"All indications are that there will be less pūtea to support the sector next financial year and beyond than in recent years" - CNZ Chief Executive Stephen Wainwright explains what lies ahead for leading arts funder.
The numbers aren't in yet - but they don't look promising for Creative New Zealand (CNZ) and those who rely on (or hope to draw on) their financial support.
Many in the creative community are sweating on where the incoming government will put their Arts, Culture and Heritage priorities. Despite that unknown factor, CNZ has come on the front foot to spell out what they know about the organisation's financial forecast.
In a just-released blog designed to keep the situation as transparent as possible, CEO Stephen Wainwright writes "We understand that the current environment is tough for the arts community. Philanthropy, sponsorship and public spending on arts are all feeling the squeeze, as is funding from local government and community funders."
The main message is while CNZ's budget through until 30 June 2024 is locked in, they will be operating with a smaller revenue pool - though the total amount isn't finalised.
"All indications are that there will be less pūtea to support the sector next financial year and beyond than in recent years."
Wainwright underlines that CNZ's revenue comes mainly from the New Zealand Lottery Grants Board (NZLGB), which usually makes up about 70–75% of CNZ's overall public funding - the balance coming from government.
That's been altered since the pandemic, with the one-off COVID funding increasing the government's contribution since 2020/21 - something set to end abruptly.
Wainwright states "Our financial planning for the next few years is shaped by three factors that we know about now: the tight fiscal environment; the end of the COVID funding; and signalled changes to the way NZLGB allocates funding to CNZ."
The lotteries funding has increased steadily over the years (in line with lottery profits rising). As an example - In 2006/07, CNZ received a total of $21.310 million. Last year (2022/23) that total was $54.649m.
Wainwright explains that the way this funding is calculated is changing.
"NZLGB has recently advised that from 2023/24 it will allocate CNZ - and other entities that rely on lottery funds - a set amount instead of a percentage of Lotto New Zealand profits.
"While NZLGB's review of how it allocates lottery profits is ongoing, we have been advised, based on lottery forecasts, that we’ll receive $49.5 million this financial year and indicatively the same for 2024/25.
"This is about $5 million less than last year and roughly $4 million less than the year before.
"While lottery funding forecasts are normally conservative, NZLGB has advised that it expects we’ll receive less funding if lottery profits are less than forecast. And we’re not guaranteed a share in any above-forecast profits."
The COVID funding that has been received will be gone by the end of this year. Of the $22m one-off sum from Manatū Taonga Ministry for Culture and Heritage (MCH) earlier in 2023, half is committed, the other half has to be committed by the end of December.
Wainwright expands "The end of COVID funding means we’re planning for a return to broadly pre-pandemic funding levels in 2024/25. We’ve had the benefit of additional one-off funding since 2020, so some may not recall what this looks like. The graph below shows our changing revenue picture over recent years.
"As you can see, there’s been no significant change to Creative New Zealand’s baseline government funding for some years, which sits at $16.689 million for 2023/24. It has broadly been the same since 2006/07."
Given the $495m the creative sector has seen over the last four years, many will be feeling the pinch once that channel is permanently closed.
Given Wainwright states that CNZ has seen record demand for support in recent times, he notes "With this funding ending, we may see increased demand on our services."
"To maintain our current service levels – which should help lessen the immediate impact on the sector – the Arts Council has agreed to use some of its reserves to cushion the blow this year.
"CNZ does not have the financial reserves to continue doing this."
Wainwright continues "There is no doubt that the end of the COVID one-off funding and changes to NZLGB funding will be felt within the arts and creative sector, as funds available return to broadly pre-pandemic levels in 2024/25.
"Given the financial outlook and context we’re operating in, we’ll also be looking hard at our own costs. This is in keeping with government guidance but also aligns to our commitment to ensuring as much pūtea as possible is invested in the arts and creative sector.
"We remain committed to changing the way we work and the services we deliver to better meet the needs of the arts community."
For those looking for a deeper dive, more details are available in CNZ's Statement of Performance Expectations for 2023/24.