Funding cuts - stay calm and prepare for change

Author:   |   Date: 10/01/2016   |   Categories: Fundraising, Leadership, Leading in crisis, Making change, Strategic Planning

This year nearly every small to mid-size arts company will be impacted by the decisions being made by the Australia Council and other funding bodies around organisation and project funding.

Last year we heard of numerous companies closing or winding back operations. Despite partial backflips by Minister Fifield (backflip with a half pike?) there is still a greatly reduced pot of funds to go around.

These decisions impact the entire arts ecology, from the SMEs to the majors, as well as individual artists. Any contraction in production puts pressure on all points of the sector. If you are working or aspiring to work as an arts professional you will be effected.

There is little to be gained from general anxiety or panic, but if you are in a leadership role you need to acknowledge, understand and communicate the reality of the situation.

There are some critical actions you can do now (that is before any external funding decisions are made) that will put your organisation in much better shape for dealing with changes as they come.

Firstly, if you are facing a real or potential significant drop in funding, you need to step up and accept this reality. Now is an opportunity to act as a leader not just a manager, by responding courageously and creatively to change, and taking responsibility for the outcome. It is time to stop being a victim to circumstance and get your head and those around you out of sand.

It is time to step up and bring about some fundamental change in your company for a better future.

  1. Forget business as usual. The world has changed and anyone in your team from your board to your artistic and management staff that argues differently is no longer your greatest asset.  Don’t scare the horses, but if you are in a leadership role make it clear that you are expecting your team to be aware and responsive to the changed environment.  That includes not assuming that all current and future commitments can be met.  See point 2 and 3.
  2. Review your delegations. Working in government I saw lots of arts organisations come unstuck, posting continuous deficits and struggling to turn things around.  More often than not there was an issue in the governance of the organisation: that is clear processes to manage the “who, what, why and how” of decision-making, especially around expenditure and forward commitments. The single most useful thing you can do now for your own sake, as well as your staff and board, is review your delegation policy. If you have or are likely to be posting a deficit, you may need to wind delegations back to board or CEO level, so that major or long-term commitments (especially staffing) are properly scrutinised. 
  3. Review your financial position or budget. Get on top of your figures. THIS WEEK. No excuses. Just do it. Don’t rely on your accountant or finance manager (if you have them). As CEO (Chair or board member) you are responsible and you need to know what you have, what you are committed to spend, and what you are realistically going to earn.
  4. Throw out your strategic or business plan. The environment for arts production in Australia has fundamentally changed and will continue to change over the next few years.  If you have a business or strategic plan that is more than six months old, you can pretty much throw it in the bin and start again.  That might sound harsh, but if your plan was made any time before mid to late-2015, than it was based on different assumptions about the funding market and operating environment. Working off that plan will risks bringing you unstuck.  
  5. Assume you will be unfunded. For your own sanity and the future of your organisation. You may not be, but your operating model should assume no significant government funding in the long-term.  That way you will have a business model that allow you to be (almost) independent of government-funding if need be. 
  6. Repurpose all government funding as a limited-term strategic investment. If you do get an organisation grant this year, congratulations, but assume it is the last you will ever see.  Plan to use it as you would an angel investor or similar.  That is as resources to develop your current or new business opportunities so that they can operate without ongoing government funding.  If you think of all funds as a one-off grant, you will be less tempted to use the funds to increase the scale of your operation beyond what is feasible long-term.
  7. Revise your business model to drive revenue, not just manage costs. The best use you can make of any organisation funding at the moment is to unpack and review your business model and budget with fresh eyes and no assumptions.  That means looking at all your activity in terms of its potential revenue, market position, cost to deliver and operational risk.  That way you can see where you need to invest resources strategically to grow the high potential parts of your program, which deliver on your mission and artistic vision. You can also see what needs to be cut. 
  8. Remember it’s never just about you. If you are running a not-for-profit you are custodian of a vision, which is more than you, your staff or board. Your intention must always be to leave a legacy so that the mission will continue, for as long as your community has need.  If you are stuck in the struggle at the moment, step back and ask yourself this question – who are we doing all this work for?  Then give yourself some time and space to let the question sit there and see what comes up. It might be that your community has moved on or newer products and services are meeting changed needs. If you are no longer relevant, as seen in response to your funding requests and income-raising, then start preparing to let go. 

 

If you want some support and advice on how to prepare and respond to changes in the funding environment, including reviewing your business model and strategic plan, contact us for some no obligation ideas on what to do next (contact@albanylane.com.au).

Judith Bowtell of Albany Lane is an executive coach offering workshops, mentoring and coaching to individuals and organisations in the arts. Her background includes more than 20 years experience in arts strategy and policy, in funding and cultural agencies, as well as leading small arts organisations.


If you would like to discuss coaching options with Albany Lane, please send an enquiry.

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