Many arts and heritage organisations are now facing an economic emergency due to the global COVID-19 pandemic. Many are going to have to fight for their survival. Venues are having to close, tours cancelled, commercial income dwindling… it’s going to be difficult.
Our Senior Partner, Tom Wilcox, sets out some thoughts on approaches to addressing the financial adversity caused by COVID-19.
“Sweet are the uses of adversity,
Which, like the toad, ugly and venomous,
Wears yet a precious jewel in his head”
William Shakespeare, As You Like It
10 Tips
- Never waste a good crisis (to paraphrase Churchill, who was later echoed by Rahm Emanuel). These challenging times are an opportunity to make positive changes to your organisation, such as to cease or alter off-mission and excessively costly activities.
- ‘The First Council of Nicaea’ – form an emergency working group based around senior management, supplemented by input from an ecumenical selection of colleagues from across the organisation where appropriate. Report key dilemmas and decisions to the Board regularly. Try to create consensus about what you are doing, but don’t fear disagreement as some people will fight for their own agendas, even in the face of an existential threat. Check existing insurance policies for any loss of income clauses and create a list of assets that could be quickly converted into cash if possible.
- Be decisive – it may be necessary for many organisations to make hard, even, ruthless decisions, to survive. No one will thank you for bankrupting an organisation later by avoiding difficult choices now. After all, “we are stardust, we are golden and we’ve got to get ourselves back to the garden.” Joni Mitchell.
- Make necessary cuts quickly – reduce as much expenditure as possible as early as possible, without unduly affecting your organisation’s reputation or creating a false economy whereby reinvestment is required to restart full activities in a few months’ time. Do not let vested interests within the organisation stop you from doing what is necessary to ensure it doesn’t disappear.
- Cash is king – prepare detailed weekly or daily cashflow forecasts. If you have to – pay suppliers at the last point allowed by your credit terms with them, use cheques for some payments (on average this leaves you holding onto cash for a week or two longer than by paying digitally), spend more time on credit control (chasing customers to pay you) than usual and use the online small claims court system to collect stubborn old debts. However, for moral and reputational reasons, do consider your suppliers and customers’ cashflow needs where possible too – particularly small businesses and artists. If you have a significant Creative Tax Relief claim to make for the current financial year, consider completing the annual accounts early and getting the claim in quickly.
- Communicate clearly and regularly with all key stakeholders – create a compelling narrative about what you are doing during the COVID-19 crisis and in particular the rationale for the difficult decisions you have had to make. Show empathy for anyone affected by your decisions and emphasis the overarching imperative of the company continuing to exist.
- Safety first – exercise particular care not to prejudice the health and safety of your staff, visitors and others; this necessitates acting quickly on advice and putting steps in place ahead of and along with developments in the spread of the virus.
- Speak to existing funders – Some lottery, public sector and trust/foundation funders will already be making plans to assist the sector with early payments of existing grants to aid cashflow and new funds to mitigate COVID-19-related losses.
- Be aware of all Government initiatives to assist with financial hardship caused by COVID-19 and take full advantage of them.
- “Abandon Yesterday” (Drucker) – what activities and practices that the organisation carries out now can be jettisoned or changed? Be creative and find innovative ways to reduce financial exposure.
My colleagues and I would like to hear from cultural organisations facing challenges in these exceptional times, please get in touch.
“Life is short and Art long; the opportunity fleeting, experience deceitful, and judgment difficult”. Hippocrates.
Good luck.