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Culture social investment

Here at BOP we were delighted today to see the launch of the new Arts Impact Fund. It is high time the UK cultural sector taps into the social impact investment market, and this is the first significant initiative on this front – the first time a fund has offered repayable loans that require organisations to track artistic and social outcomes, as well as financial ones. However we can also foresee a couple of challenges on the horizon in making this model work well for the arts…


Although far from being a magical solution that will address all societal issues and eliminate the need for public funding (as it is sometimes portrayed to be), social impact investment is a growing market and an important part of the social economy. The UK is a world leader in the field, and significant results have already been seen in health, education and criminal justice. So there are high hopes for its potential to help the cultural sector access new finance and develop cross-sectoral initiatives.


On the other hand, the set up of the fund poses some important questions. The first question, which is really a logistical one, is about the kind of support available for organisations to negotiate and manage social impact loans. At present the offer here is not clear, but we are certain that some support will be critical to the successful performance of the fund (which, in turn, is critical to ensuring the sector benefits from social impact investment). Support may also be needed to ensure that small and medium cultural organisations can successfully secure loans in the first place, and that the fund does not unintentionally exacerbate the existing resource inequality between small and large cultural organisations.


Second is a slightly trickier question: is the sector ready for this? Effective use of social impact investing requires organisations to be confident with both tracking social outcomes and financial returns. However, recent research, including the evaluation of the Catalyst Scheme carried out by BOP, consistently shows that many small and medium sized organisations (which are likely to constitute a significant portion of the AIF target) often struggle to define and articulate the nature of their social impact, let alone evidence it. Other recent research has highlighted how the sector suffers from lack of knowledge and expertise in financial management.


These things are ongoing challenges for the arts, and ones BOP is often engaged in helping our clients tackle. Hopefully the existence of the Arts Impact Fund – as well as providing new finance streams –will help drive improved understanding and capacity around capturing social impact across the sector.

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By BOP Consulting

Rossella Traverso

Associate

Rossella has four years experience of working in research and evaluation. She holds particularly strong qualitative research and project management skills.

Rossella Traverso - Associate | BOP Consulting

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Rossella Traverso

Rossella Traverso

Associate