Most arts and cultural organisations are overextended and undercapitalised or, in other words, they try to do too much with too little too often on their own.
One reason for this, Russell Willis Taylor (President and CEO of National Arts Strategies based in the USA) told us in a recent interview, is that arts and cultural organisations tend to focus on the resources received and deployed to sustain day to day activity. They do not think sufficiently about the resources needed for building or changing the organisational structure, or ‘platform’ from which work is produced and presented.
Russell emphasises that arts and cultural organisations need access to both financial and human capital in order to take risks – a defining characteristic of artistic endeavour and the wellspring of artistic renewal.
They need to be sufficiently financially capitalised to take the long bet and be able to budget for failure and they need human capital, leaders who have the opportunity to reflect and plan over the longer term. Too often the people who work in arts and cultural organisations are overstretched and overwhelmed by the day to day.
Russell’s three recommendations for tackling over extension and undercapitalisation are:
- a focus on strategy, which often means doing less better;
- helping the board understand that investment in required in the organisation and its future and not every penny should be spent on programme;
- a change in mind set on the part of arts and cultural organisations and funders so that they appreciate that spare financial capacity is a good thing, enabling organisations to respond to change in the environment both positive and negative.
In her view, the root of all innovation, financial and artistic, is spare capacity. This is something that the private sector understands very well but that the arts and cultural sector are being slow to catch on to.
Whilst Russell talks primarily about these issues in the performing arts context, her points are relevant for all kinds of arts and cultural organisations.
See also Accessing financial capital– John Kingston (Board Member of Big Society Capital and founding Director of Venturesome) provides a briefing on different forms of non grant financing and their risk profiles here.
And, Two case studies of non grant financing Jim Beirne from Live Theatre and David Watt from Glasgow Sculpture Studio talk about their first experience of accessing loans here.
For more about MMM’s work on this topic see here.