Art as an Impact Investment: Transforming Culture and Society through Purposeful Capital
Imagine a world where individual and institutional investors use art to enrich their portfolio, generate a return (for their clients in the latter case), contribute to sustainable development, address global challenges, and empower marginalised communities. Art, long celebrated for its cultural value, is now gaining recognition as a powerful impact investment tool. With the convergence of finance, philanthropy, and purpose-driven goals, impact investing in art offers a unique avenue for collectors and investors to generate social and environmental returns alongside financial ones.
But how exactly does art as an asset class fit into the broader landscape of impact investing? And how can it address critical global challenges while meeting investor expectations?
What is Impact Investing?
Impact investing refers to investments made with the intention to generate positive, measurable social or environmental impact alongside a financial return. Impact investments often focus on renewable energy, healthcare, and affordable housing sectors. Still, the art world is increasingly being recognised for its potential to contribute to global sustainability goals. According to the 2023 Art & Finance Report, more than 85% of wealth managers and art collectors believe art and collectible assets can play a role in addressing social and environmental challenges, making this an exciting frontier for investors who are both art enthusiasts and changemakers.
Art Investments: A Diverse Range of Instruments
When considering art as an investment, it’s essential to understand the various forms these investments can take. From traditional purchases of fine art to innovative financial instruments, impact investors have several options:
- Direct Purchases of Art: Buying pieces from artists or galleries, particularly from underrepresented regions or emerging artists, can provide economic support to marginalised communities while allowing collectors to build unique and diverse collections.
- Art Funds: These collective investment schemes allow investors to pool their capital to buy artworks. Impact-driven art funds prioritise investments in works that promote cultural heritage preservation, social justice, and environmental awareness.
- Socially Responsible Art Loans: Investors can also lend artworks to museums or cultural institutions, ensuring public access to critical cultural artefacts while supporting artistic preservation. These loans can also promote education and sustainability by fostering exhibitions on socially relevant themes.
- Art-Directed Securities: A growing number of financial products allow investors to invest in art-directed securities. Securities, such as equity or loans at concessionary rates, which offer both a financial return and the ability to impact the cultural sector by supporting artists and organisations that address social causes, through residencies or holding exhibitions. Outcomes-based funding for art would be a welcome addition to the securities available.
- NFTs with a Purpose: The rise of digital art and NFTs (non-fungible tokens) has opened new doors for impact investing. Some NFT projects direct proceeds toward charitable causes or environmental restoration, marrying cutting-edge technology with social impact.
Art’s Role in Addressing Global Challenges and SDGs
Art’s capacity to contribute to the United Nations Sustainable Development Goals (SDGs) is vast, cutting across economic, social, and environmental dimensions. Let’s explore how art investments align with key SDGs:
Economic dimensions
- SDG 1: No Poverty: Supporting local artists, especially from underrepresented or marginalised communities, can directly contribute to poverty reduction. Impact investors can foster economic inclusion and resilience by creating opportunities for these artists to enter global markets.
- SDG 8: Decent Work and Economic Growth: The art market, valued at over $65 billion, is a significant driver of economic activity. Investing in art-related industries—such as conservation, curation, and art-tech—supports sustainable economic growth, cultural industries, and decent work opportunities for artists and professionals. The financial impact of art events, achieved through tourism, should also not be underestimated.
- SDG 9: Industry, Innovation, and Infrastructure: Impact investments in digital art, NFTs, and art-tech platforms are at the cutting edge of innovation. These investments contribute to building the infrastructure needed for a resilient and sustainable creative economy.
Social dimensions
- SDG 3: Good Health and Well-Being: Art therapy is increasingly recognised for improving mental and emotional well-being. Corporate collectors adorn their office spaces with art to enhance the mood and inspire creativity in their employees. Some hospitals and medical institutions also use art to improve the well-being of their patients. Investments in art programs that promote mental health, particularly in underserved communities, contribute to global well-being. Recognition of Indigenous knowledge in art is also linked to improving well-being from generational trauma.
- SDG 11: Sustainable Cities and Communities: Investing in public art initiatives or urban cultural projects can enhance the aesthetic and social fabric of cities. Art-based urban renewal projects create vibrant public spaces and foster social cohesion and cultural identity.
Environmental dimensions
- SDG 12: Responsible Consumption and Production: Investing in art that highlights environmental sustainability or is made from eco-friendly materials aligns with responsible consumption practices. Art with a message of ecological stewardship promotes public awareness of sustainability. Similarly, notwithstanding the opportunity presented by NFTs, energy consumption associated with blockchain technology, particularly in proof-of-work systems, has raised concerns.
UNESCO’s Culture 2030 Indicators: A Case for New Metrics to Measure Art’s Impact
To better measure the contribution of culture to sustainable development, UNESCO introduced the Culture 2030 Indicators. These indicators help quantify the social, economic, and environmental impacts of cultural activities, including art. By aligning art investments with these indicators, impact investors can ensure their contributions improve employment, gender equality in artistic production, and the preservation of cultural heritage.
Deloitte Italy analysed the impact of Parma Italian Capital for Culture 2021+21 by proposing potential key performance indicators (KPIs) for each of the four pillars of the UNSECO Culture 2030 Indicators. We offer two additional indicators in each pillar alongside two KPIs proposed by Deloitte Italy:
- Environment & Resilience: “Role and contribution of culture to sustainable human settlements with a focus on cultural and natural heritage and urban environment.”
- Events’ locations (Deloitte Italy)
- Number of partners, sponsors (DI)
- % contribution of materials used in exhibitions which is from reused/recycled/environmentally-friendly materials (Capital Art)
- Number of artworks per employee working at the [office] location (CA)
- The distance and manner in which art is freighted (CA)
- Prosperity & Livelihood: “Contribution of culture in driving and enabling more inclusive and sustainable economies, by generating income and employment, stimulating revenue through cultural goods, services, and enterprise.”
- Generated income (ticket office vs ancillary services) (DI)
- Number of suppliers (DI)
- Sales made through auction houses which implement an artist royalty scheme or if, on blockchain, royalties for the artist (CA)
- Art collection activities comply with the code of conduct for art collectors (CA)
- Knowledge & Skills: “Contribution of culture in building knowledge and skills including local knowledge and cultural diversity.”
- Available languages (DI)
- Number of cultural mediators (DI)
- Number of bursaries/loans provided for skills development in art-related roles for people from under-represented groups (CA)
- Recognition for funding provided for research for local researchers to document Indigenous knowledge related to art production (CA)
- Inclusion & Participation: “Contribution of culture in building social cohesion, as well as fostering inclusion and participation.”
- Number of participants/ visitors (DI)
- Number of volunteers and origin (DI)
- Number of new collectors, curators and galleries added to the source database (CA)
- % of items exhibited procured from local artists or collectors (CA)
- Geographic diversity: an index can be created which can provide a national and international assessment of geographical diversity of visitors, and contributions/works (CA)
Based on the proposed KPIs, which do you think would score the best in terms of sustainability: the Venice Biennale (Italy), the Islamic Arts Biennale in Jeddah (Kingdom of Saudi Arabia), or the Dakar Biennale (Senegal)?
Capital Art’s Role in Empowering Marginalised Collectors
Capital Art is committed to supporting art as an impact investment by providing marginalised communities (that is, communities outside of the major art markets) with the tools and services to manage their collections. Through our affordable collection management software, collectors from diverse backgrounds can organise and protect their assets, making them more likely to participate in exhibitions and contribute to the global art market.
Our platform helps these collectors manage their portfolios and connects them to a broader network of institutional curators and exhibitions that align with their values, contributing to a more inclusive and sustainable cultural economy.
Next Steps for Impact Investors: How to Get Involved
The first step for impact investors looking to incorporate art into their portfolios is education. Understanding the cultural and financial dynamics of the art world is crucial for making informed investment decisions.
Investors should also consider collaborating with cultural institutions and local galleries that promote sustainable art practices or investing in artists championing social causes.
Diversifying across different types of art investments—whether physical artworks, art funds, or NFTs—can further enhance your portfolio’s impact and financial performance.
A New Era for Art and Finance
As art and finance continue to intersect. Positioning art as an impact investment is emerging as a powerful force for good. By investing in art that promotes social and environmental goals, collectors and investors can play an active role in shaping a more equitable and sustainable future.
But what will the art collections of tomorrow look like,? And how can today’s investors ensure they are part of a movement that redefines value? The answer lies in the decisions we make today—decisions that balance cultural preservation with social impact.
Are you ready to make your next investment not just a financial one, but a cultural and societal statement?