Adding value

I was recently interviewed by a student about her dissertation on cultural sponsorship – the key questions were around new trends, innovation and the changing nature of sponsorship. I don’t believe that the sector is currently undergoing a massive paradigm … Continue reading

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#giveitbackgeorge – the Robin Hood of philanthropy?

For the last couple of weeks countless articles, opinion pieces, blog posts and tweets have appeared on a daily rate raging about the recent plans to cap the tax relief on major gifts to charity.

The announcement prompted a very quick and strong reaction from the charity sector and major philanthropists themselves, led by a campaign with the eponymous hash tag #giveitbackgeorge (though I’m not sure if it alludes to the tax relief or the money it will indirectly deprive the sector of). Another hash tag that has emerged is #capgate, alluding to the scandalous nature of the proposal and the bewildering level of fragmentation that seems to exist within the current government.

On the one hand, Jeremy Hunt and other governmental ministers are actively promoting an increase in philanthropy and charities’ reliance on private giving, and on the other hand the Treasury is announcing measures which are sure to have a stinting effect on it. Where is the consistency in current government policy? As Sir Nicholas Hytner recently put it, “[this] makes no sense according to their own policies.” But not only does this contradict all the talk and effort around increasing philanthropy, seemingly a big priority for the Government and a large component of the “Big Society”, it is in fact counterproductive.

Hours after the plan was announced, Twitter was filled with accounts reporting real-time conversations with philanthropists who were either planning to withdraw some of their support or decided against going ahead with pledged donations. With 9 out of 10 philanthropists saying that they are planning to reduce their giving if this plan goes ahead, the threat to the future growth of philanthropy is very real. And arts and cultural organisations (particularly large ones) are disproportionately reliant on major donors – according to the latest Coutts Million Pound Donor report, they received the third highest amount of million pound donations as a single charitable sector. Recent estimates suggest that the resulting deficit of the proposed plan could add up to £80m worth of philanthropic money for the cultural sector alone – more than a 20% decrease.

The other real threat is that of deterring new philanthropy – not only will this not incentivise more people to start giving generously, it is likely to discourage them.

Which neatly brings us to the issue of motivations: the Government seems to want to penalise philanthropists that don’t give for purely altruistic reasons – it almost seems like a test to see who is truly committed and will continue giving or giving us much, despite the disincentives for doing so. However, the drivers for giving are not always straight-forward or one-dimensional, nor do they have to be. The forthcoming NPC/ Ipsos MORI study of reasons for giving will provide some interesting insights into philanthropic drivers. However, in the argument of tax reliefs these are almost irrelevant. It is no secret that the tax efficiency of philanthropy can be particularly appealing for some major donors. But the motivations behind a gift should not undermine its value. If the issue is, as the Government claims, that some philanthropists are abusing the system and enjoy tax reliefs on donations to “overseas charities”, then the crack-down should be on addressing this rather than throwing the baby out with the bathwater – by inhibiting the majority of philanthropists who give a lot to legitimate charities and with great impact, they’ll be hampering (would-be) recipient charities, and of course the beneficiaries of the charities themselves.

And going back to the initial issue of disjointed policies, this all comes at a time when arts organisations (and other charities) have had their public funding slashed and are consequently investing in fundraising (as they were told) so as to fill some of these income gaps wherever possible. But as they try to build relationships and start these conversations with philanthropists, against this hostile backdrop it seems likely for the returns on investment to be lower than anticipated. And to further add insult to injury, the Arts Council is delaying the launch of its Catalyst funding (£7m) for the smaller and more inexperienced organisations. This must be frustrating for those smaller organisations that have budgeted for increased individual giving and were counting on the support of the Arts Council to achieve this, though in fairness they’re the ones least likely to be directly and massively affected by the cap restrictions, as they are most likely to try to raise more modest amounts of money.

The only silver lining is seeing the charity sector coming together with a strong and coherent voice, which is in stark contrast to that of the Government. A government spokesperson has now said that they will work with charities and philanthropists “to ensure the removal of the tax relief does not have a significant impact on charities which depend on large donations.” But it’ll take more damage control towards philanthropists themselves, who have been alienated by being branded tax dodgers as a collective. The Government’s attempt to emulate Robin Hood will fail – he took the money from the rich and gave it to those in need, whereas the current plans will ‘hijack’ rich people’s money that would’ve otherwise gone directly towards the greater good to begin with!

Further reading:
John Studzinski: Hitting charitable giving is a poor way to get tough on the rich, The Independent
Charity tax row: We will stick with policy, says Danny Alexander, BBC
Charity tax relief plans attacked by philanthropists, The Guardian
Nick Clegg to go on charm offensive amid fury over charity tax cap, The Guardian
Charity tax relief cap under fire as philanthropists warn of funding crisis, The Telegraph
Vince Cable and David Davis break ranks to join outcry over charity tax cap, The Guardian
‘Almost Frightening’: Philanthropists React to Government Tax Dodge Claims, Spear’s
Who are you calling tax dodgers? Philanthropists enraged by slur, The Independent
Giving with one hand, Museums Association
Arts & Business response to Budget, March 2012

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Wage slavery does not suit the funding challenges of a ‘knowledge economy’

The funding challenges in a knowledge economy – whether that entails building a new social web platform, reinterpreting national statistics to provide useful insight or developing games and entertainment – have more in common with the traditional arts than you might think, since attitudes to employment and wages dating back to the middle ages don’t particularly suit the creative challenge ahead.

The common expectation is that the intellectual workhorses behind the knowledge economy - the software architects, engineers, games designers, copywriters, journalists and graphic artists – are employed; attend a workplace and work for a wage.

Yet wages are better suited for a different kind of industrial challenge less prevalent today.  Workers were and still are needed in the factories, on the farms, to fix the roads, teach our children and tend to the sick.

But today far fewer workers are needed to sustain a functioning society.

Since the industrial revolution we’ve seen productivity rocket.  Machines help us get far more out for each staff hour put in, and that can only improve further as advanced computing techniques – artificial intelligence - bring even more labour saving.

The Luddite workers smashed the mills in fear of their livelihoods as machines replaced workers. But automation is only a problem if wages are the only remuneration society has to offer.

In a wage culture, society ends up inventing jobs to give people something to do. And I mean this with only a hint of irony.

I’ve witnessed an office full of my co-workers first left to rust, then tasked with finding a new employer as a mammoth organisation ‘reorganised’ itself.

The workforce released through automation (or outsourcing) needs to be utilised in a more meaningful way than the modern equivalent of paper-shuffling or digging holes and filling them back in again.

Enter the role of venture capitalists, taking a punt on creating the next big thing. Surely they’re focussed on creativity and invention?

Yet venture capitalists are ultimately chasing not ideas and creativity but building an entity that is saleable or floatable to make a large-enough return to cover their investment in this – the one successful venture – plus all their other profitless ventures.

And in building an entity one gets back to employment and wages, bricks and mortar - despite numerous studies showing the futility (Teresa Amabile for one) of using money, deadline pressure, internal competition etc as a motivator for creativity.

Essentially nearly everything employment and the workplace has to offer bar the social interaction acts as a de-motivator for creativity.

Duncker’s candle problem allows the impact of incentives on solving a ‘creative’ challenge to be measured. Experiments consistently show financial incentives, or other motivators e.g. through competition, only hinders performance.

Stress can be explained as an inhibitor for creativity – it provokes a fight-or-flight response; diverting mental capacity away from the creative areas of the brain towards the motor functions to help our chances of survival.

Nearly everything employment and the workplace has to offer is an inhibitor to creativity, yet the knowledge economy demands masses of multidisciplinary creative skills; and yet the main funding method is employment, driven by the need to build and sell organisations.

And so onto my hobby horse of copyright. Copyright, in its purist uncorrupted form, despite its own inherent problems, provides a better model.

(Now I bet you never thought you’d hear me singing the praises of copyright! FWIW I’ve never been against the concept, just the bastardisation we see today.)

Copyright gives creators an income which is not reliant on them spending 5 days a week behind a desk.  Independent funding through copyright for past works gives a freedom which helps creativity for future works.

An epoch in my many years investigating copyright and creativity came after talking to a writer, who told me the technology industry should move towards a copyright model, not drag established creators into wage slavery.

I dismissed this at first, but now it makes sense. Organisations on a whole aren’t great places for creativity. Some are, but most aren’t.

The urge to make a profit usurps all other corporate drivers, and most CEOs and directors turn to the traditional mentality of organise and control to achieve this; and methods used to organise and control staff end up inducing unnecessary stress, and stress inhibits creativity.

The stress is inherent and inseparable. An individual dependent on a corporation for their income and therefore their home and their ability to feed and clothe their family can see minor work issues become major worries.

And all this without further stress added by total corporate monitoring regimes (email/web use etc), frequent performance reviews, banning of comfort zones like social networks, etc.

Facebook buying Instagram for silly money will only fuel the drive of investors to build more entities capable of being sold for silly money.

Yet wouldn’t a different mechanism to encourage independent auteurs in digital sectors not work better for society? (As in provide a better range of innovative services faster, for less overall investment.)

I’m not for a minute suggesting copyright without massive reform would facilitate this. But the concept – of providing remuneration outside of traditional employment for digital creators – might prove a better model than the bubble-inducing scramble to build and sell the next Instagram.

@JamesFirth

 

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Hunted out

And so farewell to Dame Liz Forgan, the Arts Council’s first female chair, as well as one of its finest.

Mark Robinson has already written about the subject over at Thinking Practice with his customary eloquence and pertinence , and I’d urge you to read his post.

Dame Liz Forgan, current chair of Arts Council England

Mark knew Liz Forgan better than I during our time at ACE, but I would echo his comments. She was an impressive, warm and highly effective presence at precisely the time ACE needed one. My dealings with her were hugely instructive and very productive. Her sacking is as regrettable as it is risky.

It represents a huge throw of the dice for Jeremy Hunt, whose relations with the Arts Council as Culture Secretary have done little to endear him to the arts sector. The settlement DCMS obtained was poor, and Hunt’s early focus on endowments bordered on the obsessive. His settlement letter to the Arts Council in 2010 reduced the arm’s length principle to a hair’s breadth, with senior figures briefed in advance that they would ‘be alright’.

The insistence on a 50% admin cut for ACE was arbitrary and, at best it was a piece of attention-seeking from a minister seeking a promotion. (There is probably no one in the country more frustrated than Hunt that Lansley was not sacked over the NHS debacle, and that puts him at the front of a very long queue). At worst, it was an attempt to undermine an organisation which he did not have sufficient political capital to abolish. The transfer of MLA responsibilities looked, from the outside, like an afterthought – the allocation of essential responsibilities to the last NDPB standing.

And then there is the re-balancing of the Arts Council’s funding away from direct government grant to a share of proceeds from the National Lottery. This was sold as an *heroic* restoration of the original lottery percentages, and used to package the poor grant settlement for the Arts Council as a much smaller reduction in funding. Yet lottery ticket receipts are, well, a lottery, and the regulations that accompany them are more restrictive than grant-in-aid in important ways. The full extent of the change will not be clear for at least one or two more funding rounds, but whatever plays out, the sector’s funding base is less secure and less certain than it was.

Yet, while Hunt has not done much to endear himself to the sector, he is not yet wildly unpopular. Reaction to him, at least as far as I can gather, is indifferent. And for that, he has much to thank Liz Forgan for.

It is easy to find fault with some of the Arts Council’s policies and processes (we at Bad Culture have done in the past and will do again),  but the organisation has played the hand Hunt dealt it with aplomb and criticism of Hunt is muted as a result. It is a stronger, more confident organisation and it has resisted the temptation to pick a fight with the Secretary of State, and has simply got on with making the best of a difficult situation. This is not only Liz Forgan’s doing, but it remains to be seen how the relationship between Hunt and the sector will play out without her at the helm of the organisation that lies between them.

One final thought. The two specific reasons Hunt gives for seeking an alternative chair – ‘the digital and philanthropy agendas’ – seem bizarre. In both cases, the Arts Council has a role to play and its Chair can make a difference. But the person who can make a far greater contribution to both areas is… Jeremy Hunt. And in both areas he has not yet delivered.

On philanthropy, the single measure that would make the most difference is now generous tax relief, and as Mark points out, the Chancellor appears to be rowing in precisely the opposite direction. Hunt’s most heralded action to date was, almost exactly a year ago, to write to the FTSE 100 Chief Executives asking them to give more money to the arts. I await the analysis of the exercise’s results with genuine interest.

And on the digital agenda, some targeted ACE funds will be nice, but what’s essential and lacking is a regulatory framework that nourishes creativity and innovation. Again this is Hunt’s domain not the Arts Council’s, and I urge you to read the other blog of my fellow Bad Culture vulture, James Firth, to get a feel for the current state of government digital policy.

Although (and this really is the final thought) I’m not sure I agree that Liz Forgan’s role at the Scott Trust as evidence of her ability to engage in the digital agenda. I recall a conference where she broke off her talk to chastise an audience member for ‘twittering’ rather than engaging with her talk more directly. It was a good-natured exchange, but very Cnut-like.

Liz Forgan is certainly not a digital native, and the Guardian’s successful entry into the interwebs should be seen in the same way as the Arts Council’s resurgence: evidence that Dame Forgan is an excellent chair who can lead organisations through difficult challenges, whatever they may be.

The arts sector may quickly rue Jeremy Hunt’s short-sightedness as, I fear, may he.

(NB This was drafted before Nick Hytner’s comments came out, but they obviously provide some additional context)

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