The importance of funding for Cultural and Creative industries
The cultural and creative sector plays a vital role in our society, contributing to economic growth and social development. From music and film to design and gaming, the creative industries help to shape our culture and influence our lives. However, for creative entrepreneurs and organizations, securing funding is THE major challenge as shown by the CCE index, the CCi Boost dashboard that generates data and statistics around CC economy and entrepreneurship.
In this blog post, we will discuss the importance of funding for the cultural and creative sector, the challenges that creative entrepreneurs and organizations face when seeking funding, the benefits of investing in the creative industries, and resources for funding creative projects.
"The Moneylender and His Wife" by Quentin Massys (1514)
The Challenges of Funding in the Cultural and Creative Industries
Creative entrepreneurs and organizations evolve in a unique and complex context. One of its main challenges is that they:
-often operate in highly competitive and rapidly changing markets,
-many require a significant investment of time and resources before they can generate revenue or attract investors,
-and the intangible nature of creative projects, such as the difficulty of quantifying the potential impact of a creative work, can make it more challenging to secure funding from traditional investors or lenders.
Cultural and Creative industries lacking visibility
Adding to the above the fact that investors may not have visibility on what’s happening in the sector and lack understanding on the specificities of the cultural and creative industries makes it difficult for them to understand the risks and potential rewards of investing in creative projects and businesses.
According to a study by the European Investment Fund, creative entrepreneurs face more difficulty in accessing finance compared to entrepreneurs in other sectors, with only 18% of creative SMEs obtaining the full amount of financing they requested.
Similarly, a report by the British Business Bank found that small and medium-sized enterprises (SMEs) in the UK’s creative industries were more likely to have their loan applications rejected compared to SMEs in other sectors, with a 20% rejection rate compared to a 5% rejection rate for all sectors combined. Additionally, a survey by the International Confederation of Societies of Authors and Composers found that financing is a major challenge for the creative sector, with only 5% of cultural and creative organizations reporting that they have access to sufficient financing.
Other barriers
Access to information is another barrier. For the Global South, information related to cultural and creative funding/investment, and who is providing what, is scattered and hard to access.
Finally lack of skills and skilled professionals in fundraising for the CC sectors is another major barrier. Engaging, mapping and building funder and/or investor relationships, or designing a fundraising strategy is full time job and technical skill that requires time and resources.
The Benefits of Investing in the Cultural and Creative Sector
Investing in the cultural and creative sector can have a range of benefits for both investors and society at large. The creative industries contribute significantly to employment and GDP. According to the latest UNCTAD report on the creative economy, the global market size of the creative economy was estimated at $2.6 trillion in 2019, and is projected to grow by 4.5% annually from 2019-2023. It also encourages investment in the creative sector which can have a positive impact on economic development, as it can stimulate innovation, diversify local economies, and create jobs.
For instance, a study by NESTA found that companies in the UK’s creative sector are more likely to introduce new products and services than companies in other sectors. Additionally, a report by the World Intellectual Property Organization found that creative industries can help drive economic growth by promoting innovation, enhancing social welfare, and contributing to overall economic diversification.
Investing in the cultural and creative sector can also have a positive impact on communities and social cohesion. For example, a report by Arts Council England found that arts and culture activities can have a positive impact on mental health, community engagement, and social cohesion.
Finally, investing in the cultural and creative sector can have a positive impact on tourism and international reputation. In the UK, for instance, the creative sector contributes significantly to the country’s reputation as a cultural destination, with over half of international visitors participating in a cultural activity during their visit.
Case Studies
There are many successful creative projects that have received funding and had a positive impact on the cultural and creative sector. For example:
1. Virtual Reality Theatre: The VR theatre company, Immersive Storylab, raised £300,000 through crowdfunding and angel investment to develop and produce immersive theatre experiences that incorporate virtual reality. The company has since attracted investment from larger venture capital firms and has been commissioned to create experiences for major brands and institutions.
2. Nollywood is Nigeria’s film industry and one of the largest film industries in the world. The industry has been growing rapidly in recent years and has attracted significant funding from both local and international investors. In 2018, Nigeria’s Bank of Industry launched a $1 million fund to support the industry, while Netflix announced a $100 million investment to produce more African content, including in Nigeria.
3. The Talaat Harb Cultural Center is a multi-purpose arts center located in Cairo, Egypt, that promotes cultural and creative activities in the country. The center raised EGP 12 million (approximately $760,000) in funding from the National Bank of Egypt in 2020, which it used to renovate and expand its facilities and organize more cultural events.
4. Music Technology: The music technology company, ROLI, raised $27 million in venture capital funding to develop innovative music creation tools that utilize tactile interfaces and cutting-edge software. The company has since been recognized as a leader in the music technology industry and has been awarded numerous patents for its innovative products.
5. Sustainable Fashion: The sustainable fashion brand, Reformation, raised $12 million in venture capital funding to expand its operations and promote sustainable practices in the fashion industry. The company has since become a leader in the sustainable fashion movement and has been recognized for its commitment to transparency and ethical production practices.
Resources for Funding Creative industries in the Global South
There not so many one-stop-shops platforms that share and ease access to funding and resources for Cultural and Creative industries in the Global south. There are also very little intelligence, data and researches. In many ecosystems funding and investment are led by international organizations and foundations.
Global Crowdfunding platforms such as Kickstarter, Indiegogo, or Zoomaal for the MENA region allow creators to raise funds directly from their fans and supporters; while grant programs such as the Creative Europe program, the Arab Fund for Arts and Culture, the Asia Europe Foundation, the Asian Development Bank , Africa No Filter, Mo Ibrahim Foundation, French Institute, British Council, and the Goethe globally provide funding for cultural and creative projects.
Access to information on open opportunities for Global south can be found Culture Funding Watch, that publishes, for free, calls and opportunities for cultural and creative projects, and provides monthly deadline alerts with at least a hundred funding opportunities on its website relevant to the Cultural and Creative sector, allowing creative projects to do a quick mapping of the programs from which they could benefit.
Conclusion
In conclusion, funding is crucial for the cultural and creative sector to thrive and grow. While there are challenges to securing funding for creative projects and businesses, investing in the cultural and creative sector can have significant economic and social benefits. By supporting creative entrepreneurs and organizations, investors and funders can help to foster innovation and creativity, and contribute to the growth of a vibrant and dynamic cultural sector.
Be sure to stay tuned for our upcoming blog posts, where we will take a closer look at each of these funding types and provide valuable insights and resources for successfully navigating the funding landscape in the cultural and creative sectors
References:
Australian Bureau of Statistics. (2019). 8655.0 – Cultural Funding by Government, Australia, 2017-18. https://www.abs.gov.au/AUSSTATS/abs@.nsf/Lookup/8655.0Main+Features12017-18?OpenDocument
Creative Industries Federation. (2020). The impact of the COVID-19 crisis on the UK’s creative industries. https://www.creativeindustriesfederation.com/news/impact-covid-19-crisis-uks-creative-industries
European Commission. (2018). Study on the economic potential of cultural and creative industries. https://op.europa.eu/en/publication-detail/-/publication/4f313f0d-4b8d-11e8-be1d-01aa75ed71a1
OECD. (2018). Culture and local development: Maximizing the impact. http://www.oecd.org/cfe/leed/Culture-and-Local-Development-Maximising-the-Impact.pdf
PwC. (2019). Global entertainment and media outlook 2019-2023. https://www.pwc.com/gx/en/industries/tmt/publications/global-entertainment-media-outlook.html
UNCTAD. (2020). Creative economy outlook: Trends in international trade in creative industries. United Nations Conference on Trade and Development. https://unctad.org/system/files/official-document/tdbckdn2020d3_en.pdf
UNESCO. (2021). Culture statistics. https://en.unesco.org/themes/culture/culture-statistics
