Friends like these

Philanthropy could, in theory, put an extra £90m into the arts by 2016, but will not be able to plug gaping holes in arts funding if the government makes severe cuts, according to a new report from Arts & Business (A&B). Although 54% of adults currently donate money, only 2% give to the arts. The report, ‘Arts Philanthropy: the facts, trends and potential’, is cautiously optimistic that philanthropic support could grow, but it requires “time, effort and commitment”. It raises concerns that small- to medium-sized arts organisations will not to have the staff or the time to pursue high net worth donors. Colin Tweedy, Chief Executive of A&B, stressed “that in no way will a growth in private sector funding, in the short or medium term, compensate for cuts of between 25-40%.”

 Private investment currently accounts for around 15% of the arts sector’s income, of which over half comes from individual donations. The report quashes a widely-held belief that private investment and donations discourage creativity and are like to make work increasingly conservative and dull: A&B’s research suggests that “high net worth philanthropists like to take and encourage risk and innovation… so the myth is simply untrue and a groundless generalisation”.
A&B says that future growth “will come from those already interested in and engaged with the arts”, which means that arts organisations are well-placed to capitalise on this potential – if they can find the time. However, only 12% of overall arts philanthropy goes to the English regions, and a noticeably high percentage of larger donations were made to organisations in London.
Philanthropic giving also “overwhelmingly favours large organisations”. To this end, the report suggests that arts organisations, particularly smaller ones, do not put their energy into attracting a greater proportion of existing philanthropic money, but instead try to turn more individuals who engage with the arts into financial supporters. Friends’ schemes are cited as a key mechanism “through which the sector is likely to experience growth in the coming years, if developed and encouraged properly”. Only 32% of arts organisations currently have friends’ schemes, but “organisations should be encouraged to build relationships with their stakeholders in order to secure additional financial backing from them”: 47% say that being a friend or member encourages them to give more. Similarly, legacy fundraising is also limited in the arts sector: only 8% of arts organisations have received legacies, despite them being worth an estimated £1.9bn a year for the wider voluntary sector.
Approximately 45% of arts organisations received one-off individual donations in 2009/10, from an average of 84 donors per organisation and totalling an average of £12,000. Museums, combined arts, dance and opera received the highest number of individual donations, but friends’ and membership schemes currently account for the majority (48%) of individual giving in the arts. The main reasons organisations have not established friends’ schemes are a lack of administrative and financial resources or a lack of knowledge. If at least half the sector had a friends’ scheme similar in scope to those already established, up to £98m more could be raised,
and if the entire sector had similar schemes to those currently running, it could bring in an additional £300m.