Valuing small to medium arts venues

Government Funding

There is broad recognition that the sectors reliance on government funding is unsustainable, with many interviewees making specific reference to the federal governments changes to arts funding in 2015/16. These changes are seen as having had a disproportionate impact on larger and more established S2M arts spaces as these organisations have, historically, developed with and relied on Australia Council funding.

It appears difficult for the sector to disentangle itself from government funding, in part, because their operations have become aligned with the priorities and key performance indicators (KPIs) of funding bodies. Several interviewees have described a shift over the course of their careers from arms-length funding intended to support artistic risk-taking, towards funding tied to demonstrable public benefit including new opportunities for cultural expression and audience engagement. This change has had a disproportionate impact on S2M arts spaces that have seen their role as facilitating artistic risk-taking and the creation of new work.

There appears to be a disconnect between a need from the sector for stable operational funding and current schemes that are perceived as increasingly focussed on discrete projects. In the absence of secure operational funding this has meant arts spaces who receive government funding reported a need to pursue ‘safe’ projects to help cover operational costs.

Obtaining this funding incurs time and resource costs that detract from perceived core-business and capturing and reporting on the data required for acquittals places further stress on the, already stretched, capacity of staff. There is a perception that the sector is putting inordinate energy into meeting KPIs in order to align with the goals of government funding bodies and that this encourages pitching and developing work that they think the funders want.

Smaller and younger arts spaces appear less reliant on government funding through design or necessity but are forced to operate with less money. This is often expressed as a positive as it forces younger organisations to find creative solutions to resourcing problems, but may limit their growth and long-term viability.

Diversification

Diversification of income to include philanthropic donations and sponsorship was a goal for most of the organisations that participated in this research. However this process is not quick or straightforward and comes with additional time and resource costs. This diversification does not appear to result in increased capacity but is required to replace government funding or other operational income that has been lost.

Fundraising and managing stakeholder relationships requires a skill set that may not be present in small organisations, requiring them to either recruit or hire new staff, volunteers or board members. Partnerships that deliver off-site programs and exhibitions is also seen as way to diversify operations and income, but again these require time and expertise to develop and come with additional costs that may outweigh the benefits. For many S2M arts spaces this diversification appears to be a zero-sum game, necessitated by the disappearance of government funding, which has simply increased competition for donor money across sector.

Relationships with regulators

The experiences of S2M arts spaces dealing with various facts of local, state and federal government could be described as disjointed. On the one hand, several interviewees spoke very highly of the role the CoS plays in supporting the sector, particularly through schemes such as accommodation grants. However, there is also a perception of a lack of interdepartmental communication and a lack of a consistent approach to dealing with S2M arts spaces and activity at a local and state government level.

One often cited example is that the development applications (DA) process is slow and hampers activity as S2M arts spaces have difficulty aligning building code definitions with actual usage of their space. In part this is likely due to bureaucratic processes being seen as intimidating or counter intuitive. Several interviewees expressed a desire for a single point of contact in council and state government who could explain processes clearly and advocate for their interests. Irrespective of practicality, this suggests there is a genuine problem with the interface between S2M arts spaces and various regulatory functions.

There appears to be some activity happening under the radar of regulators because navigating the process to legitimise this activity is seen as too difficult given the short life of some projects. Associated with this is a perception that transitioning informal arts spaces to more legitimate operations is more difficult than in the past. Primarily this is due to a lack of funds, absence of long-term rental contracts and landloards being unwilling to commit to upgrades required for regulatory compliance.

Costs

The labour, materials and infrastructure that enable galleries and art spaces in Sydney are either directly purchased or donated at a cost. Given the scarcity of resources, diversion of money to art spaces implies other opportunities are denied—a social cost that is also considered.

The total social and economic cost of attending art spaces in Sydney and related enterprises in 2016 is estimated to be $113.28 million. This includes direct costs of $111.92 million and opportunity costs of $1.37 million.

Direct costs

Direct costs estimate the change to final demand attributed to attendance of art spaces in the City of Sydney, 2016. To avoid double counts, intermediate inputs including costs of production are not counted separately.

From our survey data we know the average spend of a consumer attending an art space in the City of Sydney, and we have made an estimate on the number of visits in a year – we estimate that in 2016 consumers directly spent $111.92 million on attending art spaces in Sydney.

It should be noted that these costs appear significantly broader in their coverage and greater than previous costs attributed to art spaces in other studies. These departures are reasonably explained by the differences in methodology as described in UTAS (2015).

Galleries and art spaces are further subsidised by individuals, businesses and various levels of government through other venue revenue, volunteering, sponsorships, grants programs, free concerts et cetera. The sum of these investments is what is known in economics as the shadow price (McKean, 1968). Shadow price has the net effect of either enlarging producer profits or reducing the cost to consumers.

As such, it is a real stimulus to art spaces in the City of Sydney and relevant to the scope of our enquiry. Unfortunately it was beyond our means in this instance to gather the necessary data, and the development of a more comprehensive art space satellite account is recommended as a direction for future research.