Social investment fund pays out first loans to the arts

The first three loans of the new £7m Arts Impact Fund have been awarded to dance agency South East Dance, artists’ studio providers Bow Arts Trust and the volunteer-run Titchfield Festival Theatre.

The Fund, launched last year, supports capital and non-capital projects that demonstrate a combination of social, artistic and financial return, offering arts organisations an alternative to commercial loans and grant funding.

Convened with the help of the Cabinet Office, the Fund brings together public, private and philanthropic investment from the Bank of America Merrill Lynch, Esmée Fairbairn Foundation, Nesta, and Arts Council England with additional funding from Calouste Gulbenkian Foundation.

Flexible access to funds

Brighton-based South East Dance has received a £350k loan to support work on its new building, The Dance Space. The organisation will rent out studio and office space in the building, reducing its need for public funding and supporting its community development programme and work with local artists.

“Arts organisations are facing continuing shifts in the funding landscape,” said Jamie Watton, South East Dance’s CEO and Artistic Director, “so it is incredibly valuable to have a fund which helps temporarily bridge gaps in income streams for important projects like The Dance Space. This fund allows us to move full steam ahead with our plans at a crucial moment.”  

Bow Arts Trust has been offered a £600k revolving credit facility until July 2017 – the maximum available through the fund. It will use the credit to purchase and develop property in order to expand its offering of artists’ studio space and support its education programmes in London schools. The Fund approved the loan without a particular property identified on the basis of the Trust’s strong balance sheet.

Bow Arts’ CEO Marcel Baettig said: “It offers us flexible access to substantial funds over a rolling period and we believe shows both a growing understanding and confidence in our sector.”

Volunteers at Titchfield Festival Theatre in Hampshire, one of the UK’s largest amateur theatre groups, will use its £150k loan to carry out repairs and improve functionality at one of its venues in a bid to grow its rental income. It also hopes to reduce its energy costs by installing solar panels. The money will support its theatre education programme and free tickets for schools scheme.

Strengthening resilience in the arts

The three organisations will document the artistic, social and financial impact of their loans every quarter.

So far more than 60 organisations have made applications to the Fund, which hopes to support 20 to 30 organisations over the next two years. It offers loans of £150k to £600k with an interest rate of between 4% and 7% to arts and cultural organisations in England.

Helen Goulden, Executive Director at Nesta, said: “We know that social investment has proved to be successful in other sectors, such as health and energy, and we hope this unique fund can further demonstrate the role of different kinds of finance to strengthen the resilience of arts.”

Nesta said there is the potential for the model to be scaled or replicated in other sectors.

Successful applicants to the next funding round will be announced in June.