Seven Questions on Business Support to Culture - 2000
The two partners, the business company and the cultural institution, first certainly agree on the conditions:
- how much the company will pay;
- what they get in return (size and form of logo above the stage, on the title page of the book etc.etc.etc.);
- on what can the money be spent and so on.
1. What happens
then? Which is the typical, dominant way of administration?
a)
A sponsorship agreement is made about the money given and received.
b) A donation (patronage) document is prepared about the money given and
received.
c) A sponsorship agreement is made, which is followed by an invoice from
the cultural institution.
d) The cultural institution writes an invoice about the publicity (advertisement,
P.R. etc) service which they do and "sell" to the business company. And
the company pays.
With the a) solution
we made a mistake, which later corrected by modifying the questions as
a) Law defines what a sponsorship agreement should contain: this is the
basis of payment and no invoice is needed. But
by then almost everyone selected a) and often also another letter. Finally
10 chose a) and 4 answers came to b) c) d) each.
A few important remarks:
It looks like a), but it is not called like that, because there is
no this kind of legal agreement which is named the sponsorship agreement
in Polish legislation. It is very often prepared as the barter agreement.
(Dorota, Poland)
All possibilities are very often used. Sponsorship means that the cultural
institution pays tax, patronage is tax-free but nothing in return can
be given. (Roman, Yugoslavia) These are clear statements. As you will
see our meagre country profile,
we still miss the exact legislative sources.
Typical is an informal, 'shadow' donation in cash or in kind, with
no written agreement - simply to evade taxation, which is Ukrainians'
favourite sport. (Oleksandr, Ukraine)
2.
Tax deduction. What is the typical case?
a) The business company deduces from
its corporate (profit, company) tax what is
allowed for in the law.
b) Businesses do not care for such tax deductions.
Reasons: too much bureaucracy and eventual complications
with tax authorities.
c) The form, in which businesses support culture,
does not allow such deductions.
Although the answers to question a) -in spite of its clumsiness- prove that the majority of business support to culture is real sponsorship against invoice; and we know from our inquiry that in most countries this entails no tax relief, the majority believe that a) is the typical case: 10 choices. 6 voted for b) and 1 only for c).
3.
Financial support for culture as business expense.
What is the case?
a)
Businesses treat the amounts of financial support
as business expenses because it is allowed in
the laws.
b) Law does not allow to treat such payments
as business expenses.
c) Although law allows for such a possibility,
most businesses are too cautious to do so.
d) Although law does not allow for such treatment,
most businesses find a way to go around and
book such payments under different names among
business expenses.
8 respondents voted for a), which is in coincidence with the dominance of the invoiced way reported at question 1. Interesting are the 4 'yes'-es for d), for b) and c) 1 and 2 selections.
4.
What about VAT on financial support for culture?
a)
The support is given in such forms where VAT
does not apply. So no VAT is paid.
b) VAT is added. The business company can deduce
it but the cultural institution must pay it
to the tax office or the budget and is therefore
lost for them.
c) VAT is added. The business company can deduce
it and the cultural institution also has ways
to regai n it.
d) VAT should be added but it can be avoided
by using different ways.
Probably all replies, created for the questionnaire, are right in given circumstances. The even distribution of the positive answers ("this is the typical case") may prove that: 4, 6, 3, 3 respectively.
5.
Where do people get information on all these
problems?
a)
They ask each other.
b) They use their specalists: legal advisors,
chief accountants etc.
c) There is a useful manual: ...
d) There is a useful web-site: ...
c) and d) collected
1-1 only (no need or no offer for such manuals or sites?); specialists
seem to be used most (11), followed by 7 on a) (the blind leading the
blind?).
Oleksandr (Ukraine) sees some system in the choice: (a) for cultural
institutions, (b) for sponsors themselves.
6.
What do you think is the proportion of financial
support from business companies in your country
in relation to the total financial support to
culture from the government?
a)
1 to 100. (That is, business sponsorship equals
about 1% of the cultural expenses of the government.)
b) 5 to 100.
c) 10 to 100.
d) More than 10 to 100.
Noone knows it for sure - says rightly Ivo (Macedonia). Three respondents, independently from each other, created an interim category "between a) and b)", 5 selected b) and the rest (a), c) and d) collected 2 votes each. The median of the estimates may be around 4%. Let us remember when we arrive at real data.
7. Where is the role of business sponsorship vital? Name cultural sphere or give concrete cases.
Festivals and music were both mentioned 6 times, followed by exhibitions 5.