Arm's length, 2001


Arm's Length Financing in Culture: Why? Why not?

As one of its first actions, the Budapest Observatory set out in late 1999 to survey national arm's length agencies of cultural grants: the findings were accessible on these pages.

We soon discovered, that in some countries such institutions functioned in a natural, organic way, in others though, there seemed to be altogether no need for them. Since our real mandate is east-central Europe, we are intrigued to find out, whether the countries in our region will vote "yeah" or "nay", to arm's length financing in culture. Still the answer is not clear and not final, the nearly 20 countries have produced almost the same number of models for the distribution of public grants for culture.

In order that these societies make up their minds, the pros or cons should be clear. The literature is full of arguments in favour of the arm's length principle. I was (and am) looking for the explanation why in many respectable societies the idea is not even considered seriously. In the absence of such reasons, I start out from the following hypothesis: The arm's length principle is so essentially Anglo-Saxon, that the less a society is (feels, looks, hopes to look...) like the UK, the less they are inclined to set up an arts council of their own.

Since it is next to impossible to find arguments to justify why a country does not tread on the path of arm's length funding of culture (Mundy is a rare exception), the observer must do the adverse: start out by taking stock of the arguments in favour of the arm's length principle.

One obvious point of departure is consulting the web site of IFACCA: the International Federation of Arts Councils and Culture Agencies. There we find the explanation that arm's length agencies are born as a response to number of compulsions: collapse of old structures, need for reform, desire of participation in decision making, increasing recognition of the civil sector etc. These necessities are there in many places but still the question remains, why an arts council is the remedy... The IFACCA site raises one pragmatic point, too: such agencies may encourage private sector contributions.

This last point is in the focus of the argument developed by Watanabe in his preparatory paper prepared for the Unesco world conference on culture, held in Stockholm, 1998. Stability, freedom from the oscillations of annual government budgeting. And of course the freedom from political and bureaucratic intervention is reiterated here, too.

We must check back to Mundy, for one more point that he identifies clearly: the function of an official body which can give strong independent advice to the public authorities on policy direction and the distribution of funds. This function dominates the arts council of the Netherlands.

My own personal recollections of the founding of the National Cultural Fund in Hungary in the early 1990s coincide above all with Watanabe's two points. There was an air of thinly conspired revolt against the administration: we were looking forward to the abolition the oversize influence which directors of unit and even rank and file clerks, "instructors" of a cultural field used to exert over funds; but even greater were the expectations vis-a-vis the arch-enemy, the ministry of finance. Surrounded by all the misery of the agonising old system and the uncertainties of the new one, the zealous but largely helpless cultural state secretary kept saying with gleam in his eyes: wait, until we have the Fund! Other partisans even used the expression of creating our own "republic of culture" within the state.

The main motive and expectation in this and some other cases which I have met, has been financial autonomy. The democratic ideals appeared to follow these arguments at such a distance, which makes me suppose, that if there is a considerable flow of public funds, these (the democratic arguments) themselves fail to collect momentum to coerce the creation of arm's length autonomous agencies.

Which brings us back to the initial hypothesis. In such bulwarks of European culture as France and Germany the arm's length arts councils have not taken hold primarily because there is no coercion to adapt British institutions, other than the phenomenon of convergence of public administration systems, described by Hillman-Chartrand and McCaughey. This classic essay was adamant in demonstrating the very British nature of arm's length arts councils.

Nowadays being British is by itself no warranty to world success. However, the distinctly English foundations, cited by Hillman-Chartrand and McCaughey, upon which the institution of autonomous arts councils are based, belong to the realm which is largely shared by the wider Anglo-Saxon legacy. If you search for related terms on the Internet, UK references are in minority compared to overseas addresses. And if something is cherished by this powerful cultural community, it is destined for world success. An important explanation for the spread of arts councils and similar institutions is that it appears to be a current top commodity on the world market of ideas.

In the earlier version of this paper I also attributed the proliferation of arts councils largely to the fact that the main, or rather only vehicle of international communication is English, and the majority of papers on financing culture simply equate it with an arm's length agency. People in east-central Europe almost never read arguments in French, German etc. or on French, German etc. resistence to arts councils. I recall another personal memory from the early 1990s. During a well conceived and managed Malraux seminar in Budapest, when experts from Paris presented French cultural policy to the Hungarian participants, a total communication block emerged around the issue of who effectively decides on the fate of a cultural grant. The Hungarians took it for granted that in a western democracy there is no alternative to autonomous bodies. The French took it for granted that the ultimate responsibility lies with the civil servant. So profound was the basic principle on both sides that neither felt the need to explain - until after a lengthy dialogue of confusion both parties were illuminated about the starting point of the other.

I missed this inter-cultural dialogue in Ottawa, at the World Summit of Arts and Cultural Institutions (December 2000), which, in spite of the cultural plurality of the participants, fully remained inside the Anglo-Saxon world of ideals. The dilemma of Why or why not? was not seriously tackled (except for one of the working sessions). It was a convention of the converted. Although anything which is done about cultural policy in Canada is also a defiance against America, one sensed signs of the proverbial American self-centred concept of the world, which, especially in light of open hearted good intentions, produces them so many disappointments.

If there is someone who has read this text up to this point, might be wondering what is wrong? Whether I feel that arm's length arts councils are not really appropriate for the new democracies in east-central Europe? Whether I believe that to our traditions the decisions taken by a Beamter and the fonction publique are more fitting? That we should face facts namely that the typical east European cultural manager prefers the old-fashioned bargaining with the officials to the new fashion of filling endless application forms? And I just wonder why no-one has the courage to cry out "the king is naked"?

This is not the case. I regret seeing a number of examples when arts councils are only such in name, created indeed to follow suit, not to say fashion. And regret the shortening of the arm's length in my own country, where the legal foundations of guaranteed resources and independent decision making were so well constructed. And regret that these things take place in the absence of clear confrontation of arguments of why so and why not differently.

We, at the Budapest Observatory, shall try to pay more attention to these aspects during the second round of collecting information on systems and institutions of distributing public grants for culture.

December 2001, by Péter Inkei

See also Why not, indeed? - on the same subject.

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Levels of government

For most countries the structure which derives from these principles will have space for each level to have clear lines of authority, with mechanisms for linking discussions upwards and downwards through the system. In some nations this is complicated by the "arm's length" principle which seeks to put a buffer of independence between the cultural sector and the political sector. While this gives politicians a welcome screen from responsibility for cultural work which might upset the electorate and rebound on them, in reality it rarely protects the cultural sector from the political climate of the day. At its worst it can further complicate the means of resource delivery. Instead of smoothing the way for cultural organisations, it often merely gets in the way, duplicating bureaucratic processes, allowing other authorities to draw back from committing their own resources, and pursuing an agenda which may be worthy in itself but serves the interests neither of the cultural nor the public sector. The semi-autonomous agency can find itself caught in the middle, able neither to compel government to take a positive position nor to deliver sufficient resources itself to satisfy the imaginative needs of the cultural organisations or the projects of individuals.

At its best though, the arm's length principle allows government to concentrate on overall policy, not day-to-day operations. It also insulates the political regime from having to rule on issues of taste and decency which, though embarassing, are matters for the audience, not the authorities. Administrating at arm's length also allows cultural organisations to demonstrate their independence-as long as the arm is really long. There is an important role, however, for an official body which can give strong independent advice to the public authorities on policy direction and the distribution of funds. If this body has a statutory basis, and if the authorities are required to give reason why the advice is or, more crucially, is not being followed, then the whole process of policy delivery moves out into the open. Cultural organisations can accept or appeal against decisions knowing that procedures are transparent. They might not like either the advice or the decision but at least they can be assured that both have been arrived at fairly. Placing cultural policy firmly in the arena of public debate is the only way to ensure both its continued vitality and accountability to all the parties with a compelling interest. Culture is too important to the atmosphere of a society for its resourcing to be veiled by a cloud of illegitimate interests.

Extract from Simon Mundy: Cultural policy. A short guide. Council of Europe Publications, Strasbourg 2000; p 32-33.


Welcome to IFACCA

In the last decade and a half the cultural support structures of many nations have undergone radical change. In Africa, Latin America, Central and Eastern Europe and parts of Asia, there has been an explosion of council-like or foundation-like agencies. These organisations are public bodies operating at the national level to support artistic and creative expression, with some (varying) degree of independence from government. Typically, they have been set up in response to social and political change, for example, the:
· collapse of colonial and Communist state structures
· emergence of new democratic governments
· desire of communities to be active participants in arts/cultural decision-making
· need to reform government structures
· desire to encourage private sector contributions
· increasing recognition of the value of civil society or 'third sector' institutions
There are now quasi-governmental national bodies funding the arts in all parts of the world, in poor as well as wealthy nations, including many non-English-speaking countries. Scholars of cultural policy today view the development of independent arts councils, with artists directly involved in policy-making and grant-making, as one indicator of the emergence of a cultural democracy. In establishing these organisations, governments have usually placed them squarely within the democratic tradition. From the objectives: create and maintain a supple and accountable organisation by
· ensuring best practice in corporate governance and
· managing financial, human and information resources ethically and efficiently.


Introduction of Public Endowments

The introduction of public funds or foundations endowed with a permanent fund, the proceeds of which are used to support the arts, is an option that merits serious consideration. Such agencies have an advantage over a direct subsidy by government branch, particularly if the latter adopts what is known as 'the arm's length' principle, giving the agency a high degree of autonomy and its own decision making body independent of government control. Such a system can minimize the danger of political and bureaucratic intervention in the distribution of subsidy, which is inevitable even in the most democratic system of governance. Further, it will secure a stable source of income to arts and cultural organizations free from oscillations of annual government budgeting.

Nevertheless, such endowments have become less attractive in recent years. Firstly, few governments will find themselves in a position to invest enough funds in the current budgetary conditions. And an inadequate endowment that cannot generate enough revenues can have only a limited impact on cultural development. Further, interest rates are at an historical low in many countries. Hard-pressed arts and cultural organizations may demand the money to be spent immediately rather than laid aside as income generating endowment.

Such arrangements have definite merit if additional funding is made by local governments and the private sector to supplement the funds provided by central governments . One such example is the Japan Arts Fund established in 1990. The Government of Japan allocated 50 billion Yen to its endowment while corporations donated 12 billion Yen. The proceeds of this Fund, totalling approximately 3 billion yen a year, are used to finance creative activities. Stimulated by this initiative by the government, prefectural governments established 57 similar endowments and municipal governments 86 by 1993. The total amount of these local endowments exceeded 117 billion Yen as of 1992. In Argentina, the National Arts Fund was established in 1958 to finance cultural development. The Fund is financed by an initial government contribution which is supplemented by the charge on the revenues of radio and television Stations, admission tickets and pools for sporting events.

Extract from Mobilizing Resources for Cultural Activities by Michihiro Watanabe, Preparatory Paper VII to the Unesco World Conference on Culture, Stockholm, 1998.


The arm's length principle and the arts: an international perspective - past, present and future

In the popular press, the debate has involved issues such as the level of support to national "flagship" institutions; the increasing role of "ministries of culture" in direct support to fine arts organizations; and the proposed disbandment of arm's length councils.

"Arm's length" is a public policy principle applied in law, politics and economics in most Western societies. The principle is implicit in the constitutional separation of powers between the judiciary, executive and legislative branches of government.

The arm's length principle is also applied to public funding of the arts in some countries.

The Arts Council of Great Britain (ACGB), established in 1945, was the first arm's length arts council. The British government adopted the arm's length principle in order to distance the arts from politics and bureaucracy. They wanted to avoid the system of state support existing in Russia and Germany prior to 1945, where official art was imposed by Ministers of Culture. The government also recognized that within the arts community there was "a desire to run one's own show and deep rooted mistrust of bureaucratic interference"

The arm's length arts council, as an institution, has been described as "distinctly British".

Lord Keynes, first Chairman of the Arts Council of Great Britain, described arts patronage in Great Britain as having come about in a "very English, informal, unostentatious way. Others view the arm's length arts council as: a classic British compromise, dependent on Treasury grants, supervised by a Government department, but with Council members appointed, in theory at least, for their expertise rather than their political disposition, and a staff who were not civil servants.

The Board of Trustees
One feature of arts councils essential for the operation of the arm's length principle is the board of trustees, whose members collectively constitute the council itself. Members of the board are generally appointed by the government of the day. It is to the board that the State entrusts responsibility for the activities of the council; that is, after being appointed, members of the board are expelled to act as "legal trustees," independent of the political needs of government. It is public confidence in the integrity and ethics of board members that ensures that government remains at arm's length from the council. Ideally, members of the board should be individuals with wide knowledge and experience of the arts

Peer Evaluation
The arm's length arts council uses a system of peer evaluation to ensure that its granting decisions are based upon professional assessments that are then approved, or from time 'to time rejected, by the board of trustees. The peer evaluation system lies at the heart of the arm's length arts council. This system has its origins in English law. It rests on the premise that justice imposed by the lords on commoners is unjust because the circumstances of lords and commoners are radically different. Therefore, an artist ought to be judged by his or her peers, and, accordingly, other artists are involved in grant-making decisions.

Client Relations
An arts council has, in effect, two distinct sets of clients, the artists and arts organizations.
The arts council's relationship with the public involves yet another dimension. In general, arts councils have mandates to support both production and enjoyment of the arts; that is, the arts council serves as both "paymaster and tastemaker."

The Status of Arts Councils
The arm's length principle as applied to arts funding has thus been reaffirmed in many countries as the most effective means to foster and promote the fine arts. However, the autonomous arts council remains the subject of ongoing international debate and now confronts "a volatile situation where the arts are thriving and vocal, the community is more aware and equally vocal about its need for the arts, while government is both interested and more inclined to interfere."

Excerpts from Harry Hillman-Chartrand (c) and Claire McCaughey in Who's to Pay? for the Arts: The International Search for Models of Support, M.C. Cummings Jr & J. Mark Davidson Schuster (eds.) American Council for the Arts, NYC, 1989


Networking session on councils and ministries

The group suggested that the new international federation take up the two issues the networking group did not have time to develop - i.e., recommending reports and studies which contribute to an intelligent discussion of the division of responsibilities betweeen councils and ministries and acting as a forum for further discussion on the topic.

Extract from the Final Report of the World Summit of Arts and Cultural Institutions (Ottawa, December 2000), p. 30.


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