Need to know

Q What can my organisation do to challenge a cut in grant funding, and how?

A Though much of the recent discussion about funding cuts has focused on the Arts Councils, local councils and other government bodies are also likely to be reducing budgets. But grant agreements are like other agreements with obligations on both sides: a funder can only reduce or cut funding if it is entitled to do so under the terms of the grant agreement.
Arts Council England (ACE) has standard forms of funding agreements with Regularly Funded Organisations (RFOs) and other organisations in receipt of funding. The standard RFO wording gives ACE the right to reduce or stop funding if government funding of ACE is reduced. Organisations should check the relevant provisions as to whether any proposed reduction or cut is permitted for any cut in the current year or subsequent years. The same goes for other funders and for next year’s funding decisions following the spending review on 20 October.
Where organisations feel funding decisions made by a public body are incorrect – perhaps based on incomplete evidence or faulty reasoning, the principal legal remedy is judicial review. This is the process by which the legality of decisions made by public bodies can be challenged in court – please note: a case can only be brought within three months after the relevant decision, or earlier if appropriate.
Courts primarily look at two features of the decision to see if it may be challenged. First, whether the process adopted in coming to the decision was fair or not and second, whether a reasonable decision-maker could have properly made the decision given all the facts available. This is a high hurdle. Courts will generally expect organisations seeking to challenge decisions to have gone through any applicable complaints procedure or appeals procedure before seeking to apply to the courts. For instance, ACE has its own three-stage complaints procedure, one shortcoming of which is that there is no means of expediting the procedure.
Organisations can also consider referring complaints through an MP to the Parliamentary Ombudsman who has wide powers to investigate. In practice an investigation takes longer than judicial review. The power of this approach is that the Parliamentary Ombudsman has an extensive ability to investigate any shortcomings. In 1998, the government established the ‘Compact’; a code for working with the voluntary sector covering all aspects of the relationship including funding. The Coalition has reaffirmed a commitment to the Compact and the Prime Minister has pledged to “refresh and renew” it. There is no means of directly enforcing the Compact terms but references can be made to the Compact Commissioner.

Other steps
There are a range of steps organisations can take in the event of possible future funding cuts or withdrawal:

• Review contractual obligations. For contracts with other parties it is worth establishing the extent to which they can be cancelled at any time or in practice whether there is any redress should cancellation take place. It would be helpful to
match up those agreements with obligations to artists, staff or other third parties in respect of projects to ensure that if a third party cancels a project there is no undue exposure.
• Review of projects to identify the extent to which projects are fully funded or financially viable only with development funding.
• Review property obligations in particular lease obligations.
• Review staff contracts to ensure they are appropriate. If the worst happens there may need to be consideration of notice periods and redundancy.