26 September 2015

Aside: The odds of all-male creative teams

Mentioned in The Gate's 2015 accounts is the fact that in 2014 The Gate took part in Tonic Theatre's Advance programme. The programme brought together senior staff from 11 theatres who recognised that something was stopping talented women from rising to the top and wanted to address gender inequality. Despite the fact that The Gate ended up being one of the more gender balanced theatres, they have pledged that they will "never again employ an all male creative team on a Gate production." This prompted the question: probabilistically speaking, how often should all male creative teams occur?

We know that more women study performing arts than men (something Frantic Assembly want to address). We can likely assume an 75:25 split in favour of female students, although claims of 80:20 abound. Reliable numbers are problematic because 'performing arts' is a vague definition and research tends to focus on specific age ranges.

A slightly more reliable assumption is that there is a 2:1 ratio of men:women employed in creative roles within theatre. This shift in ratios from education to employment is likely impacted by an industry wide bias towards employing men rather than women.

To flesh those ratios out a bit: 50 hypothetical students (12 male and 38 female) study theatre on a hypothetical course. Assuming all 12 men find employment in theatre, expect only 6 women to (16% of women who studied vs 100% of men who studied). In reality, employment within theatre is not actually guaranteed for those 12 men, so let's say 50% do something else and 6 end up working in theatre. That's, on average, only 3 women with [under]paid work in a related field to their area of education (or 8% of female course participants).

Clearly there's something very serious in play here and it doesn't strike me that priority #1 should be urgently supporting more young men to study performing arts.

If the 2:1 ratio holds (which it looks like it does at least at The Gate according to this data), a creative team of 10 should naturally be all male 1% of the time. This is simplified a bit because some creative roles have more skew to their ratios but roughly equates to about 1 in every 100 productions. An unusual natural event (in the same league as tossing a coin and it being heads 6 times in a row) but likely to occur roughly once every 10 years (assuming 10 productions a year). The larger the creative team, the more unlikely it is to be all male without inherent bias.

If the ratio of men:women employed were to improve to 1:1 then an all male creative team of 10 should only naturally occur once in every 1024 productions, or once every 100 years.

The data that Tonic provides on the website covers only 5 creative positions: writers, directors, designers, lighting designers and sound designers. The data spans approximately a 10 year period for each theatre. The below numbers show how probable it is (for those theatres that disclosed the data) that those 5 creative positions would be all male (assuming you would have one of each position involved with a production). Keep in mind that accepting the 2:1 ratio, there's  naturally a 12% chance that those 5 positions would be all male (a 1:1 ratio would mean only a 3% chance of natural occurrence).

Gate Theatre 8%
Almeida Theatre 50%
Chichester Festival Theatre 67%
English Touring Theatre 34%
Headlong 18%
Pentabus 1%
RSC 27%
Tricycle Theatre 11%

The Gate are clearly at the better end of the scale here, with only 3 theatres coming in under the 12% line implied by the 2:1 ratio. Let us be clear: all male creative teams are not the result of a meritocratic industry ("we hired the best people for the job" is, quite frankly, a ludicrous assertion - for a start, there is a mountain of research showing how flawed and biased people's judgement is when it comes to assessing others professional capability), they are the result of (one would hope 'lazy' rather than 'malicious') gender bias and the resulting population skew.

For good measure, this is how probable it is that a production at those theatres over the last 10 years had those 5 roles filled by an all female creative team:

Gate Theatre 0.4582%
Almeida Theatre 0.0002%
Chichester Festival Theatre 0.0002%
English Touring Theatre 0.0075%
Headlong 0.0309%
Pentabus 1.0526%
RSC 0.0195%
Tricycle Theatre 0.1833%

That's right, four decimal places.

Pledging to never again employ an all male creative team is an interesting thing to do in the face of this bias and certainly raises some questions about how creative teams will be put together (optimally, you should recruit a female member first to give you complete freedom on the final four rather than risk limited choice later). Whilst it will have a very obvious effect at one end of the probability spectrum (reducing the probability of all male teams to zero and bumping the probability that a team contains at least one female member to 100%), it is unlikely to dramatically increase the probability of an all female creative team. To do that you would need to directly address the 2:1 employment ratio and pledge to create work with balanced female:male creative teams as a minimum.

Theatres are unlikely to do this because it will be viewed as a 'limitation' or a 'constraint' on their creative activities and heaven forbid that gender equality stands in the way of artistic vision. The irony of course is that 'constraints' give birth to innovation and creativity: precisely the qualities that artistic vision requires.

13 September 2015

The Gate 2015 (Act III: assets)

The Gate's balance sheet and breakdown of funds provides the focus for this final part. Since the balance sheet represents only a snapshot of a single day at the end of the accounting period, it isn't a robust thermometer in itself (much like every element of annual accounts) but it should be taken as a positive sign when it reinforces what ‘should’ be happening elsewhere in the organisation given the story the accounts are telling.

For example:

Act I: The Gate show substantial growth in revenues achieved through production model diversification and fundraising in their 35th anniversary year. We see touring income grow and fundraising income grow accordingly.

Act II: The Gate kept costs under control, with 2015 costs being kept below 2011 levels despite expanded output through touring and expanded fundraising activities. We see expected changes in things like production costs and The Gate reports a healthy surplus.

Now consider two hypothetical Act III scenarios:

1) The Gate shows minimal change on the balance sheet apart from increases in cash and consequently net assets.

2) As above but with Creditors jumping to -£275,000.

Scenario 1 would be line with the story begun in Act I and Act II and makes sense as a result of expanding activities but keeping costs under control. Scenario 2 would be a contradictory story since activities were expanded but with substantial (currently unpaid) costs incurred. The Gate's actual balance sheet is shown below.

The Gate's balance sheet nicely reinforces the earlier action with a clear through line. The standout number is cash at bank and in hand (as it should be). This has increased by 79%, from £216,271 in 2014 up to £512,038. The amount owed to The Gate is down about £10,000 from 2014 and with not much change in Tangible Fixed Assets (which have been accounted for as part of the unrestricted funds), 2015’s Net Assets stand at £540,136 (up 59% from £339,145 in 2014). There is a slight increase in the creditors number but some increase would be expected given expanded output. Trade Creditors is actually only up £11,800.

There is a note in the accounts that £200,000 has been set aside as a support reserve representing 3.5 months running costs. This currently appears to be reflected in the General Unrestricted Funds, of which about half of the remaining surplus has been earmarked to support a new Marketing and Audience Development Officer role. The Designated Unrestricted Funds have been set aside to support Gate Educate (£2,318), theatre and office improvements including sound-proofing (£49,452) and £78,363 to support organisational development out to 2018 (including salary increases across the organisation as approved by the Board's Remuneration sub-committee).

Leaving output aside, there are obvious and substantial differences between Paines Plough and The Gate. Despite their proximity in terms of ACE Portfolio funding, Paines Plough's income is much more dependent on grants than on the personal philanthropy that The Gate relies upon. The overheads involved in running a venue mean that The Gate require much larger reserves and are consequently a little less agile in their producing model than Paines Plough. The strong similarity between the two is that both organisations are clearly willing to take risks to expand their output and that both have been moving from strength to strength in recent years. The main danger for The Gate is that 2015's revenues can't be replicated in 2016 and that the costs of expanding output creep up on the hope that revenues will be replicated. Paines Plough's 2015 accounts are not available at time of writing but once they are it will be interesting to put this year's numbers side by side.

9 September 2015

The Gate 2015 (Act II: expenditure)

Get in the van: Grounded on tour. Image taken from The Gate's website.
With The Gate's 2015 revenues enjoying the success of Grounded's UK tour (a first for The Gate), it would be reasonable to make the assumption that costs did not stand still. Indeed, The Gate did spend more money in 2015 than in 2014, as the below summarised expenditure breakdown demonstrates.

The £108,402 change in Charitable Activities largely results from increased spending on Production Costs (up £39,967 but offset by ~£40,000 savings in Theatre Running Costs and IT Costs), Production Wages/Salaries (up £83,795) and Travel/Transport (up £18,277). Precisely the areas you would expect spending to show up when producing a tour. It is noteworthy that there was little change in the ~£22,000 spend on marketing/advertising (actually a slight decrease) despite this additional activity. Unfortunately there's no specific breakdown of Production Wages/Salaries which would help understand how production and administration staff were deployed. Not an accounting imperative but is mentioned in The Charity Commission Statement of Recommended Practice (Section 9.29 of FRS102 in case you're wondering) and does significantly aid understanding of how an organisation is producing work. Maybe next year?

It's difficult to categorise The Gate's 2015 expenditure into Support Costs and Production Costs because of the aforementioned lack of insight into how The Gate's 21 staff (up from 17 in 2014) were deployed. Always worth mentioning the average salary (flawed though it may be as a measure since it includes part-time staff and, in The Gate's case, actors as well) and for The Gate it stands at £13,329 (for reference, the inner London median annual gross wage is reported by the ONS as £34,473). Also worth a mention that no employee earned more than £60,000 and no remuneration or expenses were paid to trustees in this period.

The other expenditure standout is the £50,559 cost of Generating Fundraising Income. This can be attributed solely to fundraising event costs celebrating The Gate's 35th anniversary year. Given that the amount of revenue generated by fundraising events in 2015 was £166,585 this looks like money well spent.

Spending money well is something The Gate seem to have been excelling at over the last few years. In 2011, expenditure was significantly higher than the generated revenues, resulting in a deficit of £105,047. In every single following consecutive period The Gate have improved the relationship between revenue and expenditure. In the 2015 accounts, expenditure is actually below 2011 levels but revenue is up ~41%. The chart below shows the closing of the gap in 2012, the crossing over into surplus of 2013 and the continued expansion since.

The big difference between an organisation like touring powerhouse Paines Plough and a producing house like The Gate is the monthly overhead. Estimating that The Gate have running costs of approximately £57,000 per month (based on designated funds of £200,000 stated as covering 3.5 months running costs), they have more than double the overhead of Paines Plough (estimated at £25,000 a month and based on annual support costs from previous analysis). Perhaps an obvious point but it's that overhead that can cause major headaches if revenues drop sharply and unexpectedly.

A potential problem for The Gate could be that with 34% of their income coming from philanthropy, they are more exposed to sharp drops in revenue than Paines Plough. Personal giving is linked to the wider economy in volatile ways: consumer pessimism and economic instability will reduce giving but low interest rates encourage it (theoretically: the feelgood factor of giving to a cause outweighs low returns on savings). The trusts and grants that form the majority of Paines Plough's income tend to be formed of funds that are locked away for a longer period of time and are not subject to the whims of the consumer: they're a little more insulated from economic volatility. Coping with this additional risk definitely requires a 'make hay while the sun shines' approach and with a healthy surplus of £200,991 in 2015, it looks like The Gate are doing precisely that.

Looking forward, 2016 could also return a surplus but expect it to be diminished since the substantial gains from specific fundraising events are unlikely to be repeatable. The success of Grounded will also need to be replicated in some form but The Gate are in excellent early shape with Fringe First winner The Christians. In the years following a substantial surplus, organisations understandably tend to push those funds into production costs so do expect to see costs rise. However, with a rolling three year business plan in place, it would be surprising to see an excessive increase in expenditure over the next period and The Gate look very well placed to deliver on planned strategic growth out to 2018.

6 September 2015

The Gate 2015 (Act I: revenue)

Following on from looking at Paines Plough, it seemed pertinent to explore the accounts of an organisation with a contrasting business model. The next series of posts will look at a real-life location: an actual brick and mortar theatre. A quick glance down the ACE Portfolio list reveals that The Gate in Notting Hill is the venue closest to Paines Plough in terms of Portfolio funding received, which seems a solid choice of secondary criterion.

The Gate are one of the smallest producing houses in the ACE Portfolio. They’ve secured continued Portfolio status for the 2015-2018 funding cycle and happily celebrated their 35th anniversary in 2014 (which means much of that 35th year’s activity is reflected in these accounts – who doesn’t love birthday accounts). Interestingly The Gate had never toured a production across the UK before 2014 (Grounded’s 12 week sojourn breaking through that barrier) and also chose 2014 as the year to start producing branded merchandise.

The Gate's ACE Portfolio funding has been confirmed out to 2018 and won't change much year-on-year for the foreseeable future. These funds are of course unrestricted and can be spent on anything fulfilling the core aims of The Gate. 'Project Specific funding' in the revenue table below refers to voluntary income from trusts, grants or donations provided for a specific purpose. 'Operating revenue' covers everything incoming from The Gate's charitable activities. 'Donations & other' includes general donations provided for an unspecified purpose, plus things like a very small amount of investment income.

£20152014Growth% Growth
Arts Council Portfolio Funding306,331305,0921,2390.41%
Project Specific Funding227,800119,017108,78391.40%
Operating Revenue262,666194,69467,97234.91%
Donations & other171,31898,82872,49073.35%
Total Revenue968,115717,631250,48434.90%

Project Specific Funding & Donations were clearly big wins for The Gate in 2015. The bulk of that increase comes from fund raising events, many of which were related to the 35th anniversary celebrations. Personal philanthropy was actually down from 2014, one would assume the reason being that the fundraising events will have cannibalised some of the funds which would otherwise have shown up as individual donations. The Gate have earmarked this additional revenue to support an increase in programming and essential overhead cost over the coming years.

The Gate have perhaps taken on board the chancellor's mandate that The Arts should be supported by philanthropists as £331,112 of their revenue (34%) came from a combination of donations, gift-aid and fundraising (IE not grants, portfolio funding or operating revenue). Compare this to Paines Plough, where less than 3% of their £690,766 revenue was classified in the same way (Paines Plough instead have a lot more Project Specific grants). A chunk of The Gate's 2015 revenue relates to special events in their birthday year (IE this performance is unlikely to be repeated in 2016) but there is still a world of difference between the two organisations. The Charities Aid Foundation report on UK Giving 2014 shows that only about 2% of people who give to charities in the UK donate to the arts and those donations amount to 1% of charitable donations in the UK. Compare that to 12% of donors giving to religious causes, with those donations amounting to 14% of the amount donated in the UK. The arts are the lowest ranking 'cause' in the data provided by the Charities Aid Foundation and clearly venue-less organisations producing touring work are scraping the very bottom of the philanthropy barrel.

The really interesting aspect of revenue in The Gate's accounts for 2015 was actually their Operating Revenue. On the surface, this number does not look particularly remarkable (even seems healthy) and since The Gate celebrated their 35th birthday with a series of events and a marketing campaign centered around the special year, one would hope to see an uptick in Operating Revenue. However, box office ticket sales were actually down to £114,519 in 2015 from £157,653 in 2014. Sales of programmes, texts and merchandise also dropped from £5,436 in 2014 to £3,394 in 2015, which is far from the result you'd expect to see given the introduction of a new product range (branded merchandise). So how have The Gate managed that 35% increase in Operating Revenue?

They've managed it through Touring Income which rocketed from £21,597 in 2014 up to £117,769 in 2015. In terms of audience figures, The Gate state that 10,958 people came through their doors in 2015 and 9,338 people saw a Gate production across the UK and internationally (giving a total of 20,296 which is up from ~14,500 people in 2014). Since 4,963 of those audience members who saw a Gate production elsewhere witnessed the UK tour of Grounded and with that production also spending 4 weeks in Washington DC (98% capacity houses) and 2 weeks at Gothenburg English Speaking Theatre (96% capacity houses), it seems a good bet that Grounded is responsible for the jump in Touring Income. Coupled with ~£20,000 of income from 'Other Activities', that's how The Gate have managed to grow Operating Revenue by 35%. Not traditionally known for producing touring work, it will be very interesting to see if The Gate continue to diversify their producing model and can replicate Grounded's success with productions such as The Christians.