Should art groups jump at private funds?

Private sector investment in the arts is more vital than ever as public funding has fallen by more than 25 per cent since 2008, but acceptance of this change is hard for some to take, writes SUZANNE LYNCH

EARLIER THIS month, some of the biggest names in Irish business mingled with senior figures from the arts world at an evening event in the Bord Gáis Energy Theatre. Beneath the din of tinkling glasses at the awards ceremony for Business to Arts, an organisation that recognises and promotes collaboration between business and arts communities, it was the tinkling of money that was really on people’s minds. With public spending under pressure and consumer sentiment still weak, corporate sponsorship has become big business.

Once a form of arts funding that dared not speak its name to many in the arts world, private sector investment is now seen as a legitimate and increasingly necessary strand of funding for the arts. The reason for the shift is obvious – public funding of the arts is sharply down. Arts Council funding has fallen from €85 million to €63 million since 2008, a drop of more than 25 per cent.

As public purse strings tighten, attention has turned to the private sector as a potential funding source. At a Government level there have been conscious moves towards encouraging more private money into the sector. The 2011 programme for government contained a commitment by the two Coalition parties to work with the arts community to build private support of the arts either through philanthropy sponsorship or endowments.

In May Minister for Arts Jimmy Deenihan announced details of the philanthropy leverage initiative, a scheme that incentivises arts organisations to source private sector funding. Applicants to the scheme must match the state’s investment in their organisation with a multiple of private sector money – on average 2.5 times the state allocation.

With the State committing €230,000 in the pilot year of the programme, the aim is that €805,000 in additional private money will be raised.

In parallel, the Arts Council has launched Raise, an initiative that aims to help its funded organisations raise more money from philanthropic sources. Under the scheme, eight organisations will be given professional support to develop a fundraising programme. The winning organisations will be announced in the coming weeks.

The Arts Council is committing €100,000 to each organisation for the two-year programme; in turn the recipient organisation will be required to raise an additional €250,000 in private investment within three years, and a further €250,000 each year after that.

Initiatives such as these represent a novel approach to arts funding. They also mark a major change in the way the Government thinks about private funding of the arts. Historically, such funding in Ireland has been relatively underdeveloped, particularly in comparison to countries like the US. But, as Prof Tony Meenaghan from the Smurfit Business School points out, this is mainly down to historic cultural reasons. “Unlike Europe, where there has been a long history of public funding of the arts, in the US there has always been a tradition of private funding, mainly through philanthropy or foundations, stretching right back as far as Carnegie for example.”

Nonetheless, the arts world has generally been relatively slow at seeking private investment, particularly in comparison to sport, where sponsorship is accepted as a central strand of the funding model. As many in the arts are quick to point out, sport’s huge reach and popular appeal gives it a distinct advantage in attracting commercial sponsorship.

But there is also a mindset issue. Many arts practitioners are inherently resistant to the idea of commercial funding for a variety of reasons – from ethical concerns about the intrusion of commercial interests into the creative sphere, to a deeply held political conviction that it is the State’s duty to fund the arts.

But there may also be a more prosaic reason for arts’ poor record at attracting investment “One of the issues facing many arts organisations is that, financially, they can’t sustain a full-time, up-to-speed and commercially focused fundraiser but in the current, competitive market place it is incumbent upon arts organisations to become more commercially minded,” says Meenaghan.

This need to develop and improve fundraising skills is a key focus of Business to Arts. Its ‘New Stream’ programme, sponsored by Bank of America Merrill Lynch, is essentially a professional development programme, which trains cultural organisations in how to develop fundraising skills. Over the last two years Bank of America Merrill Lynch has invested €300,000 in the programme, while participating organisations say they have attracted €3 million in private funding, which they attribute to the skills and knowledge they gained through the programme.

Helping arts organisations to up their game in terms of sponsorship is also the key focus of both the Department of Arts’ philanthropy initiative and the Arts Council Raise scheme. While both have been welcomed by many in the arts community, there is some concern from smaller arts organisations about the projects’ relevance to them. With a focus on eight arts groups, Raise is inevitably selective, and many smaller arts groups are pessimistic about their ability to compete for sponsorship in what is a crowded market.

While the huge international profile and success of some of Ireland’s bigger arts groups, particularly in the field of theatre, is a draw for would-be sponsors, the question of how smaller, niche groups can attract private money is another matter.

Business to Arts has itself been moving away from a focus on developing fundraising skills, believing that a more holistic, institutional approach is necessary.

“While fundraising skills are important, there are a lot of other factors at play – audience development, the artistic programme,” says Stuart McLaughlin, its chief executive. “For example, because of the public funding cycle, many organisations plan no more than a year ahead, but no business, no philanthropist is going to invest in something that doesn’t have a more long-term artistic vision. What we’ve found is that many arts organisations are very good at programme marketing, but not at institutional marketing.”

To this end, Business to Arts has partnered with the DeVos Institute of Arts Management at the Kennedy Center in Washington DC in a venture that will involve the centre working with 15 arts organisations across Ireland, the first time the institute will have delivered a full-year programme outside the US.

The other question surrounding the Government’s new focus on developing a culture of private investment in the arts is timing.

Economic difficulties mean that corporates are in retrenchment mode. This year marks the last year of Absolut’s sponsorship of the Fringe Festival, while the Dublin Theatre Festival is without a title sponsor following the planned cessation of Ulster Bank’s involvement. The festival, which already has a number of other sponsors, such as the Dublin Airport Authority and the Doyle Collection hotel group, is likely to move away from the title sponsorship model towards a more multi-strand sponsorship model. It is also expected to increase its reliance on funding from private, anonymous donors.

So has Ireland missed the boat somewhat in terms of accessing private money for the arts? Not necessarily, according to Meenaghan. “Some arts, and indeed some sports, organisations are now experiencing a 30 to 40 per cent reduction in sponsorship funding compared to the height of the boom, but in reality there is a huge disparity among organisations. High-quality sponsorships are still being sought and renewed, but organisations that are not delivering value for money are finding it much more difficult in the current environment.”

Stuart McLaughlin agrees. “Surprisingly, it has remained fairly consistent, partly because we are coming from quite a low base in terms of private sector investment in the arts, and partly because, although certain funding sources have dried up, other new names are coming in. The most obvious example is the Irish banks, who were traditionally strong supporters of the arts. But now we have a lot of the international banks coming in, names like BNP Paribas, Bank of New York Mellon, Bank of America Merrill Lynch.”

Overall, McLaughlin sees huge opportunities for the arts in Ireland to access funding, particularly from the multinational sector. Many of the global giants in the pharmaceutical, technology and financial sectors with operations in Ireland have attached foundations as well as sponsorship capability.

Meenaghan is similarly upbeat. “The arts actually have a huge opportunity at the moment. There is almost a bigger role for the arts during an economic downturn. Arts organisations should capitalise on that, hone their skills, become more commercially focused and show what they can offer. “

'You can't think of the investment purely in terms of a mercenary type return'

KBC Great Music in Irish Houses festival"The festival is consistently of a very high quality," says John Reynolds, chief executive of KBC, about why the bank sponsors the festival. "It's unique and authentic, and has some of the best international and national performers in the world performing in great venues."

KBC’s partnership with the classical music festival goes back 15 years. It was initially down to former bank head Frank Casey who was on the festival board. “We inherited it, if you like, but knew we were on to a good thing; after three years KBC became title sponsor,” explains Reynolds.

Earlier this month, the festival won the award for the long-term partnership in the Allianz Business to Arts Awards. According to Ciara Higgins, artistic director of the festival, the relationship with KBC has been crucial to its success. “The festival would not exist without the support of KBC,” she says.

While the festival has a number of smaller sponsors, such as Irish Distillers Pernod Ricard and Merck, more than a third of its funding comes from KBC, a third from public funding and the remainder from box office. According to Higgins, this is the “ideal” balance of funding streams.

KBC’s re-endorsement of the festival each year has also been very helpful in attracting Arts Council funding, she says. “There has never been any artistic interference from KBC.” Nonetheless, there is constant dialogue between the two parties, with KBC helping out with social-media strategy, and the bank playing a role in the recent subtle name change of the festival.

Reynolds says the bank reassesses the sponsorship yearly but finds that it consistently delivers. “You can’t think of the investment purely in terms of mercenary type return; it’s about affinity, values, compatibility. There is certain amount of corporate identification between the two. The KCB Great Music in Irish Houses festival is a small festival doing something exceptionally well. Similarly, we are a comparatively small bank giving high quality service. It’s a good fit.”