The heart of CultureBank is this:
Communities that have been traditionally understood as “poor” are not. They hold assets of value, opportunity, and inspiration. Undeveloped assets in marginalized communities—assets like music, dance, cultural tradition, diverse language skills, natural green spaces, oral narratives, and people themselves—are extremely valuable in achieving long-term health and shared prosperity. Identifying and unleashing the potential of these assets will help communities thrive.
But developing these assets requires a new model for investment and for assessing returns on investment. CultureBank is an entirely different investment platform, seeking to trigger a cultural shift in social impact investing and community development so that assets of all kinds can be understood, leveraged, valued, and shared. In its very early stages of development, CultureBank is founded on three critical concepts:
- CultureBank believes that artist-driven enterprises are essential to nurturing and revealing community value because of their demonstrated ability to identify and lift assets in communities; we therefore seek to develop our ecosystem of artist-driven enterprises.
- Rather than return on investment, CultureBank seeks a “ripple of investment” through imaginative structures that create value that can be commonly experienced, and where everyone is an investor—the artist, the financier, the community members.
- By leveraging unique investment structures, CultureBank aims to feed a rich but underinvested ecosystem of artists and connect them to growing movements to incorporate health outcomes into broader equity efforts.
What Is CultureBank, and How Will It Work?
CultureBank began as a series of conversations between Deborah Cullinan, CEO of Yerba Buena Center for the Arts (YBCA), and Penelope Douglas, a longtime community investment and social enterprise leader.
YBCA is pioneering a new model for an arts organization, one that builds the ecosystem of artist entrepreneurs and creates the conditions for diverse thinkers, inventors, innovators, and artists to come together around the critical questions in our communities and our society. CultureBank is a leading example of the kind of big idea that YBCA is interested in bringing into the world. We focus on a process of inquiry and then investment, empowering artists to become truly important early-stage investors in communities.
The concept behind CultureBank is best illustrated through our first pilot community, in Dallas.
The initial work establishes new forms of collaboration among academia (Southern Methodist University and its Meadows School), community arts and culture intermediary organizations (Texas Arts and Culture Alliance), civic engagement leadership (Ignite Arts/Dallas), formal and informal community leaders (social activists, citizens of all kinds, private wealth holders and entrepreneurs), and artists.
These collaborators participate in conversations led by artists who are working in Dallas’s underserved communities. The conversation focuses on critical questions about community assets. Inquiry might look like this:
- “How do we overcome stressors on our community?”
- “Which assets in our community most inspire us?”
- “What are the most valuable assets we have to increase community safety?”
For CultureBank, these conversations are the part of investment. Mainstream impact investors go through a due diligence process; CultureBank follows a model using a process of inquiry initiated by artists and their community. In the CultureBank model this core function is called Asset Discovery and Development.
In the next step of the Dallas pilot, philanthropic capital will be raised through Donor Advised Funds and invested in a radically different manner. Decisions regarding investments (likely to be grants in the first several cases)—who will receive them and what results will be targeted—will be made by and through a gifting circle. For CultureBank, everyone in the circle is considered an investor, and investments focus on supporting artists who are lifting and celebrating assets in the community. Assets in a community might include language skills, knowledge of local geography, natural green spaces, creative approaches to food security, or the factual narratives of communities. Investments are successful if the collaborators are able to identify and plan to further develop these assets. Within the first year of the pilot, our aim is to make between two and four grants for such development.
Later stages of investment will further these goals, so that pilot communities develop their shared vision for their future, focused on stewardship of value built within the community. Debt, non-controlling equity, and equity for shared ownership investment forms will be refined and put to use, based upon the learning from the pilot. As value is built, CultureBank will collect and share the early indicators of impact to build the next phases and collaborations. CultureBank is based on a long-term theory of change, as its goal is to effect outcomes that are enduring.
In addition to processes of Asset Discovery and Development and Investment, CultureBank is also focused on building a rich knowledge base by collecting stories and cases of artists and their community-changing enterprises around the country.
The Development of CultureBank to Date
There have been several milestones in the development of CultureBank to date:
- Publication of working paper about CultureBank by the Federal Reserve Bank coauthored by Penelope Douglas and David Erickson of the Federal Reserve’s Community Development Division
- Funding for CultureBank from the Surdna and Kenneth Rainin Foundations
- Design of and implementation of a Think Tank including impact investors, social entrepreneurs, field experts, and arts and culture leaders
- Formal collaboration with RSF Social Finance
- Decision to use 2018 to complete design work and case studies of artists, build out concept
- Completion of several case examples of artists and their enterprises
- Meadows Prize Awarded to CultureBank by SMU’s Meadows School
- Confirmation of first Pilot collaboration with Dallas stakeholders with formal announcement in November
- Continuation of CultureBank Pilot conversations, collaborations, and artist case story development in several communities including Kansas City, Philadelphia, New Orleans, Hawaii, and the Bay Area
Current Funding and Structure
CultureBank has its home and is being incubated at YBCA in San Francisco. It is designed to be replicable in other communities. Culture Bank is built on a series of somewhat radical collaborations among unlikely partners and will continue to form partnerships for pilot initiatives in local communities.
Funding for the early phases of CultureBank has come from two major funders, the Surdna and Kenneth Rainin Foundations. These funds have been invaluable, and now CultureBank is at the stage where new and talented people need to be hired.
The Pilot Phase, late 2018 – 2020
For each pilot initiative, CultureBank and its local partners will raise approximately $2 million of donor funds for investments, and $2 million for operating expenses for CultureBank at YBCA. In addition, CultureBank is exploring the use of art assets as part of the inflow of resources to be invested in communities. There is an important opportunity for CultureBank investors to reimagine the use of their own assets as part of a transformation in communities. Art assets held by investors might be pledged, for example, as a means of providing credit enhancement or risk mitigation for loans and other investments by CultureBank in artists’ enterprises.
Each pilot will demonstrate the four core functions of the CultureBank business model. These are:
- Asset Development and Discovery Services
- Work with the pilot community to illuminate assets of value and envision the future together
- Prepare for CultureBank investment with artists/their enterprises
- Deepen the network of stakeholders
- Funds Development and Demonstration Investments
- Complete funds development for investment
- Invest in artists with integrated capital and CultureBank investment structures
- Foster the goal of upending traditional notions of “investor” and “investee” in a community
- Knowledge and Storytelling
- Collect hundreds of artist case examples and build the knowledge base
- Create collaborations and seek allies in new communities of interest for replication opportunities
- Narrate the story of CultureBank as it progresses
- Education and Convening
- Bring artists into investment discussions in many different settings and put key questions out for inquiry among artists, investors, and community members
- Educate the audiences of institutions, health organizations and foundations about CultureBank and its groundbreaking model
For the pilot phase, donor capital is the most important financial support mechanism. These early donor/investors will be inspired to experience the initial steps in a model of community investment for shared prosperity and greater well-being. CultureBank seeks to build value within communities and does not aim for any sort of traditional ROI during its pilot phase.
At the next phase, CultureBank will source capital from impact investors seeking an “evergreen” investment model, with return of principal as well as the direct experience of a community’s cultural assets as a participant in the CultureBank Commons.
For any individual or institution considering how to rethink the design of a community investment system, or how to transform hidden value in marginalized communities into shared inspiration, CultureBank offers a new model.
Photo: Black Women Rock at the YBCA Transform Festival. Hunter Franks, ©Tommy Lau.
This is an excerpt from Cornerstone Capital’s report Creativity & The Arts: An Emerging Impact Investing Theme.