Mr Cameron, our Prime Minister, has very recently announced that he wants to establish what he calls the ‘Big Society Bank’. In the face of the reluctance of the major banks to lend money to charities his solution is to set up another source of income that can be lent out and repaid on agreed terms. So the Big Society Bank does not give money, it lends it. His Big Society Bank is a good idea.
Now I’m going to go back to a book of mine published in 1984, Guide to Arts Marketing. In Appendix C there is an item called ‘Arts Bank’ and in it I outline the benefits to the subsidised arts sector of having an extra source of funding based on repayable loans to supplement the grant system which operated then as it does now. Grants, of course, are simply gifts for which the only return is public benefit.
I first put forward the idea in Spring 1979 when I was giving a lecture tour of New Zealand and Australia and I remember the Western Australia Arts Council getting very excited by the idea. On my return to London I published an outline of Artsbank in The Stage and Television Today. Then, with Tony Gamble (my colleague in the consultancy business Subscribe Now! (UK) ) and a former colleague from Merseyside Arts Association days, David Pratley, a joint paper was produced and circulated. When David became regional director of the Arts Council, he could not maintain his association with what was becoming thought of as a realistic project rather than merely ideas presented on paper and left it to Tony and me to progress. Earlier we had put the outline of Artsbank to the then Finance Director of the Arts Council, Tony Field, who told us that he had discussed it with colleagues who, he said, ‘were adamant that they could not recommend the Council to take any financial interest in it’. Nor any other kind of interest it would transpire.
We approached many influential organisations to obtain their opinion of the idea and to see if they might be prepared to put up money for the initial funding. The Gulbenkian Foundation liked the idea very much and was clearly prepared to consider supporting it. One of the equally encouraging replies came from the head of public relations of one of the major banks (not then up to their ears in the pile of approbium heaped upon them by society) who said he had sought the views of a banker colleague and told us, ‘He first of all thought your proposition was hopeless, but on closer examination he agrees with me that it is highly original and contains a lot of sound sense’, and went on to say, ‘ there is no doubt that there is indeed a need for this kind of source of funds, particularly with those arts activities which find it difficult to attract commercial sponsorship.’ He went on to say that he thought our chances of finding sponsors for the scheme were low.
We explained the Artsbank scheme as follows:
The idea of Artsbank is to create a central source of money that can be loaned to arts organisations, artists and craftsmen to provide short term working capital; this can be used to encourage and make possible projects that are worthwhile and ambitious within the context of the applicant and the relevant field of activity. Unlike any other funding approach it will expect money loaned to be repaid.
The Artsbank idea offers a way of helping the subsidy system to get more for its money. It can help the arts organisations see success for what it really is and it can provide the financial help necessary to overcome the barrier of risk. Artsbank sets out to build relationships with individuals as well as organisations so that successful Artsbank customers may carry their creditworthiness through a career, irrespective of place or type of arts organisation and this can assist in their career growth which, in turn, will make organisations healthier and more success orientated.
Basic to the idea is for a relationship between the applicant and Artsbank to develop over a period and for that relationship to be founded on business agreements which are adhered to. Artsbank would lend money over an agreed period at an agreed interest rate with an agreed system for repayment. Artsbank would expect to have agreements honoured. As in the normal bank/customer relationship, the consistent honouring of agreements leads to trust and the willingness to take further risks on the bank’s part.
Although Artsbank would attempt to following normal banking criteria in assessing applications it would have to take a less stringent view and recognise the particular difficulties facing applicants; this would also apply to the conditions attached to any loan. Artsbank must accept from the beginning that it cannot operate in a true commercial sense and that because of the risk factor inherent in the promotion of most arts programmes and the frequent need to be generous in terms of interest rates it will ultimately lose rather than make money. But it would not lose all its money all at once. It would recirculate its money, recycle it so that each pound is made to do the work of many pounds – unlike the subsidy system where each pound is used only once.
The creation of a money-lending organisation, run along the lines of a bank rather than a traditional arts funding body, would be an invaluable complement to the present system and would encourage the entrepreneurial element in a consistent and reliable way. It could also do something which has never before been attempted; it could encourage and reward the talented individuals who work in the organisations so that eventually the proposed Artsbank would build up business relationships not only with arts organisations but also with individual arts administrators and with individual artists and craftspeople who are attached to no arts organisation at all.
In that section of my book I said, ‘Tony Gamble and I with other pressing things to do decided that the best thing was to let the idea lie until circumstances were more favourable.
I added: ‘Perhaps the idea was simply ahead of its time.’
That was around 27 years ago. For ‘arts’ read ‘charities’ and today you have the same idea.
I shall watch the progress of the Big Society Bank with paternal interest and I wish it well.
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