Arts Funding

ARTS FUNDING A new perspective.

The funding of the arts is subject to a new debate, due in part to the new Government’s declaration that massive and swingeing cuts are in the future.

I would like to propose an entirely new approach to arts funding, which will be cost effective as no other system has been.

The basic principle is
“Guarantee against loss”

“Subsidy” gives to an organisation a fixed sum of money that the organisation is then obliged to spend, regardless of the financial viability of the project in question.

“Guarantee against loss” would make available to an organisation a sum of money equivalent to the production costs which would not then necessarily be called upon if the project were to become financially viable in its own right.

“GAL” therefore maximises the efficacy of the financial resources available to the funding body by essentially making the same money available to finance different projects.

Many projects never get off the ground as organisations lack the financial resources to front them – even though the project may, in the long term be viable, either completely or in part.

Having been awarded a “GAL” an organisation can then launch the project and within a predetermined time frame, eventually returning all or part of the money that was guaranteed.

A practical example:

A theatrical production destined for touring with pre-performance costs of £10k.
The GAL is established at £10k with a time frame of 18 months.
The company in question is then in a position to rehearse and prepare the production, shop window it and find touring dates for the following season.
The subsequent tour of – for example – 60 performances with a ratio of 30% revenue over touring expenditure and an average performance fee of £600/performance would result in a net touring revenue of £10.8k enabling the company to return the £10k to the funding body and retain a small profit. Once the GAL has been reimbursed in full, the company would then be free to continue exploiting the production – maybe with a small percentage of profit going to the funding body to help finance other projects.
Should there be a shortfall and the project does not reach the target figure of £10k by the end of the predetermined period, the funding body could then look at the possibility of extending the time allotted, if there is a reasonable chance of the project gaining further revenue or terminate the arrangement and recall whatever money was available. (Obviously the company would not then be permitted to continue to tour the production.)

If the company is only able to reimburse £8k of the GAL, the funding body has nevertheless obtained £10k of activity for £2k of expenditure.

The figures can be multiplied depending on the size of the projects concerned.

The advantages of this system over subsidy are manifest.
1) The money available to the funding body is recycled, whereas with subsidy it is given once and then is no longer available and has to be renewed.
2) The companies will be encouraged to economise rather than expand their expenditure to the money available.
3) There is a very strong pressure on the companies to maximise box office or sales revenue, rather than relying on funding.
4) Sound economic management within the companies would be encouraged because if the shortfall on a project were large, the funding body would be reluctant to accept the same company a second time.



Much has been made in the current debate of business and other private sponsorship of the Arts being encouraged as an alternative to public funding.
Setting up a funding body of this nature could be very attractive to business sponsors as their participation could be visible on all the activities supported, rather than just one particular project.
Ideologically business leaders might also find this more interesting as much of their resistance to subsidy is “giving money for no return” or to put it more graphically “hand outs”

Initially the running and organisation of the funding body should be by volunteers. For too long the situation has been that the administrators receive salaries, while the creative workers/artists work for nothing and it should be remembered at all times that each £ spent on administration is a £ not spent on the primary activity of the organisation.

The funding body would solicit funds from business partners and even modest contributions would make it function. Funding a single project requires a certain commitment which in the current economic climate is unrealistic. Finding 200 partners each prepared to donate £1k would give a substantial start to the idea and make it functional.