The discussion around arts funding, and alternative models, raises a fundamental question for me: what do people want or indeed need the funding for? Arts funding is not an abstract thing, and certainly not good only in the abstract. As I've said elsewhere, there is some so far useful muddle about whether 'funding' is a kind of prize, gap funding for otherwise unaffordable socially-valuable goods or innovation, quasi-purchase on behalf of certain citizens, or investment needed whilst someone builds viable businesses, or a mix of all of those. But when arguing for arts 'funding', with people who need to save money somewhere, it helps to be clearer about what the money does. (And let's be clear: that argument is not primarily with any arts council, it's with politicians.) This requires greater clarity of purpose within the user of funding - and yes, I did deliberately choose that word rather than recipient.
My sense is arts organisations currently fall into two main camps in their attitudes to public money, which leads to two dominant 'business models', regardless of actual company structure. I've written about this in a paper on adaptive resilience to be published soon by Arts Council England, and here's an extract from the draft, in the hopes it's useful right now, and because quoting it is more 'efficient' than rewriting just for you.
'Nowhere in the evaluations [of some previous Arts Council England schemes] do I find copper-bottomed alternative business models. What can be seen is arguably a consistent picture of a variety of business structures emerging where core purpose is matched to the environment. This practice finds a reliable set of people including 'funders' willing to pay for the services or activities which are delivered via a strong set of organisational skills and resources. The alternative models are more about mindsets than aiming for particular percentages of funding from different sources.
Binaries are dangerously attractive, but I would suggest arts organisations split into two basic types here. Some people see their activities, products and capital resources as assets that create income which pays for that activity and future development, and work toward predictable and reliable income streams from a variety of sources. Some people see their activity as driven by or enabled by the availability of funding and work towards make that predictable and reliable. Those seem the basic ‘viable’ alternatives. The first seems likely to encourage a number of resilient behaviours: diversity of income streams, ingenuity, resourcefulness, re-use of materials. It will inevitably have an impact on business models, and this is further enhanced by the impact of digital technologies and interaction.... The central idea is twofold: looking at what the organisation does in a different way and using the income generated to invest in further work that creates new assets.'