- developing alternative sources of funding or launching an emergency appeal
- borrowing money from banks, members or stakeholders
- reducing actual or planned spending
- stopping doing some of your charity’s activities
Tuesday, 11 April 2017
Up the creek… without a budget
Many of you that watch what’s going on in the arts in Northern Ireland know only too well that times have been tough. Those of you, artists, staff, volunteers or participants engaged in work for the 105 regularly funded arts organisations in Northern Ireland perhaps understand better the perilous position that our public finances are in. And any complacency or indeed security there may have been, has evaporated rather quickly in the wake of the recent annual funding letters of offer received from the Arts Council of Northern Ireland.
Staff and directors of various organisations up and down the country will have received communication from the ACNI stating that instead of the monies that they had anticipated receiving, they would only be receiving precisely 50% of those funds. The letters come without any caveat or condition offered but the reality is that the Arts Council staff are only in a position to guarantee half the funding at this stage in the hope that things change, and that an Assembly or an Executive will be in place in the not-too-distant future to allow a budget to be set for Northern Ireland. Because this is the crucial issue facing not just the arts community but all communities in Northern Ireland. We have no budget.
In the interregnum between Assembly Executives, where our local legislature has not been convened, it seems that the Northern Ireland Civil Service has no alternative but to insist that the Arts Council offer only a half a year’s budget. The failure to form a new Executive has resulted in this unprecedented crisis regarding our budgets. Even the raising of monies through our rates’ bills is now a month late. So in the political vacuum, as the talks at Stormont Castle ebb and flow, those organisations and services that are dependent on the public purse find themselves in this parlous position. The Department of Finance permanent secretary David Sterling, under section 59 of the Northern Ireland Act 1998, has the power to release cash and resources from budgets but he can only draw down 75% of Northern Ireland’s bloc grant by the end of July and 95% by December. How that budget is then distributed amongst departments is again under the control of the civil servants at present. And should there not be an agreement to form a new Assembly Executive by this Friday, ironically Good Friday, then in all likelihood we are set for fresh elections with perhaps a period of direct rule in between.
So for organisations in the arts what should we do? Do we plough on optimistically with our strategies and programmes or do we send out protective notices to staff and participants, informing all that we cannot guarantee employment or projects beyond September. And what of the 105 plus boards of trustees of organisations up and down the country… what are they expected to do? It must be remembered that all publicly-funded arts organisations have charitable status (some of course will have trading subsidiaries too) and therefore are dependent on a board of voluntary trustees for their governance and oversight. It is the personal liability of these individual volunteers that underpins the charitable status of all arts organisations. It is the responsibility of these individuals to assess whether an organisation is in fact a ‘going concern’ because it is negligent and therefore illegal in company/charity law for trustees to allow organisations to continue to trade if they do not have adequate funds in place. As its states on the GOV.UK website: If your charity is a company or charitable incorporated organisation, it could become insolvent and face administration or closure if it can’t pay its debts. If your charity is an unincorporated association or trust, you and the other trustees could be liable for its debts.
The website then advises
This means that if your charity won’t be able to pay its debts, either with its income or with its assets, you need to act quickly. Take professional advice as early as possible – this will help you work out what action to take. For example:
So trustees, and their staff colleagues, have to make judgement calls and these cannot necessarily be made in September... they may have to be made a lot sooner than that. There are many organisations that may have adequate reserves and therefore can afford to continue to programme and work as normal. However there will be a great deal more for whom the years of cuts have undermined their ability to ride out such funding storms. For those organisations there will be some earnest conversations around board tables. There will be discussions with auditors, treasurers and chief executives and there will be panicked phone calls to funders undoubtedly as well.
Having witnessed five years of unprecedented cuts to the arts, with in-year cuts only two years ago, to now be faced with only a guarantee of funding until September leaves many organisations teetering on the brink. For them, their staff, patrons, trustees and indeed stakeholders and beneficiaries, participants and artists alike, these are very difficult times. For Northern Ireland, these moments exemplify the difficulty that 19 years after the Good Friday Agreement we find ourselves in uncertain waters, navigating between governments... up the creek without a budget. In the recent welter of such recent electioneering promises, no one said that livelihoods, services and programmes would be placed in such impossible positions. The promises and ambition offered then was for certainty and opportunity. For a great many within the voluntary, community and social enterprise sectors, this uncertainty and insecurity of resources may well push some beyond the brink. For everyone here, it represents just how precarious all our public services actually are. And if and when budgetary pressure on the public purse comes again, will the Arts, the smallest and most vulnerable budget, be hit once again?
Optimistically of course, there is still a conversation and negotiation taking place at Stormont. Indeed, there still is every chance that an Assembly can and will be formed and that budgets will therefore be set. Or, failing this, and via some enabling legislation, the Secretary of State may well take it upon himself to curtail such budgetary insecurity and in effect set a budget. But we also know that any of the much-vaunted concessions around welfare expenditure and the so-called “bedroom-tax”, may not survive, placing further pressures on budgets and of course, on some of our most vulnerable citizens.
Maybe there will be a snap election called and an Executive subsequently formed. But we've just been through an election and that hasn't been the outcome, so perhaps that confidence is misplaced.
In any case, these were already difficult times for the arts and for those we serve.
The challenges now for all concerned are even greater.