Hill Strategies Reports on Arts and Culture Funding & Finances

In this issue: Summaries of three recent reports that examine direct and indirect spending on culture by provincial, territorial, and municipal governments. Also included is a report on broader trends in the not-for-profit sector, based on a national survey of charity leaders.

Flat-lined but Still Alive: Overview of the 2012-13 Provincial and Territorial Budgets from the Perspective of the Arts and Culture Sector

Canadian Conference of the Arts / Centre on Governance, University of Ottawa, 2013

Authors: M. Sharon Jeannotte et al.
http://www.socialsciences.uottawa.ca/governance/eng/publications.asp
 
This report, based on an analysis of budget information from each province and territory, provides a summary of cultural spending in 2012-13 by each provincial and territorial government, along with a brief analysis of overall trends.
 
The report recognizes the challenges of comparing cultural funding between provinces and territories. Key differences between the provinces and territories include:

  • Different cultural policies and programs.
  • Differing histories of cultural support, resulting from varied political, economic, and social contexts.
  • Different methods for administering cultural revenues and expenditures. In addition, the report indicates that “not all expenditures and revenues that can be considered ‘cultural’ are counted.” 

The analytical section of the report highlights social factors taken into account in provincial and territorial decision-making regarding culture. The report indicates that, in “Alberta, Newfoundland and Labrador, and Nova Scotia, culture is viewed as a means of promoting creative and prosperous communities that attract tourists and creative workers. However, this message is less prominent in the other provinces and territories.”
 
The report notes that fiscal restraint was a key priority for many provincial and territorial governments, limiting the potential for growth in cultural budgets. In this context, the report indicates that “cultural budgets in most jurisdictions are flat-lined” in 2012/13.
 
There appears to be a trend of providing tax credits for children’s arts activities, with several provinces introducing new credits or expanding sports-related tax credits to arts activities. New tax credits were announced in British Columbia, the Yukon, and Quebec, while Manitoba implemented a similar credit in 2011. Saskatchewan did so in 2009. The report argues that, “with the flat-lining of arts budgets in all these jurisdictions, it appears that these provincial governments are trying, among other things, to encourage the arts community to offer classes for children and thus increase their reliance on the market for ongoing support.”
 
In most jurisdictions, film-related tax credits were maintained. However, in Saskatchewan, the Film Employment Tax Credit was eliminated.
 
In New Brunswick, the provincial government did not change cultural budgets, pending completion of a major Cultural Policy Renewal exercise.
 
Heritage-related changes were, in general, thought to be “neutral or mildly negative”. While many jurisdictions had no change in their heritage supports, a number of provincial museums received moderate decreases in their budgets.
 
The analysis concludes that “across Canada, there is a persistent sense of unease about future levels of provincial support for the cultural sector”.
 
While not nearly as thorough as the Canadian Conference of the Arts report, an information sheet from The Arts Advocate (http://on.fb.me/17vNWh1) provides highlights of provincial arts and culture spending in 2013/14. Many arts councils and boards saw no change in funding, and there were some increases and some decreases in other provincial supports. Positive developments include the establishment of Creative BC, Creative Saskatchewan, the Ontario Music Fund, and Arts Nova Scotia. However, the new Saskatchewan organization follows the loss of film tax credits in the province.
 
 

Indirect Cultural Investments in Five Large Canadian Cities: A Preliminary Analysis

Hill Strategies Research Inc., May 2013
Author: Kelly Hill
http://www.hillstrategies.com/content/indirect-cultural-investments-five-large-canadian-cities
 
Based on a survey of and follow-up interviews with cultural staff members in five large cities (Vancouver, Calgary, Toronto, Ottawa, and Montreal), this report provides a brief summary of indirect supports provided to the cultural sector. The report attempts to gauge the broader range of local supports for culture – beyond direct monetary support (which was highlighted in Municipal Cultural Investment in Five Large Canadian Cities, a previous report for the five cities).
 
While there is no standard definition of “indirect cultural investments”, nine elements were examined as potential indirect supports for culture (based on information provided in three previous reports related to this topic):

 1.  Below-market or nominal rent
 2.  Property tax rebates / exemptions (whether through local decision-making or provincial statutes)
 3.  Free or below-market rates for advertising on city structures (e.g., bus shelters, buildings, etc.)
 4.  In-kind services for festivals, special events, film, etc. (e.g., permits, fire, police, EMS, waste management, transit, etc.)
 5.  Heritage conservation incentives (indirect / non-monetary)
 6.  Density bonusing (i.e., allowing higher building density in return for community benefits)
 7.  Community use agreements / public use of private spaces (e.g., a re-zoning condition allowing for cultural use of private space at a nominal rent)
 8.  Modified planning regulations to support cultural sector (with no direct financial implications)
 9.  Loan or line-of-credit guarantees by the city 

The survey found that “the five cities provide a relatively similar ‘suite’ of indirect supports for the cultural sector”. All of the cities provide at least five of the nine indirect supports, with Vancouver providing eight supports, Toronto providing seven, Ottawa providing six, and Montreal and Calgary providing five.
 
Three of the indirect supports are provided by all five of the large cities:

  • Below-market or nominal rent for cultural organizations
  • Property tax rebates / exemptions
  • In-kind services for festivals, special events, film, etc. 

Three indirect supports are provided by four large cities (with the city responding “no” being different for each of these supports):

  • Heritage conservation incentives (Vancouver, Toronto, Ottawa, and Montreal)
  • Density bonusing (Vancouver, Calgary, Toronto, and Ottawa)
  • Modified planning regulations to support cultural sector (Vancouver, Calgary, Toronto, and Montreal) 

 

Municipal spending on culture in Quebec in 2011

(Les dépenses culturelles des municipalités en 2011)
Observatoire de la culture et des communications du Québec, Optique culture no 25, May 2013
http://www.stat.gouv.qc.ca/salle-presse/communiq/2013/mai/mai1322_an.htm
 
Based on a survey of Quebec municipalities (including all 10 cities with populations of at least 100,000), this report indicates that Quebec municipalities spent $812 million on culture in 2011, a 9.6% increase from 2010 and a 29.1% increase from 2008 (not adjusted for inflation). On a per capita basis, total cultural spending by Quebec municipalities represents about $102 per resident of the province. Cultural expenditures represent 4.8% of the total operating spending of Quebec municipalities.
 
For purposes of the report, cultural spending includes: libraries; arts and letters; heritage, public art and design; cultural festivals and events; events with a cultural component; cultural and scientific leisure activities; conservation of historical archives; and other cultural expenditures. Total spending includes expenditures on services (76% of the total), financing costs and depreciation (9%), as well as other costs (15%).
 
A very high proportion of municipal cultural expenditures come from municipalities' own contributions (79% via property or other taxes, etc.), but smaller percentages do come from sales and fees (9%), grants from other governments (7%), and other revenues (5%).
 
Libraries dominate cultural spending, representing 44% of total expenditures on cultural services. Arts and letters represent 20% of spending on cultural services, followed by heritage, public art and design (17%).
 
 

Sector Monitor

Imagine Canada, Vol. 3 no 2, July 2013
Authors: David Lasby and Cathy Barr
http://www.imaginecanada.ca/node/247
 
Based on an online survey with 1,909 respondents between November 2012 and January 2013 (representing leaders from many different types of charitable organizations), this report provides a broad overview of the current situation of the not-for-profit sector in Canada and the confidence of charity leaders given the current economic and social context. The survey, which excluded religious congregations, achieved a response rate of 33%.
 
While 44% of charity leaders indicated that their expenditures had increased over the past year, only 24% saw an increase in revenues. One-quarter of all organizations (26%) had a decrease in revenues over the past year. Only 10% saw their expenditures decrease.
 
Almost two-thirds of charities (62%) indicated that their paid staff levels had remained the same over the past year. Another 22% of charities had an increase in paid staff, while 16% experienced a decrease. The picture is quite similar for volunteer levels: 66% of charities experienced almost no change in volunteers, 23% had an increase, and 11% saw a decrease.
 
Overall, this edition of the Sector Monitor is less pessimistic than previous editions, with stability in some statistics that had previously worsened, including the percentage of charity leaders predicting that they will be weaker in the near and medium terms or predicting that they will experience decreases in human and financial resources.
 
That being said, the report estimates that about one in seven charities show signs of being under high stress due to difficulties in fulfilling the organization’s mission, increased demand for their services (which is a negative indicator for most charities but a positive one in the arts), and feeling that the existence of the organization was at risk. In general, the larger the charity, the less likely it is to be under high stress.
 
A similar proportion of organizations in the broad area of arts, culture, recreation, and sports (13%) appears to be under high stress as other charitable organizations (14%). Just over one-half (54%) of arts, culture, recreation, and sports organizations were not considered to be under stress, a proportion that is similar to the average for all charitable organizations (52%).
 
Another stress factor is severe financial pressures, such as the possibility of having difficulties covering expenses in the near future. Thirty percent of charities indicated that they might have difficulty covering their expenses in the next 12 months.
 
The report concludes that, “while the size of the shifts in individual measures is not currently large enough to be statistically certain that this marks a reversal, multiple indicators are showing small shifts in a more optimistic direction”.

 

 

 

 

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