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CEEAC Committee call for views on funding the cultural sector

Written Evidence from the Office of the Charity Regulator (OSCR), 8 September 2021

Dear Convenor,

CEEAC Committee call for views on funding the cultural sector

While the Office of the Charity Regulator has no formal response at this time to the Constitution, Europe, External Affairs and Culture Committee’s call for views on funding the culture sector, OSCR felt it would be helpful to provide some back ground information on charities in the culture sector including their experience of the COVID pandemic to date.

Background

Charities with the charitable purpose the advancement of the arts, heritage, culture or science make up a significant minority of the charitable sector – 5,817 of the 24,004 Scottish charities (therefore excluding cross-borders – those charities registered in both England & Wales and Scotland) or 24% of Scottish charities. Even within this subset of charities there is significant variety of scale ranging from some of the largest charities on the Charity Register with incomes in the millions of pounds like the ALEOs that operate many cultural venues across Scotland down to small local photography clubs, history associations and choral societies with incomes in the hundreds if that.

Attached with this letter, we’ve provided a snapshot comparing the income profile, area of operation and median gross income of Scottish charities advancing purpose (g) the advancement of the arts, heritage, culture or science with Scottish charities in general. For example, 59% of Scottish charities with this purpose operate at the local level (compared to 67% for charities in general), 29% operate nationally (22%) and 13% operate internationally (11%).

A significant number of charities with purpose (g) also have the charitable purpose (b) the advancement of education (65%), purpose (f) the advancement of citizenship or community development (44%) and/or purpose (i) the provision of recreational facilities or the organisation of recreational activities (24%).

The impact of COVID

OSCR surveyed the charitable sector twice in 2020 on the impact the COVID pandemic was having on the sector. The following figures are taken from the second of those surveys undertaken in November 2020. Of the respondents, 526 stated that one of the sectors they ‘mainly operated in’ was culture and arts making up 20.6% of total responses. Throughout this section of the letter, we’ve also included some of the responses to the open section of the survey to provide first hand examples of issues facing culture charities:

‘We're a small Arts Association, and therefore not eligible for many grants that have been available. We run almost entirely with volunteers. Our activities are small scale, but reach a wide range of people in the Community. We feel that arts and music are essential for good personal and social mental health, yet our activities can't be described as directly addressing mental health issues. We therefore fall through several financial help nets, and would appreciate a funding source that includes our activities.’

When asked to identify how COVID had impacted their charity generally, 73% of arts and culture charities stated that they had cancelled planned work or events (compared to an average for charities in general of 66%). Culture and arts charities were also more likely to have said they were prevented from working or delivering services due to the restrictions (50% compared to 45%). Furthermore, culture and arts charities were more likely to have suspended all operations (30% compared to 18% of all charities) and a lower proportion of culture and arts charities saw an increase in demand for their services (5% compared to 12%).

‘The charity was set up to promote and produce historical event celebrations. As most of these involved the use of enclosed or open venues with large crowds and close contact with a variety of people, the pandemic was catastrophic on all the events that we had worked hard to find finance for, design, produce and encourage participation of the public, especially schools. Because the future is unknown at this time, events have had to be curtailed and cancelled and the whole series relooked at and designed from scratch, with new or alternative ideas. Difficult to itemise or quantify, due to the nature of our charity and its purpose. We are not of the same genre as most other charities, e.g. looking after or serving service users.’

Culture and arts charities were also less likely to have adapted their services in response to the restrictions (34% compared to 43% of all charities) and were less likely to have adapted to meet the needs of their beneficiaries or the community (23% as compared to 30%).

‘Initially it was incredibly challenging - we had to completely change how we deliver music workshops and connect through music with disabled children, young people, and older people in care homes. Not being able to work face to face has altered everything for us. We have taken time to re plan and change our projects to better fit with digital delivery and this is now beginning to have a positive effect. One of the main challenges was the sudden change that had to take place. We still feel the impact of the restrictions and are aware that the work we can do digitally has massive limitations. One of the main areas of concern is the digital gap that exists in society for people with learning disabilities/older people. It's not only the digital equipment that is required but also knowledge and support to access the equipment.’

When asked about funding specifically, 88% of culture and arts charities that received trading income saw this decrease (compared to 83% of all charities that received trading income) while 81% of culture and arts charities that received donations and fundraising income saw this decrease (compared to 79% overall).

‘Before Covid we were always told that it was a strength to be earning almost 50% of our income from trading and to have a business model of income from several different sources. However, our dependence upon trading income has in fact turned out to be a liability. At the moment we can see no return to pre-Covid levels of trading and are having to adapt and plan accordingly. This will mean having to continue to reduce headcount and operating costs, probably over the next few years.’

Ultimately, 17% of culture and arts charities stated that the COVID pandemic and the associated restrictions at the time of the survey posed a critical threat to the viability of the charity over the next two years (compare to 12% for all charities).

When asked to identify which sources of additional funding had or would be more useful since the start of the pandemic, 49% of culture and arts charities identified local authority funding, 44% identified Scottish Government funding and 41% identified independent grant funding.

‘The wide range of funding bodies can be confusing, particularly those which are being used by the government to distribute government funding. Being in a remote area we suffered badly from extremely poor broadband to share information and to submit funding applications.’

Many of the open responses also noted the importance of longer term funding, particularly funding for core costs.

‘The greatest frustration is uncertainty about future funding commitments by the Scottish Government and its agencies. We know we can get through 2020-21 and probably 2021-22, but whether we can carry on beyond that will depend on on-going funding for our sector (arts/education).’

‘Flying the flag for core funding, which is such a challenge for smaller charities that aren't doing huge contracts. Also, access to funding in the coming two or three years - all the charities are worried right now about being able to get grant funding, which everyone is forecasting will be scarce due to all the covid spending.’

‘Encourage more Trusts and Foundations to support core costs Encourage more Trusts and Foundations to provide funding for more than 1 year.’

Finally, many respondents noted the negative impact of the pandemic on workers in the culture sector.

‘We provide live music and the main impact has been on freelance musicians whose bookings we have had to cancel and who are effectively losing their livelihoods.’

‘As a cultural sector charity working in music, all activities have been stopped and no forseable restart date. Our self-employed musicians are really suffering from lack of work and funding as many many fall between the cracks of grants.’

Summary 

To summarise:

• the restrictions brought about by the pandemic posed particular challenges to culture and arts charities, which were more affected by cancelled events and were prevented from working or delivering services due to the restrictions;
• furthermore, they were less likely to have adapted their services as a result of the pandemic; and
• one of the key common themes identified from interrogating the open responses was the desire for a more stable multi-year funding model (wherever the source of that funding may be). Hopefully this information will prove useful to the Committee when deliberating the issue of future funding for the culture sector. If you have any follow up questions or seek further information on charities in the culture sector, we will do our best to provide it.

Yours sincerely
Chris Kennedy,
Act. Policy Manager

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