The intersection between the arts space and social investment is not fully realised. Yet many of the social investors Investing for Good works now realise that if they support social ventures, it is not a great leap to support artistic ones that also confer social value? A triple bottom line of social, financial and artistic return? That’s compelling. In the UK context could an influx of funding of this nature help to replace a hole in the arts budget for the arts, needed after the drastic cuts of recent years?
Looking more narrowly at the music space, charities working in the field have traditionally performed a wide range of functions from supporting grassroots, community-based programs to publicising good causes, to benefit concerts, to educating festivalgoers about environmental sustainability. One that stands out is Help Musicians UK, the leading charity supporting and empowering musicians to have successful careers and lives. In Place of War also does some vital work in places of conflict, as does Musicians without Borders. Music Venue Trust too – a charity that campaigns to overturn closure of small venues across the UK. Long-term they plan to acquire the freeholds of as many of these vital venues as possible.
How to access finance?
In terms of currently accessible finance for those working in music, the main providers of project funding are the Arts Council and the PRS for Music Foundation. The PRS for Music Foundation is entirely music focused and offers small grants. Creative Industry Finance has helped independent record labels, recording studios, producers and artists with advice to create or strengthen their business plan and also offer access to affordable loans. Help Musicians UK match fund crowdfunding campaigns on PledgeMusic. On their website, they also have a particularly useful Funding Wizard tool which can help musicians identify organisations that might support their project. Start ups can find access to new incubator models, perhaps via a soft loan but more likely just grant support at present. Early growth stage organisations can obtain investment and business support from ACE Creative Industry Finance, Esmee Fairbairn Finance Fund and a new programme called Prosper.
Unlocking social investment
Whilst grant funding is where the greatest need is and probably always will be, how can we unlock additional capital in the form of social investment? For now impact investment is most immediately accessible to larger organisations - music venues, live music events or labels that have a social mission through flexible, cheap loans. In some ways impact investors are stricter, as not only do you have to show that you can repay their loan but you also need to be able to demonstrate that you are achieving social outcomes and commit to measuring them. Yet this comes with benefits if you meet the criteria. The money is usually cheaper, more flexible and unrestricted. Usually you need to satisfy three key criteria:
- You must have social objectives and ideally have these be set out in your legal documents
- A high percentage of your revenue should come from trading
- You must be able to demonstrate the social outcomes achieved
The last point can’t be overstated. Without a proper framework for measuring impact, all you have is noise...
The Arts Impact Fund is a good example of impact investment working in practice. A £7m initiative with government backing, co-conceived by Investing for Good and set up to demonstrate the potential for impact investment in arts. Its structure reflects the importance of measuring the artistic and social outcomes generated by investees. The Arts Impact Fund receives investment from both ‘finance first’ investors such as banks and ‘impact-first’ investors that may include foundations. It’s small in the world of funds but with a very structure based on blended finance. The fund offers repayable finance on soft terms to arts organisations that can show that they are sustainable, have strong artistic ambitions and positive impact on society. By investing in the arts they want to support more organisations to become enterprising and resilient.