Arts and cultural organisations contribute insight and cohesion to society as well as significant positive outcomes for individuals and communities, but are under serious financial pressure due to cuts in public funding at the national and local level. Nesta, with partners including Arts Council England, has therefore been exploring innovative approaches to help them access the appropriate finance they need to thrive and continue delivering their impact.
This survey-based research study examines the existing and potential future demand for repayable finance in the arts and cultural sector in the UK. We have used the term ‘repayable finance’ because it is a clear, yet broad term that incorporates all manner of financial instruments: repayable grants, loans, equity and bonds. This broad grouping is helpful in understanding the state of demand for all types of finance amongst arts organisations, irrespective of whether the financier expects social and artistic returns over and above or in part exchange for conventional monetary payback, what we consider to be social impact investment.
This research also provides a detailed account of the key issues related to repayable finance in arts and culture, such as barriers to taking on such financing. Survey responses numbering 1,068 were used to model the potential future demand for repayable finance across the sector, which is estimated at just under 3,000 active arts and cultural organisations above a threshold level of identifiable income (see Methodology on page 30).
In conclusion, the study has found that, while current demand for repayable finance is concentrated among a small proportion of organisations, the expected future demand suggests repayable finance is going to play a far larger role in arts and culture funding over the next five years. Overall, the study has found that:
• Repayable finance is currently used by a small proportion of organisations, and these are typically larger and based in London.
• There is significant growth potential for repayable finance, with expected demand of £309 million1 spread over the next five years.
• Repayable finance is attractive for entrepreneurial purposes – developing new revenue streams and scaling up existing activities – rather than as a replacement for grant or other types of funding.
• Organisations not interested in repayable finance are concerned about repayments and limited resources to manage the process.
• Attitudes towards repayable finance are positively linked to organisations using it: there is limited positivity among organisations which haven’t previously used it, but this improves significantly after organisations have.