'If we continue at the current rate, the fund will be exhausted in the foreseeable future.' This can be read in the 2018 annual report of the Performing Arts Social Fund. Plenty of reason to sound the alarm, indeed. Is this yet another victim of the cabinet's cuts? Not really, it turns out. When you the documents looked at in detail, you mainly see that people have not been paying attention.
About three quarters of a year ago we reported a governance crisis with the Performing Arts Social Fund. Direct - official - cause was the halting of an application for a European subsidy worth €1 million. Board members, especially those who represented the social partners Kunstenbond and NAPK, had decided to do so without the chairman and vice-chairman, after which the pair kept the honour to themselves and left.
Incorrect
The official response from the board at the time was somewhat meagre and inaccurate on crucial points. For instance, it was denied that any decision had ever been recorded to initiate the application, even though it was clearly stated in the minutes. So it was waiting to see how this would be reflected in the 2018 annual report. So there is indeed that sentence there, that the financial risk was too great. That sentence stems from the rather extreme loss the fund made in 2018: over six tonnes.
Curiously, it was apparently feared that with responsibility for such a large grant amount, the cost of arranging it all would also become too high. This had happened in a previous round and there was a fear of a repeat, although different conditions applied in this case.
However, that negative result is not an incident due to a single scheme. In the years of its existence, the SFPK has not had a positive result in a single year. This is evident from the chart below, compiled from the annual reports.
Negative Operating result
| 2015: |
-223.508 |
| 2016: |
-1.138.324 |
| 2017: |
-435.132 |
| 2018: |
-615.402 |
| Cumulative: |
-2.412.366 |
Decline in power
So all these negative results lead to the Social Fund digging into its equity. And not by much. In five years, more than EUR 2.5 million evaporated: more than half of its assets. With that, any interest rates and investments of those assets will also decline more sharply. Bad news for the fund.[ref]The SFPK is not an endowment fund. It is therefore not intended that its assets remain untouched. It was started precisely - after the merger of the smaller social funds in the performing arts sector - to finally spend the accumulated assets on what they were intended for: the training and sustainability of workers in the performing arts. So five million was too much, but no assets at all is not good either, and that is where the sfpk is now in danger of ending up. Moreover, the board has always maintained that staff costs would be paid from the interest and investment profits on the assets. So then there must be assets. Originally, an aggressive and unsustainable investment strategy had been chosen, but the departed chairman opted for a friendlier alternative, which, however, would yield smaller profits: 'no weapons and missiles'. In 2018, this produced negative returns.[/ref]
| 2014: |
5.091.497 |
| 2015: |
4.850.762 |
| 2016: |
3.689.931 |
| 2017: |
3.235.155 |
| 2018: |
2.510.125 |
| Total power loss |
2.581.372 |
How bad is it?
Very bad. If this had been a pension fund, workers as well as employers would have taken to the streets and demanded the head of the board. But this is not a pension fund. A social fund is meant for, as the fund itself puts it:
- stimulating and funding activities aimed at training, career development and age-conscious personnel policy;
- encouraging mobility within and outside the sector;
- Conduct and finance research on the labour market, working conditions, employment conditions, etc., as a basis for targeted policies;
- increasing the expertise, productivity, employability, health, vitality and labour market position of everyone working in the sector.
So the fund can do that by carefully handling its assets, which are partly made up of things like the Hans Boswinkelfonds. That fund for relieving the distress of destitute actors and their dependants consisted of a one-off donation from the theatre pension fund. According to the theatre encyclopaedia, it was slowly depleting. We now know what made it disappear altogether: it merged into the Social Fund for the Performing Arts. Now, some of those millions from the fund are meant to be used for the purpose, and so it succeeds. Performing artists are very happy with it. But so it's going too well, actually.
Tering/nering
The assets managed by the fund are evaporating because there are structurally more expenses than income. About income later. Let's look at expenditure first. In the interview with the departed chairman, she explained that the problem lay with the 'open-ended nature' of the subsidy provided by the fund. That grant came from the state, but was provided by the fund. And so that made it an 'open-ended' thing. That meant that subsidy was left for as long as a particular training programme lasted, even if it was much longer than what was originally budgeted. And even if the grant ran out. The board - minus the chairman - wanted to stick with that in 2018. Now they think more nuanced about it. Or rather, they are sitting under the desk waiting for the squall to blow over: 'In addition to internal measures, the scheme should be reappointed from 2020.' For 2019, the board therefore expects a similarly hefty budget overrun. With which the assets will have fallen below two million.
A hilarious solution?
Since the board does not want to tamper with the open-ended scheme, pennies have to be made in other ways[ref].Increasing the premiums, to enable an annual programme of support worth 6 tonnes, is still non-negotiable. According to anonymous sources consulted for this research, not raising premiums was even an argument put forward by NAPK to persuade prospective members to become members.[/ref]. Therefore, the board has thought it would be good to further erode office functions. I haven't spoken to her yet, but I imagine that limiting the role of fund coordinator to a purely administrative one, including a hefty cut in other staff costs doesn't really sit well with her. It will also save at most a few tens of thousands of euros, which is little when you have a million to make up.
Perhaps the board could then also look at some past items. For instance, once, in 2015 and 2016, the Fund spent over a tonne on the collective bargaining negotiations between the Arts Union and NAPK, when the money was not intended for that at all. Also, the not exactly philanthropic Cultuur+ Ondernemen foundation presented a hefty bill for consultants who provided their services to sfpk at commercial market prices for the Culture Sector Plan, of which the foundation was the penciller.
A real solution?
The only solution you can suggest as an outsider is to be found on the revenue side. A social fund is filled by premium payments by employers and employees in the big people's world. Something about solidarity and so on. Now this is a bit thin on the ground in the performing arts sector. In fact, across the sector as a whole, employees don't contribute a penny in premiums, while employers contribute a lazy 0.1 per cent of the wage bill. That comes to a tonne or two and a half a year, so you can't keep a fund afloat on that.
However, an increase in premiums is not obvious. That would require the fund board, as an independent party, to bang its fist on the table with employers and employees, but the fund is not very independent. The directors also have and in some cases had positions, temporary or otherwise, with - especially - the Arts Union. The president of that union even sits on the 'independent' board of the SFPK[ref].According to the statutes, the fund's board must function 'without charge or consultation'. Members can be chosen from the organisations that compose the fund (Kunstenbond and NAPK) but must primarily have the fund's interests in mind. This is also stipulated in the cultural governance code, which the board claims to follow. When the chairman of the Kunstenbond also sits on the board of the SFPK, it is difficult to maintain that the fund has a board that functions 'without charge or consultation'. [/ref]. Since it is mainly the workers who have to start contributing something to save their own social fund, the cooperation of that union is needed. And so that is somehow going to be difficult.
How important is all this now?
Partly in the context of the now dreaded Fair Practice Code, the Ministry of Education, Culture and Science has pledged several millions for training and retraining of artists. This is money normally distributed by a social fund. It is highly questionable whether a minister is happy to give a few million in subsidies to a fund that has just put more than two and a half of it in the stove.
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