News that Norwich Theatre Royal has received a £1.3m windfall without even having to submit a Lottery application (p3) may encourage more than a few Chief Executives to phone their accountants.
The new VAT rules offer potential New Year cheer to any not-for-profit cultural organisation that makes admission charges, and the fact that VAT rebates can be backdated suggests that more than a few arts organisations could be in for a tax bonanza. The fact that “transitional arrangements” will be set up to protect organisations with major building projects in progress is further cheer, and no doubt a great relief to any capital project manager fearing an unbudgeted and equally unwelcome 17.5% increase in costs. A possible downside will be the reaction of commercial suppliers of theatrical productions and exhibitions when their not-for-profit colleagues are uniquely able to zero-rate their tickets. One might anticipate more than a few objections being lodged and VAT offices approached to make rulings upon this and one or two other perceived anomalies.
It is no surprise, perhaps, that Norwich Theatre Royal has been among the first to re-structure their VAT arrangements. This organisation has reported surpluses for five consecutive years – nearly £50,000 last year. Its four-and-a-half week panto run generated a net financial contribution of £200,000; its 10,500 friends spent over £1.1m at the box office; and through the operation of its business over the year, the Theatre Royal calculates that it has contributed nearly £13m to the local economy. Compared to the average of 16 similar sized UK theatres, it sold 7.5% more tickets, presented 59 more performances, and has 8,900 more friends. It’s impressive stuff, especially as these figures were achieved with a range of high quality work – a week-long run of ‘The Mysteries’ played to nearly 8,000 people, and there were capacity audiences for Glyndebourne Touring Opera and Northern Ballet Theatre. Not only do the numbers continue to impress year-on-year, but the fact that the organisation is able to quote these figures at all is a testament to the priority given to monitoring and evaluation by its its goal-driven leadership. It would be interesting to know how many other UK cultural institutions are able to calculate how much cash they contribute to their local economies, or the financial value of their friends – let alone how many would then publish their findings for the world to see.