The creative economy in communities across the United States is ripe for impact investment—but where should funders start? As outlined in Callanan’s article, Upstart Co-Lab views the arts “as a way to tackle sustainability, to make communities strong and vibrant, as a rich source of new business ideas and quality jobs, as a money-making and do-gooding proposition.” There is a clear role for artists to play as social entrepreneurs, community leaders, asset builders, and job creators as part of the booming creative economy. This includes a focus on art, culture, entertainment, media, and innovation, within innovative businesses in fashion, culinary arts, architecture, game design, industrial design, and much more.
While philanthropy has a key role to play in continuing to encourage growth in the creative economy - “the sort of job-creating, wealth-building business activity that naturally occurs in creative places” - arts funders have not yet connected with impact investors to engage their capital and scale a creative sector that is inclusive and equitable. But there is a significant pool of capital to tap into. According to Foundation Center’s aggregate data made available at the time of the original article, “the arts receive 5 percent of US philanthropic giving, roughly $17 billion annually. If the arts got just 5 percent of all the investment assets of US foundations, that number would be $43 billion. And if the arts got just 0.5 percent of all the investment assets under management in the United States, that number would be more than $200 billion.”
Connecting arts and culture to impact investing will not just unlock new sources of capital - it will also ensure that as the creative economy grows in strength and importance to the U.S. economy, values of equity, sustainability, and inclusion will be embedded within it so all may benefit.
As foundations and other arts funders increasingly align their investing with their missions, impact investing in the creative economy is a way to ensure increased support for arts and culture and the communities they serve while also maintaining equitable practices. For example, the Nathan Cummings Foundation recently announced a 100% commitment to their mission, citing that “capital markets have to change to drive sustainable and inclusive growth that will create long-term value for people, the planet, and the economy.”
In the upcoming discussion about impact investing in the arts, Callanan and Torres will expand upon potential actions arts funders can take now. These tools give way to unleashing more capital for creativity and ensuring equitable practices.
Editor's Note: Laura Callanan, Founding Partner of Upstart Co-Lab, and Eddie Torres, President & CEO of Grantmakers in the Arts joined Foundation Center to host a free webinar on why impact investing has a critical role to play for the arts and culture sector as another lever for arts funders to use to advance their missions. Watch the webinar recording for free here.
“How to Invest in the Arts without Buying a Picasso” is an article by Callanan that originally appeared in the Winter 2017 issue of Grantmakers in the Arts’ GIA Reader, a national publication dedicated to the field of arts philanthropy. Check it out to learn learn more about this conversation. GIA’s position on racial equity was also a part of the discussion on social impact investing, offering suggestions and strategies for an equitable investment process.