Beckett, Bacon or Bar Mitzvahs?

 What non-arts activities can Arts buildings do to increase income

The two things you can usually be certain of managing an arts building is that its running costs will always go up and that its income cannot be guaranteed. Increasing income streams mitigates the risk associated with any single source performing below expectations by spreading it more widely. But what are these non-arts activities? Can and do they make money and what are their pros and cons?

Catering, conferencing, retail, rental of space and private hiring are the most common of these activities in building-based organisations.  But across Europe other examples can be found. Metelkova in Ljubljana is based in the former barracks of the Yugoslavian army where local artists were commissioned to convert each of the former prison’s twenty cells into a bedroom, creating Hostel Celica, a popular budget accommodation option for tourists that was rated the ‘hippest hostel in the world’ by Lonely Planet.

Ufa Fabrik in Berlin produces its own water, electricity and heat. Excess electricity is sold back to the power grid, so no utility costs and an extra source of income. At Korjaamo cultural factory in Heslinki, fifty office workplaces are rented out, which make a net profit and produce 20% of its income. The WUK in Vienna has a bicycle repair shop, Stanica in Slovakia is also the local railway station and Farnham Maltings owns a large car park, which produces a healthy income with minimal outlay.

Food operations can make but also lose money. Restaurants have the highest bankruptcy rates of all businesses and catering operations in arts buildings are not immune from this risk. A well managed bar operation should be making a net profit after all commercial costs of at least 35% of net turnover. What you are selling, to whom you are selling it to and how many visitors you receive a year will all affect turnover and profit. The Melkweg in Amsterdam takes €3 million from its bars, producing a net profit of €1.2 million. But its main activity is rock and pop concerts and audiences for these events will spend four times as much on drinks per head compared to theatre or dance audiences.

Conferencing and private hiring for meetings, training, weddings, parties and product launches can all be a valuable source of income. But they will be competing with a professional industry that includes hotels and conference centres. Experienced management, effective marketing and high service levels are essential to compete and make a profit. In the USA many arts buildings derive a major part of their income from these activities. Headlands Centre for the Arts near San Francisco charge $4,000 to rent for weddings. On its web site you will even find an ‘exclusive caterer and ‘preferred vendors list’.

Capital financing for non-arts activities could be sourced as investment or sponsorship from a commercial partner, as a loan from a not-for-profit bank, from private investors for an equity stake in the activity/company, from a franchisee, from reserves or through fund raising. If public investors can be convinced that projected income from non-arts sources are low risk and form a crucial part of the organisations revenue financial strategy, they may be more inclined to support capital bids that include facilities for non-arts activities.

But if the majority of management time, buildings spaces and organisational resources end up being spent on non-arts activities what happens to the art and the artists? There probably is a ‘tipping point’ where arts buildings are perceived to be (and sometimes actually are) spaces in which art becomes its secondary rather than primary activity? And then the organisations profile, customer base, management culture and image can all be adversely affected. Public funding bodies want arts organisations to diversity their income sources but can become concerned if non-arts activities are too dominant. The answer is to find the right balance between arts and non-arts activities, primary and supporting income streams, what is subsidised and what is commercial. Although they can be an essential source of income, non-arts based activities must be (and be seen to be) supporting and secondary to a building-based organisations primary activities, vision and core purpose. If they become the major discussion item at board meetings they probably have, or are about to become the organisations main business. This then might be the time to revisit the vision and consider if it might have become slightly blurred.