Nesta’s Arts & Culture Finance team is launching a new £20 million impact investment fund for the UK’s arts, culture and heritage social enterprises - the Arts & Culture Impact Fund.

Impact investment is about providing organisations with capital for both a financial and social return. This form of funding is useful to social enterprises, and arts & culture organisations in particular, because conventional repayable finance may be too expensive or simply not available for them. This is because there’s often a perception that social sector organisations are too (financially) risky coupled with a poor understanding of the depth and breadth of their socially beneficial work by mainstream investors and wider society.

Bringing together a mix of public, private and philanthropic investors - Arts Council England, the National Lottery Heritage Fund, Big Society Capital, Bank of America, the Esmée Fairbairn Foundation and Nesta - the Arts & Culture Impact Fund is now the world’s biggest impact investment fund for the creative arts. From now until spring 2023, the fund will be making affordable, flexible loans available to arts, culture and heritage organisations that have a positive social impact on people and the communities they live in.

The Arts & Culture Impact Fund builds on Nesta’s work in providing bespoke repayable finance to arts and culture organisations that they often cannot find anywhere else. In 2015, we launched the £7 million Arts Impact Fund in partnership with Arts Council England, Bank of America and the Esmée Fairbairn Foundation. We followed this in 2018 with the £3.7 million Cultural Impact Development Fund, which was supported by Access - The Foundation for Social Investment, with finance being provided by its partners The National Lottery Community Fund and Big Society Capital. Across both of these funds, we have made 30 loans totalling £9.1 million since 2015.

In 2018, we also commissioned market research asking arts and culture organisations about their attitudes towards, and demand for, repayable finance. This found that the sector would have a financing need of £62 million per year on average over the following five years - a positive indicator of demand that chimed with Nesta’s own experience.

The capital on offer through the Arts & Culture Impact Fund can range from £150,000 to £1 million and is repayable over a period of up to 10 years. As with our earlier funds, we take a relationship-centred approach to making investments, working closely with applicants to understand their needs and structure the finance accordingly. Many of the loans that we make through the Arts & Culture Impact Fund will be unsecured - meaning that applicants do not need to have assets to serve as collateral in order to apply. This is important because, for the most part, arts & culture organisations do not have assets to act as security, which restricts what finance is available to them. For larger, property related deals, security will be sought where appropriate.

In all cases, applicants to the fund will have to clearly outline how their work positively affects the lives of individuals and their communities. For example, an arts festival in a public park may contribute to good physical health and community cohesion - we would want to understand the cause and effect chain in this statement, the assumptions underlying it and the evidence for them, as well as how the social impact might be monitored. But we would be supportive too - working closely with organisations to strengthen their impact monitoring and evaluation capabilities. In this way, we will continue to make the case for the transformative power of arts, culture and heritage on society at large.

Impact investment from our funds has supported organisations like InHouse Records - a record label operating from prisons - to deliver its work out of the gate with a focus on prevention. Or Project Inc., a social enterprise that delivers creative alternative education to young people at risk of becoming NEET - not in education, employment or training - within cultural and heritage venues such as the Manchester Museum.

The Arts & Culture Impact Fund is now open for applications. Alongside the Cultural Impact Development Fund, Nesta’s Arts & Culture Finance team is open to enquiries for finance from £25,000 to £1 million. Aside from providing some basic information in our enquiry form, there’s no application to fill in - this is carried out by our investment team, who guide applicants through a process of due diligence. So if you think you can achieve great things through the power of arts, culture and creativity - or know someone that does - take a look at our website and get in touch! You can also sign up to our quarterly newsletter to hear about the latest opportunities.