Funding attitudes change as grant options shrink

Arts organisations would like to generate more income from commercial activities and are open to new relationships with investors, according to a recent survey. Conducted by AP on behalf of Arts Ventures, the new initiative that aims to provide development funding to support additional income streams, the survey revealed that the combination of reduced state funding and a decline in corporate giving has left many arts organisations keen to explore ways of diversifying their income and more open to the possibility of loans. Almost two-thirds of respondents would aim to create a more sustainable business model by using non-grant finance to scale up existing artistic work, leading to a measurable increase in arts audiences; but other ideas put forward include digital products, cafés and restaurants, property development, commercial arts products, merchandising and brand licensing, and for-profit business/arts partnerships.

The survey attracted over 200 responses from arts organisations, with strong representation from live events and performance (44%), but also music, visual arts, literature, theatre and dance. Three-quarters of respondents were looking for less than £500K to invest, and the majority of these for less than £100K to enable them to develop new sources of earned income, suggesting that a relatively modest level of investment could have a major impact on the sector. However, despite their enthusiasm, around half of arts organisations fear that they could be saddled with debts they are unable to repay.

Arts Ventures is the brain-child of a group chaired by Tim Joss, Director of the Rayne Foundation, and involving other arts professionals and specialists in social investment. The group aims to establish a new Arts Investment Fund with the aim of providing development funding on the basis of a semi-philanthropic rate of return. Only a quarter of survey respondents felt that their ideas could generate a standard commercial return for investors, but 40% thought that they could guarantee a lower return and most are confident of being able to repay capital over a 3–5 year period. Seventy-seven business proposals were received as part of the survey, and are being submitted to a due diligence exercise run by Geoff Burnand of the Social Investment Business, to assess their actual investment potential.