The National Endowment for Science, the Arts and Technology (NESTA) has been praised in a National Audit Office (NAO) report for the rigour of its funding decisions and the management of its awards portfolio, though there is criticism of one of its three funding schemes. The report also urges the organisation to improve the evaluation of its own operational efficiency, but absolves it of blame for the fall in value of its endowment fund.
NESTA was established in 1998 to pioneer ways of supporting and promoting talent, innovation and creativity, and its remit embraces the support of experimental and unusual projects which often have uncertain outcomes. Measures taken to manage the risk of such projects failing, including the setting of clear project milestones and objectives, regular project reviews and the provision of mentor support, were found by the NAO to be working well, and NESTA is summed up as being ?a flexible and responsive organisation, keen to learn and to improve its levels of service.?
Less favourable, however, were comments about its Fellowship Programme, applicants to which are largely sourced through a process of nomination by experts. This was found to be inadequate at reaching many of those who could be eligible, and has been widely criticised for its lack of transparency. In terms of geographic spread, NESTA was found to be close to achieving an equitable distribution of awards between the four nations of the UK. However, London has received nearly three times the number and value of awards that would be expected for its population. The NAO also draws attention to the lack of internal performance indicators specifying an appropriate level of programme support costs in relation to the number and value of awards made. It suggests that NESTA and the Department for Culture, Media and Sport (DCMS) agree an appropriate ratio against which to measure operational efficiency.
Falling interest rates have severely undermined the performance of NESTA?s endowment since 2001, but the NAO has recognised that restrictions initially imposed on the types of investment that NESTA could make rendered it less able to protect itself from the downturn in the stock market. The annual return on investment on the £200m endowment peaked at £17m in 2001, but the following year, as equity values went into decline, that figure fell sharply and the DCMS added a £95m top-up to the fund to enable NESTA to maintain its levels of activity.
Responding to the report, Jeremy Newton, NESTA Chief Executive, said: ?We are a young organisation with a hugely ambitious remit and the report largely endorses the way we have fulfilled our statutory objectives so far? The report has highlighted a few areas where NESTA can enhance its programmes and operations. NESTA is already researching these areas for action and is putting in place robust measures to address them.? Targets are now being set to improve the number of quality approaches to NESTA?s programmes from areas which are currently under-represented; and a range of measures have been introduced to open up the Fellowship programme, including the open-access scheme, ?Dream Time? Fellowships, which has been extended from its pilot last year. The organisation is also developing a fund-raising strategy to ensure the long-term viability of its endowment.