Funding culture in Europe: Public and private partnerships

Parent Category: Sponsorship and taxes
La rencontre de Séville, 8-11 March 2007

Speech by Péter Inkei at the panel on Sponsorship - The contribution of foundations and enterprises


With the dwindling of public resources businesses should fill the financial gaps, needed for the steady functioning of culture - this is the prevailing concept in many places, especially in eastern Europe. The work partnership in the title of this rencontre, however, implies a different relationship between private resources and culture. Partnership may take various forms of private involvement in culture. The two speakers of the first plenary session, Françoise Benhamou and Vesna Čopič treated public and private partnership in this complex manner, posing the difficult task to subsequent speakers of avoiding repetitions of what they have said.

The two extreme poles of the types of private involvement in culture are represented by sponsorship and charity.

Sponsorship in its pure form fully belongs to business: a marketing tool, in the service of publicity, of branding a firm, its products or services. At the other end of the scale, charity or patronage takes the form of gifts or donations, most often of money, but also of support in kind, including one's time and skills, in case of volunteers. This is the world of philanthropy, of altruism.   

Between these two poles there are a number of interim, transitional types of private involvement acts in culture. Some of these types are linked to a specific country, to special cultural traditions and legal environments.

Accordingly, the underlying motives and values that are behind the acts of partnership can also be designated to the two opposite poles: interests at one end and ideals at the other. Counting on the returns for the support on the one hand, and no compensation expected for donations on the other. These two very different combinations are no theoretical abstractions: sponsorship to culture based on business interest is as common as is philanthropic contribution to cultural endeavours.

Nevertheless, more often than not, the values leading to private involvement in culture belong to neither of these pure cases. The underlying motivation is usually more complex, with quite a few crossover types: „dirty" taints can be easily discerned within the motivation of „clean" charity, and "clean" ideals alongside shrewd business motives. The tough interests behind a sponsorship decision are often coloured by softer reasons like personal fondness, attachment to and familiarity with culture on behalf of people in businesses. Also, many (if not most) donations have hidden agenda and second intentions behind. Some of these intentions are benign and legitimate, others not so spotless.

In recent years the notion of corporate social responsibility (CSR) has occupied the centre, both of the scale of business partnership types, and of the value chain behind the involvement; which is a very positive development. CSR appears to correspond to the notion of co-responsibility, emphasised by Juan-Carlos Marset in his welcoming speech to this conference, told at the reception in the Alcázar Palace.

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One reason for mapping and analysing types and motivation of private involvement in culture is that this helps in making successful policies vis-à-vis private partnership. How to boost private involvement? How to handle private partnership in the most effective way?

Which are the most efficient incentives? The speakers before me were right to warn against exaggerated expectation attached to legal (fiscal, administrative) measures; the survey just quoted by Paula Hunjet has also proven that tax benefits rarely figure among the top incentives that lead to private involvement in culture. It happens rarely that cool calculation of tax return leads to a charity decision in favour of culture.

A recent analysis done by the London based Charity Aid Foundation has pointed at the complexity of motives behind philanthropy. The researchers identified at least five factors that influence charity willingness in a country. Factors that explain why in the USA the value of donations is estimated to be more than twice as much as in the UK, and over ten times higher than in France, in relation to the gross national product. What seems to count most is the general tax burden, and most particularly the social security to be paid by employers in a given country. One can say that in a country either individual charity or collective solidarity is the dominating feature. 

The CAF study was about philanthropy in general, not just charity for sake of culture. Which points at another limitation of fiscal measures: rarely do legislators pass measures that are pinpointed to favour culture only. Most instances of tax incentive laws benefit all kinds of "good causes", ranging from education to health services, and from social affairs to the environment. 

Where fiscal measures are effectively applied in favour of culture is the area of investment. Several countries have had favourable records of this kind of intervention, e.g. Ireland, France and Hungary, especially in the audio-visual field. Tax credits offered to investors into cultural projects have greater impact than tax incentives to donors and sponsors of cultural projects. (This important distinction was made clear by Vesna Čopič in her comment to my intervention.)

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Coming back to policies vis-à-vis private involvement to culture. Such policies and strategies need to be consciously elaborated and on every level: national, regional and municipal, and also by cultural operations and institutions, big and small. The advisable order is to establish what potential investors and donors need (or might need), that partnership for culture can provide to them. This is the golden rule of fund-raisers: instead of concentrating on what culture needs, point out what culture can offer to funders (donors, investors etc.).

The key notion is recognition; acknowledgement, to use another expression. The significance of which is important, not only in cases of philanthropy, where recognition is the symbolic reimbursement for the support given to culture. Also in cases when the contractual duties towards the sponsor have been fulfilled, recognition should be the bonus for investing in culture.

In fact tax benefits and similar public incentives to certain extent function in this sense. In addition to the immediate reward that the donor or sponsor gains from supporting a cultural act, the fiscal benefit is an additional bonus, a reinforcement of recognition. The symbolic significance of administrative incentives is probably more important than their economic effect on companies and individuals.

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The word public is used as an adjective in the title of this conference. I end by calling attention to the noun: the public, the viewers and customers of cultural goods. This kind of private partnership deserves special attention, too, which is manifested by citizens who buy tickets, books, records, handicraft and so on. The yearning for the involvement of businesses and foundations should not suppress the efforts made for the attraction of the public. The contribution of the public constitutes a precious component of cultural finances, not only in the entertainment business and other commercial sectors of culture.