Arts Impact Fund investment The art-focused community cafe will use the…
Arts Impact Fund investment
The Arts Impact Fund offered the educational arts charity a £600,000 credit facility to purchase and develop property.
Bow Arts Trust is an educational arts charity operating since 1995 out of its long term base on Bow Road, and several other locations within East London. Bow Arts offers affordable studio space to artists and designers at the start of their careers, and also runs the Nunnery Gallery, part of the Bow Road headquarters, which displays visual art firmly rooted in the history of the area.
Bow Arts works with local schools to provide opportunities for artists to supplement their income, and artistic programmes for students which improve their sense of integration and their enjoyment of learning, which is likely have a positive effect on their academic attainment – particularly since the majority of their partner schools are located in areas of high deprivation.
At the time of approaching Arts Impact Fund, Bow Arts ran eight studio spaces in London, designed to provide studios and facilities as well as acting as a geographical hub and support system for artists and creatives. These sites were placemakers, attracting commerce and customers to the local areas, while retaining a strong sense of community history and integration. Bow Arts works closely with local authorities and is a keen supporter and advocate of the placemaking agenda; their work with schools strengthening and lengthening links with the communities in which Bow Arts and its licensed artists sit and operate.
In addition, Bow Arts operates a web service matching artists to studio space (Artist Studio Finder), and has established the East End as London’s Artist Quarter, coordinating events such as Open Studios across the region.
Bow Arts has always operated as a sustainable social enterprise, and has acquired its studios on long leases, funding capital refurbishment with the help of grants, then covering the costs of the lease and the running of the studios with the licence fees charged to artists. Surpluses derived via donations are used to offer the artistic educators to schools at a discount, or reinvested into the charity for future expansion.
"Bow Arts Trust's business model is a landmark in sustainability."
Bow Arts’ business model is a landmark in sustainability, and has received many plaudits, as well as being an Arts Council NPO and receiving a small annual grant. In recent years, Bow Arts has been able to generate a surplus on live/work spaces, bringing otherwise untenanted social housing into productive use, but the organisation is wary of relying on this as a long-term ballast to P&L as the leases are short-term, and it would be unwise to rely on this high risk business development as a lynchpin of future strategy – it is dependent on so many factors, including securing strong relationships with a variety of social housing providers, who are themselves in a period of increasing uncertainty.
The economics of the studio space business are also under pressure in terms of new developments, due to the dramatic and well-documented rise of property prices in London, meaning freeholders are favouring shorter-term leases while keeping an eye on residential development potential given the high margins. In addition, larger spaces are harder to come by, increasing the proportional cost of development. Each of these factors renders the depreciation of any capital works (over the life of the lease) significantly more burdensome on Bow Arts’ income statement going forward.
For a number of developments in 2014-15, Bow Arts managed to take on new premises and get help with the capital development costs from the GLA’s High Street Fund as well as from local authorities, which mitigated this effect, but the organisation wanted to exercise caution so as not to become too dependent on a finite source of capital funding.
For these reasons, Bow Arts was keen to secure its long-term future by taking advantage of its strong balance sheet while retaining prudent cash reserves against operating costs. In 2015, the Arts Impact Fund extended a £600,000 credit facility to Bow Arts Trust with the intention of using it for purchasing and developing property on its own balance sheet, conditional on approval of the proposed purchase.