Growing the pie: increasing the level of cultural philanthropy in Aotearoa New Zealand
The report was commissioned by Chris Finlayson, the Minister for Arts, Culture and Heritage, from the Cultural Philanthropy Taskforce.
The Taskforce was chaired by Peter Biggs, the ex chair of the Arts Council, which governs Creative New Zealand, the government agency that distributes funding to arts organisations and artists. Alastair Carruthers is the current Arts Council chair, and was also on the Taskforce.
Other members included prominent arts philanthropists Dr Robin Congreve, Dame Jenny Gibbs, and Dayle Mace; experienced fundraisers Margaret Belich (who has worked with groups including the theatre group Indian Ink) and Jim Hill (director of External Relations at Auckland University); and Carolyn Henwood, a retired District Court judge with a history of support for theatre.
In the media release announcing the establishment of the Taskforce, Finlayson emphasised that his interest in increasing individual’s support of the arts in New Zealand was “over and above - not instead of - government funding."
He noted that New Zealand does not have the culture of private giving that is well established in other countries, and I think the strongest contrast you can draw is to the United States, which has an entirely different system of supporting the visual arts – at least – compared to countries modeled on the British institutions.
What the report recommends
- develop a fundraising capability building initiative to mentor and advise cultural organisations on a one-to-one basis
- promote knowledge and awareness of the recently introduced tax incentives
- introduce Gift Aid to boost private giving
- explore the workability of a cultural gifting scheme
- recognise and value the generosity of philanthropists
- reward with matched government funding cultural organisations that succeed in increasing their levels of income derived from private giving.
Looking at some of these recommendations in a bit of depth:
Gift aid
In terms of tax breaks, New Zealand is a bit different from other countries. As we don’t have capital gains tax or death duties, there are no advantages to encourage people to give money or items (such as paintings) to reduce or avoid these taxes.
One suggestion from the Taskforce was Gift aid, which they singled out as the “most significant remaining tax initiative New Zealand can consider”. It wouldn’t involve a new tax incentive, but instead would allow the giver to direct their tax break for their donation (the 33% IRD rebate), as well as the donation itself, to the receiver.
Explore the workability of a cultural gifting scheme
Apparently the Ministry and the IRD are looking into this idea already.
Cultural gifting would introduce tax incentives for the giving of physical items – rather than cash – to organisations: everything from paintings to personal papers to scientific collections. The market value of the gift would be fully or partially tax deductible.
These gifts are expected to become part of an institution’s permanent collection (and not, for example, on-sold to raise cash).
Countries with cultural gifting programmes include Australia, Canada, Ireland, the United Kingdom and the USA.
Since its establishment in Australia in 1978, over A$575 million worth of items have been donated through Australia’s “Cultural Gifts Program”. Under this programme, givers are eligible for these tax breaks:
- The market value of the gift is fully tax deductible
- Donors can elect to spread the deduction over up to five years.
- Gifts are exempt from capital gains tax (not applicable in New Zealand).
Matched funding
This involves government proposing a contribution that would depend on the ability of the recipient organisation to identify a matching amount from a business, or possibly from an individual or a trust or foundation. This could also happen in reverse with a private contribution dependent on matching support from government.
For example, the Australia Business Arts Foundation operates the Premier’s Arts
Partnership Fund in South Australia, West Australia and Tasmania which doubles the value of new cash partnerships between small-to-medium businesses and cultural organisations.
The Taskforce suggests trialing matched funding initiative as a three year pilot.
What are institutions currently getting in the way of private sector/individual support?
In 2009 the Ministry for Culture and Heritage surveyed cultural organizations on their income sources for the 2007/08 tax year,
2000 organisations were invited to respond, and nearly 500 did, including most of the organisations who get recurrent funding from Creative New Zealand.
Although it’s a survey and therefore only a snapshot of the organisations who filled it out, it did have some interesting figures.
The total amount of gifts, grants and sponsorship, both cash and non-cash, received in 2007/08 by the 480 responding organisations was $383.2 million.
Central and local government contributed the lion’s share at 80 percent
Lottery Grants contributed 6.5 percent.
The corporate sector contributed 6 percent (or $22.6 million) towards total giving and sponsorship levels (that is, excluding all other types of income such as earned income from ticket sales).
Trusts and foundations contributed 4.5 percent ($16.7 million)
Individuals just 3 percent ($9.9 million).
The Art of the Possible: Strengthening Private Support for the Arts in New Zealand, October 2010
In May 2010, Creative New Zealand commissioned the Allen Consulting Group to conduct research into private sector support for the arts, and to develop an plan for increasing this support.
The report had 33 recommendations, and among the themes identified in the executive summary were the statements that:
- the private sector is the most viable source of additional external support (financial, in kind goods and services, skills-based volunteering) for arts organisations
- it is unrealistic to expect that the wealthy philanthropists will be the primary source of funds from the private sector
- increasing the number of New Zealanders who give to the arts, in a highly competitive and sophisticated philanthropic market, is a worthy but long-term endeavour
- arts/ business partnerships offer the greatest opportunity
I'd guess that CNZ will soon have a new branch in its organisational structure, a small office that focuses on training cultural institutions to raise funds from business and individuals. I also wonder if we'll see CNZ introducing criteria around fundraising for its recurrently funded organisations, as part of the revisions that are currently being made.
As payroll giving (the ability to make donations to charities automatically from your salary) has already been introduced, it seems simple to pass gift aid in too.
Overall, none of this feels world changing. As the budget and election come closer though, there'll be opportunity to test Finlayson's assertion that government funding isn't going anywhere.
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