By David Maggs, Metcalf Fellow on Arts and Society
Picking Our Pathway: Punitive or Strategic?
We hear the speeches, grasp the premise, and accept the analysis, whether Carney in Davos, Hodgson in Ottawa, or others from elsewhere: The world is different. Canada’s place in that world is different. And so what Canada does next needs to be different too. Told to navigate the world as it is, not as we wish it to be, we wonder which fools need reminding of that?
Having spent the past year in steady dialogue with our arts sector, I am proud to say it doesn’t seem to be us. Increasingly, Canada’s arts leaders grasp the need for systemic change, and happily, ours is not the only sector struggling to catch up to the world as it is. The only downside, however, is that our usual tools aren’t built for the moment we are in. We can’t sit inside our traditional creation and business models and beef up the lobbying to keep us safe and sound. Our response needs to be active, collaborative, and transformative.
As with any journey to places unknown, morale is a concern. Funders are struggling with both the rising numbers of applications and the rising needs of applicants, while practitioners face rising costs and unpredictable revenue streams. The inevitable strain brings us to a fork in the road: strategic or punitive? Are we going to hold together in a shared recognition that things can’t keep on as they are and build collaborative, strategic pathways forward? Or are we going to retrench into old models, amplify unrealistic expectations, deepen our scarcity mindset, and let escalating frustrations foster a punishing vibe between the sector and funders?
Arts & Social Finance is a proposed $100 million investment fund built from public, philanthropic, and private capital designed to offer low-interest loans to cultural organizations, accompanied by ASF Build, a grant-based readiness initiative. It’s designed to support the development of sector visions and capacities, and represents one attempt to keep us on a strategic path, where funders and practitioners approach the challenge of change together and avoid resenting each other because the world is not as we wish it to be. With this initiative gaining momentum, however, it’s important to remember that Arts & Social Finance is not the change facing Canada’s cultural sector. It is a tool to help navigate the changes that have already come, like it or not.
Getting to Different
Even the most energetic and innovative arts leaders cannot carry organizations towards something genuinely different without the conditions to foster and support that process. While we have seen various attempts to create these conditions, we need to be thoughtful, open, and humble about why they may have fallen short — as no less a challenge awaits us too.
Generally, capacity-building and sector transformation initiatives have been low consequence. Resources are presented without feedback loops to translate activity into learning and learning into transformation. Successes remain isolated, failures dissipate, and the system absorbs both of these with almost nothing to show for it, neither scaling enough nor dying enough to sprout new possibilities.
As described in a previous essay, threshold effects often make capacity-building resources counterproductive as grant dependent organizations have no choice but to use grants that were designed to help them become something different as the very means of staying the same. Additionally, these change-making resources are often singular injections (i.e. non-phased) and insufficient. As a result, ideation, germination, cultivation, and evolution are highly compressed and rarely applied within structured experimentation with audiences, markets, or operational realities to mature them into viable opportunities. Too many good ideas go unvalidated and unrefined, thereby remaining too risky for increasingly precarious operations to explore.
When more structured experimentation does occur, it tends to happen in isolation. Individual organizations test, adapt, and learn within their own walls, but those insights rarely accumulate into shared knowledge. Without mechanisms to connect, compare, and build across cases, the sector struggles to establish itself as a system able to convert invention into innovation. Far from ideal systemic conditions demand maximum efforts while leaving little to show for it, organizationally and sectorally. As Newfoundland songwriter Ron Hynes loved to croon, “you can spend, spend, and spend, and never get back change.”
But fear not, that’s when well-meaning people like me come along and say “we need a mindset shift.” What a helpful lad. Isolated from the conditions needed to support, sustain, and reward such a thing, the imperative to change makes inefficient use of precious energy from sector leadership.
So that’s the challenge. Perhaps a low bar to improvement, but the obstacles, barriers, and gaps to supporting organizational transformation are high, wide, and deep. Can we create a context where the intentions, desires, and energy for change are empowered and rewarded?
ASF Build: Creating the Conditions for Change
If transformation requires de-risked environments where learning accumulates rather than dissipates, we need to create these conditions before asking the sector to consider such journeys of transformation. This is the aim of ASF Build, a grant-based investment readiness program for Arts & Social Finance designed to help arts and cultural organizations explore revenue-positive opportunities and establish the financial and governance capacity needed to access repayable capital. More than pre-financing information sessions, ASF Builds aims to create core infrastructure through which change becomes possible, testable, and, where appropriate, investible.
ASF Build is structured as a progression with off-ramps at every step of the way — rather than a conveyor belt moving organizations forward at all costs. Step 1 offers accessible, low-commitment orientation, introducing the logic of repayable capital and exploring case studies where cultural nonprofits have used it to strengthen, stabilize, and grow their operations. If this proves of interest, Step 2 brings organizations into cohort learning around financial structure, profit margins, and assets, while expanding horizons around revenue, risk, and capacity. Here, cohorts learn about revenue diversification models drawn from the nonprofit sector more broadly and begin considering their own potential ideas against this range of possibilities and pressures. From there, organizations zero in on a strategy for themselves, shaping a proposal that merits further imagination and investigation.
The goal of Step 3 is to provide sufficient resources for organizations to develop ideas, test viability, and build capacity. Market testing helps organizations engage directly with audiences, customers, and partners, probing demand, running pilots, and building financial models that hold under scrutiny. This process of ideation, experimentation, and development is analyzed to determine overall desirability, feasibility, and viability before any financial risk to the organization. In this respect, ASF Build does two things simultaneously. It de-risks the investment fund — ensuring that capital is deployed into opportunities that have been tested, modelled, and understood. But more importantly, it de-risks the sector — ensuring that organizations are not drawn into financial commitments they are ill-equipped to carry.
The final step — due diligence — makes this explicit. At this point, development ends and evaluation begins. Governance, financial management, market assumptions, and operational capacity are assessed by an investment committee determining what ideas are promising but need further development, versus what ideas are ready for investment.
At every step of the way, organizations build capacity, whether it’s understanding new revenue models, reflecting on their visions, missions, and mandates, confronting the limits and potential of their operations, or testing out their ideas in applied contexts. Across the process, structured data is captured and integrated — on revenue models, pricing, governance, demand, and risk. What is learned in one organization gets anonymized, aggregated, and fed back into the system, allowing patterns to emerge across regions and contexts. What was once fragmented experimentation becomes shared intelligence. This, we hope, is how invention becomes innovation.
ASF Build is not simply a pathway to capital. It is a system for determining — with clarity and discipline — which projects, capacities, and pathways to revenue are viable, which are not, and under what conditions possibilities become realities.
Staying Strategic
Throughout this series, we have emphasized the risks facing the sector, risks that are real and present, pressuring our business models and funding models more every day. Risks, we have argued, that outweigh whatever riskiness we perceive in trying something new. While we have been energized to discover a sector eager to respond, we have to create better conditions for these responses to take hold. When expectations and urgency keep rising without the viable contexts and pathways organizations need, this growing pressure around the need to change starts to produce a tonal shift. What might have been navigated through shared strategy is in danger of hardening into something punitive instead.
The distinction matters. Punitive change produces compliance at best, and withdrawal at worst. It narrows behaviour, reduces trust, and weakens the very capacities it seeks to inspire. Strategic change creates the conditions under which organizations can engage with new realities deliberately rather than reactively. It introduces consequence, but in forms that produce learning rather than harm. It allows for differentiation — recognizing that not all organizations will move in the same way, or at the same pace, or toward the same ends. And it builds the collective intelligence required to navigate uncertainty over time. This is the space ASF Build aims to hold. Not a solution imposed on a sector, but a structure within which a sector is supported to cultivate different possibilities, explore different options, and become different things.
Conclusion
In order to design an initiative that we feel can help Canada’s cultural sector, we’ve spent years watching how social finance works in other public benefit sectors here at home and in cultural sectors outside the country. We have been in dialogue with arts organizations and policymakers across the country and are proud of the momentum behind this initiative. But we understand the worries that Arts & Social Finance can raise and have worked hard to clarify its role as additive, constantly and consistently warning against its use as a replacement for granting.
We are in communication with the provinces and territories, working to bring this additional resource to them at a time when funding is under extreme pressure and operational capacity is in urgent need of redress. We are steadily building a roster of early adopters from across Canada — arts organizations who understand how social finance can support their ambitions — and will showcase some of their projects in the coming months. As always, reader engagement with this topic is invaluable to us, so please get in touch if you’d like to join the conversation more directly.
There are many ways to understand what culture is, what the arts are for, what the sector needs, how governments should get involved, and how organizations should respond. At its fundamental level, Arts & Social Finance is a proposal designed to deepen sector resilience through a resourcing stream that helps shift attention from artistic visions to cultural needs, while strengthening fiscal capacities. The evidence behind this goal is empirical, with clear illustrations of increased organizational resilience that lasts over time. Yet the proposal remains just that. A proposal. A fleshed out, evidence-based design available to the sector should it decide it’s ready for something new.
