Using benchmark data to help you set Key Performance Indicators

We’ve had quite a few conversations both with funders and other stakeholders such as Local Authorities and with individual arts organizations on this topic recently so we thought we’d open up the debate a bit wider.

Background

As the funding jam gets more thinly spread there seems to be a greater focus on the accountability of the funders and their responsibility to ensure that they are achieving the greatest/largest/best/most sustainable outputs for the funds (public or private) being made available. In some funders this goes as far as to become a set of contracts where the term is ‘investment’ rather than ‘grant’ as the former has a greater sense of expectation of some form of return on that investment.

There is increasing talk of ‘impact’ not just in arts funding circles but in academia and other sectors in receipt of public funds. We’d suggest this is part of the same trend. On one level this is nothing new, there has always been measurement. The difference this time around is that unlike the boom times the consequences of not achieving the KPI’s are less likely to be a discussion about setting more realistic/appropriate objectives and there’s a greater risk of disinvestment because the terms of the contract have not been met. If an organization is to avoid this scenario then clearly the task is to set targets they feel confident they can achieve whilst making them ambitious enough to be good value for money.

When we are talking about topics in which both funder and arts organization are experienced then setting KPI’s is not too tricky. There is however far more focus on increasing the earned income than we’ve seen previously and it is reasonable to expect this to turn into pressure from key funders such as the Arts Council England, Creative Scotland and the various Local Authorities to set higher and more challenging targets for this area.

The risk then is that arts organizations feel pressurized to set higher goals and if they don’t have enough experience in the areas of income development they select then they risk over-committing themselves. How can we avoid this? Well for a start you need to know your own business model inside out and backwards. This means looking at several years of profit & loss sheets and having a good think about which areas of development have a reasonable chance of delivering earned income growth. If you want some stimulus material to help you start thinking about this try Capitalising Creativity, LUX Leveraging Leadership and Size Matters.

Once you are familiar with your own data the next question is how good are you vs. your peer group and vs. those who are one level up in terms of size of organization and total turnover. You can of course ask your peers to share their P&L data with you, you can also download some of this sort of data from the Charity Commission website (look up each organization by name to get to the details). The work of Culture 24 on a benchmark for digital activity, the work of MyCake with the Culture Benchmark and RFO Benchmark, the annual benchmark of private investment in culture run by Arts & Business and Audience UK’s development work on benchmarking (soon to be an online benchmark) are also routes to these comparisons.

Irrespective of the route you take the sorts of questions you want to use comparisons to other organizations to answer includes:

• How does my mix of grant, earned and other income stack up against my peers i.e. what’s the overall mix on average, and how does it compare to the ‘best in class’ • How do my sources of earned income compare?

• Comparing my organization just against organizations of a similar size/geography or sector are there any obvious gaps in our business model e.g. if it looks like others are achieving income from their intellectual property and you are not then is this an area to develop?

• If there are pressures to develop particular strands e.g. private donations then what is this actually likely to be worth for an organization of your size/sector/geography i.e. it works well for larger organizations but does it really work well for smaller ones? Trusts & Foundations seems to be a greater source of income for visual arts organizations (perhaps because they don’t charge for tickets???) than for performing arts so if you are in the performing arts you certainly need to compare just within your sector … I suspect Charlotte Jones (ITC Director) would go further and say that you need to compare just to your own type of performing arts organization ie youth theatre vs. youth theatre not vs. large venues

Can you use comparisons to do more than look at earned income?

Sure! The question is one of finding appropriate sources of comparison data. The data we hold in the Culture Benchmark and RFO Benchmark certainly enables you to compare all your sources of income as well as all your costs, so does the data you can download from the Charity Commission.

Comparing non-financial information starts to get a little trickier as less is published. Folks like Audiences London run ‘snapshot London’ and the various audience development agencies tend to have their own versions of this sort of thing. The tourism agencies such as Welcome to Yorkshire run monthly stats on visitor figures to a wide range of tourism venues (including cultural ones). Of course Arts Council England runs the annual RFO survey and publishes the aggregated data on this. For simplicity here at MyCake we’ve replicated the RFO data form so that you can benchmark your audience and organisation structure data and make use of the advanced filters that we can deliver through online benchmarking that you simply can’t do with excel. As ever it is about picking an appropriate profile for the comparisons.

There have been a variety of projects funded by the Arts Council England and others to help review the state of a sector or activity. For example Culture 24 has been funded to gather data on digital activity of arts organisations, this would provide a very good start point for setting KPI’s for your organisation in this area.

So, in summary, in our view you need to have high quality and specific data on a topic, sector or area of work in order to be able to set appropriate KPI’s. Whilst this is not an issue for areas of work you’ve been engaged in for some time it is more challenging when entering new territory. There are sources of data, some more accessible than others but all useful in discussions with funders and stakeholders about what level to set the KPI’s at.

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