Commercial activity ‘largest income stream’ for cultural organisations

Commercial income makes up 40% of a cultural organisation's annual turnover, a study by the Association for Cultural Enterprises has found.

Research conducted across the Cultural Enterprises membership of 335 organisations, which took place between April and June this year, found that during 2023/24, the annual income from commercial activity, on average, was greater than any other income stream – more than box office, fundraising and grants.

Cultural Enterprises CEO, Gordon Morrison said the findings indicate a growing focus on commercial opportunities to generate the financial means to deliver on their charitable aims.

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The survey found evidence that organisations are benefitting from variable pricing and experimenting with new approaches to ticketing and audience engagement.

It also identified potential benefits from the development of commercial marketing. 

"Marketing and communications for income-generating areas of business have not received the support they deserve in relation to the revenue they contribute. There’s a clear growth opportunity here," the report states.

The report also identifies "premium products" as another growth area growth due to them being shown to generate "significant revenue". and should be considered a growth area

Meanwhile, staff retention was found to be one of the biggest challenges in the sector. The report demonstrates what organisations are doing and what best practices are available to reduce staff turnover.

Maximising commercial returns

Cultural Enterprises CEO Gordon Morrison said the findings highlight the importance of commercial revenue generation in the cultural sector. 

"At a time of unprecedented cuts to core funding and ever-rising costs, our comprehensive study demonstrates that cultural organisations of all shapes and sizes are increasingly focussing on commercial opportunities to provide them with the financial means necessary to deliver on their vital charitable aims," he said.

“It is particularly telling that almost 40% of total income is now generated through commercial means, substantially more than income generated from fundraising activities or the receipt of grants. 

"The Association’s mission to support cultural organisations to maximise their commercial returns through education, training and the sharing of best practice has therefore never been more vital to the sector. 

"This important study supports our mission by providing cultural organisations with clear benchmarks for performance measurement as well as guidance and case studies on how to achieve the best possible commercial results.”