Impact investing refers to investments made with the intention of generating positive, measurable social and environmental impact alongside financial returns. It enables individuals and institutions to address pressing global challenges while pursuing sustainable and profitable investment opportunities. According to the Global Impact Investing Network (GIIN), global impact investments reached over $1.571 trillion in assets under management in 2024, with high-profile sectors such as renewable energy, healthcare, affordable housing, and education drawing the lion’s share of attention. Yet, beyond these well-trodden paths lies the arts and culture sector—a less visible but intriguing area for exploration.
According to the GIIN, 5% of impact investors are involved in the arts and culture sector. Discussions about impact investing in the arts have appeared in mainstream media outlets such as Forbes and Barron’s, with some referring to it as a new frontier for impact investing. The rationale for such investments is grounded in the arts’ transformative power (Landry et al., 1993), particularly in areas like cognitive development, moral growth, mental health, well-being, and the promotion of social justice and inclusion. However, the share of impact investment funds allocated to the arts and culture sector has not grown; in fact, it decreased from 2015 to 2019. This trend has persisted into the 2020s, with the share remaining exceptionally low, at just 0.1% in 2023.
Given that impact investing typically demands measurable social or environmental benefits, the inherent complexity of how the arts influence society may explain the relatively small share of impact investment directed toward the arts. Critiques surrounding the measurement of the social impact of the arts, or even the concept of “social impacts of the arts” itself, may provide valuable insights into the challenges of applying conventional impact investing strategies within the arts sector.
Belfiore and Bennett conducted a systematic and critical examination of the concept of the “social impact of the arts.” In their 2007 paper, they argue that several assumptions and beliefs are rarely questioned in the ongoing debate about the social impacts of the arts. For example, extrapolating the effects of art from the individual to the societal level assumes that arts experiences are comparable, allowing for generalizations within specific art forms, across different forms, and among diverse populations. However, individuals’ experiences with art are inherently varied, shaped by factors such as age, ethnicity, and social class. Furthermore, the richness of artistic expression and the complexity of individual engagement make such generalizations even more tenuous.
In their 2007 paper and other research publications, Belfiore and Bennett emphasize the importance of adopting a critical-historical approach to examining the social impacts of the arts. The debate about the social impacts of art is not a recent phenomenon but has persisted throughout human civilization, dating back to Ancient Greece. They classify different perspectives into three categories: the “positive tradition,” the “negative tradition,” and the “autonomy tradition.” The positive tradition highlights the educational, humanizing, moralizing, and therapeutic power of the arts. In contrast, the “negative tradition” argues that artists do not possess superior knowledge compared to their audiences, casting doubt on their ability to fulfill such roles. This tradition also emphasizes the potential negative impacts of certain types of art, such as “copycat behavior.” Finally, the “autonomy tradition” acknowledges the limitations of the arts in addressing social issues, asserting that their value lies solely in the aesthetic realm and that it is unnecessary to legitimize them through external benefits.
Mirza (2006) critically examines the practice of financing art projects based on their purported positive impact on the health and well-being of individuals and communities within the context of the UK public health sphere. The author raises concerns about the lack of attention to the integrity of the arts, the absence of uniqueness in how the arts address certain issues (i.e., similar outcomes could be achieved through less costly non-art interventions), and the risk that emphasizing the arts—such as using community art projects to improve subjective well-being—may divert focus from identifying and addressing root causes within the social sphere. The paper questions the assumption that art always produces positive outcomes, emphasizing the unpredictable and sometimes disruptive nature of great art. By suggesting that genuine artistic expression might evoke negative emotional states or even social unrest, it challenges the instrumentalization of art for purely positive social impacts. Instead, it advocates for preserving the arts as a space for free expression, unbounded by expectations to meet specific social or therapeutic objectives.
Critiques of the methodologies used for quantitatively evaluating or measuring the social impacts of the arts are not uncommon. For example, Galloway (2009) highlights the limitations of traditional evaluation methods, particularly the reliance on large-scale longitudinal studies and the successionist model of causation, which often fail to capture the complexity of arts interventions. The paper argues that complex factors—such as the characteristics of the art, social contexts, and psychological dynamics, which traditional models attempt to “control for”—are, in fact, the very elements that shape how artistic experiences affect individuals. It highlights that the context of each artistic encounter is unique, shaped by the open systems of the social world, and cannot be repeated. This complexity challenges the assumptions of generalizability and causality often inherent in traditional evaluation methods, underscoring the need for a more nuanced understanding of these contexts to accurately assess the social impact of the arts.
Given the inherent complexities of art experiences, developing effective methods to evaluate or measure the social impacts of the arts is an immensely challenging task—if not entirely unattainable. Below, we examine several approaches proposed in academic research for such evaluations, along with their potential limitations.
Jackson and McManus (2019) proposes the use of Social Return on Investment (SROI), a systematic methodology for quantifying the social value generated by an art organization’s activities. The SROI process consists of several steps: defining the scope and identifying stakeholders affected by the intervention, mapping out a story of change to outline how the organization’s activities produce social impacts, gathering evidence, assessing impact and causality, calculating the SROI ratio, and applying the insights to enhance future practices.
The SROI ratio is calculated by dividing the total monetary value of social outcomes by the total investment, representing the social value created per unit of currency spent. Non-market outcomes are converted into monetary terms through financial proxies. For instance, the authors conducted a “revealed preference” valuation game in which participants assigned value to their lifelong learning experiences. They ranked outcomes from lifelong learning alongside items with known market values, such as accommodation, food, heating, a car, and non-essentials like a cruise or a television. By integrating these rankings with the market values of the comparison items, participants collectively estimated the monetary value of their lifelong learning experiences.
The SROI method offers a structured approach to measuring the social impacts of the arts, bringing a level of rigor to the evaluation process. However, it has several significant limitations. Assigning monetary proxies to non-market outcomes often requires subjective judgment, which can oversimplify complex social impacts and result in inaccuracies. Measuring intangible outcomes, such as community cohesion or cultural value, remains inherently challenging. Establishing causality between an organization’s activities and observed outcomes is particularly difficult in complex social systems influenced by multiple factors. Moreover, the method’s reliance on context-specific assumptions limits the generalizability of results and complicates comparisons across different interventions. The evolving nature of social impacts, which often unfold over time, is also difficult to capture within the static framework of SROI analysis. Additionally, implementing SROI requires substantial investment in time, resources, and expertise, which can pose barriers for smaller organizations or those with limited capacity.
Galloway (2009) advocates for using Theory-Based Evaluation (TBE) to assess the social impacts of the arts. Unlike traditional positivist methods, which often rely on a linear cause-and-effect framework, TBE adopts a generative model of causation, viewing social change as a product of open systems where individuals act as agents of change. It also embraces methodological pluralism, combining qualitative and quantitative approaches to develop a more nuanced understanding of how and why interventions lead to specific outcomes.
TBE emphasizes theory development rather than simply focusing on quantifying social impacts. It seeks to uncover the underlying mechanisms and contexts that drive social change, aiming to articulate and refine theories of change through empirical evidence. For instance, the paper references a study by Miles and Clarke (2006) examining the role of arts in offender rehabilitation. The study found that it is the process of engaging with the arts—rather than any specific art form—that drives positive outcomes. This process provides a framework that fosters respect and responsibility within a disciplined, creatively stimulating, yet psychologically safe (non-judgmental) and supportive environment.
While TBE provides an insightful evaluation framework, its limitations highlight the complexities involved in assessing the social impacts of the arts. To address this complexity, TBE studies often need to narrow their focus, which can restrict the scope of inquiry and result in only modest progress in overall theory development. Moreover, if the selection of case studies and participants is driven by the desire to explore specific cause-and-effect patterns, the options for organizing and conducting the study become constrained.
This challenge underscores the difficulty of balancing rigorous evaluation with the rich, multifaceted nature of artistic initiatives.
This article explores the critical examination of impact investing in the arts, yet it cannot fully encompass the intricate dynamics of the arts’ social impacts or the challenges of evaluating them within the impact investing framework. A deep understanding of this topic requires critical thinking and a nuanced appreciation of the arts and the diverse social contexts in which they thrive. While the arts hold immense potential to drive social change, an overemphasis on immediate, measurable impacts risks distorting both artistic creation and its evaluation. When funding is contingent upon such metrics, the pressure to deliver quick results can compromise the integrity of the arts and overshadow the profound, long-term benefits of certain initiatives—benefits that often unfold gradually and defy simple measurement.
References:
Belfiore, E., & Bennett, O. (2007). Rethinking the social impacts of the arts. International Journal of Cultural Policy, 13(2), 135–151. https://doi.org/10.1080/10286630701342741
Galloway, S. (2009). Theory-based evaluation and the social impact of the arts. Cultural Trends, 18(2), 125–148. https://doi.org/10.1080/09548960902826143
Jackson, A., & McManus, R. (2019). SROI in the art gallery; valuing social impact. Cultural Trends, 28(2–3), 132–145. https://doi.org/10.1080/09548963.2019.1617937
Landry, C., Bianchini, F., Maguire, M., & Worpole, K. (1993). The social impact of the arts: A discussion document. Stroud, UK: Comedia.
Miles, A., & Clarke, R. (2006). The arts in criminal justice: A study of research feasibility. Manchester, UK: Centre for Research on Socio Economic Change, University of Manchester.
Mirza, M. (2006). The arts as painkiller. In M. Mirza (Ed.), Culture Vultures (pp. 93–110). Policy Exchange. Retrieved on December 31, 2024, from https://policyexchange.org.uk/publication/culture-vultures-is-uk-arts-policy-damaging-the-arts/
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