NATIONAL ARTS COUNCIL OF SOUTH AFRICA PRESENTATION TO

NATIONAL ARTS COUNCIL OF SOUTH AFRICA PRESENTATION TO PORTFOLIO COMMITTEE ON ARTS AND CULTURE 6 NOVEMBER 2007 – 10 H 00 VENUE: ROOM V 226, SECOND FLOOR OLD ASSEMBLY WING, 120 PLEIN STREET, CAPETOWN.

NATIONAL ARTS COUNCIL OF SOUTH AFRICA INDEX 1. Background of the National Arts Council of South Africa. 2. 3. 4. 5. PAGES 3 -5 Review of the Annual Report 2007 year. 2. 1 Financial Review and Audit Report, and 2. 2 Funding Allocations. 6 - 10 11 - 13 6. Background to Accumulated Surplus. 7. 4. Highlights. 18 6. 5. Challenges. 19 6. Thank you note. 20 7. Summary of Budget 2008 / 2009 Year. 21 14 - 17 2

1. BACKGROUND OF THE NATIONAL ARTS COUNCIL OF SOUTH AFRICA OUR VISION To promote, through the arts, the free and creative expression of South Africa’s cultures. MISSION To develop and promote excellence in the arts. 3

1. Background of the National Arts Council of South Africa. • The NAC was established through Act no 56 of 1997. Its vision is to promote through the arts, the free expression of South Africa’s cultures, while its mission is to promote excellence in the arts. • The NAC receives its annual grant from the National Department of Arts Culture. The NAC is governed by a Board which comprises 23 members, 14 of whom are appointed by the Minister of Arts and Culture, the remaining 9 members are the provincial representatives. • The Board is mandated to approve recommendations for funding from Advisory Panel members are publicly nominated and appointed by the Board. • The National Arts Council currently offers financial support to organisations and individuals involved in dance and choreography, literature, music, theatre, multidiscipline, visual arts and craft projects. Each discipline is chaired by a Board member. 4

1. Background of the National Arts Council of South Africa Appointment of New Council • The NAC operated without a Council for approximately 18 months and a new Council was only inaugurated in September 2006, 6 months into the year under review. • The Council had to prioritise its plans and the top three priorities and key deliverables for the year under review were identified as: 1. 2. 3. An improved Audit Report, An improved Staff moral, An improved Public image. • Whilst the Council recognised that funding remains an integral part of the NAC’s work, it is clear that this is not the only role for which it was established. • The key aspect of the NAC’s strategy relates to the development of an integrated model that will ensure harmonious work between the Provincial Arts and Culture, the Provincial Department of Arts and Culture as well as the NAC. This will necessitate the overhaul of the funding model and the Council plans a series of consultative meetings with all stakeholders over a period of time. • The three year strategy will include improved grant making processes, transformation in the arts research and policy, broader cultural participation and audience development, international liaison and fostering a shared South African identity. 5

NATIONAL ARTS COUNCIL OF SOUTH AFRICA 2. 1 STATEMENT OF FINANCIAL PERFORMANCE FOR THE YEAR ENDED 31 MARCH 2007 Note REVENUE 2007 R 83, 288, 180 2006 R 53, 033, 458 Grants received 62, 081, 000 47, 894, 000 16, 935, 180 2, 170, 508 3, 892, 448 2, 614, 774 379, 552 354, 176 58, 517, 648 54, 510, 482 48, 202, 957 45, 571, 768 Operating costs 10, 314, 691 8, 938, 714 Surplus / ( Deficit ) for the year 24, 770, 532 (1, 477, 024) Grants and initiatives expired 8 Interest received Other income EXPENDITURE Agreed distribution transferred to project and bursary creditors and initiatives 10 6

NATIONAL ARTS COUNCIL OF SOUTH AFRICA 2. 1 STATEMENT OF CHANGES IN NET ASSETS FOR THE YEAR ENDED 31 MARCH 2007 Accumulated surplus R Total 6, 646, 635 (1, 477, 024) Balance at 31 March 2006 5, 169, 611 Surplus for the year 24, 770, 532 Balance at 31 March 2007 29, 940, 143 Balance at 1 April 2005 Net deficit for the year R 7

NATIONAL ARTS COUNCIL OF SOUTH AFRICA 2. 1 STATEMENT OF FINANCIAL POSITION AS AT 31 MARCH 2007 Note ASSETS NON - CURRENT ASSETS Property, plant and equipment 2007 R 3 CURRENT ASSETS Accounts receivable Cash and cash equivalents TOTAL ASSETS 4 5 2006 R 3, 324, 401 3, 405, 649 64, 052, 512 51, 901, 035 684, 824 63, 367, 688 1, 373, 000 50, 528, 035 67, 376, 913 55, 306, 684 8

NATIONAL ARTS COUNCIL OF SOUTH AFRICA 2. 1 STATEMENT OF FINANCIAL POSITION AS AT 31 MARCH 2007 Note 2007 R 2006 R TOTAL NET ASSETS 29, 940, 143 5, 169, 611 Accumulated surplus 29, 940, 143 5, 169, 611 37, 436, 770 50, 137, 073 199, 956 276, 134 34, 502, 249 2, 458, 431 262, 877 142, 827 45, 568, 187 4, 163, 182 67, 376, 913 55, 306, 684 NET ASSETS LIABILITIES CURRENT LIABILITIES Accounts payable Provisions Projects and bursaries payable Administered Funds 6 7 8 9 TOTAL NET ASSETS AND LIABILITIES 9

NATIONAL ARTS COUNCIL OF SOUTH AFRICA 2. 1 Summary of the Audit Report History for the past 4 years. • Over the 3 years preceding the year under review, the institution’s governance and compliance record grew steadily worse. • However, the audit outcome for the 2006/7 year is evidence of a comprehensive turnaround in this area. 10

NATIONAL ARTS COUNCIL OF SOUTH AFRICA 2. 2 FUNDING ALLOCATIONS 2006 - 2007 Applications Received Funding Requested 1620 R 253 756 900 11

NATIONAL ARTS COUNCIL OF SOUTH AFRICA 2. 2 FUNDING ALLOCATIONS – PER DISCIPLINE 2006 - 2007 12

NATIONAL ARTS COUNCIL OF SOUTH AFRICA 2. 2 FUNDING ALLOCATIONS PER PROVINCE 2006 - 2007 13

NATIONAL ARTS COUNCIL OF SOUTH AFRICA 3. Background To Accumulated Surplus • Over the period, 2004 to 2007, the NAC has cumulatively allocated in excess of 75% of its annual parliamentary appropriation to grants to the arts in accordance with S 16(2)(a) of the NAC Act. • Over the 4 -year period 86% of the parliamentary appropriation was allocated as grants. These grants allocations are held in a current liability account from which actual grants disbursements are drawn down and are then reflected in the performance statement as expenditure. While the grants allocations were allocated to applicants in each year, not all applicants were actually paid their allocated funds. This is accumulated surplus is a result of : (1) Applicants that did not claim their allocations because they became defunct or the (2) projects for which they applied were no longer viable, (2) Applicants whose allocations were withheld due to contractual non-compliance and (3) Interest earned, rental income and savings on administration costs. The result is that a grants surplus developed and accumulated over the years. • These surpluses were not immediately apparent since they were held as part of the overall current liability owed to applicants. It was only after an analysis of grants undertaken during March 2007 to May 2007 that expired grants were identified and quantified as set out in the table below. Note that expired grants are defined as grants that have either not been claimed for period of 1 year after the allocation decision was taken; or have not satisfied contractual terms by the due date. 14

3. NATIONAL ARTS COUNCIL OF SOUTH AFRICA Prior Years R’m 2004 2005 2006 R’m R’m Parliamentary allocation - 42. 1 44. 7 47. 9 Grants allocation per NAC Act (75%) - 31. 6 33. 5 35. 9 Grants allocated (R’m) Grants allocated (% of appropriation) - 28. 4 67% 46. 5 104% 45. 6 95% Grants actually paid out - 25. 5 29. 4 40. 0 Balance of Grants Allocated - 2. 9 17. 1 5. 6 7. 1 6. 9 2. 9 0. 1 Historical analysis of grants to the arts Expired Grants Accumulated operating surplus as at 31 March 2006 5 169 611 Operating surplus for the period 2006/7 8 235 340 Accumulated expired grants as at 31 March 2007 17 003 130 Total accumulated surplus as 31 March 2007 30 408 081 Less: Fixed Assets (3 324 401) Accumulated surplus available for re-allocation 27 083 680 15

3. NATIONAL ARTS COUNCIL OF SOUTH AFRICA 16

3. NATIONAL ARTS COUNCIL OF SOUTH AFRICA 17

NATIONAL ARTS COUNCIL OF SOUTH AFRICA 4. HIGHLIGHTS 2006/2007 » NAC delivers its first unqualified audit report in four years » NAC allocates R 48, 2 m to 426 arts entities » NAC allocates 78% of annual parliamentary appropriation as grants to the arts. This is in excess of the legal requirement of 75%. » NAC wins bid to host 2009 the IFACCA (International Federation of Arts Councils and Cultural Agencies) World Summit on Arts and Culture. 18

5. CHALLENGES OF THE NATIONAL ARTS COUNCIL OF SOUTH AFRICA The strategic challenges that the NAC will need to address in the coming year and beyond are as follows: » The NAC needs to provide leadership in the sphere of public funding of the arts. Currently, the NAC is a small player in an arts funding landscape that is confusing and inefficient. There is now an opportunity, given the NAC’s improved governance environment, to consider centralizing the management of public funds to arts at the National Arts Council. » There is a need for equity and balance of funding across our various communities, the arts disciplines and across our provinces. However, the treatment of this issue should not be approached naively but should take account of the inherent complexities of resource allocation in the arts. » There is a dire need for intervention in the arts at the sectoral level. Such intervention – which would include sector research, advocacy, policy input and the like – is very much a part of the NAC’s mandate and the NAC must step into the breach. » The NAC must identify its stakeholders and engage more effectively with them – such engagement should not emphasize the promotion of the NAC but should 19 seek to add value to the NAC’s stakeholders through the dissemination of information and knowledge. … Budget

6. THANK YOU The National Arts Council of South Africa wishes to thank the Portfolio Committee on Arts and Culture. Mr Nicholas Motsatse, Chairperson of the NAC Board. Ms Brenda Madumise Deputy Chairperson of the NAC Board. Mr Navin Lakha, Chairperson of the Audit Committee. Mr Kiran Isvarlal, Chief Financial Officer. Mrs Julie Diphofa, Chief Operating Officer. Presentation prepared by : Mr Kiran Isvarlal (Chief Financial Officer), Mrs. Julie Diphofa ( Chief Operating Officer ), Mrs Nazlie Walters(Finance Officer) and Mr Andy Perumal ( IT and Database Officer). 20