We will be a financially resilient organisation, driving a commercial mindset that is agile, ambitious, opportunistic, entrepreneurial and data driven.
In the context of a challenging economic climate, pressure within public funding, and a broadening remit, we are targeting addressable income growth of 10% over the next three years, as part of our wider organisational review and transformation work.
This will allow us to:
- Deliver our charitable objectives from a position of baseline stability.
- Build financial resilience through the development of an appropriate level of reserves, allowing stability and greater risk-taking.
- Support the ambition of Screen Culture 2033.
How things stand: Our current funding model and its challenges
BFI total income 2022-23 (Budget)
Revenue (Self generated) – £22m / 20%
Grants & Sponsorships (Self generated) – 9.6m / 9%
Grants in Aid (Core) – 14.9m / 13%
GIA (Ringfenced Awards and Other)* – 13.8m / 12%
Lottery Section 27** – 5.9m / 5%
Lottery (Ex Section 27) – £45.3m / 41%
**GIA (Ring-fenced Awards: Global Screen Fund, Northern Ireland Language Funds, Film Academies; Other: Film London/BFC)
** Lottery Section 27 – to support LFF & H22
BFI Direct Delivery Activities
Revenue (Self generated) – £22m / 20%
Grants & Sponsorship (Self generated) – 9.6m / 9%
Grants in Aid (Core) – 14.9m / 13%
Lottery Section 27** – 5.9m / 5%
At present 25% of our total income (including National Lottery funding) is in the form of Grant in Aid (GIA) (see Chart 1), with 12% of this ring-fenced for awards which we manage and distribute on behalf of DCMS. The remaining 13% core GIA funding is how much we have available, alongside our self-generated revenues (29%) and Section 27 Lottery funding (5%), to deliver the wide breadth of activities and services we provide to the cultural and creative sectors (see Chart 2).
The considerable challenges within the public sector funding landscape have meant that our core GIA funding levels have not increased in line with inflation, resulting in us having to do more with less.
Alongside this real-terms reduction in our funding, we have also taken on additional responsibilities, such as those within the BFI Certification Unit – which now encompasses an even broader set of screen sector tax reliefs – our expanded policy and evidence work, and the growth in activity as we expand our remit to embrace broader screen.
As a result, we need a strategy focused on income growth to ensure we can continue to deliver our activities and services to the cultural and creative sector.
As a National Lottery distributor, we also receive and distribute a 2.7% share of the Lottery ‘good cause’ funding and retain a small percentage of this total allocation for our administrative overheads.
The wider economic challenges of inflationary pressures, changing consumer habits and post-pandemic market conditions all reaffirm our focus on the need to build on the work to date in developing our income streams, to improve our financial resilience and our ability to exploit opportunities and ultimately subsidise our cultural activity. This focus is essential to ensure we can realise the full range of our ambitions, as outlined within this strategy, and ensure we can continue to deliver to the sector and create value for both the BFI and our customers across our broadening remit.
We will focus on maximising commercial self-generated revenues and also look at income in its widest definition. This ranges from GIA, trust grants and philanthropy to partnerships, industry support and commercial exploitation. The identification of income growth areas at which to target viable business models over the next strategy period is a key priority.
How we spend it
Our GIA funding is the bedrock of our charitable activities. The purpose of this funding is to support our cultural remit and to address market failure in the moving image sectors. We successfully use this funding to build additional revenues and fundraising incomes. And it helps further bolster our outputs and achievements against our and the government’s goals and objectives.
Of the £14.9m of core GIA that goes towards running the BFI’s operations (Chart 2):
- c. 45% goes towards supporting the UK’s National Film and Television Archive, incorporating the national film library. This is a world-leading archive in size, breadth and technical innovation.
- c. 25% goes towards supporting BFI Southbank, a world-leading moving image venue that showcases UK and world screen culture and houses the public-facing BFI Reuben Library.
- c. 15% goes towards supporting the wider distribution of the best of British and world film and television through various channels. These include VOD through BFI Player and YouTube, DVD, BluRay and theatrical distribution to cinemas around the UK and internationally.
- c. 15% goes towards industry and policy support including certification for accessing the UK screen sector tax reliefs, evaluation and inclusion work.
Alongside our GIA and in order to support the BFI London Film Festival (LFF) and our Heritage 2022 project (H22) (5%) (see Charts 1 and 2), we also access a small allocation of National Lottery funding, using a technical mechanism called Section 27. This 5% allocation reflects a higher-than-normal funding requirement due to Covid-related delays with the H22 project.
Moving forward we may no longer be able to support the LFF through the Section 27 mechanism to the same level, which has created a funding challenge in that area. Our objective is to remove the current need for Lottery funding to support our core activity, in order to provide greater stability. Importantly this will also release this funding for external distribution through our National Lottery funding programmes.
Focus areas for growth
Our focus will be to optimise our margins and, where appropriate, in a commercial context, seek to maximise market share. We will do this by simultaneously rationalising and building on our existing income streams using a ‘commit, rework, stop’ approach. We will also seek out new potential sources of revenue.
We will develop appropriate and sustainable business models to maximise, sustain and diversify our income growth across all of our income streams in response to changing markets and circumstances.
In seeking out new opportunities, we will play to our strengths, ensuring value creation for the BFI and for our customers. As an organisation, we have a highly skilled and experienced workforce, and this considerable strength will support how we identify, take forward and realise new opportunities, to their full potential.
i. Funding for strategic projects
Our key strategic priorities give us the opportunity to create tailored projects with bespoke funding plans. These will allow us to pursue projects of strategic importance to the BFI and at the same time improve our financial resilience.
These could include:
- Digital transformation
- Screen Archive of the Future
- Education and skills
- Expanding our remit to broader screen
- Investment in our estates
ii. Assets
We will unlock the value of our assets, whilst recognising the need for targeted investment to realise long-term benefits:
- Rights – we will undertake a comprehensive review to understand the extent of our rights asset holdings and from this create a comprehensive rights strategy to optimise their management.
- BFI National Archive Collections – we will acknowledge the value of our collections, recognise where the commercial opportunities exist, and work to exploit these both in the UK and internationally.
- Estates – we will develop a comprehensive estates strategy to maximise return on our estates. We will optimise their use to serve the needs of the organisation, our audiences and visitors, and for income generation.
- Brand – the BFI is a valuable brand recognised internationally as innovative and agenda-setting. We will reinforce our profile as a charity that has a transformational impact and drives nationwide change, and we will leverage its power and appeal for commercial benefit.
- Our people and knowledge – our people are our greatest asset. We will ensure we understand our full range of strengths, skills and knowledge and harness these to further the ambitions of the organisation.
- Our digital products and user base – we have an established and growing foothold in the streaming market with BFI Player, and over 16 million global website sessions a year. We recognise that there is significant potential to grow our overall reach and we will invest in this to further develop our provision.
- Our cultural programmes – we are renowned for our cultural programmes including the BFI London Film Festival and BFI Flare. These continue to evolve and our ambition is to increase audience reach and relevance by curating world-class cultural programmes. Some of these will be commercially successful and will subsidise others; all of them will be important to our mission.
iii. Fundraising and enterprise
Our new strategy, coupled with our brand and values, provides us with an opportunity to:
- Expand and diversify our philanthropic supporters and ladder of giving.
- Grow our corporate and business partnerships, including industry and technology partners.
- Express our impact to charitable trusts and foundations.
- Unlock more opportunities for a growing area of commercial ventures.
We will remain flexible and innovative to ensure we retain and diversify our business partners and donors in a challenging market. That means drawing on:
- Support from our audiences and members:
We need to ensure high levels of awareness of our charitable work, educational programmes and sector leadership through our campaigns and messaging. This will help our audiences, members and visitors to understand the value of their contribution to our mission through buying a ticket, a membership or an item from our shop, and making charitable donations. - Support from screen talent:
Talent from across the industry is essential for raising awareness of and attracting interest in our work. We already work closely with many individuals who help us communicate the value of the BFI. We will grow the number of high-profile ambassadors who openly support our work, endorse it, and donate to major fundraising projects. - Opportunities through new strategic projects:
Through major new strategic projects, we expect to increase major gifts. We will also grow the value of our biennial fundraising gala, LUMINOUS. - Building international support:
We will build on our brand and reputation amongst filmmakers, studios and the wider film industry. This will grow our community of supporters internationally – with an initial focus on the US.
iv. Audiences and commercial development
Self-generated revenues will continue to be of critical importance to the BFI. We will focus our energies on developing existing and new income streams across:
- Customer data – to develop a more in-depth understanding of our customer base, we will invest in digital technology to better capture our customer data. This will help us devise more targeted, effective and efficient customer acquisition and retention strategies, supporting the transition of our customers’ engagement from single to multiple interactions. We will aim to increase our supporter conversion rate by communicating the cultural value of the BFI and our need for public support.
- Audiences and memberships – we will improve our customers’ digital experience, to grow our membership and develop and diversify our audiences. With the development of appropriate dynamic pricing strategies and a clear understanding of our USP, we will increase our reach and achieve greater access and improved conversion opportunities. Coupled with improved and targeted communication and marketing strategies, we will build lifelong relationships and grow customer engagement from casual to sustained, and from transactional to philanthropic.
- Online exhibition – we will improve our offer, building on our USP to retain and grow our audience share in a saturated and competitive market. We will do this by continuing to invest in our online exhibition delivery on BFI+. We will identify growth areas both in the UK and abroad, exploring the viability of our international expansion and add-on services for specific markets.
- Acquisitions – we will build on the success and learnings of the last five years and will investigate a new approach to acquisitions. This will be designed to unlock the potential for greater cross-platform programming and growing BFI+.
- Retail and merchandising – we will review our physical and digital retail offers to ensure they meet customer expectations and demands. We will identify what is working well and what is not, and develop a greater understanding of customer trends, behaviours and buyer journeys. We will explore and develop new merchandising strategies, looking to other sectors for proven approaches and utilising our assets and knowledge of audiences, film culture and online marketplaces to create tailored and targeted merchandising.
v. Government and industry
We will work closely with both government and the industry to ensure support for our existing and expanded remit as the sector’s needs develop. We will focus on:
- Government support for video games – we will develop a greater understanding of the support required by the games sector. This will include for the collection, preservation and exhibition of video games. We will build the case for government and industry support in the first three years of the strategy.
- Government support for the BFI London Film Festival – we will continue to work with government to develop a new funding model for the festival. That way, we can ensure its continued success and delivery in London and across the UK.
- Industry support – in light of the ongoing pressure on public funding, we will work with industry to consider an appropriate level of support for the BFI. Doing so will ensure the ongoing delivery of our cultural activities (such as the BFI National Archive and the BFI London Film Festival) and industry support services (such as certification and our policy and evidence work).
Our goals are:
- To be financially resilient and build our strategic ambitions from a stable position by achieving at least 10% addressable income growth over the next three years.
- To be an agile, dynamic and data-led organisation, able to identify and take advantage of new opportunities on a timely basis.
- To benefit from a staff body that is confident, informed and empowered by our shared goal of positively contributing to the BFI’s success.