– £7million Arts Impact Fund brings together public, private and philanthropic investment
– New funding model will bring social investment to the Arts
A fund that brings together public, private and charitable investment to support arts organisations has launched today. This is the first of its kind to focus on the social, artistic and financial return created by arts-based organisations.
The £7million Arts Impact Fund was created and funded by Bank of America Merrill Lynch, Esmée Fairbairn Foundation and Nesta, supported by Arts Council England and with additional funding from Calouste Gulbenkian Foundation. It was convened with the help of the Cabinet Office, to demonstrate the significant social value created by arts organisations and support their work through loan finance.
The initiative uses a three-way funding model – called comingling. It has been developed after Cabinet Office research suggested there is an investment demand of £28million from arts-based organisations.
As a demonstration fund, it combines the expert knowledge and networks of the arts industry with charitable foundations, investors and social impact specialists and will:
- Identify a portfolio of artistically-excellent organisations seeking to expand / scale
- Contribute to the debate on how to track and report on artistic and social outcomes within the wider arts sector
- Establish demand for social impact funding from arts-based organisations
- Demonstrate how arts organisations can generate both financial and social returns
- Promote case studies of arts organisations improving resilience through social investment
- Establish the fund mechanics, metrics on loss/default rates and returns to allow for a larger follow-on fund
The Arts Impact Fund offers an alternative to a commercial loan and grant funding. The advantages of this model include: working with experienced arts investors, sharing risk and providing the opportunity to secure finance for core costs and accelerate development plans.
Arts organisations interested in applying will need to show a need for the finance, explain what the social impact of the investment will be and demonstrate how they will repay the loan. The impact of the arts organisation should be in at least one of the following areas: Youth and Educational Attainment, Community and Citizen, Health and Wellbeing.
Organisations will be able to apply via the website – www.artsimpactfund.org – from Wednesday 15th April for an unsecured loan ranging from £150,000 – £600,000 and with an interest rate of between 4 and 7%. All applications will be considered by the Fund investments team before being presented to the investments committee. Successful applicants will be announced every six months over a two year period with their performance and social impact measurements published.
Rob Wilson MP, the Minister for Civil Society, said: “The UK’s social investment market is world-leading and contributes to economic growth, tackling social problems and supporting public service reform. As part of this Government’s long term plan for the economy, social investment plays an important role by unlocking finance to help charities and social enterprises do more. We believe that the Arts Impact Fund and this pioneering new model is just the start and we want to see it scaled up and replicated in other sectors to address a range of social challenges.”
Andrea Sullivan, head of Corporate Social Responsibility for EMEA at Bank of America Merrill Lynch, added: “Bank of America Merrill Lynch is a recognised leader in supporting the arts around the world. Maintaining a vibrant arts sector is critical to the social and economic development of our communities, and with traditional funding sources constrained, the Arts Impact Fund is a timely and innovative financial solution with tremendous potential for scale. We are delighted to be able to offer not only financial support but also our proven experience of global impact investing to help create sustainable change in our communities.”
Helen Goulden, executive director at Nesta, and on behalf of the Fund, commented: “It has never been more important to think imaginatively about how to increase access to finance for arts organisations. The Arts Impact Fund not only opens up opportunities for social investment for the whole sector, but brings together public, charitable and private finance in support of that mission. These first two years will be critical to understanding the long-term potential of impact funds of this kind to support the Arts.”
For more information about the Fund and how to apply visit: www.artsimpactfund.org The pilot will determine whether there is a demand for a longer term, larger fund with the model potentially also being applied to a variety of other sectors of the UK economy.