Impact investors have begun turning their attention toward the creative economy, which covers a range of areas from sustainable food and ethical fashion to media companies and art-making spaces.
One institution within the creative economy is starting to take on a particularly visible role in mission-related investing: museums. With some major institutions managing hundreds of millions of dollars or more, museums have the potential to make significant social and environmental impacts with their investments.
The Appeal of Sustainable Investing for Museums
Why are museums beginning to embrace sustainable and impact investing? Some advocates see it as a way for these institutions to attempt to enhance their portfolios’ performance and align their investments with their often humanistic mission and values.
At the same time, Morgan Stanley advisor Anna Raginskaya suggests that museums—especially those aiming to maintain their collections in perpetuity—have a long-term responsibility as investors to address the challenges faced by their communities, society, and their own institutions.
Museums may also consider mission-aligned investing as a donor-engagement strategy. As interest in impact investing and sustainability grows, donors may come to care about not just the art a museum shows but how it stewards its resources.
Mission-Aligned Investing by Museum Endowments
Perhaps the largest institution to embrace impact investing is the Louvre art museum in Paris. As Louvre Endowment Fund CEO Philippe Gaboriau told Investments & Pensions Europe, the museum’s move was made possible in 2008 when the French government introduced endowments resembling those in the US. The next year, the Louvre established the first endowment fund in France, including an impact investing approach to support mission-aligned areas like education and small French artisanal companies. The museum now invests 5% of its €250 million endowment fund in a socially responsible and impact-oriented way, according to Social Capital Markets.
In the US, Raginskaya describes how the Massachusetts Museum of Contemporary Art shifted to focus its portfolio on socially responsible investments, community infrastructure, and affordable housing, including housing for artists. Meanwhile science and natural history institutions like the Field Museum and the American Museum of Natural History have divested from fossil fuels in an effort to align their museum endowments with their positions on climate change. The board of the Phipps Conservatory and Botanical Gardens in Pittsburgh also moved its investments away from fossil fuels to invest in clean energy, at the same time screening out investments in tobacco and weapons producers, among other areas.
Organizations have emerged to help museums and other investors understand how to move more of their portfolios into mission-related investments inside the creative economy and beyond. For example, Upstart Co-Lab connects artists, impact investors, and social entrepreneurs with a mission of “creating opportunities for artist innovators to deliver social impact at scale.” In 2019 Souls Grown Deep, a foundation that documents, preserves, and promotes the work of African American artists from the South, joined Upstart’s Upstart 2.0 initiative with a plan to make $1 million in impact investments at the intersection of racial justice and the creative economy. “As cultural institutions grapple with misgivings about sources of philanthropy,” said Souls Grown Deep president Dr. Maxwell L. Anderson, “our board decided that it’s not just where we provide support, but how and with whom we invest that matters.”