Patrons, donations, sponsorships: How funders challenge and promote art

With the help of art, a large financial contribution is made. Yours Contribution to total economic output in Germany amounted to around 95 billion euros in 2020 (Share of GDP: 3.1 percent). As a result, the cultural and creative industries are now even surpassing sectors such as the chemical industry, energy suppliers or financial service providers in terms of added value.

However, as young painters, musicians or visual artists in particular often lack the financial means to secure their livelihoods or to market their works, they are often dependent on state and private support.

Donate (for) art and do good

According to the GfK study “Assessment of Helping” Germans donated around 5.8 billion euros in 2021. This is the best result since the survey began in 2005. Compared to the previous year, which was already very good, marked by the corona pandemic, the level of donations rose by a further seven percent. At 75.8%, the majority of donations continue to go to humanitarian aid. But the cultural and historic preservation sector also achieved significant growth in absolute terms, with an increase of 22 million euros. Many German citizens have obviously recognized the enormous plight of artists and cultural workers during the Corona years. Because theaters, museums and galleries remained closed for months, artists lacked the opportunity to present and sell their works.

Except they had digital channels or collaborations with online portals that make art accessible to a wide audience, offer alternative sources of income and have been a huge boom experienced.

However, it will also not be possible in the future without state and private funding. This is because the system of mixed financing of art and culture is generally regarded as a model for sustainable, financial sustainability.

Forms of art funding

In Germany, there are essentially three main sources of financing for culture: state funding, private funding and income generated.

• Revenue generated

This includes, for example, ticket income, royalties and revenue from the sale or rental of works of art, instruments, etc.

• State funding

This includes both indirect funding, such as a reduced VAT rate on art or donations to reduce income tax, as well as direct support for artists, institutions and projects. For example, as part of Federal Cultural Foundation or the Stiftung Kunstfonds.

• Private funding

This can be done, for example, through companies, donations from private individuals, foundations and trusts, or crowdinvesting. Donations and investments are based on different motives. Investments are about making profits that can be measured in surplus; donations are made either out of social responsibility, advertising or tax interest. Donors often receive tax breaks from the state, which are intended to support the decision to make voluntary donations. For donating companies, this is also a popular advertising measure that can contribute to an image gain.

Criticism of the commercialization of art

On the one hand, art funding is a necessity, but on the other hand, it also repeatedly calls on critics who believe that art is being commercialized and influenced as a result. Sponsors, for example, are intended to threaten artistic freedom. Yet banks, car manufacturers and other large corporations have become indispensable as promoters of the modern world of art and culture - which is, in the end, to be viewed positively.

Because a sponsor or a company can support the artist in developing his skills and marketing himself. When art and commerce are interwoven in this way, the two terms do not have to be mutually exclusive.

This is shown, for example, by a comparison between Europe and the USA: While European countries have introduced tax regulations that support and promote private investments in the cultural sector, government agencies in the USA have significantly reduced public funding of culture and thus left it to market forces.

Nonetheless Do the USA and other non-European countries dominate the global art market. In 2021, the United States, China and the United Kingdom were the leading countries in the global art market, which together accounted for 80 percent of the total sales value. While the US achieved the highest total value of transactions this year, China retained the highest share of global revenue from art auctions.

The most important challenge for Europe is therefore to maintain its achievements in supporting art and culture as a public good while promoting mechanisms for private financing.

Because even famous artists started out small once and were dependent on patrons or funding programs. For example, the American painter Jackson Pollock, who has lived in poverty for a large part of his life. In the 1930s, Pollock benefited from the so-called Federal Art Project, which supported American artists with large public commissions. He took part in the “Wall Painting” section in 1935, but was excluded from the project in 1938 due to abstinence due to his addiction to alcohol. In 1943 he took part in the first important exhibition organized by the famous American art collector Peggy Guggenheim. Among the jury members, Piet Mondrian and Marcel Duchamp gave him a positive verdict, so that the famous art patron offered him a monthly salary, dedicated her own exhibition to Pollock and thus paved the way for him into the art scene.

Invest in art and get a return

Works by famous artists such as Picasso or Van Gogh and contemporary painters such as Jackson Pollock, Andy Warhol, Damien Hirst and Keith Haring were certainly still affordable in their early years - but have experienced an impressive increase in value over the years and decades.

Today, art is widely regarded as an alternative form of investment that not only high returns but also has a relatively low correlation with other financial investments. However, as access to Fine Art remains closed to many private investors, FINEXITY has established a platform for liberalizing tangible assets. Investors can thus purchase digital shares of works of art (or other collectibles and real estate) curated by experts for as little as 500 euros and benefit from their potential increase in value just like an owner.