What is arts funding?

The UK is the envy of the world because of our vibrant and growing cultural and creative industries. They are a key part of why the UK is a great place to live, learn and work, and they provide an ever growing contribution to our economy. But who pays for it all?

Most people (if they think about it at all) may imagine that entry fees or the high price of tickets should cover the costs. But this ‘commercial’ model is only a small part of the wider cultural ecosystem.

Money from ticket sales and entrance fees can provide a good profit for must-see exhibitions, pop festivals and the glitzy musicals in our big cities, where audiences are large and are happy to pay high prices.

Even then, the costs of putting on some shows or maintaining large companies of people can far exceed the income from ticket sales (which is why many exhibitions have sponsors, and our national orchestras, arts centres and opera houses receive commercial sponsorship and public funding).

For smaller theatres, or free events and museums, or anything that doesn’t have a ready-made audience, funding can be an essential part of the income mix.

And funding is important where longer term investment is required – anything from the initial cost of a new venue to building the infrastructure of trained staff that keep audiences safe and entertained.

Funding can also be key when developing new, experimental or challenging work. Funding provides the space for artists to take risks and make the leaps that challenge us to think differently – which is exactly what great art should do.

Of course, it isn’t all one way. Funding the arts is an investment, an investment that reaps huge rewards. Bodies like Arts Council England state that for every £1 invested, the nation benefits by £4 of rewards.

The tricky bit is that the path from investment to profit is rarely clear. It’s complex and fuzzy; we’re dealing with creative processes and human emotion, and that can be infuriating for people who want clear, simple ways of measuring profit margins.

How do we pay
for arts and culture?

In the UK our arts and culture are funded for in four main ways. Most cultural organisations, venues and artists survive on a combination of all four areas:

Earned income

Either we buy tickets or we buy things (like cake in the cafe, postcards from the gift shop, DVDs of a show, or a physical painting to hang on our wall). The profits, or losses, are usually split between artists, the venue, and producer of the show or the thing.

National Funding

A small percentage of public money (mostly from our taxes) is set aside to fund arts and culture. We also have a National Lottery with profits split between different recipients including the arts. These combined funds are distributed in many different ways (detailed below).

Local Funding

Historically many local authorities have run their own festivals, theatres, concert halls, museums and galleries as well arts events, cultural and community arts groups and programmes in the community. Most areas of funding are not ‘statutory’ so, faced with their own funding crisis, many local authorities have drastically cut (sometimes totally removed) funding for local arts provision.

Sponsorship & donations

Most arts organisations, galleries and museums rely on contributions from commercial companies (sponsorship) or private trusts that donate to selected beneficiaries. Many also have membership schemes or individual donors. Donations are often topped up through tax concessions.

How does public funding work?

In some ways it’s very simple. We pay our taxes and we elect politicians to decide how to spend or invest that money (as well as the money they collect in other ways). Currently they decide to invest a small percentage of that money in the arts: the artists, the performers, the venues and the infrastructure that make it all possible.

How that money is split up and spent is decided in a huge variety of ways at a central and local level across the UK.

A significant amount, around £900m each year, is distributed from central government via the Department of Culture, Media and Sport. That seems like a huge amount of money but it’s only around £14 per person per year.

Of that £14 per person, the DCMS directly funds some large museums and galleries such as Tate and the British Museum. Most of the rest of the money is distributed on its behalf by bodies such as Arts Council England which operate independently but with oversight and guidance from politicians. They also distribute money made available through the National Lottery.

Grants for the Arts is the name for Arts Council England’s main distribution method. Individuals and groups can apply for project funding, and 663 National Portfolio Organisations and 21 Major Partner Museums (who have been through a rigorous selection process) are given money to support their work and stated aims. All are continuously assessed.

Arts Council England also has some money set aside in different specific, often time-limited categories (funds), where arts organisations can apply to have their project funded, in part or in full. Or sometimes money is leant to organisations at favourable rates.

Additionally, they have set aside money to target particular challenges, opportunities or funding gaps, they call this their strategic funding programme.

What are the other sources of funding?

  • The Department for Business, Innovation and Skills also funds some university museums.
  • As well as Arts Council England, National Lottery money is also distributed by other public bodies such as the Heritage Lottery Fund.
  • The BBC is one of the UK’s biggest arts bodies, with several orchestras and a film investment arm. It is funded by the licence fee.
  • Some funding is currently available from European bodies but the future of this source of funding is uncertain following the decision to leave the EU.

Are the arts funded differently across the UK?

The devolved governments in Scotland, Wales and Northern Ireland decide how much money is spent on the arts from their settlements agreed by the UK Government. In Scotland, for example, most money is distributed by Creative Scotland from a budget provided by the Scottish government – but projects in these nations are also allowed to apply for funding from UK organisations for projects such as film production.

Thanks to Will Gompertz for allowing us to use his writing as the starting point for this article.