DCMS measures to cut costs focus on ACE?s grant-making expenditure.
Arts Council England (ACE) does not have a clear understanding of the costs or efficiency of its grant-making, and in the 2006/07 financial year spent up to 35p in the pound in the administration of some of its grants, a report from the National Audit Office (NAO) has discovered. Scrutinising the grant-making process and its associated costs among four of the major grant-giving bodies – ACE, the Big Lottery Fund, English Heritage and Sport England – the NAO has found that little or no sharing of information and practice occurs, and that organisations do not separately identify the costs of grant-making. The report was commissioned with a view to ensuring that the DCMS’s sponsored bodies “operate as efficiently as possible”, citing “the need to achieve cash savings following the announcement of the 2007 Comprehensive Spending Review”.
ACE, which is not required to report separately on the costs of its grants programme, normally apportions its administration costs across all its Lottery-funded programmes. Asked by the NAO to recalculate the full costs of grant-giving, the figure of £3.36m was reached. The report noted that “the average cost for each grant awarded was therefore £2,015 and for each grant application received £904.” The direct staff costs of each award under Grants for the Arts for Individuals was 18p in the pound, a figure which rose to 35p when all costs were included. Grants for the Arts for Organisations cost 4p in the pound in staff costs, rising to 7p when all costs were taken into account. [[the average cost for each grant awarded was £2,015 and for each grant application received £904]]
Grants for the Arts for Individuals was the only grant-making scheme examined by the NAO which makes grants to individuals rather than organisations. Exploring the factors that make this such a high-cost practice, the report cited the support which ACE gives to individual artists “in developing their ideas into a credible grant application” and the additional checks which have to be made to assess their “suitability for funding”. ACE also spends considerable time giving feedback to the high proportion of unsuccessful applicants. Costs for Grants for the Arts for Organisations were comparable with other organisations’ expenditure. However, ACE also achieved the joint lowest overall outlay with its Regularly Funded Organisations grants costing only 1p in staff costs and 2p overall – a figure matched by Sport England’s Community Club Development Plan. The low cost of this programme was attributed to a longer-term relationship and greater assurance of the intended recipient’s eligibility, backed by “economies of scale due to the high value of grants awarded which average over £300,000)”.
The NAO also canvassed opinion among 250 successful and 250 unsuccessful applicants to the four organisations, and found that “successful grant applicants reported high satisfaction with the grant-makers’ processes while… satisfaction was much lower among failed applicants”. The report recommended that grant-makers should consistently collect information on the costs of grant-making, with a framework agreed with the DCMS, and that comparison of processes among grant-making bodies, facilitated by the DCMS, should increase the efficiency of the process. It further concluded that “grant-makers should review whether the costs of making grants are proportionate to the size of grants awarded”.