Author: Williams, Caroline and Sharamitaro, Lisa

Publication Year: 2002

Media Type: Periodical (article)

Summary:

In this article we take the position that, current trends aside, the investment strategies that emerged over the last ten years can inform the cultural sector in exciting and innovative ways. We explore three specific financial investment strategies for their potential applicability in the cultural sector.

Abstract:

The “irrationally exuberant” stock market ended in April 2000. Since then it has been further undermined by the terrorist attacks of 11 September 2001. The result was a weakened and struggling U.S. economy. Nine months later, just as the economy appeared to be recovering and the stock markets had begun to stabilize, the investment markets were rocked again, this time by corporate accounting and governance scandals. Investor confidence is once again shaken. In the past it has taken the markets years to recover from such scandals, but history indicates that they do ultimately recover.

In this article we take the position that, current trends aside, the investment strategies that emerged over the last ten years can inform the cultural sector in exciting and innovative ways. We explore three specific financial investment strategies for their potential applicability in the cultural sector:

• Socially responsible investing, or the selection of publicly traded stocks based on screens for social impacts and values
• Venture capital, or investing in equity securities of small, young companies before the stocks become publicly traded
• Community investing, or financing that generates resources and opportunities for economically disadvantaged people in urban and rural communities in the United States and abroad that are underserved by traditional financial institutions

We explore ways to adapt and combine these ideas to assess the feasibility of culturally conscious investing as an infrastructure development strategy for the arts and culture. Although both socially responsible investing and venture capital have positive aspects, their adaptation to the cultural sector poses significant challenges. Eventually, we found the most promising model in the evolution of community investing, which combines the most applicable aspects of venture capital and socially conscious investing.

In the following section we provide a short overview of the norms and trends in venture capital and socially responsible investing. Following that, we introduce community investing as a model of socially responsible venture capital, using a series of organizational profiles. Finally, we present four models for potential culturally responsible investment vehicles to aid in understanding these tools might be applied in the cultural sector.

Arts & Intersections:

Categories: Private Sector, Fundraising, Funding, Creative Economies