The national funder is told to focus on financial resilience, transparency and digital engagement in the first review for seven years.
Arts Council England (ACE) must operate as a development agency and focus on developing financially sustainable arts organisations, a wide-ranging review by the Department for Culture, Media and Sport has concluded.
For ACE to fulfil this role, the review presents a series of recommendations in areas including partnership working; digital development; place-making and relationships with local authorities; diversity; and the environment.
The aim of tailored reviews is to “provide a robust challenge to and assurance of the continuing need for government-sponsored organisations” as well as “review their functions, form, performance, and governance arrangements.”
First signalled in last year’s Culture White Paper, the tailored review of the Arts Council – the first for seven years – has found that functions it performs are still needed, and that the arms-length principle remains the most appropriate model for their delivery.
Focus on finance
The theme of financial sustainability runs throughout the whole report, which makes a broad series of recommendations for measures that ACE should take to build the financial resilience of the sector:
- further integrate financial sustainability into its grant applications
- support the sector to build financial skills that will help organisations diversify further their revenue streams and explore “alternatives to pure grants”.
- embed commercial skills and commercial leadership, and support organisations to become ‘investment ready’
- facilitate the sharing of best practice so that organisations can learn from each other how to “strengthen their respective financial resilience models”
- innovate around business delivery, such as touring models, fundraising and digital skills
- encourage partnerships to reduce costs, “for example by providing capital grants for organisations to share space, storage and/or services”.
It implies that continued funding should depend on organisations’ success at reducing their reliance on grants, and ACE is asked to set “more stretching targets” for National Portfolio Organisations (NPOs) to further diversify their sources of income.
Held to account
ACE’s funding decisions will increasingly be under scrutiny, as will the performance of organisations that receive funding. ACE is being asked to provide “a systematic, strategic, and measurable way” to monitor its own progress towards the five goals underpinning its 10-year strategy, and the delivery of its “development agency” role.
The system of holding ACE to account for spending public money should be “as robust as possible”, the report says, and the DCMS should take a more structured approach to monitoring its performance. This includes monitoring its plans for making savings in its own costs, “to ensure that projected savings are delivered.”
ACE in turn is being expected to take new steps to hold its NPOs to account. The report calls on ACE to be a leader for the sector in “developing a rigorous methodology to assess the outcomes and impact (i.e. beyond inputs/outputs) of its funding portfolio.”
It is also being asked to “set clear and ambitious audience engagement targets for its NPOs”, to demonstrate that Grant-in-Aid funding is reaching as wide an audience as possible. It must also require and monitor “a commitment to reaching diverse audiences, ensuring accessibility, and improving board and workforce diversity.”
Singled out for particular attention is ACE’s approach to digital engagement. It should set “much more stretching targets” for NPOs to increase their digital content and encourage audience engagement, which should be robustly monitored through “compulsory reporting”, the report advises.
ACE is also being encouraged to collaborate on the Digital Culture Project with DCMS and other stakeholders, on issues such as digitising collections and developing the sector’s digital capacities.
Driving wider participation through digital engagement, distribution and content is identified as a priority. As part of its development agency role, ACE should be sharing best practice to develop the sector’s digital capabilities, including in intellectual property, data usage and digital leadership.
Grantium to stay
The report notes that Grantium, the funding platform introduced in January 2016 as a cost-saving measure, received “mixed feedback” from the sector-wide survey that underpinned the review.
“Many stakeholders and survey respondents felt that the new system was ‘arduous’ and ‘un-user-friendly’, particularly for new and inexperienced applicants,” the report states.
It accepts it is “not surprising” that an off-the-shelf product would be less user-friendly than a bespoke product, and time has been spent responding to queries and developing guidance, but says ACE still anticipates substantial savings.
It therefore concludes ACE should continue working with the sector to “identify ways to improve the Grantium application portal”, and to combat the impression from a small number of stakeholders that the system was “designed to put people off applying”.
ACE has also been urged to address concerns about the transparency of its decision making.
While commending ACE for being a “lean and efficient” organisation, the review finds that just half of survey respondents thought ACE made decisions very or fairly transparently, while 40% thought it was not very or not at all transparent.
In response, the report advises ACE to hold an “open annual general meeting” in a digital forum; provide a summary agenda in advance of National Council meetings; and publish data about all its spending over £500.
It should take steps to ensure that grants administration processes are compliant with the minimum standards for government general grants, ensuring that details of current grant schemes and awards are available on the Government Grants Information System.
The tailored review continues a push towards a “place-based approach”, identified as a priority for ACE in the Culture White Paper.
By engaging in and establishing more local partnerships, the Arts Council is told it will satisfy calls for “a more tailored approach to regional needs and priorities” when making policies, setting priorities and distributing money.
The review therefore calls on the Arts Council to “be creative” in identifying diverse partners with whom to collaborate, and should set an “ambitious focus” on finding expertise from other sectors to build skills capability in the arts.
For instance, it suggests working with the corporate and private sector to encourage “skills support, staff exchanges and mentoring opportunities”.
In addition, the Arts Council should create more broad-based local partnerships across the country to identify specific needs, and fund projects “of value” that will contribute to local growth and development.
Culture Minister Matt Hancock echoed these suggestions in the report’s foreword. “I fully support the recommendations the review makes about how the Arts Council can develop and strengthen its effectiveness,” he said.
“In particular, supporting the development of the sectors through an increased focus on financial resilience, building skills capability, promoting digital, and strengthening the importance of cultural investment in place making will be key for the Arts Council in the coming years.”
The Arts Council is to publish a response to the review in June, including an agreed plan for implementing the recommendations. DCMS officials will monitor the delivery of the agreed actions.