This commitment was made in the wake of COVID and Black Lives Matter. And to date, there have been no answers to the question. Two years on, as life moves to a post-COVID norm and memories of the killing of George Floyd fade, ACE’s commitment to increased racial equity is being severely tested.

While its budget for the next spending round (2023-26) will increase by 2%, the DCMS has instructed that all of it – some £43.5m – must be spent on delivering the government’s levelling up agenda. That is, redistributing funding outside London, where possible specifically targeting 109 prescribed ‘levelling up for culture places’ across the country.

In addition, to further redress the funding balance between London and the regions, London’s National Portfolio Organisations (NPOs) will receive £24m less, a reduction of 15% over the next four years.

So, to meet its commitment to racially equitable funding, ACE has to balance the government’s geographical priorities with the demographic reality. The two things are in tension because the places identified have fewer Black communities compared to major cities, especially London.

Geographic versus racial equity 

London’s population is 40% greater than the combined population of England’s next ten largest cities. It also has the highest proportion of BAME* people, home to 80% of England’s most ethnically diverse local authorities. Moreover, London hosts more than 40% of the UK’s creative industries.

Together, these statistics suggest that the vast majority of BAME creative organisations are in the capital. To make meaningful steps to racially equitable funding therefore requires a significant increase in the funding of London based Black-led organisations.

This is not to argue against levelling up on geographical grounds, but simply to point out that if the policy is applied simplistically there will be unintended consequences on competing priorities such as racial equity. This is a zero-sum game scenario: if London’s budget is redirected to the regions, funding for BAME-led businesses in the capital suffers.

A potential solution would be to reduce funding to White-led organisations in London. ACE needs to be transparent about how it intends to manage this conundrum, not least so it can manage the expectations of the ‘losers’ and promote the opportunity to potential ‘winners’.

To achieve a step change in racially equitable funding, incumbent, Black-led organisations must be actively encouraged to apply for funding and the number of new Black-led NPOs needs to rise.

Moral and ethical leadership vs self interest 

ACE’s executive team and board will need to take bold decisions (as signalled in their briefings) imposing cuts on larger white-led NPOs. And in turn, these White-led institutions must take a moral stand, acting for the benefit of the arts’ ecology rather than the short-term self-interest of their organisation.

Ethically, these organisations cannot continue to consume a disproportionate amount of the sector’s finite financial resources at the expense of both those outside the capital and those from Black communities.

While regional leaders from all communities and regional Arts Council bodies should rightly argue for their fair share of funding, they must be wary of inadvertently pitching against racial diversity. London-based organisations cannot all be treated the same as this ignores the historical legacy which has led to Black communities being clustered in the major cities, especially the capital. Regional leaders need to hold a position for both geographic and demographic equity.

London remains the hub for Black communities and the creative industries, and it follows, for Black creative founders. If London-based, Black-led enterprises are pitted against both organisations outside London and White-led institutions in London, they will inevitably continue to be underfunded and underdeveloped – perhaps even more so than now.

We don’t have to choose between geographical and racial equity. We can level up in two dimensions. All that’s required is organisational and moral leadership.

Need for transparent monitoring of racial diversity 

ACE has begun to outline how it will balance the levelling up agenda with the diversity agenda in London. They intend to fund new organisations and give an uplift to some existing ones. They say they will “use the London NPO budget to make the portfolio more representative of London in terms of the diversity of its leadership and its geographic distribution”.

But they ask that London organisations set their expectations in line with expected cuts.

Some ‘good organisations’ might be lost in the process. With both the number and proportion of Black organisations being funded currently below equitable levels, presumably these won’t be ‘good’ Black-led organisations.  Black-led organisations need ACE to be more specific and transparent on the implications of the settlement for them.

From public briefings and documents, the intention to deliver on racial diversity appears genuine. But without specific explanation and targets to back these up, it’s not possible to assess whether there will be any improvement in racially equitable funding, or to judge if this is sufficient, or to measure if it has been achieved.

To date there has been little accountability on racial diversity. As a result, investment has remained at c.2.4% or less for over a decade, despite promises and initiatives for change. Just as DCMS has seen it fit to set financial targets, and name places and dates for delivering geographic equity, so should it do the same for racial equity.

If DCMS doesn’t do it, then ACE should set out its own targets as a measure of its commitment to achieving racial equity including:

• How much it intends to increase funding to BAME applicants from its current level of c.2.4%.
• A timeframe to achieve equitable distribution in proportion to the size of the BAME population – currently 14%.
• An explanation of how equitable funding will be achieved, including the source of the funding.
• Reports on the number of applicants and the value of funding to BAME-led organisations.

With these in mind, ACE needs to accurately monitor the number of BAME-led applications, the number who meet eligibility criteria, and the number who are successful so that any racial bias in the process is transparent. Targets allow full transparency, and in turn drive accountability.

We must all take responsibility

While ACE has final say over which organisations get funded, it has been hamstrung by the DCMS’s instructions to increase spending outside of London and to reduce London’s budget. This cannot be an excuse for them not driving meaningful change in racial equity.

As a sector we can no longer accept de-prioritisation of racial equity and a reversion to pre-Black Lives Matter funding inequalities. Instead, we should hold ACE to account to meet its promise of a ‘new normal’ and greater racial equity.

It would be the ultimate irony if the new normal turns out to be worse for Black creatives than COVID and Black Lives Matter combined. Avoiding this will require strong and principled leadership by all. ACE must be accountable, but large White-led institutions must also be responsible for helping to make the drastic step change needed towards racial equity.

This change is possible and must start in the next spending round so we can achieve racially equitable funding within our lifetimes.

*We have used the term Black. We recognise the diversity of individual identities and lived experiences and understand that Black is an imperfect term that does not fully capture the racial, cultural and ethnic identities of people that experience structural and systematic inequality.

We have also used the term BAME. Our usage here reflects terminology used at the time in data collection, and to help standardisation for comparison to external data sources. It is not intended to reflect personal or community identity.

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• WHY THE DEPARTMENT FOR DIGITAL, CULTURE, MEDIA AND SPORT (DCMS) SHOULD SET ARTS COUNCIL ENGLAND (ACE) TARGETS FOR RACIALLY EQUITABLE FUNDING AND IF IT FAILS TO, WHY ACE SHOULD SET TARGETS THEMSELVES – 29th June 2022
• WHY WHITE LEADERS OF ENGLAND’S LARGE CULTURAL INSTITUTIONS SHOULD ACCEPT REDUCTIONS IN THEIR FUNDING FROM ARTS COUNCIL ENGLAND – 22nd June 2022
• WHY ARTS COUNCIL ENGLAND MUST REDUCE FUNDING TO WHITE-LED ARTS AND CULTURAL INSTITUTIONS – 15th June 2022
• DIVERSITY AT THE QUEEN’S PLATINUM JUBILEE CONCERT – GOOD REPRESENTATION OR CYNICAL EXPLOITATION? – 8th June 2022
• WHY ARTS COUNCIL ENGLAND MUST MAKE A STEP CHANGE IN ITS FUNDING TO BLACK AND BROWN ORGANISATIONS, STARTING THIS YEAR. – 1st June 2022

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Not every business owner in the UK is in the same position today. If you’re a white entrepreneur your access to finance is varied and includes venture capital, equity and debt.

If you’re Black*, you’re much more likely to have to borrow from family or friends and you won’t have anything like the same chance of persuading a funder to inject the big risky capital into your business that could support you to scale.

This is as true of socially purposeful capital as it is for conventional finance. Philanthropy, impact investment and social investment aren’t doing any better, and we shouldn’t pretend that they are. Black communities face persistent and extreme wealth and investment gaps**.

That gap must be bridged, and impact investment should be at the forefront of building that bridge because of its pivotal position. It is the central point between pure social investment – into charities, for little or no financial return, with longer time horizons – and conventional finance, that takes greater risks in pursuit of a quick exit and large profit.

What is impact investment? 

Social impact investing is:

Investment in the shares or loan capital of companies and enterprises that not only measure and report their wider impact on society, but also hold themselves accountable for delivering and increasing positive impact. 

Impact investment is heralded as the driver not only of future business but future society. It’s an investment revolution with the potential to deliver financial returns to investors, measurable social and environmental benefits, scalable social enterprises, and financial rewards for the most innovative entrepreneurs.

The total value of impact investment in the UK is currently £6.4bn – nearly 800% more than 2011 and set to double by 2025.

Broadly there are 2 types of impact investors: commercial impact investors – private equity and venture capital companies who make up 57% of the market; and charitable impact investors such as Trusts and Foundations who make up the remaining 43%.

How can it address historic inequity?

Impact investing could provide the resources to rebalance the historic legacy of exclusion from investment that Black communities face because it can:

• Mobilise large amounts of capital
• Be comfortable with wealth gains to individual entrepreneurs
• Manage risk and reward in a portfolio rather than through individual projects
• Set social targets that include uplifting excluded groups

Social (charitable) investment can’t do this as it has far less capital, struggles to accept individual wealth gain and has little ability to balance financial risk against reward.

Commercial impact investment seems a better bet, but it needs to be more flexible on timescale. The legacy of intergenerational underinvestment can’t be resolved in three years. So, impact investors need to adapt to longer term thinking on a grander scale than current short-term individual entrepreneurial wins.

Who decides what matters?

The potential for impact investing to deliver racially equitable funding is huge, but there is inherent inertia. To date no funding system in the UK has delivered racially equitable outcomes. For the potential to be realised, inequities in decision-making power must be addressed. Who makes decisions, what they define as important and how those definitions are interpreted must be on the table before we can develop funding systems which are racially equitable.

This is true in the arts, education and even in health where, over several hundred years, the wealthiest charities have invested in the most privileged, in those who are predominantly white. In the case of NGOs like Save the Children or institutions like the World Bank, the beneficiaries of the funds may be more racially diverse but the issues of power and decision making remain the same, albeit played out on a macro scale.

The funders of these global funding institutions are Western governments, the ones who ultimately decide priorities in the global South with majority Black populations.

So key challenges for impact investing must include identifying what matters, what counts as ‘impact’ and who decides.

Commercial impact investors – and indeed social investment and grant-making bodies – have typically taken a narrow view of what constitutes impact. It’s usually about reducing hardship and creating positive change in the lives of individual people***. The more direct that causal link created by the organisation funded to deliver the intervention, the happier funders and capital providers tend to be. Racially equitable funding needs to take a different, and less linear, approach that looks beyond the narrow bookkeeping of too much impact management and embraces the transfer of capital for a range of ends including wealth creation in minoritised communities.

Black communities merely recipients of white largesse?

Inequalities are invariably caused by imbalances in decision making power, and power inequalities tend to be driven by income and wealth disparities.

A contemporary funder seeking long-term change – rather than merely mitigation of the worst excesses of our system – must not only work to alleviate hardship, but also be accountable for their organisational processes that perpetuate power and wealth gaps in that same society.

If impact investment doesn’t change its own structures, in 20 years we will end up with what will simply be an evolution of our current charity system: producing worthy outcomes without changing the position of Black people.

Black communities will remain recipients of white largesse (money), being at best programme ‘delivery agents’ rather than key partners in directing flows of capital.

Social ‘necessity’ of race equity 

To unlock the vast resources of the commercial market, we need to move commercial investors from an attitude of indifference – or at best seeing racial equity in terms of reputational risk – to having a deeper concern and maturity about race equity.

This will need to be combined with building a sufficient confidence in the strength of racial equity as a specific market within social investment. In other words, we need to drive up the social ‘necessity’ and long term financial ‘advantages’ of racially equitable investing.

This is where social investors and philanthropists have a key role to play. As more mature partners, with a track record of achieving scale, patiently, for social businesses, they can lead by example.

Here we suggest three key actions to unlock the potential of impact investment:

1. With early market development support – such as providing guarantees and taking first loss positions – charitable impact investors could catalyse commercial impact investment. This would allow us to increase the profile of racial equity impact investing and test the demand by individual investors and learn about any barriers to growth. Such a fund would build evidence of reasonable returns that could then influence the industry for wider change, attracting in more money.
2. Provide evidence on patience and flexibility. Commercial impact investors must learn to be patient, following the lead of social investors who work to a different model of investing for the long term.
3. Develop Black impact investors as well as funding Black investees. Structural change will only be delivered with equity at every level of the impact investment system.

Good intentions are not enough

For impact investment to be the revolution it’s heralded to be, its leaders must mobilise the vast resources at their disposal, over a long-time horizon and at scale.

Just as importantly, the leaders of the impact revolution need to have the courage and self-reflection to closely heed how this is done – through greater inclusion and power sharing. Doing ‘with’ rather than ‘for’ Black communities.

Impact investors have won hearts with a display of social conscience, but these good intentions alone are not enough to deliver racially equitable outcomes. To do this they now need to dare to change the bones of investment itself.

*We have used the term Black. We recognise the diversity of individual identities and lived experiences and understand that Black is an imperfect term that does not fully capture the racial, cultural and ethnic identities of people that experience structural and systematic inequality.

**Only 1.7% of venture capital investments, 2.4% of public grants and 2.6% of impact investment go to Black-led organisations. This would be 14% if investments were distributed in proportion to the Black population. Were this the case, £896m would be mobilised to support the development of Black-led enterprises.

***In general, commercial Impact investors focus on environmental issues e.g. wind and solar farms where decent returns can be generated in the mid to long term; and charitable impact investors on social issues like poverty alleviation and education where financial returns are smaller and less certain, though there is some crossover.

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Why we need to build mature partnerships between Black-led organisations and funders.

There are written rules when applying for arts funding: set criteria which outline the funder’s priorities, the activities it supports, who is eligible to apply and the amount of any potential grant.  

In theory, these criteria determine what does or doesn’t get funded. But there are also unwritten constraints which play a part, such as the funder’s attitude to risk, the preferences of its founders and the culture of the organisation. 

As the majority of funders significantly underfund Black organisations, it is clear that either the criteria they use or the constraints under which they operate work against supporting Black-led projects. 

To break this persistent under investment, a different type of relationship is required, where Funders work in constructive partnership with Black-led organisations; one in which they are trusted with information about the limits of the funder to support their project.  However, the funder’s inability to develop these relationships, through greater transparency, is often itself a constraint. As a result, inequity becomes self-perpetuating.

In my work with MeWe360 (MeWe) and Create Equity I am looking at ways to break the cycle. I aim to drive more mature and trusted partnerships with funders; that do away with the current approach of ‘you tell us what you want to do, we’ll tell you if we’ll fund it’. 

This work is very much in its infancy, but here are some initial observations on how this might be achieved.

1.Balance managerial and entrepreneurial approaches

I lead (and am the founder of) two organisations with broad remits. MeWe develops and champions Black creative entrepreneurs and leaders; and Create Equity’s mission is to make the distribution of funding in the arts, social-enterprise and business equitable.

While I have clear ideas about how to achieve these missions, I am at heart a pragmatist and open to any approaches that might work. As an entrepreneur (rather than a ‘manager’) my focus is on outcomes. To achieve a more equitable and inclusive sector, I believe effective ends should be prioritised over the means – where possible. In the case of grant funding, the means – funding criteria and organisational constraints – take precedence; this then limits the available approaches and leads to the same racially inequitable outcomes. Funders need to better balance the entrepreneurial and managerial cultures within their organisations. 

2. Share uncomfortable truths

Funding criteria, though open to interpretation, are explicit; with the right experience, applicants can tick these boxes. Constraints on the other hand remain mostly undeclared. Held within funding institutions, they can only be accessed by insider knowledge or through open and honest dialogue with applicants. 

As an example, if we know that 90% of Arts Council funding will effectively be (p)re-allocated to existing organisations, and that there will be no Black-led funded organisations in its highest funding band, we can make better judgements about whether to apply and at what level. 

It’s never been made explicit in any criteria that Black-led organisations need not apply for funding above £1m p/a but, with a zero success rate in ACE’s current portfolio, there is an obvious need for the possibility of Black-led organisations to have a frank and open conversation with ACE about future prospects of success. 

The uncomfortable truth is that this ‘incumbency bias’, where those who have received funding previously are much more likely to get further funding, effectively ‘locking out’ or preventing the growth of Black-led organisations, is common amongst all funders, but rarely ever spoken about. 

3. Re-game the system

Informing people about what’s possible and helping organisations shape projects within existing criteria and constraints is considered by most funders to be gaming the system.  Yet this sharing of information does sometimes happen, and when it does, those privy to this information can navigate the funding process through strategic decision-making rather than through guesswork. 

The people ‘in the know’ are predominantly white-led institutions employing professional fundraisers who have – or can get – the inside track on the unwritten constraints of a funder. This privileged access is key to what keeps racial equity locked in. 

Working with Black leaders to develop projects that fit within existing constraints doesn’t undermine the integrity of the funding process, it re-balances it. The focus should be on an equitable and inclusive outcome (re-gaming the system) rather than maintaining a process which rewards those with access to inside knowledge.

Summary 

If funders continue to see greater transparency as a corruption of the application process, rather than the opportunity to improve outcomes, inequity will remain baked into our funding system.

Greater transparency and fair process are not mutually exclusive. Funders can be explicit about funding criteria and share any institutional constraints without damaging the integrity of their application process. The process must be robust, but it also has to include sufficient dialogue with the applicant to inform as fair a decision as possible. 

A more progressive and equitable partnership would see funders being explicit about what they can and will fund, given their criteria and constraints, empowering black applicants to make critical decisions about their funding. There might even be room in such a partnership for a culture shift, for constraints being lifted.

If this isn’t possible, funders should acknowledge this as a limitation and be accountable for the impact this has on their outcomes, importantly on those around diversity and inclusion.

There is often an uncomfortable tension between doing things the right way (process) and getting things right (outcome). Greater trust and transparency between funders and black-led organisations would allow us to do both; we should act now, in genuine partnership, to deliver the equitable and more inclusive outcomes we all want to see. 

NB. We have used the term Black to mean Black, Asian and Minority Ethnic groups. We recognise the diversity of individual identities and lived experiences, and understand that Black is an imperfect term that does not fully capture the racial, cultural and ethnic identities of people that experience structural and systematic inequality.

*Data points quoted in this document have been drawn from a variety of reputable and publicly-available sources. Create Equity is happy to provide detailed references upon request.

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I recently watched Nick Broomfield’s documentary ‘Last Man Standing: Suge Knight and the Murders of Biggie and Tupac’. It left me pretty shook up. 

It made me question my purpose at Create Equity, campaigning for a racially equitable redistribution of wealth in the creative industries. The documentary forced me to ask to what end, if the social structures and economic systems we inhabit undermine our very humanity… if we live our lives according to myths around money and power.

Suge Knight, Tupac and Biggie – three Black men – each had talent most of us can only dream of and more money than anyone could reasonably spend in a lifetime. And yet, two of them ended up dead (at only 24 and 25) and the other (Suge Knight) in prison.

From watching the documentary, none of them could be described as inherently bad. But each was  shaped, negatively, by a culture of toxic masculinity, violence and power. Despite their wealth, they couldn’t escape their conditioning and its hold on them. Their treatment of women was particularly shocking. 

The documentary shows only too clearly how racial inequities, as experienced by these men, can lead to a distorted self-perception and give rise to inhumane behaviours. Behaviours which were exacerbated by wealth. Their life stories are an extreme example of how money can never be an end in itself for us, as Black people. 

So, to what end do I continue to campaign for equitable wealth redistribution? Equity can be an end in itself; in need of no justification.  But once achieved, what we Black communities choose to do with it, how we let it shape our humanity (or inhumanity), is ultimately down to us. 

It is with this realisation that, more than a week after watching the documentary, I am now able to sleep a little less disturbed by what I have seen.

NB. We have used the term Black. We recognise the diversity of individual identities and lived experiences, and understand that Black is an imperfect term that does not fully capture the racial, cultural and ethnic identities of people that experience structural and systematic inequality.

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There is a new belief that any debate about racial inequality – its causes, impacts and solution – should be driven by those with ‘lived experience’. Increasingly, funders are embedding this thinking into policy, making participation of people with ‘lived experience’ part of their funding criteria. And white leaders are using it to excuse themselves from race conversations – or at least to be less vocal. 

The intention is good; to increase the impact of social justice programmes and to empower those affected by giving them a say in the programme design and implementation. But it raises serious questions about the benefits of relying on lived experience in dealing with racial inequalities.

How do we decide which lived experiences matter most, given the ever-increasing fragmentation of identities and perspectives on solutions to racial inequity? And within current power structures, can white people ever be excluded from driving solutions on racial inequality? 

Activists versus Assimilationists

According to YouGov research, 84% of people from black communities say they have experienced racism to some extent and agree action needs to be taken to eradicate it. However, this belies the fact that although we share lived experiences of racism, we each process and cope with them differently. As a result, views vary widely on strategies for addressing the problem. 

Within my friendship group alone, opinions range from those who believe that racism is best challenged through social and political action (Activists), to those who think our energy is better spent ‘fitting in’ and becoming successful (Assimilationists). 

These strategies vary not only between socially defined racial categories but also within these categories (e.g. Black, East Asian, South Asian etc). And of course, different people balance these strategies in individual ways. Given the range of possible responses, how do we actually decide who to listen to when implementing solutions.  

Usually, the lived experience of the most vocal takes priority over those who are politically quieter. Activists shout louder than Assimilationists and hold sway when influencing the language used in communications (political correctness), publicly stated positions (PR) and policy on racial inequity. But rarely does this convert to real change in practice.

The money does not follow the strategy

Taking the arts sector – and the Arts Council in particular as illustration – all its major policy communications talk about creating a more inclusive sector with a greater diversity of arts output. But if we follow the money, it’s clear their policy on grants distribution is neither inclusive nor diverse.

Only 2.4% of ACE funding goes to Black-led institutions – this should be 14% if distributed in proportion to the BAME population. Compare that to 14% of ACE funding which goes to opera alone. Funding is heavily skewed to the major arts institutions and to assimilating (some would say encouraging) Black communities into accessing niche art forms produced and curated by white people. 

Given the weight of investment committed to the major institutions, ACE’s diversity strategy – and budget – have been directed at diversifying the boards, staff and content of the existing major opera houses, theatres and museums. It has not attempted to redistribute funding equitably to create a wider diversity of institutions and art forms. 

No matter how strong the voices are, no matter how much we bring lived experience to the centre of the decision-making process, these views are inevitably mediated by those in power, who are predominantly white. 

White leaders must not exclude themselves

This is what drives the struggle between the disparate parts of the Black communities to be heard. There is no monolithic lived experience. Yes, there are common lived experiences, but when seeking solutions to the problems we face, there are too many views and perspectives to be heard.

Ultimately someone decides on which lived experiences to privilege. To exclude white voices from the conversation makes no sense, and is not possible given current power structures. So it is important that white leaders do not exclude themselves, shielding behind the politically correct notion of empowering those with lived experience.

You are the power brokers and it’s important to be transparent; to acknowledge that in your decision making some voices get heard while others are silenced. The work, therefore, lies in more equitable funding which would enable a wider range of interventions from a more diverse range of lived experiences. 

The money is there. Your work is not to remove yourself from the conversation but to distribute it equitably.  

We are keen to keep the conversation going. To read more and share your thoughts on this or other articles, connect with me on LinkedIn. 

NB. We have used the term Black. We recognise the diversity of individual identities and lived experiences, and understand that Black is an imperfect term that does not fully capture the racial, cultural and ethnic identities of people that experience structural and systematic inequality.

NB. Although we agree that equitable funding is important for all groups, we are talking specifically about racially equitable funding at this time.

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