Research Study on a New Funding Mechanism for Performing Arts Groups in Hong Kong

Research Study on a New Funding Mechanism for Performing Arts Groups in Hong Kong Executive Summary 2012 Introduction Positive Solutions and GHK (the consultants) were engaged by the Home Affairs Bureau (HAB) of the Hong Kong SAR Government to undertake a Study into the Funding Mechanism for Performing Arts Groups in Hong Kong (the Study). The Study was prompted by the Report of the Committee on Performing Arts (2006). Amongst other issues, the Committee identified the need for a more ’level playing field’ in determining funding for major performing arts organisations (MPAOs), and recommended the establishment of ‘a common assessment mechanism and a common set of criteria to assess these performing arts groups’. A further factor influencing the Study was the forthcoming development of the West Kowloon Cultural District (WKCD). This major cultural infrastructure project could lead to the opening of more than a dozen new performing arts venues, with high expectations locally and internationally in relation to performance breadth and quality. The Study included the preparation of an overview of the performing arts and current funding arrangements in Hong Kong, and an examination of funding mechanisms for the performing arts in a number of overseas jurisdictions. Subsequently, the consultants prepared a Draft Funding Mechanism Discussion Document, including preliminary recommendations. This was circulated to arts organisations and other stakeholders for comment. This Final Report takes into account the feedback received. The principal focus of the current Study is the funding mechanism used to support Hong Kong’s nine MPAOs. This group of organisations includes: — The Hong Kong Philharmonic Orchestra (HKPO); — Hong Kong Chinese Orchestra (HKCO); — Hong Kong Sinfonietta (Sinfonietta); — The Hong Kong Ballet (HKB); — Hong Kong Dance Company (HKDC); — City Contemporary Dance Company (CCDC); — Hong Kong Repertory Theatre (HKRT); — Chung Ying Theatre (Chung Ying); and — Zuni Icosahedron (Zuni). The works of the MPAOs range from serious classical music to experimental theatrical works, which are presented across a range of Hong Kong venues. While traditional and Research Study on a New Funding Mechanism for Performing Arts Groups in Hong Kong 1 Executive Summary contemporary drama, dance and music are included, neither Chinese nor Western Opera is represented among the MPAOs. Most of the MPAOs were established in the late 1970s and early 1980s, either by Government mandate or through the initiative of independent groups of artists. The work of the major organisations does not occur in isolation, but within the context of an inter-connected set of relationships – an ecology. The level of financial support MPAOs receive from the Government is only one in a range of factors which influence the health of these organisations, although funding support is a critical factor in their sustainability. To support its investment in the MPAOs and in other smaller performing arts organisations, Government may choose to take initiatives on other aspects of industry development. This may include building the professional capacity of individuals and organisations, establishing support or advisory services of various types, or encouraging greater private sector support for the arts. Performing arts organisations build their income from: — Earnings from box office and fees for provision of services (e.g. paid workshops, commissioned performances, broadcasts, international touring), sales of cultural products (e.g. CDs); — Contributed income from sponsors and donors; — Government subvention; — Income from ancillary activities e.g. merchandising, training services, retail, catering, rentals (where they have such facilities/ assets); and — Interest or other earnings from reserves. Internationally, recent discussion of new arts financing models and new sources of money for the arts has been prompted both by the concern that Government funding cannot keep pace with the increasing costs of arts delivery, but also by a view that plurality of funding and financing sources provides a more sustainable model and protects and stimulates artistic diversity. Hong Kong’s public finances are healthy, but an important issue for the Government will be how to encourage a greater degree of financial independence and entrepreneurship amongst those companies enjoying financial support from Government – that is, how to minimise dependence on subsidy without hindering the quality and innovation of artistic outputs. Research Study on a New Funding Mechanism for Performing Arts Groups in Hong Kong 2 Executive Summary Arts Policy and Funding in Hong Kong Government policy comprises four major elements: — Respecting freedom of creation and expression; — Providing opportunities for participation; — Encouraging diversified and balanced development; and — Giving support to build an environment that nurtures culture and the arts. More specific recent directions were indicated in the Chief Executive’s 2008-09 Policy Address: To tie in with the WKCD development, we need to enhance our software by promoting cultural activities in the community and tapping into cultural consumption markets. To bring more cultural activities into local communities, the Government will encourage cultural and performing arts groups to stage performances across the territory. We will continue to support artistic creations and overseas exchanges, encourage tertiary institutions and professional arts groups to nurture intermediaries for arts services, and develop a broad audience base. Our joint efforts will help realise the vision of developing Hong Kong into a world-class arts and culture destination. Chart 1 below provides a snapshot of the government resources devoted to arts and culture in 2009/10. Chart 1: Government Funding for Arts and Performing Arts 2009/10 Provision for Arts & Culture HK$ (million) Arts Development Fund, 2.1 Cantonese Opera Development Fund, Hong Kong Academy 8.6 for Performing Arts, 214.2 Hong Kong Arts Development Council, LCSD Public Libraries 106.1 & Activities, 746.7 9 Major Performing Arts Companies, 264.2 LCSD Heritage, LCSD Performing Arts Museum & Exhibition, Venues & 587 Others, 69.8 Programmes, 824.2 Research Study on a New Funding Mechanism for Performing Arts Groups in Hong Kong 3 Executive Summary There are approximately 1,000 performing arts organisations in Hong Kong.1 Almost 40% are Xiqu organisations, with music comprising 31%, drama 17%, and dance 9%. The rest are organisations that present or produce variety shows. The organisations range from Government-subvented, professional organisations to independent, amateur/ semi- professional and smaller organisations. During 2009/10 the MPAOs provided a total of 662 performances, of which 552 were in Hong Kong, 36 in Mainland China and the remaining 74 in overseas locations. Most of the MPAOs delivered between 50 and 70 performances. The lowest number of performances was 41 and the highest 194. All MPAOs provide workshop and educational activities, either to support professional development for artists or to create opportunities and engagement for the general public. Because of the scale and variety of operating modes of the MPAOs, it is not particularly helpful to compare their income levels in absolute terms. In the following chart, income sources are displayed, therefore, as a proportion of overall income for each organisation. It is noted that in 2009/10 Government funding contributed between 56% of total income and 85% of total income, with box office, fees and other income making up the remainder: Chart 2: Income Ratios 2009/10 Income Ratio of Major Performing Arts Organisations 2009/10 100% 2% 4% 7% 3% 11% 10% 9% 1% 10% 90% 19% 18% 1% 4% 17% 25% 11% 9% 36% 80% 4% 18% 5% 70% 16% 20% 14% 16% 60% 5% 3% 50% 85% 40% 78% 75% 69% 61% 62% 30% 58% 57% 56% 20% 10% 0% Company A Company B Company C Company D Company E Company F Company G Company H Company I Government Funding Box Office Income Sponsorship Other Income 1 Hong Kong Annual Arts Survey 2007/2008 prepared by Hong Kong Arts Development Council (2009). Research Study on a New Funding Mechanism for Performing Arts Groups in Hong Kong 4 Executive Summary Five of the MPAOs had net assets/ reserves of over $10 million at March 2010, three had net assets of between $4 million and $10 million, and one had a small accumulated deficit (less than HK$50,000). Strengths and Weaknesses of the Major Performing Arts Organisations The following summarises key common strengths and weaknesses of, opportunities for and challenges to, the MPAOs, as identified during interviews with each company. Common strengths would appear to be: — Regular funding and recognition as a major organisation; — Being the only one of its kind and hence a lack of direct competition; — Dedicated, professional staff with positive attitudes; — In most cases, supportive and experienced Boards; — In most cases, existing relationships and links with Mainland China; and — In some cases, a long operational history (e.g. roots of HKPO stretch back to 1895). Common weaknesses would appear to be: — A history of annual funding, with no requirement to prepare long-term, multi-year plans to support development proposals; — A high percentage of subvention relative to other income; — Marketing planning is short-term and sales-focused; — Restrictions to the building of reserves; — Limitations of the Venue Partnership Scheme – concerns regarding ‘fairness’ and a perception that the Government avoids making hard merit-based

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