Guest blog: Supporting creative enterprises – exploring the impact of finance initiatives

This guest blog is the second in a series of blogs from Dr Stephen Knox, working with SPICe on an academic fellowship, to explore his research into support for the creative industries. As with all guest blogs, what follows are the views of the authors and not those of SPICe or indeed the Scottish Parliament.

Introduction

This blog is a follow up from a first blog which looked at training and advice programmes to support the development of creative practitioners. The purpose of this series of blogs is to investigate the impact of various policies that aim to develop the creative industries, a key sector in Scotland. This work looks at the design and delivery of programmes to understand ‘what works’ to drive economic, cultural, and social impact.

The Scottish Government’s definition of the creative industry includes many different sectors – visual and performing arts, cultural education, crafts, textiles, fashion, photography, music, writing and publishing, advertising, libraries, archives, antiques, architecture, design, film and video, TV and radio, software, and electronic publishing, and computer games.

This second blog in the series focuses on supporting these sectors through finance initiatives. Grants, loans, and research and development (R&D) funds are designed to increase the individual capacity of creative practitioners and cultural intermediary organisations. To investigate this type of support, I analysed 30 different programmes. A list of these programmes is presented at the end of this blog. 13 of these programmes targeted practitioners with small grants, eight focused on providing intermediaries with larger grants, six focused on developing links between practitioners, intermediaries, technology organisations and universities through R&D funds, and three provided loans. It is important to highlight that only a limited number of Scottish programmes had evaluation data available to include in the study.

Smaller grants for practitioners

Smaller grants, aimed at creative practitioners, are less than £25,000 and are typically around £5,000. Generally, demand for these grants is extremely high, with initiatives receiving high numbers of applications. This makes the success rate of receiving a grant very low. For those that receive grants several benefits are created:

• Building organisational capacity and increasing productivity. New activities adopted by practitioners when receiving a grant include new collaborations, entering new markets, creating intellectual property, developing new skills and management experience, refining value propositions to make products and services more attract to customers, increasing income and bookings, and supporting new job creation or ‘working days’ of other practitioners.
• Incentivising the participation of wider audiences into art and cultural activity through increased capacity to deliver; increasing the exposure of creative practitioners to wider audiences; and giving them the ability to experiment creatively, which generates unique artistic value.
• Improvements in well-being through the creation of joy, feelings of belonging, and increased confidence; engagement with communities through developing events, improving community life, and strengthening local relationships; and social inclusion for those that are sometimes marginalised from communities through the ability to participate in cultural activity.

There are two main factors which drive these benefits. The first is the ease of application processes and flexibility in the conditions of grants. Complicated and timely application procedures restrict up-take and make it harder for diverse audiences to apply. A lack of flexibility in grant conditions constrains the ability of practitioners to experiment. Short-term funding cycles (typically less than one year) are also damaging to outcomes. They restrict the ability for recipients to build capacity, plan, and experiment which help them to maximise impact going beyond the programme duration. Furthermore, short cycle programmes increase the pressure for distributors to ‘get money out the door’ which can restrict up-take, outreach, and quality of application. The second factor is the availability of additional development support, such as training and networking. This helps to further build the capacity of practitioners to deliver longer-term impact.

Larger grants for intermediaries

Larger grants, targeted at arts intermediaries (organisations that provide support to artists and cultural practitioners) are typically greater than £50,000 and can be up to £1,000,000 in rare cases. They often require intermediaries to raise match-funding from other sources. They also generate several benefits:

• Increasing short-term financial sustainability through growing organisational capacity and helping to develop competencies which improves the ability to use resources. This includes developing new fundraising knowledge, IT and technology skills, taking on new staff, developing collaborations and networks, investing in training, and gaining management skills.
• Improving productivity through increasing the efficiency of organisation operations. This includes business model innovation, new membership schemes, marketing campaigns, increasing professionalism, strategic planning, monitoring, increasing income, and reducing costs.
• Providing opportunity for new art and creative outputs through increasing the number of events, festivals, exhibitions, and cultural productions available to practitioners.
• Increasing engagement, wellbeing, and inclusion by embedding arts intermediaries further into local communities, engaging wider hard-to-reach audiences, and generating a sense of belonging.

Key to realisation of these impacts is whether intermediaries can develop capabilities. Only a couple of programmes report that they can turn the capacity increase of a grant into longer-term abilities that enable organisations to become more efficient in the longer-term. To do this, intermediaries need to develop strategic leadership skills, engage in peer-learning, and develop cross-sector and cross-geographic networks.

R&D funds

The aim of R&D funds is to link creative practitioners, intermediaries, technology partners, and universities together to develop innovations. Typically, R&D funds in the creative industries focus on exploring digital technology to engage audiences and develop business models. These funds are often small – around £10,000 – to develop and test new products, services, or designs. Often, organisations have to match-fund and there is also sometimes opportunity to apply for larger funding after the initial pilot phase. There are a couple of main benefits for these initiatives:

• Increase in productivity through the creation of new innovative digital products, refining business models, and creating intellectual property. This is accompanied by the development of innovation skills, competencies, and collaborations which can lead to short-term increase in revenue.
• New forms of art and audience engagement are generated through innovative new products.

Key to the delivery of successful R&D initiatives is the ability for organisers to broker relationships between organisations. However, very little long-term impact on this is reported. There is a need for on-going innovation support and capacity building, including the ability to plan and build long-term partnerships. A key barrier organisations face is a lack of resources in the long-term to continue investing in R&D.

Loans

Only three programmes reported on the impact of loan schemes, and each had different aims. While there was not enough programme evidence to make firm conclusions, the positive impact justifies a larger investigation into alternative funding programmes rather than grants.

• One programme aimed to give citizens loans to facilitate the purchase of artists work in Wales. The take-up was high with lots of artists benefiting from the scheme. The flexible repayment option was attributed as important for this.
• One programme was aimed at SMEs who had previously been rejected from mainstream financial credit. These programmes reported increased business growth through turnover, accessing new clients and markets. Furthermore, no loans had been written-off from the scheme. Again, the flexible options for the loans and the availability of wrap-around business support were attributed as important for this.

Conclusions and next steps

While many finance initiatives report short-term increase in capacity and ability of both practitioners and cultural intermediaries to deliver services, these benefits seemingly dissipate over the long-term. The challenge is to investigate under what conditions short-term capacity and competency can be converted to longer-term capabilities. The provision of additional support and opportunity for development appears important. The next stages of this project are to:

1. To investigate under what conditions the provision of both training and finance deliver short-term and long-term benefits to the creative industries.
2. To investigate other policy areas – infrastructure and place-based initiatives and education programmes to understand more about how to build the institutional capacity to support the creative industries.

If you have any evidence, programme reports, impact studies, or evaluations please send them to: stephen.knox@stirling.ac.uk. Additionally, several stakeholder workshops will be conducted over the coming months to explore the impact of creative enterprise policy. If you have any interest in participating in these please do get in contact.

Dr Stephen Knox is Senior Lecturer in Entrepreneurship and Innovation, University of Stirling

Annex: List of programmes