By David Maggs, Metcalf Fellow on Arts and Society

Culture’s Big Reason Why

Secretly, I wish these articles could start with little musical memes, just to make writing about cultural policy cool, like skateboarding. Today, my opening meme would be the famous bass line from that Queen song, and it would be dedicated to our entire species, caught as we are in the storm of economic, social, technological, political, ideological, and environmental upheaval. Sure, all times are tough and all times are interesting, but scale and entanglement matter. This is a precarious moment in human history.

As we struggle to find our way through it, however, something striking has emerged. UNESCO has declared culture central to addressing its layered difficulties; the British Council positioned culture alongside society, environment, and economy as the fourth pillar of sustainability; we now see arts-based approaches to virtually every problem we find ourselves in; and more and more research is connecting cultural participation to better life outcomes.

Let’s not miss how transformative this is. For centuries, Western rationalist societies like ours pushed the capacities of arts and culture to the margins — viewing them as peripheral to the real work of solving real problems in the real world. Repealing that instinct uproots foundational beliefs in our society, about truth, knowledge, agency, utility, and reality. It’s a subtle but profound rupture, and one the cultural sector needs to ready ourselves for if we are to meet the responsibilities and opportunities before us.

This essay marks the first in a six-part series on Arts & Social Finance, a new initiative led by the Metcalf Foundation and Rally Assets to develop additional resources for culture in Canada. While our focus will be on things like financing, capacity-building, profit margins, and community impact, this broader historical moment sets an important context — a compelling “why” behind all the hard work of “how” that lies ahead. Learning to meet the cultural needs of our communities is learning to rebuild the existential foundations of our lives in a moment where all bets are off. We could not hope for a more urgent purpose.

But Are We Ready?

Great stories love to whisper the hero’s name right before cutting to the scene that shows how unprepared they are for their destiny. No one writes about heroes with their boots laced up, waiting for the proverbial call, and ours is no different. Just as our struggling worlds grasp the importance of their cultural sectors, we find ourselves in rough shape. Fiscal precarity, deep innovation deficits, and declining purchase on the public imagination — it might be enough to second guess that emerging enthusiasm. You want us to rebuild civil society? Fight techno dystopia? Forge cultural sovereignty? Strengthen global solidarity? We can barely keep the lights on!

This past year, as Metcalf Performing Arts director Michael Trent and I crossed the country talking to arts leaders about Arts & Social Finance, we heard this from coast to coast: things can’t go on like this. Revenue streams are too unpredictable, costs are too hard to keep up with, and all that brave and brilliant leadership out there is either burning out or leaving us altogether. The desire for deep and transformative change is high. Yet when we turn that desire into strategy, things get un-transformative pretty quick, as our sector’s advocacy efforts continue to distill this restless energy down to a perennial claim: we just need more grants.

During our travels, however, something has become apparent in our discussions: I don’t think we believe it. I’ve asked people, if we just increase public funding by 20 or 30 percent, would our sector become sustainable? Perhaps as the past decade featured even greater increases to the federal and many provincial and municipal arts council budgets only to find ourselves in deep precarity sector-wide, it isn’t surprising that people aren’t saying yes. Grants are all we ask for because they are all we know how to ask for. Even if we understand that the problems driving sector precarity cannot be solved by granting alone, we keep trying to do that, because we don’t know what else to do instead.

Around the world, however, nonprofits and social enterprises from other public benefit sectors are busy learning to work with a new source of funding — learning to combine grants with loans to help diversify revenues and expand operational capacity. And the good news is, Canada is right there. ESDC’s $755 million Social Finance Fund is connecting investment to impact across health, environment, reconciliation, public safety, gender and racial equity, education, and justice. But the bad news is that culture is nowhere to be found on this list. There’s $755 million serving the public good in Canada and just when we are realizing how vital culture is to our precarious futures, we exclude it from our social innovation and impact frameworks completely?

Arts & Social Finance aims to address this by building a fund that creates a new option to strengthen culture in Canada and ready our sector for its rapidly emerging destiny. A fund that combines public, philanthropic, and private money to offer low-interest loans to cultural nonprofits, along with the graduated support services organizations need to begin working with different types of finance, and to deliver new products and activities.

Our basic hypothesis is simple: Weaving an element of repayable finance into the balance sheets of cultural nonprofits matures those organizations across a range of variables more effectively than grants alone.

The coming weeks will feature an exploration of the thinking and evidence behind this hypothesis, while we preview its basic themes in what follows here: 1) the problem we are hoping to address, 2) the options available to address it, 3) our strategy for developing those options, 4) the logic underlying this strategy, and 5) the supports our sector will need for that logic to hold.

Problem: Grant Dependence

While no one advocating for more grants is advocating for more grant dependence, this second order effect is worn so deeply into our mindset that it’s no longer circumstance, it’s identity. When our futures feel precarious, how often do we turn to ourselves for the solutions versus turning to governments for help? What lies within this instinct? In other words, what is grant dependence? What are its symptoms and drivers? And can we decouple getting more grants from getting more grant dependent?

Option: Revenue Diversification

Diversifying revenue doesn’t just change balance sheets, it changes mindsets and broadens horizons. We become more responsive and strategic, operating on timescales that are both quicker and more patient than granting cycles; we can respond to regional priorities and needs that lie outside national or provincial funding priorities and programs; and we become less vulnerable to fluctuations in granting programs and political priorities. But what kinds of revenue diversification make sense for cultural nonprofits? And how do we start imagining options for revenue generation within our operations?

Strategy: National Fund

With examples like Artscape fresh in our minds (see Menon Dwarka’s analysis here), there’s reason to be wary of loans, particularly as those available to cultural organizations often feature high interest rates with no organizational support. If it is to be useful to us as a sector, Arts & Social Finance needs to offer the opposite of this: low interest rates with lots of support. Doing so requires federal and provincial collaboration sufficient to derisk investment, attract new capital, and shift policy and practice at a systems level. Success here requires a balance of scale and responsiveness. Broad enough to serve the sector with the financial and capacity-building products it requires, while staying responsive to crucial differences in regional markets.

Logic: Risk & Transformation

Having experienced the transformative impact of loans while co-leading Camber Arts, a small cultural nonprofit in eastern Canada, I worked with UK colleagues Fran Sanderson and Seva Philips who spent the past decade piloting $60 million of lending into the cultural sector across the UK. This work came together in a report we wrote for the UK’s Creative Industries Policy and Evidence Centre, and the pattern is clear: repayable finance is positively associated with organizational resilience. But why? What is happening within these organizations to produce this effect? Could there be a transformative relationship between loans, risk, accountability, relevance, and resilience?

Support: Risk & Readiness

Various initiatives have aimed to build capacity in Canada’s cultural sector, and while they’ve certainly had their effects, rarely would we call them transformative. Could this be because the stakes are relatively low? Where if these initiatives don’t create much difference within organizations, it doesn’t actually matter? Moreso, how often are such programs supporting the opposite effect, where funding designed to change organizations gets used to maintain status quo form instead? With the risk that loans bring to both funder and recipient, capacity building shifts from “nice to have” to essential. Making this shift, however, means creating genuine conditions for readiness — conditions that provide organizations with the support they need to foster genuine differences in both internal capacity and external operations.

The Risk of Doing Nothing

A perplexing thing about being human is that we can perceive danger on the horizon, yet when it comes to responding to that perception, somehow nothing feels better than doing… nothing. While we might think our capacity for imagination, foresight, and strategy would override such inertia, research illustrates a range of cognitive biases all geared towards same ol, same ol. There’s status quo bias describing our irrational preference for things as they are, confirmation bias preferring information reinforcing standard rationality, anchoring bias illustrating overreliance on what we learn first, loss aversion where we feel the pain of losing something more acutely than the joy of equivalent gain, and the sunk cost fallacy that sees us struggle to cut our losses when we should. Frogs, it turns out, are not the only ones getting stuck in their pots.

Caught in this boiling moment of upheaval, the status quo is no strategy for comfort. As climate scholar John Robinson has said, “there is no future that is not transformative.” From here, all roads lead to deep change, and perhaps none as rapidly — and unpleasantly — as business-as-usual. It’s an extremely challenging circumstance for cultural organizations working tirelessly across this country. Just as worsening conditions of precarity constrain capacity and appetite for risk and innovation, those same conditions are requiring it with ever greater urgency and consequence. It brings us all the way to the end of that Queen song, its bass line still rumbling along ominously, just as the late David Bowie delivers its climax in wonderfully insightful fashion: Love dares you to change our way of caring about ourselves. This is our last dance, this is our last dance, this is ourselves (boom boom boom ba-ba boom-boom), under pressure.