Large anchor arts organisations are faring better financially than the rest of the culture sector because they are more successful in raising private investment in the face of rising costs, a new report commissioned by Arts Council England (ACE) has found.
The Private Investment in Culture Survey found that between April 2021 and March 2024, fifteen ‘super major’ arts organisations, with annual earnings of £35m or more, were able to increase the proportion of their contributed income from 19% to 26%.
This rise contrasts sharply with the wider sector, where typically the proportion of contributed income has remained stable, dropping slightly from 18% in 2021-22 to 17% in 2023-24.
The study examines in detail the factors affecting levels of contributed income — raised by arts organisations from individuals, businesses, trusts and foundations — compared to earned sources, such as ticket sales, retail and services, as well as public funding.
Over the same period, the report found that arts organisations were able to increase the proportion of their income from earned sources, such as ticket sales, retail and services.
For super majors, the proportion of earned income rose from 41% to 52%, but this was a smaller increase than for the sector as a whole, which increased from 45% to 58%.
Meanwhile, public funding for the super majors as a proportion of total income fell 18 percentage points to 22% over the three years studied, compared with an average for the sector of 25%, a fall of 13 percentage points over the same period.
With 67% of the super majors in surplus in 2023/24, compared to 45% on average for the wider sector, the study suggests the ability to substantially grow private investment has been a contributing factor to profitability.
Using contributed income to fill gaps
Produced on behalf of ACE by The Audience Agency, MyCake and Etic Lab, the study suggests that increases in contributed income should be viewed in the context of significant increases in expenditure, setting expectations of “what gaps it can, and cannot, fill”.
Examining a constant cohort of 3,548 arts organisations over the same three-year period indicated that while total income increased by 18% to £2,684m, it was outpaced by total expenditure, which rose by 22% to £2,656m.
The report found net increases in expenditure over income during the last three years had led to an increase in the proportion of organisations making either a loss or breakeven rather than a surplus, with 5% fewer organisations making a surplus at the end of the study than at the start.
“An organisation’s financial resilience and continued viability depends not just on its ability to increase income, but on its ability to create surpluses rather than deficits,” said the report noting that “Surpluses enable it to build reserves and therefore reinvest – in assets, innovation, managing change – as well as to weather difficult times”.
Factors affecting contributed income
Factors affecting contributed income examined in the study included turnover band, income model, location, art form, size, NPO status and having a public building.
Small arts organisations, with a turnover of under £100,000, were found to be in a more complex financial position, in terms of contributed income, than the rest of the sector.
They were the only turnover band where both total income and contributed income decreased over the period studied, by £7.4m in total (13%) and £0.7m (3.3%), respectively, although their total expenditure rose more slowly than the rest of the sector.
Location wise, London-based organisations had the largest absolute contributed income (£192m, 42% of England), followed by the South East (£108m, 23%), the North (£87m, 19%) and South West (£41m, 9%) with the Midlands being the lowest (£32m, 7%).
The study found non-NPOs increased their contributed income by £53.1m, or 5.5% of total income, at a greater rate than NPOs and outpacing increases in their total income and total expenditure.
Their increase in overall contributed income was more than seven times the increase in their overall net expenditure over income during the period.
Meanwhile NPOs, which were found to have, on average, approximately five times the turnover of non-NPOs, increased their contributed income by £10.5m, or 0.8% of total income, but this was less than a fifth of the net increase in their expenditure over income during the period.
Prestige problems
The report also includes the results of workshops, which highlighted additional issues about raising contributed income, including how the historical perception of an arts organisation can influence its attractiveness to private investment, as well as the contradictions this can sometimes present.
Some of those questioned felt at a disadvantage because they didn’t belong to the group of “London-dominant prestige organisations” that are successful in offering traditional patronage schemes, “swanky corporate events” or “shiny memberships” to both individual donors and corporates.
However orchestras, performing arts venues and private libraries suggested their reputation as traditionally prosperous and elite institutions meant they were not viewed by the public as being in need of donations.
“The challenge of our job is to make everything look shiny and lovely and nice and also [to] articulate how we’re a charity and need support”, said one venue-based organisation.
Some organisations said they were working hard to manage their public perception by changing the way they present themselves, moving from a more elitist image to a fundraising narrative that emphasises creativity, inclusion and joy.
Political shifts
Case studies also explored how political trends are impacting arts organisations’ ability to raise contributed income.
Michelle Gayle, the co-founder of London-based arts and education charity, The World Reimagined, which focuses on racial justice, told the report’s authors that before the Black Lives Matter protests in 2020, which were catalysed by the police murder of George Floyd, many of the charity’s initial fundraising approaches had been noncommittal.
That changed following a dramatic shift in the political climate, with the project gaining support from a wide range of corporate and philanthropic partners, including Sky, JP Morgan, Bloomberg and many more.
“You could never, ever have legislated for that,” she said.
However, she added that recently, “There’s been a definite shift,” which has led the organisation to pivot how it pitches to potential funders, prompting it to “circumvent it being a Diversity, Equity and Inclusion (DEI) conversation.”
“When I speak to old partners, they’ll say, we’re just reviewing our policy on DEI. Even though I say this phase has nothing to do with DEI, people are very nervous.
“There’s definitely a pulling up of the drawbridge.”
Responding to the report, Arts Minister Chris Bryant said the government “strongly supports private investment towards our arts sector”.
“This isn’t about replacing public funding – it is about amplifying it and building a sustainable ecosystem,” he said, adding that he hopes that government’s previously announced Arts Everywhere Fund will “trigger more philanthropic support so the arts can continue to thrive, widen access, drive visitors to the UK and tell our national story on the world stage”.