. This in turn informed an ongoing debate about how to enable increased levels of participation in society by those with disabilities and the implications for both people and spaces in the wider community. Makeable delivered against four of the BCC areas of interest with a particular focus on the international partners and working with non-traditional arts spaces and audiences. Whilst there were learnings for the UK participants it was also clear that the UK shared best practice experiences with the other international partners and had a clear leadership role to play across Europe in this area of work.

4.5 Espirito Mundo (Friction Arts)

Espirito Mundo arose out of the hosting by Friction Arts of 27 Brazilian artists & musicians at the Edge as part of Espirito Brum 2011. The Brazilian artists and producers (Instituto Quorum) were inspired by Friction Arts work in South Africa and invited the team to undertake a research trip in 2012 to further the relationship and to enable the Brazilian team to learn about the unique process that Friction Arts have devised that not only engages local communities but involves them in all parts of a project from idea generation through to gallery exhibition. In the course of this research trip the Friction Arts team came across the catraeiros who are the local ferry service rowing people across the bay to save them a one and half hour bus ride. In devising and delivering a project to highlight the importance of the catraeiros they helped to transform a dilapidated boat yard into a venue which provides income and visibility to a dying local trade organisation. The project attracted 2 local and 1 national TV stations and a two page article which was syndicated to a national Sunday paper. In 2012 Friction Arts are again hosting artists and musicians as part of Espirito Brum 2 and will continue to build opportunities for these artists to show their work in a reciprocal relationship which also raises the profile of Birmingham in Brazil. This project delivered against four of the areas outlined above and whilst it certainly has an international focus the connection to local communities in Birmingham (particularly Brazilian but also a broader reach to South American communities in general) will continue to be important.

5 Benchmark analysis & questions arising from it

Whilst comparative analysis tools are common in many sectors as a means of identifying strengths and weaknesses in a business or cluster by comparison to a national average or examples of best practice it is not a technique that is widely used in the arts. It is however extremely powerful and has been used to great effect by both small and large arts organisations across the country. In particular the Size Matters paper published by Common Practice demonstrated just how different the business models of small visual arts organisations are to large gallery venues such as Tate, Ikon or Baltic. In the Birmingham context we have used benchmarking to look at what the norms are in the business models of small and medium sized organisations, how the members of IASN compare as a group to the cluster of larger organisations who are members of the Birmingham Arts Partnership (BAP) as well as to the national average both for the arts as a whole and for a cluster of organisations of a similar turnover level. Whilst the data from IASN members is private data, the data on members of BAP is drawn from published accounts submitted to the Charity Commission.

5.1 Grant dependence

The members of the IASN are, like so many other small arts organisations, very reliant on grant funding with an average of some 65-70% of turnover coming from a variety of grant 10

sources. The national average based on a cohort of some 350 organisations. The average for 2010 is 61.9% of total turnover and the figure for 2011 is 62.2% so IASN members are slightly more grant dependent than the national average. It should also be noted that a high level of grant dependence found across Birmingham is normal amongst smaller or non-venue based organisations (73.4% in a comparison group of organisations with a turnover of less than 400k/annum) but is abnormal in larger ones where overall grant levels are usually under 40% of turnover. It would be foolish to hope that arts funding is likely to improve in the short to medium term so clearly there is work to be done to reduce dependence on arts grants. It is notable that the larger organisations (who make up the Birmingham Arts Partnership) are also very grant dependent (58.2% in 2010 and 72.5% in 2011) and this is, if anything, more worrying both for the members of BAP and for the IASN members. If BAP members cannot generate more earned income to what extent are they competing with IASN members for the same pots of grant funds? If the larger organisations in the Birmingham area cannot reduce their grant dependence are the reasons behind this ones that will hinder the IAS members as they seek to diversify their income?

5.2 Sponsorship & donations

Many of the IASN members work in highly participatory ways with communities around Birmingham. It seems unlikely that the audience demographic for IASN members is a source of new income either from tickets or merchandise. The sponsorship potential of the IASN members is also relatively low as their projects are not likely to attract substantial press coverage nationally or regionally so the marketing value of sponsorship is low. Both of these challenges are born out by the benchmark figures which show very low levels of corporate sponsorship (0.3% of turnover in 2010 and 0.7% in 2011) and private giving (0.4% of turnover in 2010 and 0.2% in 2011). Again, with the exception of a couple of legacies the sponsorship and donations figures for BAP members (<4% of turnover) indicate that this is not a substantial source of income in the Birmingham area irrespective of the size of the organisation. The national average for corporate sponsorship was 4.9% of turnover in 2010 and 4.7% in 2011. In organisations with a turnover of <400k per annum the figure is 4.0% in 2010. The national average for income from private donations was 4.2% of total income in 2010 and 7.0% in 2011 however the average for organisations with a turnover of less than 400k is a mere 0.6% of turnover (2010 data). So whilst both BAP and IASN members achieve income from these areas that is below the national average IASN members are a long way from the average. The loss of revenue funding from either a Local Authority or other key funder such as Arts Council England has an additional impact here in that it acts as a badge of quality and recognition to potential sponsors and without this badge sponsorship is often harder to secure.

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5.3 Income diversification contracts vs. grants

Both the qualitative work with the IASN members and the quantitative benchmarking demonstrate the fragility of the business models operated by IAS members. The data of the BAP members does not offer a more rosy picture. The opportunity for IAS members therefore is to diversity their sources of grant income by working with other departments in the Birmingham City Council and where possible shifting from a grant based approach to the delivery of contracts with related service level agreements. The latter would of course mean participating in competitive tenders for work but Local Authorities are being encouraged to expand their supplier lists to include non-profit organisations so such a move should be viewed favourably. The national average across organisations of all sizes, sectors and geographies shows that contract based income is worth some 16.6% of income in 2010 and 11.9% in 2011. Contracts have been an important source of income to both IASN and BAP members and were worth an average of 27.4% of total income to IASN members in 2010 and 24.5% to BAP members. In 2011 these figures dropped sharply to 2.1% for IASN and 13.7% for BAP. A more detailed look into the individual IASN figures shows that in reality there are a subset of members who derive a high percentage of their income from contracts and an almost equal number for whom contracts are worth only a very small percentage. This would be worth looking into in more detail so that we can see whether there is a best practice which can be shared or whether contracts are only appropriate to some IASN members.

5.4 Research income

It is worth noting that the IASN members have been unusually successful in winning research monies. Whilst it is still a very small proportion of their overall income (2-5%) this is a very useful string to their bow both in terms of the financial contribution and the evaluation or validation of their impact. This is an area worth exploring further going forward and case studies of success in this area (e.g. Craftspace and Big Brum) would help increase understanding of the potential it offers. There are two major universities (Birmingham City and University of Birmingham) who are both involved in Creative City and LEP initiatives.

5.5 Cost structures direct costs, general overhead, marketing budgets & reserves
The members of IASN already operate very lean organisations with the great majority of their income being channelled straight into delivery projects - 30-35% of turnover is spent on the programming costs with an additional 40-44% spent on staff salaries most of which are delivery focussed. The national average was 42.0% and 39.4% on programming in 2010 and 2011 respectively and 35.5% and 36.6% on staff salaries. Although the balance is slightly different vs. the IASN membership the net result is fairly similar. The figures for organisations with a turnover of <400k are 43.2% and 36.6% respectively.

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The flexibility they maintain by not operating large public spaces works to their advantage both fiscally and operationally. It could be argued that they require relatively small marketing budgets (currently <2.5% of turnover is spent on marketing) in order to communicate with the audiences and participants they engage in their projects however if the members of IAS are to increase their visibility and articulate their impact to clients and stakeholders then a larger budget dedicated to this B2C marketing is probably necessary. By comparison BAP members spend 3.5-5% of turnover on marketing costs (excluding staff) and this is on a par with the spend across the national average, RFO sample and the <400k sample. This suggests that the marketing budgets of IASN members are probably too low across the board. There is very little in the way of contribution to reserves across any of the clusters we looked at. This has implications not only for the overall stability and sustainability of the organisations but impacts their ability to invest in their own new ideas in the early stages.

5.6 Using data to demonstrate impact and value?

In addition to clarifying the business models being operated by the IASN members and identifying both strengths and weaknesses in these models what can the benchmark data tell us about how the IASN members deliver against the six key areas of interest to BCC? The business models indicate that the main two areas of spend, accounting for 75-80% of total turnover are programme and staff costs. Spend on rent and other space related costs is low as are marketing costs. As we will see in the case studies this is possible either because work is delivered in community locations with low to no space rental costs or because the long term spaces used by organisations such as ACE Dance & Music and Friction Arts are not traditional arts venues with pristine white wall spaces and associated rent and upkeep costs. They are instead spaces in non-central locations which have been converted from semi-industrial buildings which can be acquired at low rents (though sometimes on rather short leases). Both these approaches not only keep costs low but support the delivery of work in priority neighbourhoods (often where the organisations are based anyway) and by working with members of the community to deliver the projects they are also delivering projects at a far lower cost base than if professional ie paid dancers, actors and back stage staff were hired. For example, Big Brum are located next to a primary school in Castle Vale & work in partnership with that school in creation and testing of educational methodology. Stans caf have taken over a new AE Harris building and are developing and mentoring a cluster of new & emerging theatre and experimental artists. So, whilst it is hard to separate out the business model from the way in which this modus operandi enables IASN to achieve impact and deliver value i.e. if they are to engage local communities in the creation and delivery of the work it would be counter productive to flood the project with a cohort of professional dancers there is a clear correlation between the way of working and the impact it has upon the business model which is that it removes a set of costs which would be incurred by larger arts organisations who maintain an orchestra, cast of actors, gallery invigilation staff etc. 13

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6 Key actions and areas of development for IASN, its members & partners
In addition to looking at the potential impact upon the small and medium sized organisations of a greater focus on the instrumental value of the work they deliver and a reduced focus on the intrinsic value (see section 2 Birmingham Context) there are a number of other areas where action will be required by the members of IASN if they are to continue to improve the way they articulate the value they deliver. Based on the case studies and the benchmarking we can see that there are activities whose impact is not evaluated appropriately with the current approach and new metrics are needed. Alongside this is a need to review how the changing relationships with BCC and its various departments will impact IASNs overall ability to communicate the value its members deliver to this broader BCC audience. These topics are also likely to be of interest to the members of the Birmingham Arts Partnership (BAP) as the impact is not limited to the smaller organisations. This presents an opportunity to develop a closer working relationship between IASN and BAP.

6.1 Data & evidence challenges the need for new metrics
The data we collected in the Culture Benchmark is a useful start point in that it enables us to better understand the business models in operation across a range of small to medium sized arts organisations across a variety of creative & cultural sub-sectors. The questions in the benchmark are however not designed to record, measure or analyse the social impact or social value of the work being undertaken by these organisations. This benchmark is therefore not yet fit for purpose for organisations in the Birmingham area and further work is required to clarify how the impact and value are to be measured and any social return on investment calculated. Only then can we start to gather data against these new metrics in a way that will more fully articulate the important role that these organisations play in the city. Action required: working with an expert in impact measurement and social return on investment to identify appropriate metrics

6.2 Relationship challenges as the business models change

In the course of the workshops with the IASN members and through other work in this sector nationally it has become clear that relationships between small arts organisations and key funders such as the BCC continue to change as funding is cut and arts organisations search for new clients and contracts. One of the differences between the way in which the arts tends to be funded and the assignment of funds from other Local Authority departments is the difference between project funding and contract based funding. The former is the prevailing method amongst arts and culture teams such as that in the BCC, the latter is more common in non-arts 15

departments. The advantage of a contract based tendering process is that the brief is clearly defined whereas pitching for project funding can feel like a subjective beauty pageant. Furthermore when trust based relationships are disappearing and relationships between arts organisations and funders are limited to functional discussions then it becomes harder to predict which pitches of ideas have a reasonable chance of being funded as there is less visibility of the decision making process as well as the absence of briefs, tenders and contracts to pitch for. Action required: review of the sources of contracts and the variety of departments so that the IASN can work out how it will keep track of contracts they can tender for either individually or together. These shifts in the relationship call for a number of additions to the way that arts organisations communicate with the various teams in the Council, both in the arts team and elsewhere. The IASN has an opportunity to communicate on behalf of the smaller arts organisations the services that its members offer, the ways in which these services deliver to both intrinsic and instrumental goals. The case studies in this report are part of that set of messages as is the benchmark data. Rather than waiting to respond there is an opportunity for the IASN to lead to focus on the key strengths such as the expertise in running events in non-standard arts locations and attracting new audiences and participants. We can see from the case studies that the spaces3 are affordable, unusual and suited to non-traditional work and that in working in these ways offers audiences something very different to the large and sometimes intimidating city centre venues. As relationships with key funders such as Local Authorities change so this has a knock on effect upon other supporters who do not necessarily support the core programme but individual elements of it. Two types of funders often either become more risk averse or seek to change the way in which they provide support. Trusts & Foundations recognise that unless the core of the organisation is stable it is risky to support some of the newer and riskier work or the peripheral activities. In kind support providers e.g. providers of space or alcohol continue to matter to small organisations but this sort of provision is inflexible, that is to say it cant be used to buy other services and this means that the support cant necessarily be channelled in to the places where it is most needed. For example in order to make use of the in-kind support the organisation is having to spend hard cash on the risky parts of commissioning new work rather than being able to use the support, as cash, to pay for the commissions themselves. It is not simply relationships with grant funders and contracting clients that are changing in response to the changes in the economic climate. As small arts organisations struggle to develop sponsorship relationships as their organisations lack the visibility of a large city centre space, their programmes of work are not suited to wining and dining sponsors then
3

Including The Edge, ACE Dance & Music, Stans Caf, , Eastside Projects, Fluid Space Arts, Grand Union, Playhouse and Craftspace

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perhaps there is a need to find another way of looking at the challenge of attracting sponsors and relationships with the corporate world? Could such relationships be supported and brokered by the large arts institutions as part of the large arts organisations own CSR activities? If we did this would it help build collaborations between large and small arts organisations and would it help build a clearer message from across the arts to the corporate sponsors in the Birmingham area? Action required: exploration of these options with BAP

7 The second stage of the project

This report on the initial findings of the work with the IAS to better understand the value being delivered by small arts organisations in Birmingham has utilised extant data both fiscal and qualitative. We can see how in principle the data collected in the Culture Benchmark connects to the work that JABA have delivered that sets out a framework for monitoring the cultural, social, human and economic benefit delivered by arts & culture projects. However at this stage we are heavily reliant on the qualitative information found in the case studies to make this bridge between financial data and a variety of types of value. We can also see in principle how the work of the smaller arts organisations underpins some of the successes that are commonly attributed to the larger organisations, particularly when we look at the engagement and participation goals, methods and approaches. Whilst we can believe that these partnerships and collaborations between large and small organisations are vital to the way that the arts delivers value in Birmingham we cannot yet prove it. If we are to move from an implicit understanding of the connection between types of value created and the metrics used to collect data on arts organisations and quantify the additionality of the partnerships between large and small organisations then a second stage of work is required. This would also give us the opportunity to move from working with existing data to developing a set of metrics that are better suited to the task at hand. In particular we wish to develop an approach which helps us measure: How participation by audiences creates deferred value and how this is different to the deferred value created by the small arts organisations researched in Size Matters How do we measure value that is created across several organisations? If we are looking at a hub and spokes model for partnership would you put the large or the small organisation at the hub? Whilst traditionally the answer is to put a large organisation at the centre this is not necessarily an accurate reflection of the relationships between large and small organisations in Birmingham. Are there new routes for income generation that enable us to leverage the stability of the larger organisations (and thus their risk reducing capability) but which are 17

founded upon the new models of operation and value creation being developed in smaller organisations i.e. can large organisations be a route to investment and scale up for smaller organisations? How can the relationships and partnerships be seen in the data gathered? Currently this is difficult to do as we only collect data on a per organisation basis, partly because these are the legal entities for which data is required for governmental purposes ie submission to the Charity Commission or Companies House. However if we are to shed light on the additionality of the partnerships we need an alternative or additional view point.

Given that other organisations and individuals such as JABA and Graeme Devlin have been involved in work that connects to these questions it would make sense if the next stage of work brought together these key researchers as well as the IAS and BAP members.

8 Summary
The last twelve months have seen considerable changes in the funding of the members of the IASN. In particular the loss of funding from Birmingham City Council has had a significant impact as it represents not only the loss of a regular source of funds but it is also the loss of a key lever for winning other grants. Based on the available data and anecdotal feedback from IASN members organisations who are in receipt of LA or ACE funds are perceived as more stable. Funds from these sources is also seen as a quality mark? amongst other arts funders. It is not only the members of IASN who are facing substantial challenges and major changes to their business models in ways which would have been unimaginable only two to three years ago. The cuts in revenue funding to the members of BAP are likely to be causing these organisations to consider substantial changes to their business models also. Birmingham arts organisations have previously been known for their leadership in the development of education and participation activities across all demographic groups and all age groups. Funding cuts jeopardise this leadership position and hamper ongoing development of existing areas of expertise such as community centred practice and youth engagement. It is unlikely to be productive to simply try to turn back the tide of funding cuts but is there an opportunity to re-focus on the strengths in collaboration & partnership, a well connected eco-system headed up by skilled professionals and to use this to develop both new approaches to leveraging funding, contracts, investment and earned income whilst improving the metrics for measuring the value being delivered and the impact being achieved?

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