Sponsors need more symbiosis: Arts festivals must offer more benefits to reverse dwindling sponsorship, explains Janet Robson

'THE proliferation of arts festivals is very British,' said Colin Tweedy, director general of the Association for Business Sponsorship of the Arts (ABSA). 'It's the village fete gone cultural.'

These days, no town seems complete without its week or two of intensive artistic endeavour. The range is breathtaking - Handel or hip hop, fireworks, fringe or flamenco - and so is the quantity - over 500 arts festivals last year. While the Edinburgh Festival hogs the headlines, it is wholly untypical in its size and wealth.

In a study to be published next week, Heather Rolfe of the Policy Studies Institute (PSI) estimates the total income of arts festivals last year at pounds 40.6m. Just five festivals take half of that pot, while nearly a third of all festivals have an income of less than pounds 10,000.

As only about half of festival income comes from box office receipts, their existence depends on public funding and business sponsorship, both of which are suffering various degrees of strain. Festivals aim to cover costs or make a small surplus but last year more than half of those surveyed by the PSI lost money. So, are they facing financial crisis?

Aside from arts associations and other foundations, the most important sources of funds are local councils and business sponsorship. Council support is given out of a feeling of commitment to improving the cultural life of the borough, but also for economic motives - to attract tourists.

Greenwich Festival is supported and administered by the borough. A spokesman for Greenwich Council said that the festival stimulated tourism and the local economy, not just by bringing visitors to local pubs and shops during the event itself but by encouraging people to visit the area again. Greenwich gave pounds 50,000 to the summer festival this year. However, this is less than it has given in the past - the council has been poll tax capped for the second year running and money is tight.

The reduction in council support has made business sponsorship even more crucial. Since the establishment of the ABSA by a group of business leaders in 1976, business sponsorship of the arts has been a great success story, growing from pounds 600,000 in 1976 to pounds 57m in 1991. The PSI estimates that festivals raised pounds 6.8m in cash sponsorship last year. Businesses also provide support in kind such as publicity and printing.

The ABSA has exhorted its members not to cut their sponsorship budgets because of the recession and is so far encouraged that they are not doing so. However, the overall impression is that sponsorship is getting harder to secure.

The experience of Amanda Sharp, administrator for Chichester Festivities, was typical: 'We lost three major sponsors this year. Happily, we managed to secure eight new, smaller sponsors and we got pounds 20,000 from the Business Sponsorship Incentive Scheme (which matches money raised from new sponsors with public funds). In the end we exceeded our sponsorship targets but it was nail-biting stuff.'

In many festivals, events do not go ahead unless sponsorship is secured, but as classical musicians often have to be engaged 18 months or more ahead, long-term sponsors are essential. If sponsorship falls, festivals usually shrink in size and scope rather than incur a financial deficit.

The Edinburgh Festival has maintained its sponsorship levels this year, but Brighton's sponsorship fell by about 30 per cent, reflecting the impact of the recession on the South. The sponsorship manager, Christine Martin, said there had been an enormous turnover among executives responsible for sponsorship. 'At one company, after speaking to the same person for 10 years, this year I have spoken to six different ones,' she said.

A number of companies are reviewing their policy on arts sponsorship. National Westminster Bank, for instance, is a large arts sponsor with an annual budget of about pounds lm. This year it is spending slightly less, but more importantly it is assessing its activities with the help of the ABSA to see what policy will best meet the bank's needs in future. 'In the past, we have had a very wide-ranging sponsorship programme,' NatWest's head of community relations, Jan Rayment, said. 'Now we are looking to see how we can build sponsorship into the business, perhaps as an alternative to advertising. We want to help the arts, but the company has to benefit, too.'

The main benefits to a business are to enhance the profile of the company and raise name awareness, and as an opportunity for corporate hospitality.

Mr Tweedy said that there was a trend to place arts sponsorship within a marketing budget, rather than community affairs, and one growth area was the use of sponsorship for product promotion. If arts sponsorship continues to move this way it may not help arts festivals: the big companies that can afford to sponsor one of the national orchestras, opera, dance or theatre companies may feel that these are much better vehicles for creating name awareness.

One area where festivals score well is in providing an event at which the sponsor can entertain clients. National companies that sponsor festivals tend to be those with a strong high street presence, such as banks and building societies, Marks & Spencer and BT, or those with a strong local connection. But festivals are particularly attractive to smaller, local companies that can entertain their clients while demonstrating their support for the community and raising their profile. However, corporate hospitality, like all discretionary spending, is recession- prone. Supporting a festival could backfire on a company if its support is interpreted by local employees as 'splashing money around' at a time when it may be making people redundant.

To combat the loss of some larger sponsors, festivals are moving down the ladder and offering smaller packages to bring in still thriving local firms, or to accommodate cuts in sponsors' budgets, through corporate membership schemes. Anne Suggate, sponsorship manager for the Huddersfield Contemporary Music Festival, this year attracted 14 corporate members (some ex- sponsors) at between pounds 250 and pounds 500 each.

Arts festivals so far are weathering the recession, but the collective view of administrators is that, if this year was tough, next year will be worse. Some sponsors have entered three-year contracts, so there may be problems as these expire and sponsors review their situations.

And the recession may not be the only problem. As the large companies adopt an increasingly commercial approach to sponsorship, festival fundraisers must respond in kind. One sponsor commented wryly: 'Sometimes I think people just work their way down the ABSA membership list until they find someone who gives in.'

As the demands on existing sponsors become more diverse - not only culture, but sport, educational and environmental projects, even television programmes - the need to bring in new blood becomes ever more pressing.

'Arts Festivals in the UK', published next week by Policy Studies Institute, 100 Park Village East, London NW1. pounds 14.95.

(Photograph omitted)