Rising rent costs and competition with other industries for available space have left some artists and creators without dedicated places to produce and share their work. Some are making do by squeezing artistic endeavors into already cramped apartments, while others find themselves forced out of areas that were once welcoming to creative expression, from Los Angeles to London to Sydney. This could leave cities without the synergy of artists collaborating, engaging community members, and sparking innovation.
Realizing the benefits of local creativity, some impact investors have turned to creative placemaking as a way to nurture artistic activity and revitalize communities.
The Dynamism of Creative Places
Creative places are communities where individuals and organizations develop, produce, and distribute artistic or cultural goods or services. Creative places may have official designations like arts districts, or they may be recognized through word-of-mouth as good places for artists to gather. Through creative placemaking, investors, public planners, and other participants can support a location’s artistic and cultural infrastructure to foster social change or economic growth.
According to the National Assembly of State Arts Agencies (NASAA), in 2017 arts and cultural production in the US created $877.8 billion in value, or 4.5% of gross domestic product, and it accounted for 5.1 million jobs. For some place-based impact investors, arts and culture may be of special interest because artists are more likely to be entrepreneurs than the general population, and local artistic activity is positively associated with some measures of innovation, like patent and trademark registrations, according to the NASAA. Creative places are also a draw for cultural tourists, who are a boon for local economies because they tend to stay longer and spend more.
The COVID-19 pandemic has given greater urgency to funding the creative economy, as many cultural organizations have had to scale back their projects or have lost conventional sources of revenue, such as ticket sales to in-person visitors.
Harnessing Impact Investing to Build Creative Ecosystems
Upstart Co-Lab promotes investing through a creativity lens and has launched the NYC Inclusive Creative Economy Fund in partnership with the Local Initiatives Support Corporation. The fund sells notes to accredited investors and uses this capital to lend money to organizations that provide affordable spaces for artists’ studios, artistic incubators, and cultural experiences. As of March 2020, the fund had received investments of more than $6.2 million and had funded projects such as the Brooklyn Navy Yard Development Corporation’s renovation of a building for creative industries, which is expected to lead to 300 jobs in manufacturing and design. The fund has also contributed to La Mama Experimental Theater Company’s renovation of three buildings for use as performance spaces and educational venues.
Elsewhere, New Jersey Community Capital has raised money for its Creative Placemaking Fund from investors such as Wells Fargo and the Kresge Foundation, and it offers financing for initiatives that bring arts and culture into revitalization projects. The fund has supplied loans for creating an arts business incubator and studio space, expanding a commercial facility with a co-working area, and redeveloping creative venues like theaters, studios, and retail spaces.
More recently, in November 2020 Seattle announced the launch of its Cultural Space Agency, a public corporation that aims to develop and support arts-related real estate in the city, protecting creative professionals from displacement. “There are a lot of folks who want to make investments in affordability and stabilizing cultural space,” said Matthew Richter of Seattle’s Office of Arts & Culture. “The public development authority brings the power of government, the nimbleness of the independent sector and the partnership opportunities of social impact investment all to bear on the same problem.”