Thank you Hamilton for showing us why arts with a social impact are a good investment

Hamilton the Musical

The Broadway show Hamilton is a popular, critical and financial success. The show has won 11 Tony Awards, including Best Musical. The Rockefeller Foundation, believing the show is a “catalyst for social change”, bought $7.5 million in tickets for public high school students nationwide. The New York Times is predicting, “the unlikely hit will ultimately generate upward of $1 billion in sales.”

This hip-hop musical is part of the more than $700 billion of the US Gross Domestic Product (GDP) generated by arts and cultural production. Since before the term “social enterprise” was coined, nonprofit arts organizations have been earning their way: 60 per cent of income for arts organizations comes from earned sources like tuition, merchandise, royalties and ticket sales.

And artists can do more than get bums on seats.

They are behind some of the most popular companies of the sharing economy. Perry Chen — musician and visual artist — co-founded Kickstarter. AirBnB founders Joe Gebbia and Brian Chesky are graduates of the Rhode Island School of Design.

Artists — like Hamilton writer and star Lin-Manuel Miranda, Chance The Rapper and movie producer Kathleen Kennedy — are consistently named as the most creative people in business by Fast Company.

Artists like Lin-Manuel Miranda, sitcom star Aziz Ansari and visual artist Yayoi Kusama were among Time magazine’s The 100 Most Influential People in 2016.

And artists like violinist Aaron Dworkin, cartoonist Alison Bechdel and — you guessed it — Lin-Manuel Miranda have been named geniuses by the MacArthur Foundation (a US investment fund for non-profits).

So, if artists bring together creativity, social change, global influence, and genius — and can earn money doing it — where are the impact investors?

Impact investors can invest in green carbon, sustainable food, and women-owned businesses. But today there is no targeted way to put impact capital behind artists or the creative economy.

Conventional investors don’t seem to have this problem. They have figured out how to buy shares in important paintings, to invest in the stream of royalties generated by music and film and to make private equity investments in the creative industries.

You would think that investors seeking to do well and do good would be curious about creativity. Not only have 11 million people taken a flyer pledging $2.4 billion to support projects on Kickstarter, but the creative economy is grabbing attention among titans and influencers at places like Davos. Top CEOs acknowledge that creativity is one of the most valuable skills for corporate workers. And creatives who would rather work on their own have driven the market value for Etsy to over $1 billion.

It shouldn’t be that tough, since some of the impact investing sector’s real pioneers are artists themselves:

· Clara Miller, founder of Nonprofit Finance Fund and who is now revolutionizing the field of mission-related investing as president of the FB Heron Foundation, majored in studio art.

· Jed Emerson, who started investors thinking about “blended value”, kicked off 2016 with a blog musing about the importance of museums and music (including his own guitar playing).

· Patricia Farrar-Rivas, founding partner and CEO of impact investment advisor Veris Wealth Partners, had an early career as a dancer.

· Debra Schwartz, Managing Director of impact investing at the MacArthur Foundation, was active in the student theater at Yale College.

Recently, two national foundations separately engaged two different impact investing advisory firms to landscape their mission-related investment options. Both foundations asked about how they could make impact investments in the arts, and both advisors said they couldn’t: there were no products or funds for impact, arts and creativity. That’s not to say investments aren’t being made. They just aren’t being made on purpose.

When the Calvert Social Investment Foundation recently looked at its portfolio, it found at least $20 million invested in creative places and businesses. When the Treasury Department’s CDFI Fund did the same, they found $460 million in creative placemaking projects. These are good deals, coming in through regular channels, and they are investable. But still there is no product or fund that allows investors to direct their impact capital to affordable artists’ housing or creative companies.

Of course art has value much greater than its financial worth, and a lot of artists and art-making will never be “investable”. But by engaging with investors who appreciate that artists can bring a unique approach to driving social impact as innovators and change-makers, we can expand the pool of resources, bringing capital needed to experiment and scale to some of the most creative people around.

Impact investing is going mainstream, as asset owners look to get more than a financial return from their investment. The social and economic benefits of investing in the arts is clear. So, as the song says, let’s not throw away our shot.

This article was originally posted on Medium and has been republished here with permission from the author. Laura is the founding partner of Upstart Co-Lab, a US-based national collaboration connecting artists, impact investors and social entrepreneurs to create opportunities for artist innovators to deliver social impact at scale. Here she shows us why arts are a great investment.

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