This text is the second part of a two-part series I prepared reflecting on my recent experience at the event Regenerative Capital: Impact and Future Meeting, organized by Onarım Atölyesi | Regenerative Impact Space. In the first part (which you can read here), I shared key highlights from the event and examined how the business and finance worlds are approaching impact investment today. In this second part, I turn my attention to the arts and culture sector, exploring its crucial role in creating social impact, the challenges it faces within the current economic system, and why it must be integrated into regenerative economies.
Where Do Visual Arts and Related Fields Stand In the Generative Economy? To better understand the position of arts and culture in the economic system, it is essential to examine how arts and cultural actors engage in financial activities.
Leaders of cultural institutions have been seeking ways to keep the institutions they work at financially sustainable while providing democratic access to the arts and culture. It seems a challenging task to balance access and financial sustainability. For example, a museum’s primary income source is its founders or institutional supporters. Their earned income typically accounts for between 20% and 30% of their total income mix.
Museums are significant because they offer multiple earned income streams. They sell tickets for entrance, events, and workshops; they engage in retailing, and they rent their facility to generate income. However, what strategies should smaller institutions or events, such as biennials, independent initiatives, artist clusters, and artist-in-residency programs, employ to scale their income generation?
These small arts and culture initiatives rely on public or private funding and grants. These grants require a lengthy and complex application process, as well as exhaustive reporting on budget management and the created impact. Reporting is essential, as grantors require proof that their support is well-spent and has reached the targeted people and fields. It has become a trend to request social impact reporting from grant recipients, in addition to activity and financial reporting.
Artistic and cultural activities primarily create social impact, often surpassing their environmental or governance contributions. Today, we need mindshifters who eventually encourage behavioral change. Artists and cultural producers have been delicately addressing the world’s most sensitive and urgent issues. We are seeing biennials, exhibitions, festivals, artworks, and events addressing climate change and its impact on us. Nevertheless, the presence of arts and culture in economic paradigms has not reached satisfactory levels. Private donors, sponsors, or the overall for-profit world see arts and culture as a leisure activity or a worthy public relations tool.
Turkey has a unique cultural sector that differs from that of the U.S. and the European Union. The system is similar to the U.S. in terms of private philanthropy but lacks an extensive individual or institutional support scheme. The Turkish system differs from that of the European Union, where the government’s presence and subsidization model are more comprehensive. As a regular approach to arts and culture philanthropy, well-known business groups in the country have founded museums and prominent arts and cultural institutions bearing their names. They also continue supporting their arts and cultural establishments.1 On the other hand, they also require their arts and cultural initiatives to reach a financially sustainable position through commercial activities. This leads to the need to comprehensively consider the role of arts and culture in economic systems. While redefining values such as success and growth, we should reconsider the value of aesthetics and cultural heritage, as well as their position in today’s economic paradigms.
Perhaps we should start redefining “scalability” alongside success and growth. Culture is vast, covering various types of cultural events that are scalable, such as cinema and music. I want to focus on difficult-to-scale events, including the visual arts and related fields, such as artist-in-residency programs and individual artistic initiatives that require significant investments and support.
The 2020 data shows that the average European spent 2.7% of their income on culture-related goods and services, including newspapers, books, audio-visual equipment, and attendance at cultural events. The same data indicates that only 13.6% of the total cultural spending was allocated to attending cultural events, visiting museums, watching shows at theaters, or going to the cinema.2 These figures indicate that only a small fraction of household spending is allocated to small arts and cultural initiatives. Moreover, these figures justify the need for public and private support schemes for the less fortunate segment of the arts and culture.
These small initiatives and production supporting mechanisms enable many independently employed and self-employed artists and cultural producers to continue their work, creating a positive local or community-level impact. Apart from that, these individuals and initiatives communicate the world’s pressing problems through their work, encouraging the audience to engage and stay informed. Thus, the audience experiences different social impacts through encounters with the arts, which is evidence that the arts hold a strong position in creating social impact. The European Commission’s 2023 policy brief reflects legitimate social values for the audience. The brief exposes how the arts and culture mitigate the adverse effects of isolation, work-related stress, and support the well-being of the public.3
Furthermore, even though independent initiatives are challenging to scale, collaboration with powerful institutions, such as museums, can facilitate achieving scalability and fair wealth distribution. It is worth noting that every £1 invested in Derby Museum in the United Kingdom generated £5.86 in social value, which in turn created a total of £7 million economic impact on the city between 2022 and 2023.4
Another strategy is to assign key performance indicators to support arts investment for investors. For example, requirements such as the inclusion of an arts initiative or a number of artists in development projects can be implemented and scaled by the involvement of larger cultural institutions. It can also be argued that taxation policy on investment returns/profits can be adjusted to allocate a share to the arts and culture sector.
Additionally, small arts initiatives struggle to find external financial support, which hinders their sustainability. Since they are not as privileged as larger institutions, they mainly depend on grants distributed by public or private institutions. They rarely have the opportunity to receive sufficient sponsorship or private investment and engage in any commercial activity. Considering alternative fair financing options for such initiatives and individuals can create a positive impact. Adjusting repayment schemes and reevaluating the applied interest rates may also influence the investors’ impact strategies. Artists, art producers, or creative people in general need motivation, reasons, and resources to keep engaging with their practice. Their overall well-being, mental health, and access to fair distribution of income also matter. Without supporting the humans behind cultural production, no financial model can succeed.
It is crucial to incorporate arts and culture into regenerative economies, as regeneration does not only come from environmental or governance efforts. Investors and policymakers should not overlook the humane aspects of impact, as arts and culture are the catalysts of perspective shifts in individuals, encourage mindfulness of individual choices, and foster inclusion to reflect diverse opinions, thereby supporting consensus on strategies to combat the world’s most pressing issues. To sum up, investors and corporations must seek ways to benefit from arts and cultural institutions in the future of the economy. Governments are responsible for adjusting current legislation to support each actor in the arts and cultural sector and ease the barriers to integration.
References
1 For detailed information, please visit my master’s thesis: https://drive.google.com/file/d/1qjlYtFTCJ-iMZBn8Xrugzi4V4ddiPl_q/view?usp=drive_link
2 The European Union household expenditure on culture statistics https://ec.europa.eu/eurostat/statistics-explained/index.php?title=Culture_statistics_-_household_expenditure_on_culture
3 The European Commission Policy Brief, The Societal Value of the Arts and Culture https://op.europa.eu/en/publication-detail/-/publication/9b22dce0-875f-11ee-99ba-01aa75ed71a1/
4 Derby Museum Impact Report 2022-2023 https://derbymuseums.org/static/e2e6cdf5710402096951a484ce8af3da/DM_Impact_Report_22.23_DIGITAL.pdf
Burak Mert 