Cultural Funding and Financing

Inhaltsverzeichnis

1. Frontmatter

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2. Chapter 1. Introduction

   • Open Access

   Carolina Dalla Chiesa, Anders Rykkja

   Abstract

   This chapter introduces the edited volume. A preamble tells the story of a musician choosing between various funding and financing options as his, her, or their career progresses. This background story sets up a discussion of two contexts that explain why we need this volume. On the one hand, access to funding and financing in the cultural and creative sectors and industries is changing through the impact of digitalisation and the rise of platform-based business models. On the other hand, many artists and organisations in the cultural and creative sectors and industries find it challenging to access public and other traditional funding sources. These circumstances justify further thinking around how sectorial funding and financing models are evolving. Following a discussion of potential theoretical frameworks for studying funding and financing in the cultural and creative sectors, as well as definitions of key terms, the chapter provides an overview of the book's individual chapters and highlights their main contributions. The chapter then concludes with reflections on how emerging funding and financing models are, in some respects, spin-offs that blend traditional tools and practices with the capabilities of modern technology.

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3. Core Funding and Financing Models

   1. Frontmatter

   2. Chapter 2. Direct Government Contribution to Culture: Legitimacy, Financial Mechanisms and Level of Spending Compared Internationally

      • Open Access

      Lluís Bonet

      Abstract

      This chapter delves into the intricacies of direct government contributions to culture, examining the legitimacy, financial mechanisms and levels of spending in an international context. It highlights how public funding of the arts reflects governmental values, priorities and administrative structures. The study explores various forms of government intervention, focusing on the different ways of direct spending and its impact. It addresses the economic, social and political justifications for public investment in culture, such as efficiency, equity and national identity protection. The document also discusses the impact of cultural policies on different cultural sectors and regions, emphasizing the importance of a supportive regulatory environment and efficient administrative structures. Through international comparisons, it reveals significant disparities in cultural funding and the diverse approaches adopted by different governments. The analysis underscores the need for comprehensive data and a nuanced understanding of cultural policy to inform effective and equitable public support for the arts and cultural heritage.

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   3. Chapter 3. Funding the Arts and Culture Through Tax Incentives

      • Open Access

      Sigrid Hemels

      Abstract

      Tax incentives can be a policy instrument to fund the arts and culture. Such incentives must meet certain rules and principles, including, for EU Member States, EU requirements. In addition, various other aspects must be taken into account in the appreciation of tax incentives as a cultural funding instrument. This includes, on the one hand, notions of fairness, concerns about ‘philanthrocapitalism’, wealthier citizens undemocratically deciding on government spending through tax incentives and, on the other hand, opportunities to engage citizens and take their preferences into account. Tax incentives are not inherently better or worse than other policy instruments. The most effective and efficient instrument or mix of instruments depends on the policy aim. In addition, the funding culture and mix in a certain country is of relevance. As tax incentives are currently not always democratically controlled, accounted for and evaluated in the same way as direct spending programs, these must be handled with care.

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   4. Chapter 4. Philanthropic Fundraising and Sponsorship: The Arts Marketing Perspective on Financing Cultural Projects Based in the North American Context

      • Open Access

      François Colbert

      Abstract

      The Anglo-Saxon and North American tradition in fundraising the arts follows a specific way of doing things in light of a sponsorship market for cultural projects. It borrows from the latter the government support model, from the middle one structure of arts councils, and from the former the solicitation of donations or sponsorships. The model that describes the donor journey includes the following elements: motivations and preferences, moderating effects, trust and commitment, loyalty, and incentives to donate or re-donate. The sponsorship segment involves a business relationship where both partners must find their benefit. The cultural companies must choose a sponsor congruent with the artistic mission of the company. For its part, the sponsor benefits from a niche vehicle that will contribute to its brand image rather than to the generation of sales. The chapter ends with examples of financing outside the regular framework.

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   5. Chapter 5. Patronage in the Arts: Theories and Contemporary Challenges

      • Open Access

      Helleke van den Braber

      Abstract

      This chapter offers an overview of key aspects of research into patronage exchange, highlighting ways of examining the changing requirements for—and modalities of—the exchange between artists and donors over the centuries. It outlines pre- and post-Romantic patronage dynamics and exchange patterns, paying special attention to ways of examining the volatile balance of power between artist and donor. It addresses ways of evaluating what both parties put in and get out of their alliance and looks at the negotiation strategies that have been open to artists throughout history. It also explores the role the artwork and its autonomy play in the patronage game of give and take. Lastly, the chapter addresses the issue of gift versus transactionality, exploring how artists navigate between the demands of the market economy on the one hand, and those of the gift economy on the other.

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   6. Chapter 6. Copyright’s Contribution to Rewarding Creators and the Digitalisation Paradox

      • Open Access

      Christian Handke

      Abstract

      Copyright is pivotal for creators and throughout the creative industries. Copyright is also often contentious and puzzling for stakeholders and researchers. This chapter surveys main aspects of the copyright system, reviews the corresponding interests of creators and other stakeholders (which concern finances but go well beyond them), and discusses the interface of copyright and digitalisation processes. It covers collective rights management, user-generated content, platforms and big data, generative artificial intelligence, as well as blockchain technology. Overall, the chapter identifies a paradoxical situation for creators. On the one hand, their success increasingly hinges on activating users for value co-creation. This usually requires some generosity, that is less emphasis on copyright enforcement and on immediate financial rewards. On the other hand, more robust protection of creator/rightsholder interests is necessary regarding commercial online platforms (that host or facilitate many of these creator-user interactions). Arguably, the current challenge for creators and copyright policy is becoming generous among online users and assertive regarding the platforms.

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4. Extended (Digital-Based) Funding and Financing Models

   1. Frontmatter

   2. Chapter 7. Trends in Crowdfunding for Arts and Culture

      • Open Access

      Douglas Noonan

      Abstract

      This chapter examines the evolution of reward-based crowdfunding in arts and culture, focusing on insights from an extensive dataset of Kickstarter projects. It reveals distinct category-level shifts, such as the growing dominance of tabletop games and the decline of once-popular film and music projects. Meanwhile, funding has concentrated towards a smaller number of “superstar” campaigns. The findings underscore crowdfunding’s role as a market research tool, fostering project learning and creator reputational effects rather than acting solely as a funding source. Understanding crowdfunding requires appreciating its interaction with upstream and downstream markets, including how it supports different production stages depending on industry. This highlights crowdfunding’s evolving contribution to creators’ downstream financing and market successes. Upstream factors, like creators’ labour markets and alternative financing sources, also shape crowdfunding engagement and outcomes. Ultimately, the chapter argues that crowdfunding’s primary value lies in informational advantages it brings to creators, funders, and adjacent markets.

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   3. Chapter 8. Matched-Money in the Arts and Culture: Conceptualising Online and Offline Matchfunding Models

      • Open Access

      Carolina Dalla Chiesa, Ellen Loots, Yosha Wijngaarden

      Abstract

      In arts and culture, funding depends on a wide range of stakeholders forming a complex ecosystem, including the artists themselves, market agents, politicians, policymakers, and, more recently, online platforms. Co-funding mechanisms offer alternatives to fund-seekers needing extra revenue sources, additional donations or ways to share the costs of cultural production among different parties. One type of co-funding mechanism is called “matchfunding”, in which different partners or donors match each other’s contributions. More recently, matchfunding has integrated crowdfunding platforms where the crowd’s contributions are matched with an institutional (public or private) donor. This chapter explores different matchfunding arrangements, provides examples for each type, and discusses the benefits and constraints of channelling public and private funding through (mainly online) matchfunding schemes.

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   4. Chapter 9. “I Would Do Anything for Funds, but I Won’t Do That”: On Artists’ Reluctance to Adopt Investment Crowdfunding and Possible Ways to Overcome It

      • Open Access

      Rotem Shneor

      Abstract

      Crowdfunding is an alternative project fundraising mechanism, facilitating the collection of small sums from many backers via the Internet. With growing competition for limited public cultural funds and other forms of sponsorship, artists have been exploring and even pioneering the adoption of crowdfunding. However, while the crowdfunding industry’s growth is propelled by interest in investment models offering fundraisers relatively large sums of money, artists have stayed away from this trend while focusing on non-investment models, which result in collecting modest sums from smaller circles of backers. The current chapter seeks to examine what is driving such a choice. It suggests the FPI (Fear-Prejudice-Ignorance) framework outlining mental barriers that trigger artists’ aversion to using investment models. The origin and implications of each of the framework’s barriers are discussed. Later, several methods for possibly addressing these barriers are suggested, including education, match-funding schemes, and functional integration.

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   5. Chapter 10. The Rise of Online Crowd-Patronage: Models, Challenges, and Providing Security to the Creative Worker

      • Open Access

      Wojciech Hardy

      Abstract

      The expansion of internet access introduced new forms of crowd-patronage. These new platforms allowed for direct support from niche audiences towards their favourite creators. Importantly, this may provide a stable and transparent income to the creative workers who often face precarious conditions. In this chapter, I highlight what makes online patronage distinct from other forms of funding. I describe the most important types of such patronage and their representative platforms. I then provide an overview of the dynamics of these platforms, the context in which they appear and their role for creative workers. Finally, I discuss promising venues for research by scholars, highlighting existing gaps, interesting issues, and potential data sources. I propose that crowd-patronage is a promising option for creative workers that overcomes several of the challenges of creative work. However, at the same time, much is not yet known on how to best leverage such platforms.

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   6. Chapter 11. Beyond Likes: Social Media Remuneration and Financing of Digital Cultural Production

      • Open Access

      Sophia Gaenssle

      Abstract

      This chapter examines the diverse remuneration mechanisms available on social media platforms to answer the questions: (1) How do social media creators monetise their content and art? (2) What does this mean for financing and funding cultural production, in particular core arts? Key forms of social media remuneration include direct payments, such as ad revenue sharing, subscriptions, and tipping systems, as well as indirect income through brand partnerships and affiliate marketing. Platforms like YouTube, TikTok, and Instagram enable content providers to monetise their content via their services. While direct payments offer a structured income, indirect methods often rely on creators’ ability to build and leverage personal brands or work with external advertisers.

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   7. Chapter 12. Making Money from Streaming: Benefits and Barriers in the Music Industry

      • Open Access

      Sigbjørn Hjelmbrekke

      Abstract

      This chapter studies the transition from music ownership to streaming-based access. I examine how streaming changes revenue distribution. The chapter contrasts the dominant pro rata model with the user-centric model. The latter allocates individual fees to artists based on personal listening habits. Key challenges include streaming bots, non-music content, and per-play biases disadvantaging longer tracks. The chapter goes into discussions around distribution, fairness, and efficiency. It also touches contracts, payment delays, and transparency as pressing issues. The chapter also reflects on the applicability of these discussions to other cultural goods, such as video and audiobooks.

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5. Case-Studies and Illustrations

   1. Frontmatter

   2. Chapter 13. Digital Funding and Financing in Museums and Cultural Heritage

      • Open Access

      Elisabetta Lazzaro

      Abstract

      Museums and cultural heritage have mostly relied on traditional forms of financial support, such as public subsidies, philanthropy, sponsorships, and patronage. This chapter critically contributes a current and prospective mapping of innovative models of funding and financing that leverage the latest digital technologies and are being adopted in the museum and heritage sector. Models are illustrated by means of real-world cases, which expand beyond global flagship museums, and focus on smaller museums. Evidence points to a yet unestablished range of digital financial models, spanning crowdfunding, digital payments, contactless donations, tokenised rewards, NFTs, and blockchain technology. These models are adopted to different extents, with funding prevailing over financing. Overall, adopted models confirm a wealth of benefits and rewards beyond the monetary ones.

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   3. Chapter 14. Public–Private Partnerships: When Governance Tools Stimulate Alternative Funding of the Heritage Sector and Beyond

      • Open Access

      Aline Albertelli, Anna Mignosa

      Abstract

      This chapter analyses the evolving dynamics of cultural policy and governance, focusing on the role of Public–Private-Partnerships (PPPs) as alternative financing mechanisms for the cultural sector. Although PPPs are not new, the progressive reduction of direct intervention across various sectors in Western governments has led to the introduction of special arrangements to stimulate private sector involvement, especially in cultural governance. The chapter examines the transformations that have led to the introduction PPPs. It illustrates the legislative and administrative frameworks supporting PPPs, focusing on two specific cases: Italy and Brazil. The case studies illustrate how these alternative governance models have been implemented through the introduction of ad hoc legislation to address the financial and operational challenges faced by cultural institutions. The objective of this work is to critically demonstrate the potential of PPPs as a viable alternative to traditional public funding to address the growing financial needs of cultural institutions.

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   4. Chapter 15. Tainted Philanthropy in Arts Funding: The Case Study of National Portrait Gallery in London and the Sackler Trust

      • Open Access

      Marek Prokůpek

      Abstract

      Philanthropy has long been a cornerstone of financial sustainability for cultural institutions, enabling them to preserve heritage, engage communities, and innovate programmes. However, recent controversies, such as the backlash against the Sackler family’s donations due to their ties to the opioid crisis, have brought heightened scrutiny to donor relationships. This chapter explores the complex ethical dilemmas faced by cultural institutions as they navigate the intersection of financial necessity and public accountability. Using the National Portrait Gallery in London and its 2019 decision to decline a significant donation from the Sackler Trust as a case study, this chapter examines the pressures institutions face in balancing ethical considerations with the imperative to secure funding. Key themes include the growing influence of activist movements, the role of transparency in maintaining public trust, and the need for robust ethical frameworks to guide donor evaluations. The analysis highlights the challenges posed by controversial funding sources, emphasising the delicate balance between reputation management and financial sustainability.

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   5. Chapter 16. Securing Funding for Independent Creative Firms: Insights from Video Game Monetisation

      • Open Access

      Manel González-Piñero, Anders Rykkja

      Abstract

      This chapter proposes a study of the monetisation and revenue capture strategies of independent video game studios. The objective is to understand how small firms in the games industry capture revenue by monetising their work while maintaining creative autonomy. This single case study uses two Spanish studios, Open House Games and Chibig Studio, as embedded units of analysis. Key findings show the importance of efficiently combining platform internal sales of games and other forms of revenue capture via partnerships with publishers and intermediaries while developing new relations and maintaining the loyalty of existing audiences through platform external outreach and the co-production of new titles via crowdfunding. The chapter contributes theoretical discourse on cultural entrepreneurship literature by offering practical insights for independent entrepreneurial creative firms when faced by the challenges of overcoming the paradox of generating profits to sustain business operations while preserving creative autonomy and independence through adaptive monetisation strategies that blend commercial exploitation with ‘relational labour’.

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   6. Chapter 17. (Co-)Creating from ‘Nothing’, (Co-)Producing Digitally: The Art of Funding Cultural Projects Through Bottom-Up Collaboration and Co-Creation

      • Open Access

      Alice Demattos Guimarães, Natalia Maehle

      Abstract

      This chapter looks at creating value that goes beyond either funding or financing. Digitalization has enabled many communities to share, create, diffuse, and consume arts and culture. These initiatives, regardless of whether they are managed by established organizations or emerging artists and creators, have one thing in common: the production of value—or efforts to make the proposition a reality—is shared and distributed among a group, collectively providing their inputs for the benefits of the project. Based on a case study of a youth orchestra, the authors show how to produce arts and culture through the bonds or shared value between the people in the network behind the project. Particularly exploring crowdfunding, this study demonstrates how co-production in the culture sector is enhanced, fostering co-creation, socio-economic resilience, and diverse, community-rooted artistic values while reshaping traditional funding dynamics through participatory networks and non-monetary exchanges.

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   7. Chapter 18. Conclusions

      • Open Access

      Carolina Dalla Chiesa, Anders Rykkja

      Abstract

      We emphasise the importance of mapping funding sources, addressing the recent narrative of declining cultural budgets and its implications for various regions as a first research agenda. Second, we claim that the hybridisation of financing mechanisms needs to be further investigated when it comes to how different funding sources can collaborate to enhance credibility and support for the arts. Third, we discuss the valuation of cultural products, asserting that value extends beyond financial metrics and encompasses broader societal considerations. Lastly, we advocate for a rethinking of public funding models, arguing for innovative approaches that incorporate community-driven support, public–private initiatives, and co-creation to better meet the needs of a cultural workforce post-digitalisation and its hurdles with potential job displacement following technological breakthroughs. By addressing these critical issues, we seek to inspire future research and discussions on funding and financing arts and culture in the twenty-first century.

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6. Backmatter

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