CITY CLERK. Toronto Arts Council - Operating Principles (All Wards) (City Council on December 4, 5 and 6, 2001, amended this Clause by:

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1 CITY CLERK Clause embodied in Report No. 12 of the, as adopted by the Council of the City of Toronto at its meeting held on December 4, 5 and 6, Toronto Arts Council - Operating Principles (All Wards) (City Council on December 4, 5 and 6, 2001, amended this Clause by: (1) deleting Recommendation No. (2) of the, viz.: (2) Recommendation No. (2)(vi) being amended by deleting the words not exceed 10 percent, and inserting in lieu thereof the words not exceed eight percent ; ; and (2) adding to Recommendation No. (2)(vii) as embodied in the report dated November 1, 2001, from the Commissioner of Economic Development, Culture and Tourism, as embodied in the Clause, the words with the proviso that the Toronto Arts Council could apply to City Council for specific wind-down costs upon termination, so that such recommendation shall now read as follows: (2)(vii) Toronto Arts Council will manage its finances in accordance with established City fiscal policies and practices, including record keeping, budget monitoring and the return of unused City funds upon termination of services, with the proviso that the Toronto Arts Council could apply to City Council for specific wind-down costs upon termination;.) The recommends the adoption of the following report (November 1, 2001) from the Commissioner of Economic Development, Culture and Tourism, subject to: (1) the report being amended to provide that the multi-year agreement with the Toronto Arts Council specify that the Toronto Arts Council continue to report to City Council through the ; and further that, in order to ensure accountability and adherence to Council policies, procedures, and the terms of the Agreement, the TAC submit its reports to the Commissioner of Economic Development, Culture and Tourism in the timeframe established for Committee reporting so that the Committee can be provided with analysis and staff recommendations;

2 2 (2) Recommendation No. 2(vi) being amended by deleting the words not exceed 10 percent and inserting in lieu thereof the words not exceed eight percent ; (3) adding that in future, transfer of funds from the Cultural Grants Program to the Operational Program be subject to Council approval; and (4) adding that the Agreement be signed upon receiving confirmation that the City Auditor is satisfied that TAC has satisfactorily addressed all issues raised in his report relating to Grants Programs: Purpose: This report recommends the implementation of a new grant agreement, based on an operational review of the Toronto Arts Council. Financial Implications and Impact Statement: There are no financial implications resulting from the adoption of this report. Recommendations: It is recommended that: (1) City Council reaffirm its decision of December 1998, regarding the Toronto Arts Council s mandate as an arm s length organization, to administer the distribution of arts and culture grants on behalf of the City of Toronto; (2) authority be granted to enter into a multi-year agreement with the Toronto Arts Council for the administration of the distribution of arts and culture grants subject to: the following Terms and Conditions: (i) (ii) (iii) (iv) City Council has control over policy; TAC will continue to report to City Council through the Economic Development and Parks Committee; TAC will continue to submit its annual Grant Budget Request to the Budget Advisory Committee; to allow staff comments on the request to be considered by the at the same time, TAC will submit copies of the request to the Commissioner of Economic Development, Culture and Tourism, the Chief Financial Officer and Treasurer, and the City Auditor, as appropriate, prior to submitting to the Committee; TAC will submit a description of planned granting activities and anticipated deliverables in its annual Grant Budget Request;

3 3 (v) (vi) (vii) (viii) (ix) (x) (xi) (xii) the actual annual grant amount will be determined through the annual budget process; the annual Grant Budget Request submission would include separate requests for the Cultural Grants Program and for the Operations Program; the request for the Operations Program would not exceed 10 percent of the total request budget; this percentage is to be proposed by the TAC on an annual basis, accompanied with clear rationale and justification; the percentage request and the actual amount of the Operations Program would be subject to the review and approval by City Council; TAC will manage its finances in accordance with established City fiscal policies and practices, including record keeping, budget monitoring and the return of unused City funds upon termination of services; TAC will submit quarterly and annual reports on its granting activities, including appropriate quantitative and qualitative overview of arts and culture activities funded, and other financial information for the preceding period, to the, with copies to the Commissioner of Economic Development, Culture and Tourism, the Chief Financial Officer and Treasurer, and the City Auditor; TAC will submit on an annual basis, audited financial statements to the Commissioner of Economic Development, Culture and Tourism, the Chief Financial Officer and Treasurer, and the City Auditor, prior to submitting to the ; TAC will submit Board minutes after each Board meeting to the Commissioner of Economic Development, Culture and Tourism and the City Auditor; TAC will provide to the Commissioner of Economic Development, Culture and Tourism an annually updated database of its grantees, containing pertinent financial and other information; and TAC will satisfy the City s insurance and indemnity requirements; and the satisfaction of the Commissioner of Economic Development, Culture and Tourism, the City Solicitor and the Chief Financial Officer and Treasurer; (3) the review the outstanding issues raised by the Toronto Arts Council and outlined in this report when considering the Terms and Conditions for the multi-year agreement: (c) (d) City Council Control over Policy; Termination Requirements; Access to TAC data; and Risk Management;

4 4 (4) the City Solicitor be requested to clarify with the Ministry of Municipal Affairs, City Council s authority to delegate its powers generally under the new Ontario Municipal Act, 2001; and (5) the appropriate City officials be authorized and directed to take the necessary action to give effect thereto. Background: At its meeting held on July 24, 25 and 26, 2001, City Council adopted Clause No. 10 of Report No. 7 of The dated June 21, 2001 from the Commissioner of Economic Development, Culture and Tourism, entitled Toronto Arts Council Operation Allocations. City Council further requested the Commissioner of Economic Development, Culture and Tourism to undertake a review of the Toronto Arts Council (TAC) administration function, such review to include consideration of other options in that regard and whether the Toronto Arts Council operations could be managed more efficiently; and further that during the said review, consideration be given to the Randolph Group report with respect to this matter; and report thereon to the. At its meeting held on March 6, 7 and 8, 2001, City Council adopted Clause No. 7 of Report No. 2 of The dated January 15, 2001 from the Commissioner of Economic Development, Culture and Tourism, entitled Toronto Arts Council Extension of Existing Grant Agreement. City Council approved that the existing grant agreement between the former City of Toronto and the Toronto Arts Council be extended until a new agreement is entered into or through the end of 2001, whichever comes first, in order to allow City Council adequate time to consider recommendations coming forward from the Randolph Group and to allow time for the development of a new agreement following this consideration by Council. Started in 1974, the Toronto Arts Council is an independent not-for-profit corporation overseen by a community-based volunteer Board of Directors. Currently, the Board of Directors numbers 29. City Council nominates five Councillors to the TAC Board. The remaining members are not selected, appointed or approved by City Council but established through the TAC s own process as an independent not-for-profit corporation. Since its inception, TAC has acted on behalf of the former City of Toronto to administer the distribution of arts and culture grants. At its meeting held on December 16 and 17, 1998, City Council approved Clause No. 4 of Report No. 15 of The Special Committee to Review the Final Report of the Toronto Transition Team, detailing an administrative structure for arts grants for the amalgamated City as follows: (1) the Toronto Arts Council be approved as the City-wide arm s length administrative body in relation to the funding of the arts and cultural organizations and artists in the City of Toronto; (2) the Toronto Arts Council report to City Council through the Economic Development and Parks Committee;

5 5 (3) the Toronto Arts Council prepare and submit its annual Cultural Grant budget request to City Council through the Budget Advisory Committee for approval by City Council; (4) City Legal work with the Toronto Arts Council to establish the terms of a new Grants Agreement with the City; the Grants Agreement should ensure, among other things: (c) (d) (e) full financial accountability to City Council; City Council control over policy; City Council approval of the total Cultural Grants envelope; continuation of City Council appointments of five Councillors to the Board of Directors of the Toronto Arts Council; and a framework that establishes Toronto Arts Council as an integral part of the City s functional structure; (5) the Toronto Arts Council continue to realign its structure and process to fit the amalgamated City; (6) appropriate partnerships be developed between TAC and the Culture Office to ensure efficient and effective co-ordination of the City's arts and culture objectives; and (7) implementation proceed regarding the recommendations of the Commissioner of Economic Development, Culture and Tourism's report of September 11, 1998 and that the four local arts councils that are not funding bodies continue to report to and enter into a purchase of service agreement with the Culture Office. Comments: Outstanding Issues: The proposed Terms and Conditions are based on recommendations made by the Randolph Group in its report, as well as Council decisions, policies and practices. Although there is agreement on the majority of the items, there are outstanding issues where TAC has requested terms that do not conform to existing Council directions to staff. City Council Control Over Policy As per the above listed December 1998 decision, City Council has directed that the Grant Agreement should ensure City Council control over policy. The draft agreement presented to TAC stated that City Council, in determining its strategic policies and directions, would establish strategic priorities and directions for arts and culture grants. TAC does not agree to City Council setting strategic policies and directions for such grants. TAC s position is that its Board of Directors, comprised of a majority of artists, should establish strategic priorities and directions for arts and culture grants and proposes that such strategic priorities and directions be approved by Council, rather than established by Council.

6 6 Similarly, as the agreement would cover a five-year period, it is proposed that TAC policies and practices be consistent with its mission statement, this grant agreement, and any additional directions given by City Council. These additional directions may be given by Council from time to time during the course of the agreement, as well as being a part of the annual budget approval process. TAC does not agree to receive additional directions from Council other than the terms of the agreement, and will negotiate the terms during the renewal of the agreement. Termination According to City financial practices with regard to any City-funded organization, all unused City funds are to be returned to the City upon termination of service. TAC s position is that if the City terminates the agreement, before returning the balance of funds TAC should pay out all grants approved by the TAC Board prior to the date of termination and should pay all expenses related to the winding-up of the operations of TAC. (c) (d) Access to the TAC In order to provide City Council with informed policy advice, the Commissioner would require grantee information gathered by the TAC for the analysis of grants impact and effectiveness. The requested information database mainly contains fiscal breakdowns and financial solvency data of these organizations. TAC wants flexibility in the way it organizes the database and would provide the Commissioner with information it chooses to retain. Risk Management According to Risk Management practices, insurance liability coverage for City-funded organizations has to satisfy the Chief Financial Officer and Treasurer. TAC has stated that it wants the ability to determine its own deductible levels, given that it is responsible for paying for the insurance coverage. Delegation of the City s Grant Making Authority: The proposed new Municipal Act, 2001, (Bill 111), gives municipalities natural person powers, which would presumably include the authority to delegate the powers granted to them under the Act. Since this represents a broadening of municipalities authority to delegate their powers, it is recommended that, in order to provide greater certainty respecting the authority to delegate powers granted to the municipality by the Province, including grant making powers, the City Solicitor request that the Minister of Municipal Affairs and Housing clarify this issue and provide that any provisions in the new Municipal Act which address this issue come into force as soon as the Act is enacted. TAC Operational Review: The Randolph Group conducted the operational review and submitted its report in early Key findings of the Randolph Group report are listed at the end of this report. In general, it delineates the roles of the City of Toronto and that of the Toronto Arts Council as follows:

7 7 (1) the City provides a broad overview through the development of cultural policy, cultural programs and projects, and ensures that arts, culture and heritage are on the City s agenda; and (2) TAC disburses, on behalf of the City of Toronto, annual operating and/or project grants to individual artists and arts and culture organizations across the City, according to its core operating principles of arm s length and peer review. The Consultant has noted that, as part of the existing practice, TAC provides annual and quarterly reports to the without any clearly documented process for review, and submits an annual audited financial statement and Board minutes to the City Auditor. The report identified issues including TAC s impediments to plan beyond the yearly funding cycle, the rising administrative costs two years in a row post-amalgamation and the asynchronous practice with regard to its request/report submissions. The Consultant was requested to examine other administrative models, including the Committee of Adjustment model. It concluded that the Committee of Adjustment model is not transferable to the TAC as the Committee of Adjustment follows clearly defined policies and procedures set out by legislation and its staff role involves interpretation of existing Provincial legislation and municipal by-laws. The work of the Toronto Arts Council extends beyond the processing of grants applications and often involves in other aspects of the arts granting and review. Furthermore, the Committee of Adjustment model has financial impact on the City, as it would require City staff to carry out all of its administrative duties. It also has the potential to increase the existing workload of volunteers and threaten the volunteer base. Staff agrees with the Consultant s assessment. The Consultant has recommended a modified practice based on the current TAC model, with a new multi-year grant agreement and a streamlined financial reporting requirement. It identified a number of advantages to this model, including: strengthens the accountability mechanisms to the City; fosters co-operation between the City and the TAC in serving the arts community; and enables the TAC to engage in longer-term planning. The Consultant has recommended that the City reaffirm its decision of December 1998 regarding TAC s mandate and adopt a multi-year agreement. The actual grant amount will be determined annually through the budget process. Staff agrees that TAC has a strong track record and credibility within the arts community for its work. This agreement would allow TAC to plan effectively for the immediate future and clearly describe granting activities that are funded by the City. It is recommended that City Council reaffirm the TAC s mandate to administer the distribution of arts and culture grants on behalf of City Council, and enter into a multi-year agreement. With the provision for a multi-year agreement with the City, the TAC will have the capability to plan ahead. The Consultant has recommended that TAC should develop a multi-year strategic plan that states clear priorities, directions, granting activities, anticipated deliverables, performance measures and other initiatives. It is recommended that the TAC would include in its annual budget submission, a description of planned granting activities, as well as anticipated deliverables for the coming year.

8 8 The Consultant has identified an asynchronous practice under the current TAC budget request process. TAC submits the annual budget request directly to the Budget Advisory Committee, without City staff having a chance to provide pertinent comments to these requests concurrently. In order for staff to provide City Council with informed comments in a timely manner, the Consultant has recommended a streamlined practice, where TAC s submissions and staff comments will be considered by the at the same time. To allow for this synchronous approach, it is recommended that the TAC would submit its requests to the Commissioner of Economic Development, Culture and Tourism, the Chief Financial Officer and Treasurer, and the City Auditor, as appropriate, prior to submitting to the Committee. Similarly, it is recommended that TAC would submit its annual audited financial statements to the Commissioner of Economic Development, Culture and Tourism, the Chief Financial Officer and Treasurer, and the City Auditor, as appropriate prior to its submission to the Committee. When comparing the operations of the TAC with other arts funding bodies like the Ontario Arts Council and the Canada Council, the Consultant found that it makes sense to analyze the funds spent on Operations within an envelope that includes the funds intended for disbursement to arts and culture organizations and individual artists. It recommended that the annual TAC Grant Budget Request submission should include a Cultural Grant Program request and an Operations Program request. The Consultant recommended that the Operations Program request should not exceed 10 percent of the total request budget, and that this percentage is to be proposed by TAC, accompanied with clear rationale and justification. It is recommended that on an annual basis, this percentage request and the actual amount of the Operations Program would be reviewed and approved by City Council. The Consultant recommended that TAC should provide clarity to City Council about its responsibilities and improve on accountability for grants administration in accordance with overall City policy and direction. It is recommended that TAC would continue to submit quarterly and annual reports on its granting activities, appropriate quantitative and qualitative overview of arts and culture activities funded, and other financial information for the preceding period. These reports would be submitted to the with copies to the appropriate City Officials. In addition to submitting its Board minutes to the City Auditor, it is recommended that TAC would submit Board minutes to the Commissioner of Economic Development, Culture and Tourism as well. The Consultant recommended that TAC should look for opportunities to harmonize the current granting functions and processes. As the granting administrator for City arts and culture grants, TAC collects financial information from its grantees. As City Council is responsible to the overall policy development, this information is useful for the analysis of impact and effectiveness of City grants and grant policies. It is recommended that TAC would provide the Commissioner an annually updated database of its grantees, containing pertinent financial and other information.

9 9 Key Findings from the Randolph Group Report: (1) Toronto Arts Council is efficiently administered and well respected within the arts community. TAC has a long history as an independent, arm s length organization; it recently celebrated its 25th anniversary; has a committee structure of 87 volunteers; and widely distributes its annual call for nominations to recruit committee and board members from across the City. (2) Arts and Culture Grants comprise the single largest category (32 percent) of the City s Consolidated Grants budget ($12,934, of $42,192, in 2000), of which over 60 percent are administrated by the Toronto Arts Council. (3) Approximately 1,250 grant applications are received annually and approximately 700 grants are awarded; approximately 8,000 events are directly supported by TAC grants. (4) Since amalgamation TAC has experienced an increase in workload. geographic area serviced by the TAC increased from 97 square kilometers to 630 square kilometers; population served increased from 645,000 to 2.4 million; (c) TAC s grant budget increased from $4.9 million (1997) to $7.985 million (2000); (d) (e) (f) (g) project grant requests increased by 180 percent (295 new requests); individual program grant requests increased by 20 percent (100 new requests); number of successful grant clients serviced increased by 41 percent (200 new files); and number of volunteers increased by 31 percent. (5) In 1999 and again in 2000, the TAC requested additional administrative resources as a result of its increased workload, due to amalgamation: in 1999, City Council granted the TAC an additional $60, that was included as part of the TAC s administrative base funding; in 2000, City Council approved $60,000.00, as a one-time increase in response to a request from TAC for $250,000.00; (c) the TAC received Council approval to transfer $43, from the loan program to the administrative program in 1999 and $21, in 2000, for a total transfer of $64, (6) Analysis indicates that the TAC is efficiently administered, currently spending approximately 7.5 percent of its City grants budget on administration; by comparison, the Ontario Arts Council spends 13.5 percent and the Canada Council spends 12 percent.

10 10 (7) The strong use of volunteers supplements the costs of operating the TAC; the TAC estimates that volunteers contribute approximately 10,000 hours per year to the work of the TAC, which translates to approximately 5.5 FTE s of staff time, based on a 35-hour work week. (8) A small core staff supports the work of the 87 volunteers, including a 29-member volunteer Board of Directors. (9) The TAC is responsible for an annual budget of close to $9 million. Conclusions: The City recognizes the importance of supporting arts and culture activities for Torontonians. These events enliven our shared expressions, enrich the quality of life and place for both residents and visitors, and encourage cultural tourism. The City continues its long history in supporting organizations and individual artists through grants made through the Toronto Arts Council. A multi-year agreement between the TAC and the City would serve the arts and culture community further. This agreement would allow a better financial and administrative reporting practice, and provide the TAC the necessary commitment and resources to manage the granting practice effectively and efficiently exercise its responsibilities to the City. Contact Name: Ms. Rita Davies, Managing Director, Culture Division, Telephone: , Fax: , rdavies@city.toronto.on.ca. Councillor Joe Mihevc, Ward 21 St. Paul s, appeared before the Economic Development and Parks Committee in connection with the foregoing matter. (City Council on December 4, 5 and 6, 2001, had before it, during consideration of the foregoing Clause, the following communications respecting the Toronto Arts Council s Operating Principles: (November 27, 2001) from Mira Coviensky, Program Director, Arts Starts Neighbourhood Cultural Centre; (c) (d) (e) (f) (November 26, 2001) from Kim Tomczak, President, Toronto Arts Council Board of Directors; (November 26, 2001) from Maxine Bailey, Manager, Public Affairs, Toronto International Film Festival Group; (November 26, 2001) from Claire Hopkinson, General Manager and Producer, Tapestry; (November 27, 2001) from Nancy Webster, Managing Director, Factory Theatre; and (November 27, 2001) from Jane Gardner, Executive Director, Theatre Ontario.)