CAF was the first specialist venture capital fund for the creative industries – established in 2001, jointly by the Arts Council England and Birmingham City Council, as a private sector led initiative. It has made successful investments at a time when the sector had little or no recognition as significant contributor to jobs and wealth generation. Having recouped its original fund with the successful exit of two companies, it made a second round of investments in companies which did not weather the financial crisis. Following the recent exit of its final investee company, CAF is seeking to support the creative and cultural industries in a new way – promoting entrepreneurship and innovation with a number of initiatives.
Given our origins as a fund, spanning both cultural funding and enterprise support, we wish to continue our unique blend of expertise both in the arts and creative industries.
However, as pointed out in the recent report from Culture Central, “A toolkit for Smarter Cultural Investment in our Towns, Cities and Regions”, the need for new models of finance in the cultural sector becomes more and more acute:
“This has often been mooted in the sector but has yet to be achieved at scale. The key fundamentals of this approach – the need for a return on investment and for securitisation (asset leverage) – have continued to be elusive but might represent the biggest potential for wholesale shift in the sector in a generation, similar to that achieved when the Higher Education sector moved to a student fee/loan structure, or social housing being provided by third-party organisations rather than directly by local government. Clearly the technical mechanisms of change are different, but the impact could be on a similar scale.” (our emphasis)
CAF has recently been funded by Arts Council England to carry out a small research project to establish how arts and cultural organisations might approach securitisation and asset leverage in a way that is congruent with their overall structure, governance and vision. Using a mixture of desk research, interviews and case studies CAF would consider the following questions:
- What are the legal, financial and, if necessary, regulatory structures and hurdles that need to be addressed and what are the practical steps for addressing them? If suprable, how; if insuprable, what other models are available and suitable.
- What are the governance implications for an arts organisation which wants to behave more entrepreneurially and specifically how, if at all, can it resolve the tension between public scrutiny and entrepreneurial risk in line with an artistic vision?
- What are the skills, knowledge and attitudes required inside an arts organisation to facilitate an investment mindset?
The Money Matters! campaign
We will collate this research and create content to conduct a 5 – 10 day social media campaign with a working title of “Money Matters!” across a range of platforms to target NPO senior management. Some of the content will be decided as a result of the research but at this stage we imagine that they may include:
- Type of return in investment: a short comparison/ explanation of the return in investment and possible case studies of successful forays by arts organisations.
- Legal and regulatory structures: A step-by-step toolkit or process map for arts organisations to follow.
- Governance: Some checklists, essays or articles and possibly other resources for boards to use in their discussion of this issue
- Skills, Knowledge and Attitudes: some case studies, possibly some online quizzes or resources that will allow some form of diagnostic for staff and boards to assess their “investment readiness”.