The well-intentioned and much-needed R300-million emergency stimulus to support artists quickly turned sour and is still mired in controversy. The media gave voice to the artists and have rightly focused on dissecting the Presidential Economic Stimulus Programme debacle.
However, scant attention has been paid to the long durée of the causes which precipitated the stimulus programme mess. After all, the National Arts Council’s primary function is to distribute grants and other support to artists. If the stimulus programme failure is an alarming symptom, what are its underlying causes?
To respond to these questions we need to attend to the arts council as an instrument for serving the arts in South Africa – which is what the National Arts Council Act clearly says it is. The council is a national public entity under the Department of Sport, Arts and Culture with a statutory mandate, public funding, systems, processes, people, structures, an elaborate governance framework and a long history. The causes of the bungled funding are to be found at this organisational level of analysis.
In this article I take a high-level diagnostic look at the performance of the arts council, using its publicly available annual reports as evidence. The diagnosis reveals an organisation in long-term decline that is now in such a poor state that it actually detracts from the arts. The Presidential Economic Stimulus Programme debacle is just the tip of the iceberg of entrenched dysfunction at the arts council. I am so forthright in my critique because I have a duty to shed light on the true state of the council as a matter of urgency. I hope it will be understood as a constructive critique which opens up the possibility of real reform.
Organisational performance, especially of public entities, can be a complex matter to unravel because it involves many variables and contingencies. Nevertheless, by analysing its publicly available annual reports, it is possible to tell an evidence-based story of the arts council’s baseline performance in terms of its effectiveness, efficiency and accountability.
According to S16 (2)(a) of the National Arts Council Act at least 75% of money appropriated by Parliament to the arts council shall be distributed as grants in support of the arts. Therefore, the baseline measure of its effectiveness is the proportion of public funds that it distributes to artists each year.
A cogent measure of the arts council’s efficiency is its cost-to-income ratio. The lower this ratio the more efficient the arts council is in pursuing its mandate.
Accountability is indicated by the audit opinion issued each year by the Auditor-General. In the case of the arts council, this opinion has either been unqualified (indicating good accountability), qualified (poor accountability) or adverse (very bad accountability).
The table below analyses these baseline measures over the 14 fiscal years from 2007 to 2020. Healthy outcomes are indicated in green, borderline outcomes in orange and poor outcomes in red.
This analysis supports 10 conclusions.
- A persistent lack of effectiveness from 2010 onwards: From 2007 to 2009, the arts council met and exceeded the legal requirement to distribute at least 75% of state funding to artists. However, since 2010 this requirement has only been met in three out of 11 years. And in those three years the requirement was met by drawing from its reserves. If we take these drawdowns into account, then the 75% benchmark was only substantively met in one out of the 11 years since 2010. Surprisingly, none of this is mentioned in the arts council’s annual reports;
- A massive decline in efficiency from 2010 onwards: The arts council’s cost-to-income ratio increased by an alarming 140% from 2007 to 2020 – 140% in real terms! In nominal terms, overall costs increased by 246% over this period. The pool of funding for artists was thus significantly reduced, especially since 2010. Compared with 2007, the total amount distributed to artists in 2020 had declined by 11% in real terms! The arts council’s massive decline in efficiency has been paid for by the arts – it has become a secretive little shop of horrors;
- The depletion of reserves from 2014 onwards: With legislative foresight, the National Arts Council Act specifically allows it to accumulate reserve funds. This reserve increased every year from 2007 until 2013 when it amounted to R73-million. However, it has been drawn down since 2014 and stood at just R10-million in 2020. The council has thus used its reserves to shroud its dysfunction;
- The disjuncture between audit outcomes and actual performance: The arts council achieved unqualified audit outcomes every year since 2013, even as its effectiveness and efficiency were in serious decline. This points to the danger of overemphasising audit outcomes and ignoring organisational effectiveness. The council demonstrates that good audit outcomes and slick annual reports can actually hide poor performance;
- Poor, erratic and absent leadership since 2010: The senior management team and especially the CEO have a large impact on the actual performance of the arts council. The periods of good, poor and terrible performance that we see in the table above can be attributed quite neatly to the management that was in place in each period. Moreover, in the past few years the CEO has been embroiled in disputes and was suspended for long stretches. Is it any wonder that the arts council is now in such a parlous state?;
- The paucity of informed board governance since 2010: A cursory reading of the board and audit committee statements contained in the arts council’s annual reports from 2010 onwards reveals a blissful lack of awareness of the long-term decline of the organisation. These governance structures appear to have been quite unaware that the council was not meeting its primary mandate year after year and was sliding into gross inefficiency at the expense of the arts;
- Department of Sport, Arts and Culture institutional governance was asleep at the wheel: The department exercises executive authority over the arts council through its Institutional Governance Directorate, which is headed by a deputy director-general. It is clear that this oversight function failed to respond effectively to the clear signs of the council’s decline over the past 10 years. This points to serious deficiencies in this important function which, worryingly, is also responsible for 32 other national arts and heritage institutions;
- Poor performance has become entrenched and is likely to persist: The arts council has painted itself into a corner due to very high operating and staff costs, wasteful legal and forensic costs and dwindling reserves. Over the next two years the council (in its current form) will struggle even more to meet its obligations to the arts. In a climate of fiscal constraint, it will have to change fundamentally if it is to properly serve the arts;
- The forensic audit of the Presidential Economic Stimulus Programme funds will not explain the deeper organisational problems: A forensic audit is necessary to unearth the specifics of what went wrong with the Pesp process. However, such audits are very limited in scope and will not address the deeper causes of poor performance. A comprehensive and very honest review of the organisation is required for this; and
- Organisational reform is overdue, urgent, but still possible: The arts council was not always dysfunctional. Indeed, following a restructuring process in 2007, the three years from 2007 to 2009 reflect good all-round performance and a healthy build-up of reserves. This demonstrates that it is technically possible for the council to fulfil its mandate. However, there is no doubt that it once again needs to be restructured to break out of its vicious cycle of dysfunction. Such a process of change is long overdue and has now become extremely urgent. DM