Unlocking potential: Investment finance at work for culture

The UK has an exceptional reputation for cultural production and world-class creativity. Our cultural and creative assets are shining stars in our national constellation. They are a significant driver of exports, tourism and economic growth; critical for community cohesion, civic pride and wellbeing; and the envy of countries across the world. However, the reality is that, to generate the maximum possible benefits from these assets, recognising a shrinking overall subsidy pot, we need to move away from the presumption of grants and embrace new funding ideas.

And this is what we at Figurative are doing. We aim to bring fresh funding models to the sector by a variety of means including impact investment – repayable finance for social good – and a mix of public, private and philanthropic sources.

This type of investment can unlock opportunities that grants alone cannot: helping cultural organisations realise their ambitions, whether it’s acquiring new assets, scaling up existing revenue streams, or realising a whole other kind of venture.

We understand the sector’s huge power to drive significant social change but sharing that potential with the broader impact investing community is crucial. Whether it’s music’s capacity to support dementia patients, building children’s confidence, oracy and literacy through Shakespeare, or developing ownership models that enable grassroots music venues to sustain themselves, our aim is to tell those stories to investors who might fund them.

When is investment the right choice?

Investment finance isn’t a replacement for grants or other forms of income. Taking on repayable finance means taking on risk. You need confidence in your earned income projections and a clear path to repayment.

We recently met around 25 investees at our annual portfolio day – one of my favourite days in the Figurative calendar. Everything we do is rooted in and dependent on the inspirational work our investee organisations do. Hearing their remarkable stories reinforces our focus on supporting organisations to build their assets, drive increasing revenue streams, and achieve financial sustainability and resilience.

One was Music Venue Properties (MVP), a charitable community benefit society that acts as a benevolent landlord to grassroots music venues. When they faced a fundraising shortfall to launch a pioneering initiative bringing venues into community ownership, a £1 million secured loan from Figurative closed that gap.

Matt Otridge, chief operating officer at MVP, reflected: “My experience is that it’s hard for a lot of cultural organisations to take on repayable finance through commercial lenders. Just being a grassroots music venue is enough to put an X in the box. Impact investment is worth looking at when you’ve got that long term vision.”

Smoothing cash flow challenges

We also welcomed Little Angel Theatre, one of the UK’s leading children’s puppetry theatres. Based in Islington, London, it has worked with Figurative in two ways.

First, the team approached us for – and received – a Theatre Tax Relief (TTR) loan to address cash flow during seasonal challenges. And second, Little Angel took out a social impact loan to support new creative and income-generating initiatives, enabling targeted expansion of productions, the puppet-making facility, and fundraising campaigns.

Artistic director and joint chief executive, Samantha Lane, observed: “We produce a lot of work every year, and one of the cash flow problems is waiting for that tax relief to come back in. We secured the loan while waiting, which was fantastic. I think we were one of the first organisations to go through that process.”

A different form of risk

Figurative works with organisations throughout the process of investment to build resilience, so investees are ready to take on the money, demonstrate their social impact, and become financially independent.

Creative Land Trust is a charity established in 2019 to address the rapid loss of affordable workspace for artists and makers in London. They used a Figurative loan to provide additional support to studio providers and their artist tenants during Covid.

Yves Blais, operations manager at Creative Land Trust, emphasised: “One of the most important things is to understand that it is a different form of risk that has to be considered. Organisations really need to understand how the repayments are going to work, so you must have a steady flow of income to service that repayment.”

Business transformation

Saffron Hall Trust, a 740-seat performing arts venue in Essex, used a loan from Figurative to invest in its fundraising capacity and grow its earned income streams. Following the unexpected early withdrawal of a key donor, it decided to take on repayable finance to accelerate its business transformation plans.

Angela Dixon, chief executive of Saffron Hall Trust, said: “It’s a very difficult climate, but if you’re confident and feel there’s an opportunity – that’s the key. If there’s an opportunity and an injection of cash would help you to take advantage of it, then do it… that’s where this kind of investment really works.”

Over the past decade, we’ve raised more than £30m and supported more than 60 cultural organisations. As we extend our investment period until 2027 with a further £10m available to deploy, I’d encourage anyone considering investment to talk to an organisation that has gone through the process – or you can watch our short film, here.