• Nesta report says supporting the arts through three new funding models could bring in more than £70 million of additional finance over three years 

Nesta is calling on private and public funders to explore new models for driving income growth in the arts. In its report The new art of finance: making money work harder for the arts, Nesta proposes that arts funders, such as the arts councils, local authorities and the Department for Culture, Media and Sport (DCMS), should make public money work harder and leverage new sources of finance in three new ways: research and development (R&D) funding, venture funding and matching money raised through crowdfunding.

The arts remain dependent on four funding sources: grants from public bodies, earned income (eg from ticket sales), philanthropy and investment. The new art of finance identifies three financing gaps and proposes solutions. They are:

• Investment in arts R&D: Arts organisations should invest in R&D to expand their audience reach, identify new ways of generating revenue and develop and evolve their missions to create new forms of cultural value. However, there is currently little targeted public funding in these areas despite the potential cultural, social and economic pay offs. Arts organisations should at least match the UK economy as a whole in allocating a one per cent share of their current spending towards R&D, and funders should allocate at least one per cent  of their money towards financing it.1 Following the example of R&D in other areas, the state should fund and incentivise them to do so.
• Venture funding and accelerators: Social ventures in the UK may offer lessons for arts organisations that want to engage investors with those that combine financial, social and artistic impact. Furthermore, public backing for new arts accelerators to develop the most promising ideas into new ventures and for venture funds to provide investment would help bring new money into the sector.
• Matched public support for crowdfunding: Nesta has been documenting the growing number of online platforms that connect small-scale donors or investors to new projects or ventures.2 Arts funders may be able to grow these potential benefits by making some grants conditional on matched funding from these platforms as a way of generating more money for the arts.

If Arts Council England (ACE) were alone to ring fence one per cent of its overall budget on R&D funding, currently equivalent to £6 million a year, and public funders were between them to allocate £10 million a year towards piloting venture funds, accelerators and crowdfunding, the report argues that after three years we might expect over £70 million of new funding for the arts over this period.3

Hasan Bakhshi, Nesta’s Director of Creative Economy comments: “The recent funding cuts in England will not be reversed any time soon. They reinforce the need to urgently explore new ways of supporting the arts. Now is the time to develop funding models which leverage in money from new sources.”

The full report, The new art of finance: making money work harder for the arts, is available here.

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For all media enquiries please contact Laura Scarrott in Nesta’s press office: [email protected] / 0207 438 2697

Footnotes:

1.       One per cent is broadly equivalent to the amount of money the UK spends on scientific and technological R&D as a percentage of gross output. A one per cent target is conservative when compared with, say, the 2.3 per cent and 3.2 per cent that the Computer programming and consultancy and Pharmaceuticals industries respectively spend on R&D as a percentage of their sales. 

2.       http://www.crowdingin.com/platforms/all/all

3.       Over £70million of new funding over three years assumes an additional £1 is raised in 2015–16 (1 X £16 million), £1.50 is raised in 2016–17 (1.50 X £16 million) and £2 is raised in 2017–18 (2 X £16 million) for every £1 of public money spent. This is described as ‘up to’ £72 million in additional funding because some of this money may displace existing funding in the arts, How can money work harder for the arts

About Nesta: (www.nesta.org.uk) is the UK's innovation foundation. We help people and organisations bring great ideas to life. We do this by providing investments and grants and mobilising research, networks and skills. We are an independent charity and our work is enabled by an endowment from the National Lottery.