Creative Australia is testing a new model for financing organisations to be named the Creative Industries Impact Fund, by working with donors to raise capital against government funds.
"We will be piloting new modes of impact driven, repayable finance, which if successful will transform the sector's financial landscape," Creative Australia chief executive Adrian Collette told the hearing examining arts philanthropy in Canberra on Wednesday.
Creative Australia provided just under $286 million in taxpayer funding to the arts sector in 2024/25, according to its most recent annual report.
There was no question the development of Australia's creative skills relied on public spending, said Mr Collette.
"But in a sophisticated market ... I think there are many interesting ways of legitimately using public funding to incentivise private investment," he said.
It's not yet clear how the private loans would be secured or what might happen if debts could not be repaid.
Almost 100 submissions have been lodged with the inquiry, with many outlining the parlous state of government funding for the arts sector.
Encouraging artists to beg for donations ignores a bigger issue of chronic underfunding in the arts sector, a submission from the Australia Institute said.
"The arts sector is in crisis, still recovering from COVID and the cost-of-living crisis, it needs support to survive," said the Institute's Skye Predavec.
"Philanthropy is too small to fill the gap left behind by hundreds of millions of dollars in underinvestment."
Accounting for inflation, government arts funding is at its lowest point in just under a decade, the Institute said, with venues closing, music festivals being cancelled, and artists living in poverty.
One organisation which does not receive any government funding, The Melbourne Opera, submitted it has to rely on box office dollars and donations to survive.
It urged the inquiry to consider the funding challenges faced by Australia's many smaller arts organisations.
Philanthropy became part of Creative Australia's remit in 2023, when it absorbed the donations body Creative Partnerships Australia.
The Creative Industries Impact Fund is expected to be launched in mid-2026.
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