Public investment is pivotal in encouraging further funding, says ACE

Government funding for arts and culture is crucial for organisations to attract further income, according to a new Arts Council England (ACE) report.

Leading the Crowd: A report on the role of public investment in Crowding In uses eight case studies – including the Baltic in Gateshead, the Lowry in Manchester and the Southbank Centre in London – to investigate the impact of public sector funding on further investment.

It shows how the eight organisations benefited in six distinct ways from public funding: delivering capital projects; generating private investment; growing commercial income; encouraging innovation; developing new activity; and building resilience.

For example, at the Baltic public investment enabled a strategic transformation in fundraising, doubling private income between 2019 and 2024, while total turnover increased by 90%. The art gallery’s £3m National Portfolio Organisation grant is matched by £3m in private income, and public investment has also facilitated the launch of a £10m endowment fund.

On Salford Keys, the Lowry used £200,000 of public funding in 2023 to run a free festival that in turn raised £100,000 in its first year.

ACE says this phenomenon, known as “crowding in”, underpins the mixed economy model that sustains most cultural organisations in England. Its report found that public funding signals confidence and makes private investors feel more secure in joining organisations by lowering the risk profile.

One donor and advocate for the Southbank Centre told researchers: “I know firsthand how crucial public funding is to unlock private contributions. Ambitious arts building and renovation projects deliver social and economic dividends for government and contribute to the pre-eminence of the UK’s creative industries.

“Furthermore, governments (central and local) are often the landlords of our iconic arts venues. Our most generous philanthropists perceive both the benefits to and the responsibilities of governments to invest in our cultural infrastructure.

“We are motivated by the additionality that our support can realise and adverse to substituting for the public pound. Public capital investment typically unlocks at least as much in private support. Without it, arts organisations struggle to get their campaigns off the blocks.”