The first question to ask yourself when you look for money is “Why do I need money?”. Always put your activities and ambition at the centre and then start looking for the right finance. Not the other way around
Instead of asking the question 'What can I get from my financier?', you should rather ask yourself 'What can I mean to financiers?' and 'What do financiers expect from me?'
    • Before looking for money, it is important that you reflect about the values that you can bring to the negotiation table, such as the access to your audience(s), or the engagement and participation of your target groups in the cultural activities that you offer.
    • Not every type of finance matches well with the activity or value that you can bring to the table. Some types of finance will only be possible when there is sufficient financial return on investment. With other types of finance, financiers do not expect a financial return, but rather a societal return or a mix of both.
  • Looking for money is only one part of the much broader strategic and financial management of your organisation or business. Start by reflecting on your current business model and putting it on paper, in order to be able to take it further in an innovative way.
    • Whatever financing sources you are applying or looking for, the starting point is a clear business model and plan to present to your potential financiers.
    • It is only once you have a clear and complete view of your current business model that you can reflect on how to introduce changes that would increase your internal revenues and lower your need for external finance.

If you want to deepen these topics and other general tips in a more exhaustive way, consult the So You Need Money Guide!

The “financing mix” means that you combine different types of financing to meet your different financing needs. An example of a financing mix is the coinciding use of a loan and crowdfunding.
The advantage of combining different types of financing is that you do not depend on a single financier.
Another plus of combining different types of financing: when one financier commits itself to financing your project, organisation,… you are more likely to be able to convince other financiers.
When combining different types of financing, think carefully about which financier you will approach first, as you might want to show commitments from a specific financier before approaching another one.
A good financing mix is situated within a broader framework, with an equal focus on ways to reduce costs, sustainable and innovative business models and the proactive generation of income from e.g. own sales

Reflecting on why you need money:
Understanding the reason why you need money is the first step to take before approaching potential financiers. Different financing needs can be met by different financing sources.

  • Finance my structural operations:
    It is not easy to find external finance to support your day-to-day business. In order to attract external finance to cover (part of) your operational costs, you can increase financiers’ trust in you/your organisation’s competences, expertise and (business) plan, by showing them the positive results of previous projects or achievements.
  • Realise a cultural or creative project:
    • Make your idea concrete
    • Map your stakeholders: who is potentially interested in your project? Clearly describe what’s in it for them.
    • Map your potential financing sources
    • Determine how much money you need and when
    • Approach financiers: determine in which order you will approach different financiers, connect personally with them to discuss financing conditions and possibilities.
    • Create a good interpersonal network along the way: this will increase the possibility of being successful once again when asking for money for projects.
  • Investigate, develop or test a product, process, idea:
    • Share your ideas with other contacts in your network, to challenge and improve (or eliminate) it, share experiences, find other interested partners (direct or indirect),...
  • Bridge a period that I have to wait for money/finance:
    • When approaching potential financiers, show them the written commitments of the financiers from which you have already secured financing.

Reflecting on your legal structure:
The legal structure of your organisation is a crucial element to consider when looking for external funding: your legal structure can influence your access to the various financial instruments.

Your values may change based on your legal structure and mission. The values that you bring to the table can be very diverse, e.g. social values, innovation values, artistic values, educational values, etc. These values are context-specific and may differ across the different activities in which you are involved and for which you need external finance. These values, however, do influence the type of finance that you might want to attract.

Reflecting on your lifecycle phase:
As you are preparing to apply for funding, it is important to reflect on the stage of development that you or your organisation is in. The financing needs and difficulties in accessing finance vary significantly at different stages of your lifeycle.

Regardless of your lifecycle phase, you should aim for a balanced financing mix. This means that, instead of looking for and relying on a single financing source, you should try to combine different financing sources.

  • Vision or start-up:
    • Friends, family and optimistic private investors (“the 4Fs: Family, Friends, Fans and Fools”) play a key role in helping you to make your creative dreams come true in this lifecycle stage.
    • Incubators to develop your business idea are another important support at this stage.
    • Depending on your legal structure and business idea, in this start-up phase you might be more or less able to raise finance through different types of crowdfunding, such as donation-based and reward-based crowdfunding, crowd-equity and crowdlending.
    • An additional financial instrument that is suitable to entrepreneurs in the start-up stage is a microcredit.
    • At this stage, Creative hubs can offer you support and access to knowledge for your further development.
  • Growth:
    • Bank loans, venture capital and crowdfunding can be valid and accessible instruments to raise money.
    • If your organisation has an explicit expected social impact and a financially sustainable business model, you can also access impact investing and venture philanthropy.
    • Business accelerators and grants continue to be accessible instruments also in the growth phase.
  • Established:
    • Once your growth/expansion goals are satisfied, whatever the size of your organisation, banks and crowdlenders are more inclined to provide loans, as long as your operations prove to be stable and sustainable.
    • In this last phase, grants and public indirect financial support such as tax incentives are still an important source of financing and support. Combined with debt financing, they can contribute to build a strong financing mix.

Be sure that you meet the requirements and priorities of the investors: have a clear idea of your (desired) impact and look for impact investors that focus on investments in projects or organisations in this specific impact domain.
Demonstrate that you have the right leadership and tools in your organisation to execute plans and to monitor your impact.
What to do if you want to access impact investing and venture philanthropy?
  • Ask yourself questions: reflect on what kind of investment you are looking for. Knowing that you need money is not enough. You need to determine what you are looking for (only capital, a mix of capital and grants, ..) and for how long will you need capital. You should also determine if you need non-financial support (e.g. technical knowledge, contacts, advice, ...)
  • Invest in your team: team's skills and motivation are crucial elements that impact investors take into account.
  • Not all financiers are good: find potential investors based on your common interests and priorities! Investors are more likely to invest in the issues they care more about. Also, each investment fund has different modalities, criteria and timelines. All those elements should be considered when approaching them.
  • Relationships matter: approaching this type of investors is also about building relationships, and not only making money requests. Show investors that you have a lot in common, and that investing in your business will also help them in their interests and objectives. To start building these relationships, approach investors with non-monetary requests, such as asking to learn more about their interests and previous experiences. Then, keep the conversation alive!
  • A business model matters too: make sure to provide proof of a financially sustainable business model. Make sure to have a clear business model describing the rationale of how your organisation creates, delivers, and captures value, in economic, social, cultural or other contexts.
  • Measures count: make sure to demonstrate your impact through a well-structured framework. Measuring and monitoring the change created by your organisation’s activities is important. This information/data is in fact useful to both approach investors and to refine activities in order to increase positive outcomes. And always be honest about your impact when pitching to investors!
  • Prepare a convincing pitch! Do your homework and prepare a presentation showing what makes you different and what concrete impact do you generate. In other words, tell/sell your story and remember that storytelling is one of the most important parts of pitching investors.

Understand your donors’ values and try to align your goals and values to theirs: philanthropists care about the long-term impact that you can have on society – prepare a well-structured plan outlining your values and showing them your potential social and cultural impact.
Philanthropists can provide you not only with financial resources, but also with non-financial resources, such as skills training and access to networks.
How to attract philanthropists?

For you to be able to attract finance in this sphere, it is crucial to have a strong story that appeals to the (emotions of) potential financiers, so they feel connected and somehow also responsible for making the project successful and for generating impact. In order to attract financial or non-financial support in this sphere, it is essential to look for potential donors whose personal values or corporate vision and mission are in line with your (organisation's) values and vision. Remember that, in this sphere, the financiers are 'allies' rather than 'business partners'.

With specific regard to patrons, firstly you should think carefully about what a patron could do for you or your organisation and what sort of patron would be best (someone who is likely to support your cause or project). It is important to reflect on this before approaching potential patrons! When shortlisting, also check if they are already patrons as they may not want to take on another role. Approach them with a presenting who you are or what the organisation does and what you would expect of a patron. If possible, make use of anyone associated with your work who has a credible link to the possible patron to facilitate the initial approach. Then continue the conversation and, after the agreement, keep the patron engaged and informed about your work. While patrons need to be identified and normally approached individually, foundations often publish periodic calls for grants and other types of support. Thanks to the list of foundations by country that we provide in this tool, you can monitor the foundations’ websites and be constantly updated on the open and upcoming calls.

Running a crowdfunding campaign can deliver you much more than only money: it can help you to test certain products, strengthen the bond with your audience, develop your skills, promote new projects,…
The fact that you are able to raise finance through crowdfunding can also be a signal that there is a market for your product/project. In turn, this can convince other external financiers like banks to invest in your product, activities, project,…
Most crowdfunding platforms have an “All or nothing” model but many also allow for “Take it all”:
  • “All or nothing” means that if the funding goal of the campaign is not reached, all the contributions are returned back to the backers. Although risky, this model shows backers that you have done your study and know exactly how much money is needed to realise a project.
  • “Take it all” means that even if you do not reach your target amount, you can still keep the amount donated into your campaign.

It is important to understand all the cost related to a crowdfunding campaign before you get started.

  • Platform Hosting Fee: Some platforms, although not all, charge an initial cost just for hosting your campaign. This cost varies from €0-300 and will be charged to all projects, be that successfully fundraised or not.
  • Success fee: The majority of crowdfunding platforms are for-profit organisations. If a project is successfully funded, platforms will take a percentage of the total amount raised. The percentage varies from platform to platform and ranges between 3% and 12% of total raised.
  • Payment processing fees: Crowdfunding platforms work closely with payment providers in order to facilitate money transfer from your backers into your campaign. However, the payment providers apply their own service fee for every transaction made. Usually this fee is on average 3%.

There are 4 types of crowdfunding:

  • Donation based: donating small amounts to meet the larger funding aim of a specific project while receiving no financial or material return in exchange.
  • Reward based: donating small amounts to meet the larger funding aim of a specific project with the expectation of receiving a tangible (but non-financial) reward or product in return
  • Peer-to-Peer: lending (subdivided into consumer and business lending): borrowing from a number of lenders via an online platform, each lender lending a (small) amount in return for financial compensation
  • Equity based: invest in a business via an online crowdfunding platform in return for a share in the business

Use your network to identify potential angel investors and venture capitalists.
Prepare a solid business plan, including a well-documented growth plan and how the investment will be used. Private investors need evidence before giving you money.
Angel Investors and venture capitalists can also bring in non-financial benefits to your business such as (sector-specific) expertise and access to certain networks that can help you to kick-start or grow your activities.
How can you find business angels to support you?
  • Finding a business angel is not easy, because they often want to remain invisible. However, there are business angel networks, each with their own area of specialisation. Each network's main objective is to bring business angels and investment opportunities together.
  • Use your own network to identify potential angel investors. For example, your private network or social media network. Another possibility might be to ask your accountant, your own bank or other entrepreneurs about potential angel investors. Also invest your time in network events: show yourself at places where these parties meet, such as events, fairs and activities of business clubs and associations of entrepreneurs.
  • Prepare a solid business plan, including a well-documented growth plan and how the investment will be used. This can be used as a “sales” document to obtain business angel finance from large corporations or individual angel investors. Private investors need evidence before investing in your company. Check out this section to know how to master a business model.

How can you apply for a loan?
  • Find the right bank: Banks are traditionally very risk-averse and only provide loans when they feel rather secure that the money will be repaid with a financial return. Therefore, banks usually do not give loans to start-ups or to businesses that cannot present a successful track record, sufficient collateral or a certain amount of revenues over the years. However, do not panic: there are banks giving loans to creative and cultural professionals, such as the banks and other financial intermediaries that have signed an agreement with the European Cultural and Creative Guarantee Facility.
  • Elaborate your business plan and financial history: Banks often perceive cultural or creative projects as risky investments and they have difficulties in assessing the value of your organisation or project. Therefore, it is important to provide them with any and all information that can help them to better assess the riskiness of their investment, such as evidence of the economic value of your business, and a sound business and financial plan.
What the bank is looking for in your business and financial plan = indications that you will be able to repay the loan:
  • Business Plan: If you have completed the Business Model Canvas; already have a solid, visual basis for your business plan. The 'helicopter overview' and the broad outlines are now fixed. But there is more to a full business plan than just a business model: a business plan not only describes what your organisation stands for, what the goals are and how you are going to achieve them, but it also creates clarity about...
    • The team: who will take which steps and assume which roles?
    • The feasibility, evidence through numbers that show that there is actually a market for your product/service/work, who your potential customers/audiences/users/visitors are, how many there are, how much they are prepared to pay, etc.
    • The financial aspects: how much resources do you need to realise your plan? In which timeframe do you expect what return? What are the worst possible and the best possible scenarios?
    • The price for your work, product or service;
    • The material aspects: what resources do you need? (equipment, staff, location,…);
    • Your vision for the future.
  • Financial Plan: The financial plan provides an overview of the expected income and expenditures for a period of two years. The most important parts are:
    • The balance sheet: an overview of the assets and liabilities at the end of the financial year.
    • The profit and loss account: the expected income and expenditures for the period in question.
How to provide evidence to banks?
  • Clearly show the positive results of past projects or achievements.
  • Show evidence of good management, constant customer/audience support for your/your organisation’s projects.
  • Indicate your capacity to create a strong interpersonal network with key people and talents in the cultural and creative sectors.
  • Show the commercial impact of your activities: Banks will be mainly interested in evidence that you will be able to repay the loan. Develop your loan application as part of a strategy for diversifying your income sources.
  • Think of alternative assets: Your brand and copyright can be defined in banking terms as intangible assets. A good presentation of their economic value to financiers and their potential use as collateral may convince banks to give you a loan.

Grants are often highly competitive and they follow funders’ priorities. This means that applications are often long procedures where you need to strictly comply with the grant’s goal and requirements. Here some useful general tips before approaching the world of grants:
  • Find it nearby: You have the best chance of receiving money when you apply close to home. Most municipalities have a grant for culture. Of course, you can apply for a grant from provincial or national funds for projects with a regional or national appearance or with a special signature!
  • Be inspired: Investigate who has won a specific grant in the past and what made their project successful.
  • Be prepared: Before applying, check whether your project cost and activities are in line with the public authorities’ objectives, and consider whether you have enough time to submit a good application.
  • Be clear: Clearly communicate what you will use the money for.
How to prepare to apply for public grants and subsidies?
  • Technicalities count: after finding a grant or subsidy opportunity, read the guidelines for applicants and call requirements carefully and check if you as a self-employed or organisation are eligible.
  • Put on paper who you are: public funders want to know who you are, what your organisational structure is, what competencies you have, what activities you do, ... In other words they want to make sure their money is in the right hands.
  • Portfolio matters: prepare a clear overview of the things you have done in the past (successful projects or applications, ...). Show also why your work is distinctive compared to other cultural organisations (there is a lot of competition out there!). Remember to also include a budget for a 'reference year', if explicitly asked.
  • And the future? Clearly state what your vision is for the coming years. This is about your activities and programming, but also about training, cooperation, networking and much more.