Broadening the fiscal support base for cultural activity

As securing grant aid from public sources is generally becoming more difficult, cultural organisations in Europe need to look harder for alternative ways to supplement their own earned income. This would include the following:

• Corporate sponsorship
• Corporate Trusts and Foundations
• Individual tax-efficient giving
• Lotteries and loans

In Europe, ‘private’ giving (support for the arts from individuals and the business sector) is much less developed than in the USA – for reasons to do with public policy and beneficial tax legislation. In the USA, individual giving constitutes by far the largest source of ‘private’ funding, followed by that of foundations, with business corporate giving ranked third. Combined, these three sources account for over 40% of the US cultural sector’s total annual revenue. Many lessons can be learned from American practice and can be adapted and applied in Europe. Public funding bodies (e.g. Ministries, regional and local government and arts councils) need to be approached in completely different ways from usual.

Corporate donations and sponsorship

Generally speaking, corporate support for the arts takes two distinct forms:

• Corporate donations come from a charity’s budget, which confers tax benefits on the company. Such donations tend not to be large sums, since there is no direct commercial gain for the company other than a minor reduction in its annual tax liability. It follows that any help offered in this way is likely to be one-off, limited, and not structured into any multi-annual agreement.
• Sponsorship usually comes from a company’s advertising or marketing budget and represents a significant commercial transaction. The company will expect to gain some quantifiable advantage – for example, in corporate image, publicity, credibility or public approval, entertainment, employee and/or community relations. Companies now take their ‘social responsibility’ seriously, with local development, the environment and good employer practice as factors.

Approaching potential sponsors – general advice

In order to acquire sponsorship, you need to have effective strategies for communicating with the market. Because sponsorship consists of individually negotiated ‘deals’, it is important that the benefits are thoroughly understood by both parties. Potential sponsors are looking for imaginative professional partners who will bring them some business advantage at a cheaper cost than commercial purchase – so don’t sell yourself too cheaply!

Check out any previously sponsored partners of companies you are thinking of approaching. A fully worked out business proposal is required, with realistic budget and timescale. Don’t think simply in terms of cash. In kind support and ‘free’ specialist professional advice may turn out to be a valuable element of any agreed package. There is no magic formula to ensure success in applying for funds, only a fundamental requirement for intelligent and meticulous research and preparation.

Don’t search indiscriminately for contacts from resource lists and just apply for money. No company responds to random requests. The relationship needs clarity, mutual trust and honesty. Tips

Sponsorship umbrella organisations

In many European countries now there are national umbrella organisations that advocate the commercial sponsorship of the arts and heritage. Bear in mind that these exist largely for the benefit of the corporate sector, and were not created to ‘find’ sponsors for ‘applicants’. However, they are sometimes assisted by governments that wish to encourage an expansion in funding sources for culture. Successful sponsorship agreements can only be negotiated as unique transactions. However, some of these umbrella bodies do offer useful services (e.g. recommending board members with business skills; mentoring; training seminars; advice on dealing with private companies, etc.). The European Committee for Business, Arts and Culture (CEREC), the pan-European sponsorship organisation, offers an excellent ‘tips’ page on its website.

Corporate trusts and foundations

Commercial companies sometimes establish their own foundations, as do wealthy individuals who have made (or inherited) a fortune in trade, industry or finance (e.g. Carnegie, Bertelsmann, Gulbenkian, Ford, Mellon, Soros etc.). Foundations are bound by the laws of the country in which they are registered, and will normally be obliged to publish clear objectives, rules and criteria. The type of programmes supported may vary from year to year, but – generally speaking – it is the same sectors that benefit.

Meticulous research is vital for any successful approach: a wish-list will not impress. Foundations by their very nature are unlikely to offer regular long-term funding support to the same applicant organisations – but will certainly expect any programme they fund or support to demonstrate its success and sustainability. Since many foundation programmes are designed to encourage applicants in successfully managing change, a practical plan with clear objectives is more likely to succeed.

Individual tax-efficient giving

National legislation determines the tax efficiencies that are open to individuals as donors to cultural organisations or projects. This might be a substantial single donation (as in a legacy), or smaller sums over a period of time (as with a ‘covenant’ or ‘payroll giving’). Cumulatively, however, this might be an additional source of income worth researching.

Lotteries and loans

Some foundations and endowments have been established on the proceeds of Lotteries and occupy a middle ground between the strictly private and public spheres. Their rules of operation are more likely to be closer to public funding criteria and accountability and will need careful checking for eligibility, etc.

Secure public funding (other than for prestigious institutions) is becoming more difficult to obtain and retain, and accountability requirements are increasing the burden on small organisations. Seeking short-term project or pump priming funds through an appropriate ‘loan’ is becoming more and more popular in the cultural sector, and is seen as preferable to the often convoluted public processes. Of course, this is not money that comes without ‘strings attached’. However, there is a growing number of sympathetic lenders offering reasonable terms (e.g. ethical banks and institutions that will lend to organisations that promote social and cultural activity). There have also been interesting recent examples of European schemes that exchange goods and services in the cultural field on a ‘barter’ system rather than for monetary exchange.

Help yourself – with clear thinking

Certain websites can help you think through the main issues you will need to address in preparing a good proposal (your project’s purpose and the community’s need for it; how you can meet the potential partner’s own objectives, etc.). You should understand precisely what each source is offering, and, by implication, what that source may require of you (which could relate to a wide range of factors – project, capital, professional development, art form, location, target audience, likely maximum sum, matching funds, etc.).

Read any published criteria and make sure you understand them fully before you begin to invest valuable time and effort in drawing up applications. It is amazing how many experienced arts applicants rule themselves out of active consideration simply by giving funders a technical reason for rejecting them. Funders’ staff may be able to answer questions that arise during the application stage. Consult them well in advance of any deadlines but don’t waste their time, not least as this could be remembered to your future disadvantage. Observe all the technical niceties of the process (tedious though they may sometimes seem – somebody devised them for what seemed a good reason) and give very careful thought to your selection of support material (if the application criteria permit this).

As funding is always limited, many public and private sources begin by lowering expectations or discouraging applications. Do not be put off by this, and bear in mind that funders normally wish that they could support more projects than their finite resources allow.

Christopher Gordon