The Microfinance for Artists Research Project is now finished and you can view the report here. The project now rests in other hands and I hope to see it move forward to implementation!
MARProject Survey Results and the way forward – 1
The MARProject survey closed April 15 and the partners in this program (Canadian Alliance of Dance Artists, Ontario Chapter (CADA-ON), CARFAC Ontario, Canadian Music Centre – Ontario Region, Dance Ontario and Ontario Crafts Council) have since met and set the course for the immediate future, which is to seek funding support to develop the business plan.
The full report on this project, featuring survey results, will be posted by late May. In the meantime, here are a few survey highlights from the demographic and credit sections of the report.
152 artists responded to the survey and while the number responding to each question varied due to internal skip logic and individual choices, 129 completed the survey. 68.5% of respondents were female. The age group with the highest response rate (31.1%) was 50-65 followed by 40-49 (21.6%).
50.3% of respondents live in Toronto. The next largest group (8.2%) lived in a Central Ontario town or rural area outside of Peterborough (Bruce, Grey, Dufferin, Simcoe, Kawartha, Muskoka, Haliburton) and with the addition of Peterborough this group reaches 9.6% of respondents. Both Ottawa and Southcentral Ontario (Durham, Halton, Peel and York) each had 6.1% respondent participation. Niagara Region followed with 5.4%.
The chart shows income levels of the artist respondents. 60.1% reported 2011 income under $25,000, many significantly under.
92.2% of respondents had unsecured credit cards. Of the 132 artists who answered the question, “Have you ever applied for a loan for any purpose?, 95 (72%) answered yes. Only 97 artists answered the question, “Was your most recent loan application successful?” and 79 (81.4%) replied yes.
70% of respondents have used a credit card to finance their art production. 75 artists provided commentary on how this worked out for them. 60% of these described their experience using credit cards as positive, allowing them to pay for raw materials, equipment purchases and rentals, workshops, studio rent, shipping costs, rehearsal space, and show entry fees either as bridge financing or because credit cards were the required form of payment. Many of the positive comments mentioned secure means of meeting payments through sales, other employment or spousal support.
Comments from those for whom the use of credit cards did not work well for them included that credit cards made required purchases possible but meant years of paying off debt. One said, “It’s as if I was paying Visa to make my work.” One respondent recounted history including credit card use for art creation and travel in combination with a line of credit for a Masters degree that led to bankruptcy and abandoning artistic practice, at least temporarily. Many respondents spoke of stress.
Of the 117 artists who responded about financing art projects through loans or lines of credit, 53.8% have never considered applying in order to finance art production. 19.7% applied for a loan or line of credit and got it. 17.9% wanted to apply but didn’t and 57% of those replied that they did not because they were intimidated by the responsibility of debt. Of the 8.5% who were refused loans or lines of credit, the major reasons were too much debt in ratio to income or too little income although they didn’t have debt. 56.3% of the artists were able to find another way to carry out their art project which of course leaves 43.8% who were not.
In the next post, I will address other survey responses and how they point to the way forward.
Survey is live!
The MARProject Survey is finally live and available here. This is the major research instrument for this project and will be used to determine the interest and need for a micro-credit program for Ontario artists. We need lots of participation to take this to the next phase! Please forward the link to any professional Ontario artist.
The example of Rise Asset Development
I recently met with Narinder Dhami, Executive Director of Rise Asset Development, a microfinance program for people living with mental illness and addictions. (Please click on the link to learn more about Rise.) Narinder was part of the project incubation while working at the Lee-Chin Institute for Corporate Citizenship at the Rotman School of Management (where she also earned her MBA and she followed this with work in microfinance throughout West Africa – Burkina Faso, Mali and Côte d’Ivoire). Rise provides loans, leases, and lines of credit up to $25,000 throughout Ontario so is an ideal model to look towards. I asked Narinder for advice on moving forward with a microfinance for artists project.
When I first dreamed up this project, I thought an eventual program might be set up in communities through partnerships with local microfinance institutions. Then I learned about programs with dedicated funds. At the December meeting of the MARProject Partners I proposed that we pursue partnerships with community-based microfinance institutions (lenders) operating with agreements with a centralized program fund with capital generated by impact investors. This is now looking too ambitious and unrealistic and I am back to the idea of partnerships with existing microfinance institutions.
Rise Asset Development operates from a position of tremendous benefits and privileges but even in their position there are many challenges to building a microfinancing organization. Rise started with a $1 million donation from Sandra Rotman! The program is supported by Rotman School of Business and CAMH, which means advisory support and lowered administrative expenses. Narinder repeated what I have learned elsewhere, that the success of domestic microfinance depends on achieving scale, which is difficult with targeted populations (such as artists), and that programs in Canada to date remain dependent on donations and grants.
Duplicating the Rise model would mean finding an angel prepared to donate start-up funds at the level that Sandra Rotman provided. Maybe it’s the February blahs but it seems next to impossible to me. It became clear during our conversation that partnerships are a more feasible option than starting a dedicated fund.
Of course there are many challenges also to finding microlending partners prepared to expand to include artists (or for that matter, finding microlending partners at all). We want to build a program with lower than regular interest rates – Rise offers 3.5% fixed interest. There are very few microfinance lenders currently operating in Ontario and some of them are credit unions that offer loans at prime plus a percentage to cover administrative costs. Avoiding them means an even smaller pool of microlenders. However, we might be able to “sell” artists to microlenders because we would be increasing their client base. (You can tell I’m an artist whose work is not object-based because of I can’t seem to use the word “sell” without quotation marks.)
My research supports the idea that the importance of education and support cannot be over-emphasized for successful microfinance programs. This make sense when one considers that programs are supporting people who don’t have money which means they (we) don’t have experience in working with money and require education. Rise has a very strong support component to their program and this of course requires human resources. My thoughts on this for MARProject are that arts service organizations are already offering professional development workshops such as WorkinCulture’s The Business of Art, so a foundation has been laid for building the necessary supports and education for a loans program through constellations and partnerships within the arts community.
However, right now the main thing is for me to complete my research and find the right person/team to build a program because I am an artist not an MBA. I never imagined that I could wave a magic wand and create a microloan program for artists, and I know from much life experience that it is more difficult to implement new ideas when they are in the early stages in the larger society than once they have become better known. However, I remain firm in my belief that artists and arts organizations should be getting in on domestic social finance on the ground floor. The survey required an overhaul and I’ve been putting that off but resolve to complete it this week.
MARProject survey almost ready
The major research instrument of the MARProject is an artists’ survey. We are a big step closer to completion of this phase of the project because the survey is now in the hands of the partner arts service organizations for their review. Barring any major issues, it will be ready for distribution by mid-late next week. The survey data will be critically important to the life of the project as it will demonstrate need and the type of capital loans program that can support artists’ production.
I’d like to thank Joanna Reynolds of MaRS Impact Investing for reviewing our survey and talking with me about it. A big part of the journey of this project has been wrapping my head around social finance and how we as artists can tap into this new paradigm and I’ve done that head-wrapping while working on art projects of my own. In December, I benefited from a bursary to attend two forums at MaRS and it really moved me forward. The bursaries were provided by Ontario Trillium Foundation which is funding this research – thank-you!
When the survey is approved by the partners, it will be distributed via their networks. The link to the on-line survey will also be posted here and on the Microfinance for Artists Research Project Facebook page. All Ontario artists will be welcome to complete it and I hope for robust participation. The survey is quite lengthy and I believe the results will offer unique information on how artists finance their work presently and how we can benefit from loan capital.
Stay tuned!
Breaking Down That Old Bifurcation
I am suspect of anywhere, anytime that people have the world clearly divided into two camps – good vs. bad, right vs. wrong, us vs. them. So it follows that I am interested in the breakdown of the division between the for-profit vs. not-for-profit divisions in the arts.
We are used to a bifurcated system in which for-profit and not-for-profit (nfp) organizations are clearly separate and in the arts, many of us have exclusively lived in the nfp world. Nfp status is a basic eligibility criteria for most arts grants for arts organizations, at least at the operating grant level. Donations from individuals and corporations are just not available for the most part unless a nfp organization also acquires the more difficult-to-achieve charitable status with Canada Revenue Agency. The opportunities to generate revenue outside of grants and donations have seemed few and far between to many artists and arts organizations; sales and box office revenue do not amount to much for many.
As stated in the last post, in recent years there has been a push (coming from such sources at Ministry of Culture and-whatever-it-is-that-year) for individual artists to frame themselves as entrepreneurs and improve their business skills. Surprise! As a self-employed artist you actually are part of the for-profit world as hilarious as that may seem compared to your bank account. I remember years ago when I first attempted a business as a consultant (my second career is always parallel to my career as an artist) that it was initially hard to wrap my mind around the idea that I was part of the private sector when my world was the not-for-profit sector. That was a tip-off to a different way of seeing things.
Consultant Jane Marsland is one person I have heard champion the entrepreneurial model and speak of the terrible cost of the constraints of nfp corporation upon artists. I have heard various generations of young artists speak of the need to find alternatives to grants, and believe me, have felt the heavy weight on my own artistic practice of the constraints of the current system. One of the most debilitating aspects of being an artist for me and many others is the sense of helplessness in the face of the gate-keepers be they curators or grant juries. But where would we be without the arts grants and nobody has ever come up with a better way.
Performing artists in particular are pushed into forming nfp corporations in order to reach for the brass ring of substantial funding and many encounter a lot of frustration. The level of accountability required of us to justify grants is out of all proportion to the crumbs tossed our way. I remember when I was Executive Director of the St. Catharines and Area Arts Council and a new hire for a major local arts organization arrived from the social services. She could not believe the level of work required for arts grant applications and reports for the goal of a fraction of the level of funding to which she was accustomed. And the arts councils themselves are “on our side” (oh no, sides!) and make these demands in order to face their government bosses.
Reactions to the notion of encouraging artists being more business-like include that it amounts to co-option and collusion with corrupt late capitalism responsible for social injustice and environmental destruction. Or, that business-like thinking is incompatible with the creative process. There’s a lot of frustration felt by arts organizations pressured to increase their self-generated revenues when that feels like a distraction from the “core business” of making art and these pressures mount without accompanying ability to pay for the attendant human resources. The artist-as-entrepreneur has arisen as complement to the economic development theory of the creative economy championed by Richard Florida. There is plenty of criticism of the Florida model coming from the arts (as well as support); I have things to say of my own on this topic but will not digress – my point is that it is part of an opportunity for the arts to be part of the breaking down of historical bifurcation around money and profit vs. social good.
I know I am jumping between the individual artist and the arts organization in this post; just to be clear, the focus of MARProject is definitely the individual artist. Last time I said my next post would be about social finance and I am still headed that way! The goal of creating a provincial system of microcredit for artists might seem like a pipe-dream, but for a movement going on called social finance.
MARProject’s 1st post
The Microfinance for Artists Research Project (MARProject) started out to investigate how micro-finance tools work and how individual artists in Ontario might use them. The long-term goal of the project is to improve artists’ socio-economic status. We recognized that although in recent years artists have been encouraged to improve their business skills and see themselves as entrepreneurs, they often lack access to the important business tools of credit and capital. After all, Ontario artists earn on average $24,500, which represents an earning gap of 38% between them and the Ontario labour force average (2006 census data)[1] and that doesn’t exactly make us the favourites at the bank.
Although the term, microfinance, refers to a range of financial service, we were not surprised to learn that its major instrument is microcredit, or small loans. We decided to focus on microcredit in the MARProject.
In many ways, the situation of artists is no different than other impoverished Ontarians (and around the developed world), which means that any credit we can get is at a high interest rate. The convention is – poor equals poor credit risk so let’s-charge-this-person-more-than-the-wealthy (for any credit we can get). (You may have heard something about the 99% lately, so at least artists know they are not alone.)
We also have a lot in common with every other self-employed person. However, 40% of Ontario artists are self-employed, compared to 7% of the overall labour force,[2] so an awful lot of us face the reluctance of banks and credit unions to loan money to someone with uneven cashflow, i.e. without a regular paycheque. The norms in banking reflect the social norms about a “steady job”.
Artists also often face specific barriers that reflect how our work is regarded in society. You know – hey artist, go get a real job. Although I believe that prejudice towards artists has decreased (empirically looking at my own long career as an artist), barriers arise when your work is regarded as insignificant.
Why would we care if artists can’t get loans anyway? Isn’t debt a bad thing? Do we want to encourage artists to take on debts? My answer is simply that our chances at improving our socio-economic status are significantly lessened when we are shut out of a key part of how the economy works. Everyone except the very rich usually make a major purchase through mortgages and loans. Whether we are talking about a stable live/work space you own or a piece of equipment, if you don’t have a huge sum on hand, you have to borrow it.
Here are some examples of how an artist’s career and ability to make a living can be compromised by lack of access to credit:
- your new work is financed by an arts council grant which won’t arrive until after the performance
- you have a chance to buy a house and be free of the landlord’s whims and restrictions, you know the mortgage would be less than your current rent so you can afford it but don’t have a downpayment
- you need a new computer to run the new software you need to make the work that will be in exhibiting next year (and you won’t receive the artist’s fee until then)
- you need to take a course now to upgrade your skills before you start that new teaching gig
- a commercial gallery is finally interested in your work and all you need to clinch it is to strengthen your portfolio with new work – you want to quit that minimum wage joe job to get into the studio and paint for a month, you can find another one after if necessary
- etc. etc. etc.
All these examples are about financial stability, research and development or cashflow. If it’s good business for business why isn’t it good business for artists?
Next (unless I get distracted by another topic for the next post) – the relationship of this to the topic of social finance.
MARProject Blog 