Sarah Gee - partner

Tomorrow's world: what happens when the public & charitable sectors merge?

Posted by Sarah Gee - partner on 23rd May 2010

It’s the eve of the day when the new Government will announce their plans for £6bn of cuts to national expenditure, and I’m musing. I feel worried that the cultural and creative industries will fare badly in tomorrow’s announcements. Although the new Secretary of State Jeremy Hunt has assured us that the cuts to arts and culture will not be disproportionate, I can’t see how they can’t be. Let me explain…

In the UK we broadly have three sectors – public, private and charitable (sometimes known as the third sector). Over a period of time, these definitions have blurred at the edges, such as public/private finance initiatives to build schools, and environmental charities securing contracts with local authorities to collect recycling from offices and homes. Some of these ideas have worked better than others, but in the main charities have lapped up such offers, keen to secure short- and medium-term income streams to ensure they can continue their core work.

The arts are in a similar situation, with many organisations creating business plans on the basis of regularly-funded organisation status from one of the four national arts councils, and a grant or service level agreement from local authorities. That tends to form about a third to a half of their income, with the remainder coming from fundraised income and/or money generated from trading activities, such as selling tickets, hiring out space for conferences and meetings, bar and food income, etc.

Arts organisations have really suffered in the last 18 months as the corporate sector has cut back on sponsorship, and many individuals have rebalanced their personal books by cutting back on charitable donations and memberships. But, because we’re a resilient bunch, we’ve just about made ends meet. However, when the public and charitable sectors are, to a large degree, interdependent, any reduction in available support from tomorrow will have a doubly-damaging impact. Cuts of, say, 10% from both the Arts Council of England and a local authority could easily cut £300,00 from the budget of a mid-scale arts organisation. When you realise that they’ve probably borne a similar reduction in income in the past year through sponsorship and individual giving, you start to realise that this is going to be beyond tough in the next few years. I hope that I’m proved wrong, but I’d be really surprised if we didn’t see some organisations go bust.

And just when you thought you couldn’t worry about anything else, here’s an extract from the coalition Governments plans for the next five years:

Support co-ops, mutuals, charities and social enterprises
We will support the creation and expansion of mutuals, co-operatives, charities and social enterprises, and support these groups to have much greater involvement in the running of public services.

I’m really hoping that the Government is fully aware as to the great degree that the arts wing of the charitable sector already has a huge stake in the running of public services through local authorities, and therefore the impact that tomorrow’s world may have on us all.

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