Limited by guarantee, free in spirit

back to the contents page

A Welsh valleys arts centre is defying creative and organisational conventions. Alex Klaushofer reports

Make sure you receive your fair share of lottery cash - take out a no-obligation trial subscription today.

The Arts Factory is a community-based regeneration project that has benefited from the Art’s Council’s broad definition of arts projects. 

Situated in South Wales’ Rhondda Valley, the project provides training courses and job search support to one of the most deprived communities in the country. Arts Factory is a membership organisation: for a fee of £1 a year, its 1,300 members can take free classes in diverse subjects from karate to cake decorating. 

In 1998 a capital grant of £56,000 from the Arts Council for Wales enabled the project to equip a graphic design studio. The same year an ACW Arts for All grant of £90,000 over two years paid for arts related classes and workshops, with the funding extended by £50,000 for a further year (all awards were Lottery). 

The work this covers stretches the traditional idea of creating art. Classes teach graphic design skills and flower arranging while environmental projects have led to sculptures and mosaics in community centres. Steve Cranston, chief executive of the Arts Factory, says, ‘We’re using arts in the broadest sense. It’s creative work and I think they’re happy to go with that.’ 

Richard Turner, joint Lottery director of the Arts Council for Wales, says the distributor sees no problem in funding broadly defined arts activity as part of regeneration work. ‘To try and confine art to galleries and museums is ridiculous,’ he says. ‘Arts activities take place in all places and at all times. If you’re trying to break down barriers of accessibility to the arts, one needs to get to the socially excluded.’ 

However, according to Cranston, funders weren’t always this receptive. The Arts Council award that equipped the graphic design studio had originally been intended for the renovation of the building, but the application process took so long that the renovation money was eventually found from a combination of the Garfield Western Foundation (a trust fund), the European Regional Fund and the Welsh Office. 

‘At the time,’ Cranston says, the ACW ‘didn’t understand what the community based regeneration sector was trying to do and they were unsure about using public funds to start our businesses.’ But, he adds, attitudes have changed: ‘There’s an increasing meeting of minds now.’ 

Arts Factory’s status as a not-for-profit limited company was the source of the trouble. It aims to raise money through business operations to fund activities that benefit the community. In Cranston’s view, this is preferable to opting for charitable status, which he believes makes organisations reliant on ‘people who may or may not support you. But the basis for long-term development is to get income from independent sources.’ 

Arts Factory chose to be a company limited by guarantee, with no capital. As a membership organisation, its members vote for a volunteer board of directors. All profits are ploughed back.

As organisations trying to make a difference in the community increasingly take an entrepreneurial approach, the traditional boundaries between public and private are becoming blurred.

income of £850,000 through business activity, which includes corporate design and environmental arts contracts with clients in the private and public sectors and community groups. 

And in a rare community/private-sector partnership, it has set up a separate company to help fund and run a joint venture with United Utilities Green Energy to develop a wind farm. Assuming the funding can be raised for the initial investment, it will be the first community-owned wind farm in Wales, and, Cranston hopes, will lead to a 25-year income for the Arts Factory ‘in the region of six figures a year’. 

As a Lottery applicant, the Arts Factory ran up against the limits of its non-charitable status when its application to the Community Fund was ruled ineligible in April 2000. Cranston says: ‘The Community Fund wanted to turn us into the philanthropic begging bowl approach and we were disappointed by that.’ 

The CF declined to comment on a particular case, but a spokesman said, ‘Organisations that apply for grants are not required to be registered charities, but have to be established for charitable purposes. Organisations that have wide trading powers allowing private as well as public benefit will not normally meet this criterion.’ 

As organisations trying to make a difference in the community increasingly take an entrepreneurial approach, the traditional boundaries between public and private are becoming blurred. The trend is creating a pressure for new rules governing the structure of organisations and the way they finance their work, and will pose increasing challenges for philanthropic and statutory funding bodies alike. 

What is clear, though, is that the cultural and political shift towards social impact is being reflected in the attitudes of funders. ‘Now we very much look at outcomes,’ says Turner. ‘Whereas prior to Lottery funding we funded organisations, the advent of Lottery funding has allowed us to invest in arts activity.’ 

In Turner’s view, the Arts Factory’s success is down to the difference it makes to people in need. He identifies its location, high degree of community involvement, and linking art to social and economic benefit as key factors in its successful bid. 

The Arts Council of Wales was also impressed by the organisation’s self-evaluation work. The project is doing its third social audit programme which, using indicators it has developed internally and an external auditor, seeks to establish who is benefiting from the project and levels of user satisfaction. The audit combines both hard data and an evaluative element. While not a requirement, Cranston feels this kind of evaluation is important as a ‘quality tool. It enables us to drive up quality in the organisation.’

For more information:
stevecranston@artsfactory.co.uk