Notes for remarks by John Hobday at the Chalmers Conference organized by the Canadian Conference of the Arts (CCA)

Panorama Room, National Arts Centre, Ottawa
Thursday, May 22, 2003 at 9:15 a.m.

The challenges:

Growing numbers
Uncertain government funding
Shifting patterns of private-sector support
Competition from other leisure activities
Increasing complexity of administrative demands

The new strategic objectives:

Fostering sustainability and adaptability through a new relationship with arts organizations
Improving cooperation and collaboration through a new relationship with other Canadian arts funders
Developing a more effective working relationship with the Department of Canadian Heritage

Thank you, Megan, and good morning everyone. There are more than a few familiar faces in this room. It has been a great pleasure to see you all again. Thank you for coming.

I too want to begin with a special word of thanks to Joan Chalmers for founding this conference. Joan and I became friends back in 1978, when I was National Director of the Canadian Conference of the Arts and Prime Minister Trudeau had just announced massive budget cuts. Joan, in her typically direct and practical way, came straight to the office on hearing the news, and began making phone calls and stuffing envelopes. Our friendship blossomed over the envelope-stuffing table and has lasted ever since. Saint Joan, it’s terrific that you are here.

For me, the arts are much more than a field of employment. They are a personal passion, one to which I have committed over 40 years of my life. I believe in the value of the arts: to individuals, to communities, to countries and to humankind.

We all do. I was most encouraged yesterday to hear that we have additional areas of agreement. We agree that some form of sustained collaboration - among organizations, across disciplines and between funding bodies and the advocacy community - is essential if we are to move the arts agenda forward, to put arts organizations on a sound financial and administrative footing, and to highlight the presence of the arts in Canadian life.

Richard Florida has clearly got his message about the interdependencies of the creative class across to us, and I think that that message has penetrated some governments as well.

This is a carpe diem moment. I got the impression yesterday that (barring the usual anxieties about resources, or lack of them) we are ready to move ahead in a concerted "pitch" for a level of secure and on-going core funding that will allow the arts to play a lead role in building the creative society.

With that as an introduction, I want to tell you about the steps we have been taking in my first four months at the Canada Council. Council staff and board members have been wonderfully supportive, and we have taken some decisions that will inform the Council’s funding policies and advocacy initiatives throughout (and probably beyond) the term of our next three-to-five-year Corporate Plan.

As the primary funder of the arts at the federal level, and as an institution responsible for both arts organizations and individual artists across most contemporary disciplines and cultural traditions, the Canada Council has phenomenally large responsibilities. The Canadian Commission for UNESCO, the Canada Council Art Bank, the Prizes and Endowments Section and the Public Lending Right Commission also play important roles in shaping and giving substance to the Council’s commitment to the arts.

The Council is widely recognized:

for its generous and inclusive vision of the arts, encompassing both our Aboriginal heritage and the cultural diversity that generations of immigrants continue to bring to our shores,
for its time-honoured and much respected arm’s-length relationship with government, and
for the dedication, intelligence and imagination of its staff in responding to the changing needs of both artists and audiences.

I am honoured to have been entrusted with the directorship of the Council and to have the support of an excellent and inspiring staff. I very much hope to do credit to the trust that has been placed in me.

Since last January, the staff and I have been analysing the nature and intensity of current challenges to determine what the Council can and will do to help artists and arts organizations meet them.

In supporting, sustaining and advocating for the arts, we will be forceful, innovative and forward-looking.

Let me give you a brief overview of the challenges we have identified and the ways in which we believe the arts community must address them. The challenges can be grouped under five main headings:

significant expansion of the number of artists and arts organizations seeking support;
uncertain government funding;
shifting patterns of private sector support;
competition from other leisure activities; and
increasing administrative demands.

Let’s explore each area in greater detail.

Challenge No. 1: Growing numbers

The expansion in the numbers of artists and arts organizations has multiple roots. Canada’s population is growing and now approaches 32 million. Education levels are rising, and practitioners of the arts are in general a highly educated group. Aboriginal Canadians are turning in much greater numbers to the arts, both as a vehicle of contemporary expression and as a means of preserving their cultural heritage. The arts field is becoming more diverse in response both to new technologies and to increasing cultural diversity in the population. It is attracting people to artistic practices across a broader field. While this diversity enriches society, it also creates larger funding needs.

The response:

Our response is to cultivate excellence. Growing numbers of artists will remain a fact of life. At the Council, through our peer assessment process, we will exercise continued vigilance, funding only artists and arts organizations that maintain high standards of excellence in accordance with our competition criteria. We will be forgiving of bad luck. We will be forgiving of occasional failure when it is balanced by successes. But the overall criterion of excellence will be firmly enforced.

Challenge No. 2: Uncertain government funding

Public funding is the fundamental base on which the not-for-profit arts rest. In order to plan, arts organizations need assurance that funding levels will be sustained and will keep pace with inflation. Public-sector arts funding currently goes overwhelmingly to the cultural industries rather than to not-for-profit arts.

Governments are increasingly preoccupied with "non-arts" issues, notably health care, education and security. Most provincial governments have drastically cut or eliminated arts education at the primary and secondary school levels.

The response:

There is a note of hope in that there has been some additional government funding lately. As a result of more intensive advocacy, Alberta, Saskatchewan, Manitoba and New Brunswick have all had increases. The P.E.I. Government just announced its contribution to an arts stabilization program. Ontario promised additional funding in its recent throne speech, although the amount has not yet been made clear. Quebec continues to be the flagship province, with funding for the arts exceeding $70 million.

Although the Canada Council has seen no increase in its base appropriation since 2000, the three year, half-billion dollar Tomorrow Starts Today funding from the Department of Canadian Heritage (a portion of which came to the Council) has given the arts a substantial and much needed boost.

Public funding levels must still rise significantly at all levels of government. Public funding is the basis for survival, the expression of our society’s commitment to the basic value of the arts. Through our peer assessment system, it also carries the stamp of professional validation.

The arts community, with strong leadership from arts service organizations and encouragement from arts councils, must lead a determined, coordinated and effective campaign of public advocacy to increase funding.

In the application of public funding, there is also scope for increased cooperation and economies of scale among existing funders: through even such modest but effective means as coordinating application forms and sharing research.

Challenge No. 3: Shifting patterns of private-sector support

Private sector support of the arts is of three kinds: self-generated revenues (mainly tickets and admissions); sponsorship and donations; and volunteerism.

Audiences are growing only slowly. In some disciplines, they are shrinking. Declining ticket sales are affecting budgets in the live performing arts. We need to understand much more exactly why people choose to participate – and why they don’t. This is an area for further research.

In response to a general stagnation of public funding, hospitals and universities have increasingly turned to corporate fund-raising, where they have been extremely successful and have, to a degree, displaced the arts. DuMaurier is the last major corporate arts funder, and tobacco-company funding will in all likelihood be cut off in October. (Encouragingly, there has been an important surge of new individual donors, notably for bricks-and-mortar projects in Toronto.)

Volunteerism is also down significantly. In particular, the pool of potential board members willing to contribute their time and talent is drying up or being siphoned off to serve other causes. People who begin as volunteers often become donors at a later stage, so this loss has long-term funding implications as well.

Some responses:

A key response must the development of a cadre of well-trained, well-qualified and highly motivated revenue generators (marketers and fundraisers) serving the arts community. They are at present in very short supply, and, once trained, are frequently snapped up by hospitals, universities or businesses offering much better pay.

Another possible avenue for new funding is through significantly improved tax incentives. The Council for Business and the Arts is lobbying energetically for these. Corporations and small businesses are potential partners in an advocacy campaign for this kind of support.

Although any significant increase in private-sector funding is probably dependent on the creation of better tax incentives, there are many generous individual and small-business sponsors. Many arts organizations already allocate staff resources for nurturing relationships with sponsors, donors and private individuals. More, however, must be done to encourage those who care about the art form and who can be persuaded to invest in the organization.

They also need to manage their volunteers effectively: by keeping them involved and enthused for the long term, by steering them tactfully into activities that can make a real contribution; and by encouraging them to become donors. The importance of managing volunteer resources with great professionalism has not yet been fully appreciated. Volunteers are becoming increasingly diverse in age, in background and in particular interests.

Challenge No. 4: Competition from other leisure activities

The arts have always faced competition from other leisure activities (sport, for example), but in the past two decades the competition has mushroomed.

This is most notable in the field of electronic home entertainment, where there is a cascade of technologies (television, CDs, videos, DVDs, computer games, Internet, etc.) and massive programming choice - with doubtless more to come. Home entertainment is an easy, passive choice that certainly has a significant built-in cost but involves no large specific outlay for an individual event. And the Canadian climate, as well, offers frequent disincentives to leave the comfort of home.

Competition also takes the form of popular mass entertainment, including expensive, usually imported, blockbuster shows.

The cumulative effect of the range and intensity of these competitive factors poses a very real challenge to the not-for-profit art forms that all of us in this room care so much about.

The response:

In a world of global capitalism, earned revenue is going to be, in the long term, the most basic and important financial resource of for-profit and not-for-profit organizations alike.

Not-for-profits can adopt - and adapt - many useful strategies from the commercial sector, notably in marketing, presentation and customer relations.

Customers, for example, don’t just CHOOSE to participate in an event. They REJECT all other options to make that choice. For this reason, arts organizations must be highly aware of internal quality and best practices and measure these against the external environment. Simply put, there must be quality and differentiation.

An encouraging sign is that arts organizations are beginning to take advantage of technology - to make the electronic media not competitors, but conduits to a richer artistic experience.

Challenge No. 5: Increasing complexity of administrative demands

This is an area I want to explore in somewhat greater detail.

In our economic system of global capitalism, marketing, fundraising and management have all become more specialized skills. Tax and labour laws, as we heard yesterday, grow more complex. Demands from governments for "outcomes-based" performance and accountability put additional administrative demands on organizations receiving grants.

Arts organizations are at present in no position to meet these additional demands.

Many are hampered by governance issues. As arts commentator Michael Crabb pointed out in "Strained Relationships" in the April issue of International Arts Manager, "the vortex of frustration appears to be centred in the murky, confused relationships between top managers and the boards of volunteer directors to whom they are required to answer."

Arts organizations also suffer from a "management deficit." By this I mean that, for reasons that are largely economic and partly a matter of past example, managers work under huge stress. As Jocelyn Harvey has so well chronicled in the Creative Management document, they lack support, adequate working conditions, and opportunities to sharpen their professional skills. Boards are not able or willing to provide pay and benefits generous enough to encourage them to stay with their organizations for the long run.

Here let me firmly clarify a misunderstanding that crept into a recent newspaper interview and was given vivid, not to say lurid, life in a speech by Bramwell Tovey, Music Director of the Vancouver Symphony, to a Mayors’ Luncheon for Business and the Arts in Calgary.

Maestro Tovey jumped on the phrase "management deficit," and argued that Michelangelo and Shakespeare were better served by their Renaissance patrons than they would have been by the Canada Council today.

Flattered as I was at being compared in his speech to the Borgia popes, I must, in fairness to my many friends who are Canadian arts managers, make my position clear.

Canadian arts managers are, within the limits of the conditions they work under, extraordinarily good at their jobs. In many cases, they are absolute miracle workers. In all too many cases, however, they are expected to perform miracles on almost a daily basis simply to keep their organizations alive!

As Bramwell Tovey quite rightly pointed out, "arts administrators … are under-appreciated and under duress. They usually work seven days a week - performances being at weekends. Volunteer boards of directors expect them to be in the office on Monday morning and are forever scrutinizing their performance. It’s a tough job."

Of course, poor working conditions are not the lot of managers alone. Many artists suffer them as well. And while people under duress may pull together as a team, this is usually a short-term phenomenon. In the long run, poor remuneration and poor working conditions are a drag on all parts of the organization and an incentive to discord.

We gained some useful insights into these patterns yesterday, through the "Creative Management" discussions, and will hear more this morning in the report prepared by Deloitte & Touche for the Cultural Human Resources Council.

A generation of inspired and dedicated arts leaders, managers and entrepreneurs is gradually retiring. Surveys show that the replacement generation is much less willing to make the personal sacrifices of wages, benefits and leisure that were the price of success in earlier decades. They want, not unreasonably, a more balanced life!

In the face of these challenges, many arts organizations, under-funded, over-stretched and increasingly fragile, are losing their ability to take the artistic risks that ensure an ongoing flow of excellent and involving work capable of attracting new audiences and retaining them.

The response:

If arts organizations are to survive and thrive, if, that is, they are to be sustainable, they will have to address these important issues of governance and administration. You cannot sustain artistic excellence unless you have equally excellent governance and management, and sound finances.

What governance comes down to, essentially, is sorting out the areas of responsibility and the lines of communication, command and accountability among board, management and artistic direction. There are no hard-and-fast systems, so it is an issue that must be re-evaluated for its effectiveness at intervals in the life of an organization.

There is a crying need for good tools, including e-learning, to address the issues of management and governance, including a range of professional development programs geared to the various levels of need and the availability of funds in the arts community. In this endeavour, ASOs and educational institutions, working together, can play an extremely useful role.

Now for the Council’s specific initiatives:

We have three new strategic objectives

For the upcoming revision of the Council’s Corporate Plan, we will be implementing three new strategic objectives to strengthen the conditions for artistic excellence in Canada and the effectiveness of the Canada Council as Canada’s primary national body supporting the arts.

The first is a new relationship with arts organizations receiving operating grants. It will improve their ability to achieve their artistic mission by fortifying their long-term sustainability and adaptability.

The second is a new relationship with other Canadian arts funders in order to enlarge collective knowledge both of the needs of the arts and of the pool of funds available to them, and to improve opportunities for practical cooperation and collaborative action.

The third objective is the development of a more effective working relationship between the Council and the Department of Canadian Heritage.

While these three new strategic objectives represent a shift in emphasis for the Canada Council, they do not represent a shift in basic priorities.

The Council has supported arts organizations and been concerned about their organizational and financial health since its first year of operations.

It has a lengthy history of communicating with other funders, especially the provinces.

It has had, over the years, numerous and complex exchanges and dealings with the Department of Canadian Heritage, and the Department’s predecessor, the Secretary of State, on which to construct a more effective working relationship.

Let me note two essential facts about these proposed new relationships.

First, they will take time to develop. Consultation will be part of the process, and implementation will take place step-by-step, in carefully calibrated stages. Full implementation may take several years.

Second, while we can develop and implement some aspects of the new relationship with existing funding, full implementation will require a significant increase, again perhaps in stages.

Now let me discuss them one at a time.

Fostering sustainability and adaptability through a new relationship with arts organizations

Within the framework of this objective, our first goal will be to significantly strengthen the arts infrastructure that has been so painstakingly developed, for both the established and the emerging arts.

In all disciplines, we will make a substantial reinvestment in organizations that lead the way in a culture of excellence.

These are not necessarily the largest organizations. They are the organizations that set the best example of artistic excellence supported by sound and equally excellent management.

Arts organizations are the major employer of artists. They bring the work of artists to the public. They also represent a major investment of Council funds. In 2002, more than 900 organizations on operating funding received 64% of our total grants budget for a total of $78 million. This included 284 organizations receiving annual operating grants and 622 which were awarded multi-year grants.

Ultimately, the Council’s public reputation for discernment is linked to the success of the artists and arts organizations it supports. A collapsing organization has a negative impact on the public’s perception of the entire arts community and raises doubts about the due diligence of public funding bodies.

I want to make it very clear that I am not suggesting setting up a stabilization program at the Council. On the contrary, I believe that by maintaining artistic excellence as our primary and most important criterion and by significantly strengthening our requirements and incentives for fostering organizational health and fiscal viability, we can have the best of both worlds in fostering creative and sustainable arts organizations.

We will establish criteria and provide tools that will firmly and proactively lead organizations, over time, to improve their managerial and fiscal health and thus become more viable, more sustainable and better able to provide artistically excellent work.

We will insist on significant levels of achievement in:

The development of artistic excellence;
Governance (with a firm curb on any board tendency to micro-manage);
Management (including recruitment, training, fair compensation, and retention of qualified management personnel);
A reasonable level of continuity among administrative and managerial personnel and board members, to avoid the destabilization brought on by chronic turnover;
Financial management (including, as essential elements of fiscal sustainability, the development of surpluses that feed working capital reserves, and, where appropriate, endowment funds);
Revenue generation (by fostering an entrepreneurial spirit in all disciplines and helping organizations to adopt modern technologies for marketing, revenue development and customer relations);
Development of audiences of all ages(including, of course, young people); and
Stronger and more vital roots in the public life of the country and their own community. Council-funded organizations are, and must be more widely recognized as, essential services in the development of creative cities and communities.

The why of sustainability and adaptability is simple- to allow organizations to explore their full artistic potential with greater confidence, to build their capacity to manage unforeseen challenges, exploit new opportunities, and take well-judged risks.

The how is more complex.

A retreat held by Arts Division staff in January, before my arrival at the Council, made an excellent start on identifying the hows.

The Director of the Arts Division, Micheline Lesage, and her staff are developing models for new relationships with arts organizations that receive operating grants. They will be consulting closely with the arts community about them. After consultation, they will make proposals including:

a step-by-step timetable for implementation,
a number of approaches appropriate to organizations of different sizes and capacities, and
the tools organizations will need to prepare themselves to meet more rigorous management criteria.

Even with new requirements and new tools for sound governance, management and financial viability, not all arts organizations will be willing - or able - to meet higher standards. Our goal is not to preserve every arts organization forever but to provide organizations with real opportunities and incentives to improve their long-term sustainability. Whether they can and will successfully seize those opportunities will be for the organizations to determine.

It is clear that we can fully achieve our goal of fostering more sustainable and adaptable organizations only if we can obtain increased financial resources. We will argue for the necessity of these resources in order:

First, to provide the tools organizations will need to meet more demanding criteria,
Second, to address areas of significant under-funding and the impact (which you discussed yesterday) of potential Canada Customs and Revenue Agency decisions on the employment status of artists, and
Third, to provide larger operating and multi-year grants for organizations which demonstrate both artistic and organizational excellence.

Given the fragility of the operational, fiscal and managerial capacity of many arts organizations, a substantial investment will be required to address issues involved in fostering sustainability and adaptability. Additional funding will be not just desirable, but essential. That is why I have laid such stress on the importance of advocacy with a common voice.

On to the second new objective:

Improving cooperation and collaboration through a new relationship with other Canadian arts funders

The form these relationships should take is still at the discussion level. What is clear, however, is that the Council, the provincial and territorial arts councils and the municipalities (as well as corporate donors and sponsors, foundations and individual philanthropists) are all in the same business, often supporting the same artists and arts organizations.

To find the means to share information, explore common interests, solve mutual problems, enhance collective understanding, and work together on coordinated advocacy initiatives is a very desirable goal.

At least three initiatives to enhance cooperation and collaboration are currently under way:

A provincial initiative, with Council support, is the development of a more formal forum for collaboration among government funders. Provincial and territorial funders and the Canada Council have been meeting annually for the past 10 years on an informal basis. The Council is working closely with Doug Riske of the Manitoba Arts Council to help bring this collaboration to a new level.

"Tri-Levels" have a long history, particularly in B.C., Manitoba and Toronto. They bring together federal, provincial and municipal funders and foundations to discuss support for the arts in a given region. We intend to work with our colleagues to initiate similar meetings in other regions of the country.

And the Council for Business and the Arts, with support from Ontario’s Trillium Foundation, is exploring the feasibility of a Canadian version of the U.S. Grantmakers in the Arts organization, which would bring together public- and private-sector funders.

The Council is contributing to, and following progress on, all these fronts. I firmly believe that these initiatives will improve the effectiveness of arts funders in responding to issues of mutual concern.

Now finally, the third new strategic objective:

Developing a more effective working relationship with the Department of Canadian Heritage

Among governments and public agencies, the Council’s single most important working relationship is clearly with the Department of Canadian Heritage. The relationship encompasses overall Council funding, policy development, program delivery, information exchange and cooperation in joint projects and research.

The Council has undertaken to ensure that that relationship is made as effective as possible.

In negotiating this relationship, our goal will be to develop a focused plan :

To demonstrate to the Department, as well as to the Government generally, the absolute necessity of a significant increase in the Council’s appropriation;
To encourage a redistribution of responsibilities between the Council and the department, to ensure that programs are administered in the way that will best serve the arts community and the public;
To establish effective and efficient formal mechanisms by which the Council can advise the department on its programs as they affect the artists and arts organizations we fund; and
To maintain and expand the successful parts of our current relationship, especially our participation in portfolio committees, joint research projects and information exchange.

Keith Kelly, with advice from the Council’s Heads of Section, is taking the lead in developing this relationship, and he will continue to pursue these goals through the Portfolio Affairs Group and departmental committees.

Media contact:

Notes for remarks by John Hobday at the Chalmers Conference organized by the Canadian Conference of the Arts (CCA)

Challenge No. 1: Growing numbers

Challenge No. 2: Uncertain government funding

Challenge No. 3: Shifting patterns of private-sector support

Challenge No. 4: Competition from other leisure activities

Challenge No. 5: Increasing complexity of administrative demands

We have three new strategic objectives

Fostering sustainability and adaptability through a new relationship with arts organizations

Improving cooperation and collaboration through a new relationship with other Canadian arts funders

Developing a more effective working relationship with the Department of Canadian Heritage

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