ACE acknowledges ‘increased risk’ for NPOs

Increasing numbers of National Portfolio Organisations (NPOs) are reporting issues with their finances and employees leaving their roles, it has emerged.

Recently published minutes of a high-level Arts Council England (ACE) meeting reveal there has been "an ongoing trend of increased risk profiles for reasons such as rising costs and staff turnover".

ACE records risks for all 985 NPOs at least every three months, or as they arise, using three categories – minor, moderate or major risk. The minutes of the meeting also raise the concern that "not all organisations were openly reporting the risks they are currently facing".

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The meeting of ACE's National Council, which took place on 14 November, came two months before ACE took the decision to extend its 2023-26 National Portfolio investment by an additional year in response to "external challenges" the sector is facing.

Announcing the extension, ACE Chief Executive Darren Henley said NPOs may be able to do less in terms of output than contractually required under the terms of their funding agreements, adding that it "can be hard" for organisations to "open up" about problems.

The minutes of the November meeting state that while ACE does not have the resources to provide financial support to organisations in difficulty, there were a number of measures being taken.

These included work to assess exposure of the sector to local authority financial challenges, and discussion with government about this.

Reduced activity

Meanwhile, to help alleviate the inflationary pressures, ACE had offered the opportunity to National Portfolio Organisations (NPO) to reduce their activity plans by 15%.

ACE has told NPOs that reductions can be across one or more of their current proposed activities, or through removal of whole activities, or delivery against specified outcomes.

The minutes also state that ACE's Enterprise and Innovation team are "thinking about medium to long-term business innovation" and that verbal updates on two specific organisations were given to the members of the National Council.

Details of the measures being taken by ACE coincide with an investigation by Arts Professional and financial benchmarking company MyCake, which found arts organisations making up the 2023-26 National Portfolio were collectively in the red by £63.1m in 2023.

The proportion of NPOs where expenditure exceeds income by 10% or more has risen sharply. Pre-pandemic the figure was consistently below 20%. It currently stands at 37%.

Nearly one in five (18%) of the 573 NPOs analysed had expenditure levels 20% or more above their income.

Arts Council England said it was unable to comment due to the pre-election period of sensitivity.