Before the Covid-19 pandemic struck, the UK arts sector flourished. It added £100bn to the UK economy and employed one in eleven Britons. But the strict lockdown measures have hit the sector particularly hard.
Numerous venues were closed for months on end, leaving tens of thousands of people out of work. In July last year, a UK Parliamentary committee warned the pandemic presented “the biggest threat to the UK’s cultural infrastructure, institutions and workforce in a generation”.
Although the UK government has since stepped in with support, investing in the arts has become even more crucial for the sector to survive.
Cultural organisations are “uniquely placed to achieve positive social change”, said Seva Phillips, Head of Arts & Culture at the National Endowment for Science, Technology and the Arts, Nesta, in London.
Phillips is passionate about how “the arts deliver a lot of positive change”. He gives as an example the Birmingham Royal Ballet, one of the investees of Nesta’s Arts Impact Fund.
The ballet ran a range of community programmes for disabled artists and used loan support to transform a production for profitable touring.
First Arts Impact Fund
Six years ago, Nesta launched the world’s first Arts Impact Fund. At the time, an impact-focused fund was somewhat of a novelty.
“Nobody is quite like us,” Phillips said, “combining investment with targeting and measuring social impact.” Over the next four years, the Arts Impact Fund invested some £8.8m, mostly through loans, in 27 different organisations.
The Arts Impact Fund offered unsecured finance of up to £600,000, repayable over three to five years. Apart from Nesta and the Arts Council for England (who make repayable grants), other investors included the Esmee Fairbairn Foundation and Bank of America.
Phillips admits Nesta’s investees are a particular "subset" of the arts. They must be organisations that are “investment ready (and)...able to demonstrate their social impact”.
“We assess the social impact they are trying to achieve, and we monitor it very closely.” He feels in the past “the arts have not been great around being clear what the social change is they deliver, and articulating it”.
Creating reliable income streams
The organisations Phillips is interested in are “those with reliable income streams, either through developing their own productions, or managing sites with other income opportunities (cafés, shops et cetera)”.
Some will also license their intellectual property (for touring or streaming) or have a source of income from working on a consultancy basis.
Nesta has a particularly close relationship with its investees. Phillips says they have similar capital needs to any business. He sees his organisation’s role as “being a critical friend”, and admits that often it is necessary to give a “gentle nudge”.
This may range from raising awareness of other income possibilities to introducing arts organisations to other support and resources, or encouraging firmer targeting, evaluating, and monitoring of data.
“Covid has been really difficult for our investees, but everyone’s been remarkably resilient”, said Phillips. Nesta worked with their investees to provide support, not least delaying capital and interest repayments if necessary.
Phillips believes Nesta’s investees “have weathered Covid well, and some will come out stronger than before”.
One of the successes he cites is a project in Salford (near Manchester), Walk the Plank, which has developed a new creative space for developing artists. He also says Artfix in Greenwich (East London) has done well, establishing a chain of community cafés where artists display their work and run community workshops.
Phillips expects the UK arts sector to start recovering from the crisis by September of this year. He hopes Nesta’s new funds can play “a major part of the road to recovery”.
Two more funds
Following the success of the Arts Impact Fund, Nesta launched two further funds. The Cultural Impact Development Fund, a £3.5m fund providing small-scale repayable finance to socially-driven arts organisations, started in 2018. And last year, Nesta launched the Arts & Culture Impact Fund.
The new funds have attracted investors including Big Society Capital, the big wholesaler of UK impact investment money, and the Freelands Foundation, an arts and education-focused foundation established in 2015.
Projects announced this month for the new Arts & Culture Impact Fund give some idea of just how the funds can work. In total five organisations share the first £1.2m investment which will play an important role in supporting the development of earned income streams and enriching the local communities where these borrowers are based.
Recent announcements include the East London Dance company, who are creating The Talent House for deprived youngsters on Sugar Island in east London. Kurious Arts are similarly creating a film production hub at Castle House in Sheffield.