Realising the potential of non-grant financing: Announcing the Arts Ventures Fund
Author: Clare Cooper
MMM Associate Margaret Bolton explains the ambitions and plans of the Arts Ventures Fund.
Over the past few years MMM has been examining the potential of non grant financing in the form for example of loans and quasi equity (or revenue sharing arrangements) to support arts and cultural organisations and to enable them to become more financially resilient. To some extent arts and cultural organisations have always accessed non grant financing: ‘friends and family’ loans; angel investors taking a stake in the success of particular productions; mortgages or secured loans for property purchase or refurbishment; artists sacrificing part of their fees in return for a profit share. However, we were interested in how the debate and action to promote social investment in the broader charitable and social enterprise sector might be harnessed to support new funds and promote new ways of thinking about how arts and cultural organisations might best be financed and more generally, better supported in the future.
A large part of our agenda has been to try to ensure that the organisations we are concerned about have access to the capital they need. Our experience is that small and medium sized arts and cultural organisations tend to be both under capitalised and over extended or in other words they are trying to achieve too much with too little resource and they lack access to the funds to change their situation. They tend to lack reserves (in large part because of the difficulty of making surpluses). They therefore often do not have the small amounts of investment needed to enable them to generate more revenue from existing activities or develop new income generating products or services.
There are specialist providers of investment to charities and other socially motivated organisations including Triodos, Charity Bank and Venturesome. However, our assessment of the market is that the sorts of financing that arts and cultural organisations most need ie high risk capital to develop new ventures and underwriting (money allocated and called down if needed) to underpin cashflow are in relatively short supply – at least relative to the potential demand!
Our view then is that new funds dedicated to arts and cultural organisations are required – although not a new financing organisation as the expertise of the existing social investment specialists should be utilised. Our contention has always been that in order not to cannibalise existing funding we need to develop new fund raising mechanisms and platforms. This is why MMM is so pleased to be part of the group developing the Arts Ventures Fund. The group aims to put together a portfolio of arts and cultural organisations and to work with wealth managers to secure investment pledges from high net worths. We have been aware for some time that wealth managers were being asked by their high net worth clients to construct portfolios which include investments which offer ‘blended returns’ ie returns that are social and/or cultural as well as financial. The proposed new fund will potentially enable many small and medium sized arts and cultural organisation to access investment from this new source.
If you are interested in being part of the Arts Ventures Fund portfolio please complete the on-line questionnaire posted by Arts Professional which will be published on 23rd February. For further information about the initiative please see the 23rd February issue of Arts Professional and watch this space – we intend to post regular updates on the MMM blog.
The Arts Ventures Fund Group is being led by Tim Joss (Rayne Foundation) and comprises, Geoff Burnand (Investing for Good), Jim Beirne (Live Theatre), Graham Henderson (Poet in the City), Graham Hitchen (Independent Consultant) and Margaret Bolton (MMM Associate and Independent Consultant). The Group thanks Liz Hill of Arts Professional for all her help and support.