Nothing ventured…

In my day job, running a foundation across the arts, education, health and social development, I meet many third sector chief executives. In these tough times, many are scared. Some are keenly alive to the opportunities. Fear is understandable, but Malcolm Gladwell, author of ‘The Tipping Point’ and ‘Blink’, makes an astute distinction: “choking [in the sports sense] is a result of thinking too much. Panic is a result of thinking too little.” Every day, there are moments when we must balance thought and emotion. The challenge is to maintain the adrenalin that fear generates, but not so much that you panic. This is a creative, not a blinkered process. This is no time for denial and panic. It is a time to look up, draw in ideas from others and dig into our imaginations. When the recession ends, the UK will be different – different economically, socially and culturally – and the future belongs to those attuned to all this change. A venture philanthropy (VP) fund for the arts could be an innovation whose time has come. It could help the arts prepare for the upturn and have a big social, economic and cultural impact.

The VP solution
The relationship between a venture philanthropy fund and a charity or social enterprise is markedly different from the standard funding relationship. The aims are to achieve major change, including organisational growth. The relationship is with the whole organisation. It is close and over a sustained period, often three to five years. A VP fund will have only a handful of investments at a time and, as well as financial investment, there will be technical support to help build capacity. The financing is tailored to particular needs. Grants are used, of course, but at times loans or even equity may be more appropriate. This means that some of the investment money can be recycled. And careful attention is given to rigorously documented performance measurement including reach (the number of beneficiaries or lives touched) and turnover. The desired results are a sustainable step-change and high social and financial impact. Opportunities are sought to replicate the achievement elsewhere and hence achieve more widespread, even systemic change in the sector the organisation works in, be it homelessness, education or indeed the arts. VP works. Evidence abounds in the UK, Europe and the US. There is no reason why the model should not be adapted for the arts and bring benefits to society and the arts sector.
Five gold rings
A VP fund could help address problems in the arts. Here is a quick review of five of them. The first is well expressed in a 2001 report from the US¹. Thinking “has been too narrowly focused on supporting the production and performance of the arts – ‘supply’ strategies – rather than stimulating public involvement in the arts – ‘demand’ strategies. A new framework that puts the public benefits of the arts at the centre of the discussion will require approaches designed to increase individual exposure, knowledge, and access to the arts.” While the UK has shifted to patient-focused healthcare, child-focused education and community-focused policing, audience- and participant-focused arts activities lag behind. The second follows on. A DCMS-commissioned 2007 report on the creative industries highlighted the demands of “articulate, discerning, better educated, richer and more demanding consumers and citizen users”². This is about so much more than just the live experience, especially when most people’s experience of the arts is now non-live. The iPod, the download and internet shopping have quickened the pace “of innovative and creative origination anticipating, responding to or shaping demand from this new class of consumers”. Look across the subsidised arts world and you find a depressingly limited range of connections between artist and citizen and, as the McMaster report noted, a widespread failure to drive technological advances.
The third is the misleading, debilitating polarity between the arts’ intrinsic and instrumental benefits. The intrinsic and the instrumental are linked. It’s obvious: art has to be intrinsically good for instrumental success; bad art fails on both counts. The sad consequence is that static engagement – getting a fairly narrow segment of society to arts venues – has prevailed over the more dynamic form of citizen-focused engagement: offering the arts in ways and in places suited to our diverse society and making special efforts to engage with those who are all too often excluded. Fourthly, things are made worse by the lack of an evidence base of what works. Where is the research that demonstrates that regularly funded organisations are achieving health outcomes, for example? We know intuitively, even anecdotally, that the arts have a major contribution to make. But where are the independent peer-reviewed evaluations needed to present the case convincingly? Finally, the Clore Leadership Programme is just one sign of better attention being given to the development of arts managers. In contrast, the development of artists once they have left the education system has been relatively neglected. Perhaps for these reasons, venture philanthropy with its demand-side culture and emphasis on reaching out beyond the mainstream and tackling disadvantage has so far shied away from the arts.
Benefits to the arts
Picture an arts organisation with growth potential, unencumbered by an accumulated deficit. VP could have a profound effect. With technical support, the organisation’s mission and business model would be health-checked and improved. More attention would be given to the demand side, leading to clarity about the organisation’s impact. This would be driven up by performance measurement across social impact (the level and quality of public engagement), cultural impact (the degree of involvement of artists) and financial impact (growth leveraged by the organisation’s efforts and the VP fund’s support). The evidence base for the impact of the arts would therefore grow. Across the whole arts sector, this would draw in new funds and expertise from foundations, the corporate sector and non-arts public funders. As arts-specific VP expertise grows and the value of VP is demonstrated, more funds would be attracted. It would increase arts organisations’ understanding of financial instruments other than grants. So where to start? Advice from senior figures in the VP world is that the initial focus should be on arts organisations doing excellent artistic work with a strong record of reaching out beyond the mainstream and helping tackle to disadvantage.