New fund woos arts investors

An initiative to generate social investment cash specifically for the arts sector is aiming to provide a sustainable additional source of funding for UK arts organisations. The new scheme, known as Arts Ventures, is being set up to generate private funding that will support organisations’ ambitions for capital development and increased earned income. Those with robust business plans and strong management teams will be eligible for investment from the fund, which will share some of the characteristics of the highly successful Venturesome fund run by the Charities Aid Foundation. This was one of the first social investment initiatives set up in the UK, providing affordable loans to charities, social enterprises and community groups when grants may not be available and access to traditional financial institutions is difficult.

Tim Joss, Director of The Rayne Foundation, is one of the founders of the group that is driving the Arts Ventures initiative. He told AP: “With the economy in such a parlous state it will be years before grant funding starts building up again, so lots of people in the arts are asking what earned income streams can be developed and how they can be financed. The rest of the not-for-profit sector is way ahead of the arts in finding solutions to this, and this scheme aims to offer arts organisations the opportunity not only to develop viable capital projects, but also to reduce their long-term dependence on public sector funding.”

Steps are now being taken to assess demand amongst arts organisations for this kind of finance and draw together a shortlist to be involved in a pilot of the scheme. A ‘model portfolio’ of arts-based projects of different sizes across a range of artforms will be created, each with a proposed development which could be realised through a non-grant investment. The final portfolio will be offered to potential investors who are keen to support the arts in alternative ways – not just with donations or grants. The costs to arts organisations will be the yield payable to investors during the lifetime of the investment and the repayment of the capital sum.

Joss is joined in the development of the scheme by other leading thinkers on arts funding, including Geoff Burnand, Chief Executive of Investing for Good; Graham Henderson (Chief Executive, Poet in the City), a champion of the idea of a limited profit ‘blended return’ arts investment fund; Jim Beirne, Chief Executive at Live Theatre, which has five social enterprises at various stages of development; and Mission Models Money (MMM), a long-time advocate of alternative funding methods for the arts. The pilot scheme, launched this week, is being hosted through MMM under the guidance of consultant Margaret Bolton.

Burnand is very optimistic that private investors will be keen to invest in the arts sector. He told AP: “Arts managers need to get into the shoes of potential lenders. These days more and more of them are considering how their money can be used to generate social benefits as well as some financial return. The arts sector is very well placed to meet their needs.”