Ms Orlaith McBride:

My name is Orlaith McBride, I am the director of the Arts Council, An Chomhairle Ealaoín and I accompanied today by its chair, Sheila Pratschke and our finance director, Martin O'Sullivan. I thank the committee for inviting us here today to discuss governance in funding in the arts sector.

In 2018, the Arts Council will receive €68.2 million in funding from the Department of Culture, Heritage and the Gaeltacht. The Arts Council's role is to support the development of the arts in Ireland. We do this through a range of grants and awards towards the production and creation of artistic work, by supporting organisations, supporting individual artists, and working in partnership with other agencies, for example local authorities, to develop the arts.

The governance regarding how the Arts Council awards funding to an individual or an organisation falls under a number of specific steps. The first of these is the application process. A call for applications with published criteria is issued, with an application window of, on average, six weeks from the call to the submission of the application. All applications for funding are submitted using our online system. The application is checked to ensure it is eligible, and is then moved to the assessment process.

The application is then internally assessed by an art form team, with at least two people contributing to the initial assessment of the application against the published criteria.

The application is then internally assessed by an art form team, with at least two people contributing to the initial assessment of the application against the published criteria. The assessment is logged in our customer relationship management, CRM, system. The assessments are then brought to the appropriate decision-making process, which is also publicly advertised.

There are three decision-making processes used by the Arts Council. The first is the council plenary for grant decisions relating to annually or multi-annually funded organisations. The assessments, with recommended amounts, are brought to the council for deliberation and decision. Peer panels are typically used for grants to individuals and project grants. Panel members for each panel are selected from an approved panel master list. Peer panels are chaired by a current or former member of the Arts Council. Panellists are nominated on the basis of their expert knowledge. In order to safeguard effective and objective decision-making and provide a wide range of opinions, a different panel is appointed for each assessment round. All decisions are brought to the council for noting. The executive panel process is used for travel and training and small festivals grants. All decisions are brought to the council for noting.

All applications for funding, regardless of the decision-making model, are scored against the application criteria so that organisations or individuals understand the rationale behind the decision. All decisions can be appealed, with the appeal heard by an independent appeals panel. All funding decisions are published on the Arts Council’s website within ten days of their being made. Once an award has been made, organisations or individuals must formally accept the award in writing and formally indicate that they comply with our conditions of financial assistance. A payment schedule is then agreed on the basis of specific reporting requirements, such as submission of audited accounts, reports on activity and so forth. The final payment is always withheld until the Arts Council is satisfied that it has received all the required documentation and assurances that the grant funding was expended in accordance with the purpose for which it was granted and any conditions attaching to the grant funding were met.

The conditions of financial assistance are in two parts. Part 1 of these conditions applies to all recipients of Arts Council funding. Part 2 applies only to annually or multi-annually funded organisations. Part 1 includes clauses dealing with: the funding offer; managing payments; reporting and assurance; keeping of accounts and making inspections; acknowledging the Arts Council; termination of the grant; and compliance with all laws, specifically as they relate to child protection, safety, health and welfare at work, employment, data protection and freedom of information, FOI. Further clauses deal with intellectual property rights and value for money.

Part 2 outlines specific additional conditions applying to recipients of grant funding, including ensuring that the Arts Council is provided with a copy of the organisation's constitution, that organisations shall hold no less than quarterly board meetings and that where any matters of material interest to the Arts Council are reported at a board meeting or otherwise the recipient has a responsibility to furnish to the Arts Council the relevant documentation and explanation in a timely fashion.

There are specific conditions on the financial reporting required for grants less than €25,000 and those over €25,000 and deadlines for their submission. For all grants over €100,000, the Arts Council can also appoint an independent auditor to: ensure that public money is managed properly and is expended on the purpose for which it was awarded; provide assurances on the system of internal financial control, ensuring that effective and efficient systems are in place to make sure there is value for money; examine whether the recipient conducts its affairs with probity and sound corporate governance; and establish that the board is furnished with adequate financial information and that all related party transactions are properly disclosed in the accounts.

Part 2 also outlines specific conditions as they relate to governance, including confirmation that the recipient will co-operate fully with the Arts Council by implementing policies and procedures in areas which include internal audit, risk management, public procurement, financial reporting and quality of service. Part 2 also requests that organisations comply at all times with governance arrangements based on: specific principles relating to strategy; compliance with statutory obligations; ensuring and managing risk; establishing and managing internal controls; clearly documenting procedures for the appointment and disqualification of board members; ensuring that appropriate financial management and oversight are in place; annual review of board performance; maintaining a code of conduct for board members setting out standards of integrity, conduct, ethics and concern for public interest; and confirming in writing that the recipient is complying with the Arts Council’s governance transparency scale.

Furthermore, part 2 outlines that where any board or staff member behaves illegally, wrongfully, inappropriately or in breach of relevant policies or procedures of the recipient, whether by act or omission, all action will be taken to deal with any allegation or complaint against a board or staff member to ensure the safety and protection of such person and members of the public generally and shall report the matter to all relevant bodies. Part 2 also outlines that where a serious concern relating to governance is identified, it shall be notified in writing to the Arts Council with a proposal for dealing with the issue. As part of the Arts Council’s ongoing relationship management, organisations in receipt of strategic funding will now also have to sign a formal funding agreement that will outline specific conditions attaching to the specific offer of funding.

The Arts Council has been leading best-practice governance support within the scope of our authority for arts organisations over recent years, particularly as changes brought about by the Charities Act and the appointment of the Charities Regulator in 2014 have been introduced. As the Arts Council is not a regulatory body and given that there are regulatory bodies in place for both charities and companies, our role is to provide best practice advice and support to arts organisations. To this end, we have published A Practical Guide for Board Members of Arts Organisations. We ran a governance seminar in 2016 and developed a draft constitution to support organisations to comply with the new charities legislation and the companies legislation. We have also developed a governance transparency code that organisations must sign up to as well as a suite of other corporate governance documents.

The Arts Council takes its role in managing and awarding public moneys very seriously. We make transparent decisions in terms of awarding funding to those artists and arts organisations that make the most compelling and ambitious applications for funding based on the Arts Council’s published strategy and funding criteria. Our decision-making processes are open and rigorous and our ongoing processes for monitoring, reporting and managing the funding once it is awarded are robust.

I thank the committee for providing us with the opportunity to outline the governance relating to how we award funding to the arts sector.