The Arts Impact Fund, launched on 10 March, brings together public, private and charitable investment to support arts organisations. It uses a 3-way funding model called ‘co-mingling’, the first of its kind to look at the social, artistic and financial return from arts-based organisations.
The 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. Cabinet Office also helped the Fund to demonstrate the social value that arts organisations provide and helped support their work through loan finance.
How the Fund works
The Fund was developed after Cabinet Office research suggested there is an investment demand of £28million from arts-based organisations.
Through expert knowledge and networks of the arts industry with charitable foundations, investors and social impact specialists, the Fund will:
- identify artistically-excellent organisations seeking to expand
- 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 their 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 the opportunity to secure finance for core costs and accelerate development plans.
Watch a short video about the Fund:
Arts Impact Fund
How to apply
Arts organisations interested in applying will need to:
- show a need for the finance
- explain what the social impact of the investment will be
- demonstrate how they will repay the loan
- be involved with youth and educational attainment, community and citizens, health and wellbeing
Organisations will be able to apply on www.artsimpactfund.org from 15 April for an unsecured loan ranging from £150,000 to £600,000 and with an interest rate of between 4 and 7%. Successful applicants will be announced every 6 months over a 2-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 partners, 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 2 years will be critical to understanding the long-term potential of impact funds of this kind to support the arts.
The pilot will determine whether there is a demand for a longer term, larger fund. It will also look at the potential for using the model in other sectors of the UK economy.