Expanding the Financial Toolbox
Context
MMM’s 2007 report ‘Towards a Healthy Ecology of Arts and Culture” stated that significant work needs to be done to refresh practice in funding and finance in order to reduce under-capitalisation and grow the financial capacities of arts and cultural organisations.
Adding to the menu of financing options by introducing the appropriate use of loans, equity and quasi-equity type instruments could be of significant benefit in helping to develop the sector’s financial resilience and enable the delivery of more great art. Money could be made to go further through recycling, new kinds of funders could be attracted across the philanthropic space, and there may be opportunities to generate additional types of income by devising new or re-packaging existing services, products and intellectual property and, crucially, it may be possible to strengthen an organisation’s asset base and infrastructure.
This programme strand builds on MMM’s 2007 report on the potential use of new and alternative financial instruments by arts and cultural organisations. It aims to show how their use works in practice and how we might grow the number of specialist finance providers across the UK who understand how to support creative practice and who are capable of responding to what we believe will be developing market.
Activities
Funds have now been identified in Scotland – the Third Sector Enterprise Fund and the Social Investment Fund – which already offer finance for the kind of capacity building support and investment that MMM has been advocating arts and cultural sector organisations use.
A pilot is now underway which aims to access these funds. If successful, finance from these funds will enable three consortia of Scottish based arts and cultural organisations develop new revenue generating activities which have the following focus:
- the development and further exploitation of tangible assets (buildings)
- the development and exploitation of intangible assets (intellectual capital and intellectual property)
- dematerialisation and achievement of a zero carbon footprint.
MMM is also working with the Shetland Arts Trust on scoping out the proposition for a new mechanism (a credit union, community development finance institution; co-operative lending society or peer to peer finance business) to help small scale cultural and creative projects access finance for their development and growth which could offer:
- small personal loans to artists (for example to frame their work or as leverage for grants);
- business loans to cultural and creative co-ops to enable them to expand/develop;
- start up loans for the creation of new cultural and creative co-ops;
- working capital loans to cultural and creative micro enterprises (businesses with 10 or less employees) looking to develop new products/services
