Creativity, culture and capital

Back in 2019, things felt pretty different. Climate change had long been a pressing issue, but most of us weren’t considering the risk of a global pandemic, or parsing the implications for our cultural lives and the livelihoods of the people and organisations who support them.

At Arts & Culture Finance (UK), together with Upstart CoLab (USA) and Fundación Compromiso (Argentina), we were thinking hard about what kind of funding environment the creative and culture sector needed to thrive. This led to the launch in 2021, the UN’s International Year of Creative Economy for Sustainable Development, of our shared initiative – Creativity, Culture & Capital.

It brings together international stakeholders who believe that art, design, culture, heritage and creativity can benefit people, communities, society and the planet – and that impact capital will be a vital tool to support the positive growth and development of the global creative economy.

At Arts & Culture Finance we specialise in social impact investment – the use of repayable finance to achieve social outcomes as well as financial returns. The Creativity, Culture & Capital coalition was built on trust, respect and a shared, unswerving belief in the case for impact investing in the creative economy.

Power of the arts

It was born out of a shared conviction that arts, culture and creative enterprise are a transformative force for good in the world, and that coordinated collective action by investors, philanthropists and policymakers can turbo-boost this positive impact – in scale, in sustainability and in effectiveness.

Using imagination, courage and ingenuity, we can ensure that the desire to ‘build back better’ delivers more than an empty catchphrase, cast adrift between the twin super tankers of risk aversion and status quo.

While the creative economy isn’t explicitly recognised in the UN Sustainable Development Goals, we believe diffuse social benefits are a feature not a bug of our sector. Whether it be grassroots craft organisations delivering jobs, creative clusters driving local economic growth and development, or dance classes addressing loneliness and reducing risk of falls in elderly patients, many arts and creative interventions address more than one of the goals.

This interdependence characterises the power of the arts to address complex systems and the wicked problems the world is facing today.

Culture and creativity permeate everything

Creative approaches are necessary, because siloed disciplines and interventions working along one axis of impact can only address social challenges in parallel or in series, rather than as a multivariate matrix. As creatives develop novel initiatives in their attempts to find solutions to these problems, so too must investors be imaginative about how they conceive of and measure impact. Directly measurable positive outcomes work for everyone, but not everything good can be measured and not everything that can be measured is good.

Culture and creativity permeate everything we do, and, as Dr Maria Jackson, Chair of the US National Endowment for Arts memorably commented at the Edinburgh International Culture Summit, “The arts are often preconditions necessary for so much of what we say we want to achieve in society”.

Creative work can provide a much-needed catalyst for significant cultural shifts, whether that be around the devastation climate change is wreaking on the natural world, or on LGBTQ+ acceptance and inclusion.

Huge potential for good

As impact investors develop their sophistication and deepen their understanding of the social challenges they demand their capital addresses, we believe the creative economy will become increasingly attractive as a home for that capital. It is vital we develop the infrastructure within the creative economy to provide investable opportunities.

The skills we have developed in investment origination, impact management, measurement and evaluation, business model understanding and market dynamics are specific to the creative economy. We also work with challenges in areas such as talent development and retention, governance, as well as shortfalls in creating supportive environments for innovation.

Our bespoke sector experience not only enables us to build better relationships and promote the potential of impact investment to drive commercial models, economic growth and the myriad other positive impacts of the sector, they also mean we make better investments. We can manage the risk of our individual investments and our overall exposure better and strike a constructive balance between financial risk and return and impact risk and return.

Passion, patience and persistence

There are many exciting opportunities for new fund development. As the energy crisis continues and creative and cultural venues across the world battle with rising costs and outdated energy and heating infrastructure, there is a huge opportunity for impact capital to be deployed to retrofit the sector’s global asset base.

The other huge benefits of collective investment vehicles, particularly when investors span the public, private and philanthropic sectors, are that power dynamics shift and diffuse and, crucially, the social impact that motivates investors becomes the lodestone around which their otherwise competing agendas can coalesce. When the positive outcome is the ultimate unifying priority, collaboration becomes easier and long-term partnerships are born.

Creativity, Culture and Capital has published three essay collections, bringing together 100 inspiring stories to ignite a pilot light under this incredible source of positive social outcomes, for individuals, communities, society and the planet.

We know there are more stories out there, and the beginnings of a movement are building. With passion, patience and persistence, we can create a perpetual source of funding for the creative economy that not only values positive impact but insists on it, and a portfolio of vibrant and profitable investment opportunities for impact investors across the globe.

Fran Sanderson is Director, Arts & Culture Investments and Programmes at Nesta.
 artsculturefinance.org
@artsculturefin

A longer version of this article appeared in Creativity, Culture & Capital Collection 3 (2023), a free essay collection about the creative economy. All the essay collections are available to download free at www.creativityculturecapital.org. 

This article, sponsored and contributed by Arts & Culture Finance, is one of series demonstrating the impact repayable finance can make to the arts, culture and heritage sector.