Policy versus Philanthropy : Between Public and Private Funding of the Arts

The aim of this paper is to analyse the relations between arts and business in the international context. It centres on two topics: firstly, the impact of the public arts funding systems on private support and, secondly, the current transitions in the relationship between arts and business that lead to the development of new forms of cooperation. The first part of the article compares systems of arts funding in different countries, mostly in Europe and the USA. The second part focuses on the definition of ‘partnership’, that is, the new paradigm in arts and business relations and describes its manifestations in real life.


Introduction
Melinda Gates, a philanthropist and wife of Microsoft founder confessed a few years ago: "I care much more about saving the lives of mothers and babies than I do about a fancy museum somewhere" (Woods, 2012).The Gates are allocating billions of dollars for developing HIV/Aids and malaria vaccines and promoting access to contraception among African women.In the face of such needs funding arts might be perceived as extravagance.Is it possible for people involved in arts to attract the business world to the value of their work?
The major challenge in arts and business alliance is finding the common language in a twofold sense.First, in the direct, lexical meaning, as both parties use two different language registers (e.g. a theatre employee prefers to use the term 'audience relations' instead of 'marketing strategy').Conversely, individuals of both environments understand the business goals differently in terms of the so-called corporate social responsibility.Milton Friedman claimed that the only social responsibility of a business is to gain profits.According to the Nobel Prize Winner "In a free market economy based on private property, the corporate executive (…) bears responsibility for his employees.That responsibility involves managing the company's business according to their wishes, which means making as much money as possible, while conforming to the basic rules of the society, both those embodied in law and those resulting from ethical standards" (Friedman, 1970).Friedman claimed that by allocating company's profit to social goals corporate executives spend the money of their subordinates -and in that sense it is unethical behaviour.If company leaders are willing to engage in charity activities, they should spend their private money and beyond their duty hours.
These days, only few managers would be likely to support such statements without concern about public criticism.The concept of CSR (Corporate Social Responsibility) has gained great popularity, and in liberal societies the conviction that enterprises should "take care of their surroundings" has been deeply rooted.Nevertheless, the scope of this care is differently understood; the practice has shown that supporting arts is perceived as an element of marketing rather than charitable activity by Polish companies (see TNS OBOP, 2010). 1 This state of affairs is not only significantly influenced by legislation (as I explained in Chapter 1) but what equally matters is managers' understanding of the social role of arts and social perception of arts.Who is supported: an artist or the society by donating resources to artistic projects?This question is especially essential in case of niche arts, focused on experiment instead of audience turnout, as the popular misconception of self-centered character of arts and 'artist's eccentricity', have not much in common with social needs.
Whereas among artistic community there are numerous expectations towards businesses; a common belief that businesses should or even are obliged to support culture prevails.The reasons for such insufficient support stem from 'low cultural competencies' of managers, which in turn the state educational system neglecting cultural education is held responsible for.
Meanwhile the demand for private funding in arts is increasing -and it is not linked only to the scarcity of financial resources and the effect of 'tug of war' in the public sector.In the cultural sector increasing numbers of independent organizations are playing a vital role in the arts development.The so-called mainstream of cultural life stops being the exceptional domain of cultural institutions as private, commercial and alternative groups and initiatives are becoming increasingly important.Their recognition by the critics and audience in Poland and abroad is not correlated with access to subsidies invariably reserved for public institutions.The case of Komuna Theatre in Warsaw could be mentioned as an example where artistic achievements fail to guarantee the supply of subsidies to secure maintenance and development as the pool of city theatre budget is drained by public theatres (Diduszko-Zyglewska, 2017).In Poland the bulk of artistic budget is spent on the activities of state cultural institutions, and merely a narrow margin is allocated to non-governmental organizations and other independent entities.Perhaps cooperation with businesses might be an opportunity to such organizations.It appears, however, that it should be a relation based on reciprocity rather than support.A key question arises here: what arts may offer to the business world?
The purpose of this paper is to partly answer the aforementioned question.In order to provide the analysis of the subject of the arts and business relationship as comprehensively as possible, the first part of the paper is focused on the international context.In the first chapter, I analyze various systems of public funding of arts in terms of their impact on private financing.In the second chapter I focus on contemporary tendencies in cultural and business relationship and describe examples of cooperation in which these tendencies are visible.

Philanthropy in the welfare state
It is commonly assumed that private subsidizing of arts is the domain of affluent and well-educated societies.It is rarely mentioned that this support depends on the arts subsidizing model enforced in the given state.Such a statement is risky for the individuals employed in arts, as the experience has shown, that philanthropy develops best in the states where public subsidies are supplementary and not primary financial resources of artistic institutions (see Netzer et al., 1978;Feld et al., 1983;Cummings and Katz, 1987;Martel, 2008).Surprisingly, it is not a simple case of relation in which public subsidies 'induce laziness' among institutions and demotivate donors.The analyses conducted by economists studying arts (e.g.Brooks 1999Brooks , 2000) ) reveal that public subsidies may not necessarily 'crowd out' private initiatives, on the contrary, they frequently constitute an incentive for a private donor who has more confidence in the institution supported by the state.Public subsidies may either 'crowd out' or 'crowd in' private donations, and everything depends on the proportion of the state subsidies in the institution's budget.According to Brooks (2000), an inverted U shape relationship occurs: relatively low public subsidies attract sponsors, but when their level exceeds a certain critical point, they become demotivating.The arts philanthropy therefore depends on how the arts funding system is designed.
In the Western Word we can distinguish two models of subsidizing arts by the state: the direct and indirect models.Simplifying, the former is typical for Europe, the latter for the USA.Direct subsidies are based on distributing donations via relevant state and local government agencies, or their subordinate arts institutions.Subsidies may have two forms: the so called, flat-rate subsidy2 granted to entities run by public bodies;3 it is a type of permanent governmental donation, the amount of which depends more on the organizer's budgetary capabilities rather than the results of the artistic activity of the institution.Another example of direct subsidies are grants and also scholarships for the artists,4 awarded not on the basis of the legal status but in the form of contests.The method and range of implementation of both subsidies types depend on the funding system in a given country, e.g. in Great Britain even the state cultural institutions (so-called National Portfolio Organisations) are obliged to submit contest applications to the bodies providing funds and the subsidies may be granted for a maximum of several years, depending on the fulfillment of specific conditions included in the state's culture development strategy (Ulldemolins et al., 2013).
Whereas the indirect support involves the creation of incentives by the state to stimulate as many cultural activities as possible.These incentives have diversified forms; and may include among others, the possibility to deduct donations from taxable income, exemptions from income and property taxation, VAT and customs duties reliefs, or low postal charges and works of art insurance (Martel, 2008).The incentives concern both artists and individuals employed in culture as well as donors (individual and corporate).In the case of the latter, the major benefit is the possibility of deducting donations from the income tax.
Although in each system of arts funding one type is dominant, none of them occurs independently; forms of indirect support are supplemented by direct subsidies and vice versa.In the United States, where subsidies for artists, especially at the federal level, are a source of constant disputes, and in the 1980s became the cause of lasting more than a decade 'cultural wars', there are some forms of public support.In the USA, there are also institutions (primarily museums) co-owned by local or central authorities (Netzer, 1978;Schuster, 1998).Nevertheless, the sources of funding of non-profit cultural institutions are mainly generated by revenues from their own activities (50% of the budget on average) and donations of private individuals (35.5%).Public subsidies constitute only 7% of these institutions' budgets. 5ther sources include the support from foundations e.g.The Rockefeller, Ford, Carnegie (5%) and the patronage of the enterprises (2.5%, data source: Martel, 2008).These proportions are significantly different from European, especially continental, arts funding systems.For instance: in Sweden the budgets of national theatres consist on average of 80% of the state subsidies, 16% of their own revenues and only about 0.5% of sponsorship (Kubiak 2016); in Lithuania, about 80% of the state subsidies, 12% -the ticket revenue, 1% -of sponsorship (Pukelyte, 2016); in Poland, the subsidies constitute 73% (including 19% of the subsidies from the state budget, and 54% -the local government subsidies), 18% -their own revenues, 1% -sponsorship (GUS, 2012). 6rom the data given above it might be concluded that the American state does not engage in the arts funding.But this is a false assumption; the culture system in the US operates on the basis of incentives that activate civil society.Instead of distributing public funds between cultural organisations, state authorities create an indirect transfer mechanism, thanks to which the state supports cultural organizations with the hands of its own citizens.
It is such a decentralized, complex and unpredictable system that, from a point of view of a European, it frequently remains unnoticeable.This peculiar invisibility is characteristic of the American system.As Martel writes (2008, p. 494): "In Europe, almost anything may be included in the cultural budget and it is presented 'ostentatiously'.On the other side of the Atlantic, it is hidden in the amazing complexity of the legislation.Here, pride dominates that something is done for culture, and there, discretion comes and efforts to hide information about the arts support to selected authorities, and especially voters.Here flaunted public policy is present, and there is a policy that remains implicit".
One more fundamental distinction should be added to this matter: the different model of private funding.Milton Friedman's view of corporate philanthropy, quoted in the introduction, explains why private individuals and foundations supported by them are the primary source of income for culture, unlike enterprises in the USA.Private support in almost 74.5% consists of donations from private individuals, and in 9% of individual inheritance.Foundations, set up mainly by wealthy entrepreneurs, constitute 10.9%, and enterprises provide merely 5.6% (data: Martel, 2008).Feld at al. (1983) provide data on museums: individual contributions reach 51% of private support, donations from the foundation equal 20%, corporate support -4%; similar data can be found, among others, in Alexander (1996).In Europe, the same distribution occurs only in the United Kingdom, which in terms of financing represents an intermediate model between Europe and the USA.According to the data of the British Arts and Business (2013), private support of arts includes 57% of contributions and donations of individuals, 26% of support from foundations, and 17% of corporate sponsorship.
Continental Europe represents a different model of private support: individuals employed in arts have the highest expectations towards business as it plays a major role here.For instance, the Dutch Centre for Studies on Philanthropy states that extra-budgetary sources of financing arts are primarily corporations (in 43%), foundations in the second place (24%), and individual support constitutes merely 11% (Bekkers et al., 2015).
Conversely, what is similar between the USA and Europe is the fact that the citizens supporting arts belong to the wealthiest social classes.In the United States, significantly more people in general provide donations to religious associations, universities and schools, and culture is supported more frequently by the richest households (Feld at al., 1983). 7Affluent citizens pay more attention to culture than the impoverished and less educated people.In addition, it is profitable for people with higher incomes in the USA to support charity because the donor is entitled to charitable tax deduction respectively to their tax deductibility threshold (e.g. a donor with a tax threshold of 35% may deduct 35% of the transferred donation).In this way, a person earning less (eligible for a lower tax threshold, e.g.25%) by donating the same amount as a rich person (e.g.1000 USD) will receive a lower tax relief (250 USD) than a more affluent donor (350 USD).Pevnick (2013) notices that the tax system designed according to this model empowers people with higher income and allows them to 'control' public money (more than people earning less).8Decisions on the distribution of the money belonging to the general public are taken by the richest.The fact that donors may influence the performance of the artistic institutions has been the subject of criticism.The word 'institution' seems to be inappropriate in this context, as it is associated with European museums or operas which are supervised by state administration.In the USA, in the culture sector, a non-profit association managed by the board is the basic organizational unit.The board consists of funders who not only devote their fortune9 but also their time to manage the organization.From the European cultural institutions perspective, sensitive to artistic autonomy, it is incomprehensible that the business people decide on strategic artistic goals.According to Martel (2008), in the USA, the board members of few institutions want to influence the artistic programme indeed, in most cases their decisions concern the general strategy direction of the organization's development, especially its financing.There is no doubt that the range and level of influence depends on specific people, the institution type and its objectives, and yet the very fact of the reliance on the donor's money makes the institution vulnerable to pressure, or at least obliges it to 'dialogue'.Alexander (1996) illustrates how the change in the financing structure of American museums influenced the form and content of the organized exhibitions.
European cultural institutions face another challenge: how to obtain a generous corporate sponsorship.The current legislation supports them in a limited way.In Poland, a company has to prove that sponsorship of culture is indicated as an advertising expenditure; only in this way it can be included in the costs. 10The donation from legal entities may be deducted from the tax base, but in the amount not exceeding 10% of the earned income.In addition, it is disadvantageous for the taxpayer that contributions cannot be treated as the tax-deductible expenses (see: Lewandowska, 2013).In other European countries, however, the regulations referring to culture are not far more favorable.11Tax incentives are a marginal reason for supporting culture.Therefore, the search for the existence of other benefits has been in progress for years; the search, which has gained a new dimension over the last decades, described in the next chapter.

From sponsorship to partnership
Significant shift has been seen in business and culture relationships.The existing forms of cooperation are being exhausted and replaced by a new idea: partnership.McNicholas (2004) distinguishes three stages of this evolution, progressing since the 1990s: from supporting culture as a marketing strategy (the turn of the 1980s and 1990s), then as an element of building relations and image (the late 1990s), to cooperation aiming at combining the goals of both parties and using the potential of arts as a source of knowledge (post 2000).The last stage, known as the 'partnership', can be considered as a contemporary tendency.This does not mean that it is the most common form of cooperation between culture and business; there is no sufficient data that could confirm this.'Partnership' is rather the notion of a certain idea of cooperation; an idea that sets standards and symbolizes new values in the relations between business and artistic organizations applying for support.Defining this form of cooperation is difficult because there are numerous different initiatives that exist under one notion.Based on previous research (Lewandowska, 2015a(Lewandowska, , 2015b) ) several fundamental features may be identified, such as: • participation of the business partner in the conceptual and implementation stage of the venture without interference in the artistic content (in contrast to patronage or sponsorship in which the company finances the complete artistic project); • learning and development as the basic benefit for the business (advantages related to the image creation and promotion are becoming secondary); • cooperation resulting from the initiative of both parties (the artistic party ceases to be 'a client' and becomes an equal partner); • the positive outcome of the cooperation is not only experienced by the two parties but also by the stakeholders.
The indicated research reveals that partnership collaboration with artistic organizations is the domain of companies characterised by the high degree of creativity.12Company representatives declared that such cooperation positively affects the development of innovation and creativity, contributes to new knowledge acquisition and has an impact on employees' engagement.
Representatives of culture also notice the shift in the culture and business relationships.They emphasize that today companies do not want to be perceived as 'donors' anymore, but rather as 'partners' involved in the co-creation of a specific project (Lewandowska, 2015c(Lewandowska, , 2016)).Contact with artists is to help companies function in an increasingly complex, international environment.Contemporary business organizations are much less interested in their brand creation in promotional materials than before.Both representatives of companies and culture emphasize that "the era of logotypes has already gone" (Lewandowska, 2015c, p. 22).
One of the pioneers of this approach is Julia Rowntree, a fundraising specialist at the London International Festival of Theatre (LIFT).In the 1980s, LIFT found itself in a group of many cultural initiatives that lost access to public funding as a result of the emergence of Margaret Thatcher's party and the implementation of the 'rolling back the state frontiers' strategy.Intensive search for founders in the private sector began to sustain the festival's existence.For twenty years  various solutions were tested, and the organisers' approach to cooperation with businesses considerably evolved.Rowntree describes this evolution in the book "Changing the Performance.A Companion Guide to Arts, Business and Civic Engagement" (2006).The first stage involved the search for corporate sponsors, who were offered traditional 'sponsorship packages': tickets for performances, invitations to parties, membership in the 'Friends' Club', etc. Efforts to provide broad publicity to sponsors were undertaken, but the chances were limited due to media reluctance to reveal company names; the editors treated this as an attempt to smuggle free advertising.The second stage was to create the conducive conditions allowing contributors to build relations, e.g. with stakeholders and influential people.Dinners at the embassies of countries where contributors were planning to invest were arranged; companies could have been shown as the particularly generous donors during social fund-raising events -in the sale of fundraising tickets of diversified value.Reflection on these practices led the organizers to a new conclusion: the company contacts with arts may not only lead to building its image, but it may also bring deeper, long lasting and valuable changes.This is how the Business Arts Forum was created -a set of meetings between the company employees and artists during which they jointly watched performances and participated in workshops.The initiative aimed at "enabling the business people to reflect on the surrounding world", providing "space for expressing divergent opinions and experimenting" (Rowntree, 2016, pp. 115, 124).The participation in the Forum helped the individuals "…get out of a rut.It led to the unknown world and forced them to view their own reality from a new perspective" (p.117).As companies covered the costs for the participation in workshops the organisers could obtain resources for other initiatives.
Current changes and tendencies in approach to business cooperation are well illustrated by the LIFT case.Examples of the companies which benefit from the  (Seifter, 2005).Companies such as Boston Consulting Group, CitiGroup or Johnson & Johnson are taught how to master the art of delivering presentations and rhetoric by the lecturers of Actors Institute from New York (Buswick, 2005).The Unilever company invited a group of actors to conduct the multi-day workshops to improve the team communication skills of its employees.This initiative has transformed into a permanent cooperation programme, under the name Catalyst, based on regular workshops with actors, writers, photographers and jazz musicians (Boyle and Ottensmeyer, 2005).The phenomenon of engaging artistic practices in business corresponds with the new vision of leadership promoted by contemporary management theorists.Mintzberg (1998) believes that an ideal manager is like an orchestra conductor who inspires and avoids control.The orchestra conductor metaphor is cited by renowned leaders such as Glen Fukushima (Castells and Himanen, 2009;Nissley, 2010).Barrett (1998) draws attention to the parallel between improvisation in a jazz band and contemporary companies' operations.According to Adler (2006), organisations should learn inspiration and creativity from the artists.
In Poland similar transformations occur, however, there is insufficient amount of research which could assess the scale of these changes.The number of initiatives, groups, and artistic organizations building their offers on the basis of innovative forms of cooperation is increasing.The 'All That Art!' gallery in Wrocław offers to companies workshops with the use of heuristic methods combined with modern arts to stimulate creative thinking, openness to change and creative problem solving.The Municipal Cultural Centre in Bydgoszcz offers courses of improvisation techniques that can be used by business partners in sales instead of traditional sponsorship.Warsaw Comedy Club organizes creative workshops aimed at companies focusing on specific problem solving, e.g.improving communication in multilingual teams.Instructors prepare the course content long in advance -by collecting information about the company, listening to employees and tailoring the programme to the group's needs.
Apart from arts-based learning initiatives, the 'partnership' approach entails joint realisation of projects.This form of co-operation means that a company has influence on a project concept and co-partners its realisation.An example is the 'Spojrzenia' competition -where the prize is awarded to young outstanding artists, organised in cooperation between Deutsche Bank and Zachęta National Gallery of Arts.The competition is an element of a broader cooperation of the bank with the artists (Arts Programmes), and was initiated by DB, which actively supports the arts.Another bank -ING -set up the Polish Arts Foundation, whose mission is not only to cater for the creation and support of modern arts collection but also cultural education of employees.The Foundation's manager is a curator managing the collection displayed on the offices' walls who also plays the role of an "animator" conducting workshops devoted to modern arts.A think-tank Opera Lab Project was the joint initiative of BMW and the National Theatre, as part of which exhibitions with the use of modern augmented reality technologies were held, and also an array of initiatives promoting knowledge about application of new technologies in cultural institutions.BMW involvement in the project had a co-partnership character -as the company was actively engaged in the concept design and substantive arrangements.
The co-production of 'Anty-Edyp' directed by Michał Zadary organized by The Polish Theatre in Warsaw, Modern Arts Museum and Luxmed Company was a novel initiative.During the play performance doctors were conducting a USG test on an actress Barbara Wysocka who was in the eighth month of pregnancy.The Luxmed Company provided equipment and medical personnel who played in the performance.The play director positively assesses this experience; in his opinion, the cooperation with Luxmed was effective and facilitated the production process.Zadara also admits that such efficiency and clarity could not have been achieved solely by an artistic institution (Paprocka-Jasińska, 2017).
What is necessary to mention in the discussion of 'co-partnership' is the notion of artistic autonomy.Co-partnership in project completion means that business partners exert influence over its content and design.However, this impact does not have to endanger the arts integrity.Firstly, the enterprises may neither have strictly artistic nature (as in e.g.performance or visual installation production) nor influence on the repertoire of the institution.Joint projects may be treated as 'extra-curricular' initiatives that provide an opportunity for cultural institutions to expand their operations and raise funds for their strategic activities.Think-tank Opera Lab is an example of such a peripheral activity which was created as a supplement to the repertoire of the National Theatre, without any changes to its strategic substantive programme.Secondly, even if the venture is of artistic nature, the business partner's influence may take a purely operational form, e.g.referring to technical issues such as equipment handling (as shown in the case of the 'Anti-Edyp' performance).However, the roles of each of the partners should be clearly specified without any possibility of misinterpretation from the outset.It is essential to be considered, otherwise the idea of partnership may easily become the subject of mistrust and criticism among cultural practitioners.

Conclusion
Arts and business relations are not established in the vacuum but in a certain social context, political and administrative systems.The purpose of the first part of this chapter was to show how crucial the interdependencies between the models of public and private arts funding are.This does not mean, however, that in the European models characterised by pro-state approach, the cultural and business relations may not develop; a lot depends on individual motivation.As a result, the search for new ways of cooperation should be continued.And although business is increasingly pro-actively treating business and arts relations, there is no doubt that this job must be done primarily by artistic employees.
One of the shortcomings requiring fulfillment is insufficient knowledge about the already existing forms of co-operation between arts and business.The subject of arts-based learning is still a novelty in Poland, although in Europe there are at least several organizations with vast experience in that area, among others, TILLT (Sweden), Conexiones Improbables (Spain), Artlab (Denmark).Systematic research of the so-called artistic interventions has been conducted in Berlin at the WZB Berlin Social Science Center, as well as Freie Universitat, where The Aesthetics of Applied Theatre project has been launched.The last mentioned initiative deserves special attention as it combines observation of practical activities with extended analysis of their effects both on the company and the theatre.Researchers, however, do not focus solely on the study of benefits, but inquire about ethical, political and aesthetic problems connected with the theatre and economics relations.Programmes based on development through the arts should be subjected to detailed and systematic review, and their methods -critically analysed, so as not to become unsubstantiated promises or glamorous dummy, using arts in an instrumental or cynical way.