Review of Private Sector Support for the Arts

Submission to the Office of the Arts, Department of Prime Minister and Cabinet

Prepared by Lynn Gailey and Dr Richard Letts AM
July 15, 2011

The Discussion Paper for the Reviews states that it is to be ‘an important element in the development and implementation of a national cultural policy’. The MCA response notes this broader context and notes the need, in that case, to consider the place of private sector support in the totality of income sources for the arts.

MCA considers the role of private support, government funding and earned income through box office in the operation of music organisations, and examines the balance of these factors in the UK/Europe, the USA and Australia.

It notes that for various reasons, private support can be more effectively won in Australia by the large performing organisations. Success is elusive for smaller organisations. If the government has in mind some transfer of responsibility from itself to the private sector, it may have some success with the large arts organisations but any abandonment of the small to medium organisations and individual artists will simply cause a contraction of activity since they are unlikely to be able to replace government funds with private funds. It should be recalled that the SMEs are the main source of artistic innovation and adaptability, and the location of much grassroots activity, and are essential to a healthy arts scene. In truth, the European model is much more suited to Australia than the American model. Here, the role of government is indispensable.

The MCA notes that some charitable foundations and trusts develop policies and procedures akin to government funding bodies and so may be more inclined to seek the broad public good than say businesses giving support through sponsorship, essentially a self-interested marketing strategy. In the USA, one reason for the development of charitable foundations has been the existence of estate taxes payable on death. Death duties have been abolished in Australia but there may be a case for imposition on wealthy estates, with a high threshold before the tax is payable. High wealth individuals may be more inclined to perpetuate their names and passions through creation of a foundation than to pay a tax to government.

Read the Paper.