Corporate arts sponsorship

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16 Corporate arts sponsorship
Volker Kirchberg
As a consequence of unprecedented business profits since the 1960s, cor-
porations worldwide have supported non-profit organizations in increasing
numbers. Such corporate contributions are a mutually beneficial interac-
tion, whereby the company gives mostly money, but also goods and ser-
vices, or expertise, in exchange for a promotional or image transfer from the
supported non-profit institution. Corporate arts contributions discussed
here are limited to non-profit arts institutions, and exclude commercial arts
enterprises.
The magnitude of corporate arts contributions has increased tremen-
dously within the last three decades. The estimates for annual corporate
arts contributions in the United States grew from $161 million in 1977, to
$496 million in 1987, to $740 million in 1995, and to almost $1200 million
in 2000 (current dollars, see Table 1).
1
Other countries followed suit. The
German corporate world gave approximately 185 million in 1989, 255
million in 1994, and 350 million in 2000 to the arts.
2
However, there are
still considerable differences among the countries of the world, although
they have become less distinctive in recent years. These distinctions origi-
nate from the different significance of private subsidies for the arts. They
are essential, for example, in the United States and other countries of the
Americas and Asia but, until recently, not in most European countries
(with the exception of the United Kingdom). For instance, United States
public agencies cannot create and preserve local arts institutions on a high-
quality level alone. Only 15 to 25 per cent of the revenues for the operating
expenses of major US arts organizations come from direct governmental
funds, whereas, in Germany, for example, public agencies give about 75 per
cent for that purpose.
Corporate grants for non-profit arts institutions complement public, indi-
vidual and foundation subsidies. For many museums, orchestras, operas and
non-profit theatres, they not only match the support from governmental
sources but are, with other private contributions, essential for the mainte-
nance, if not survival, of their institutions. With 3 to 5 per cent of the annual
total institutional budget, corporate giving is a relatively small proportion
of the budgets of arts institutions. However, this amount is critical for audi-
ence development, innovative planning and attracting other donors. For the
arts community, corporate support became a considerable factor in the first
143

half of the 1980s, at a time when government policy moved towards a more
conservative thrust, emphasizing regional culture rather than the fine arts
(Useem, 1987).
Owing to the nature of the two-way exchange, there should be a balance
of equal benefits for corporations and for arts institutions. The perception
of this exchange of benefits is the foundation for the analysis of motiva-
tion. Whereas the attention of cultural economics scholars is mostly
focused on a description and analysis of benefits and motives on the cor-
porate side, it is also important to observe the benefits and motives on the
side of arts institutions. Some fundraising literature deals with that per-
spective but it is still underrepresented. In the last decades arts institutions
have become interested in a growth of corporate arts contributions – first
in societies such as the United States where there is no tradition of domi-
nant public arts support, later also in European countries with an impor-
144 A handbook of cultural economics
Table 1 Corporate arts contributions in the United States, 1977–2000
Year Corporate arts contributions Corporate arts contributions
(current million $) (real million $)
1977 160.7 456.6
1979 227.0 538.4
1981 299.0 566.4
1984 434.0 719.3
1986 547.4 860.1
1987 495.5 751.1
1988 538.5 783.9
1989 553.2 768.2
1990 599.5 789.9
1991 558.0 705.5
1992 570.0 699.6
1993 600.0 715.0
1994 580.5 674.5
1995 740.0 836.1
1996 765.0 839.6
1997 779.0 835.8
1998 916.8 968.5
1999 1046.9 1082.1
2000 1194.6 1194.6
Note: Own calculations of data provided by AAFRC Trust for Philanthropy (1977–2001);
real dollars calculated by CPI-U (Consumer Price Index for Urban Consumers).
Source: For CPI-U (US city annual average), US Department for Labor Statistics
(ftp://ftp.bls.gov/pub/special.requests/cpi/cpiai.txt).

tant but shrinking tradition of public arts support. Government subsidies
shrank or could not keep up with the increasing financial demand from arts
institutions that had to grow to meet an increasing public demand for
culture.
Subsequently, arts institutions have been confronted by increased com-
petition for public and private funds, not only among other arts institutions
but also among a growing and more diversified field of new non-profit insti-
tutions in areas such as health, education, environment, religion or other
social causes. Grantees emphasize how critical even a small corporate grant
is for a cultural institution. The financial security of an arts organization
may be ensured by a reputation for being artistically acknowledged and
having artistic significance, and corporate support is indeed one factor in
fostering this reputation: the business world participation implies that this
organization is a worthy recipient for more non-profit and public funds.
The support by a prestigious corporation is an effective catalyst for more
funds from other corporations and funding sources outside the business
world.
Corporate support is also essential for the creative edge, the additional
innovative cultural quality of an arts organization that can be achieved
only by additional resources, resulting from aggressive fundraising that
looks for finance from every potential sponsor. Innovative arts productions
which are creative above average need commensurate funds, and these
funds often come from sources outside the (often public) funding main-
stream. Thus, without corporate support, most arts institutions may
survive but not develop their attractiveness. The arts institutions’ rationale
for corporate sponsorship is to increase the programme’s attractiveness to
the public. Corporate support may also be necessary as a fast response to
a sudden financial emergency; without quick, non-bureaucratic response,
many arts institutions might not survive a crisis. The function of the cor-
porate world, not as a supporter of sound arts institutions but as a rescuer
of those which are financially jeopardized, seems to be becoming more
important, especially in an economic recession.
Another motive for arts institutions to ask for corporate support is the
conscious effort of the non-profit leadership towards a ‘mimetic adjust-
ment’, that is, the reorganizing of an arts institution’s management accord-
ing to the more efficient standards of the corporate world. More and more
management in arts organizations has to and wants to display business
capabilities. They need these capabilities to receive corporate funds. An effi-
cient management is an important evaluation criterion for corporations
contemplating a contribution. The arts institutions know this and adjust
accordingly (DiMaggio and Powell, 1991).
More a cause than an arts institution’s motive for more corporate
Corporate arts sponsorship 145

support is the recent surge of expensive ‘special exhibitions’ in museums,
and other ‘extra events’. The support of well chosen major arts exhibitions
can attract scores of cultural visitors: big corporations make large grants
for special exhibits, especially when they expect high visibility through a
‘blockbuster show’. An increasing number of museums rely on special exhi-
bitions to attract visitors and to secure their revenues. By underwriting
these specific shows, corporations help to foster a new dependency.
However, most scholars in cultural economics describe and analyse the
potential benefits and motives for the corporate side. The long list of poten-
tial motives can be consolidated into four major ideal types, notwithstand-
ing partial overlapping or overlooking of sometimes idiosyncratic motives
(O’Hagan and Harvey, 2000). The four main motives for corporate arts
support can be labelled as the neoclassical/corporate productivity model,
the ethical/altruistic model, the political model, and the stakeholder model.
In the following, I will explain this taxonomy of motives.
3
The neoclassical model comes closest to the main commercial purpose of
corporate sponsorship, to increase the returns to a company. According to
this model, even corporate philanthropy has the underlying purpose of
raising profits. Corporate sponsorship has the immediate objectives of
improving product sales, service sales, the corporate image and other public
relation goals. Subsequently, donations can also symbolize and extend the
market position of a company. The visible ability of a corporation to
donate corporate income creates the image for competitors, suppliers and
other organizations on the production side that this company is economi-
cally in good shape. Above all, this kind of donation is supposed to
promote sales. For instance, wealthy clients of the arts are a profitable mar-
keting target group, a courted consumer cohort, and arts sponsorship is a
way to get access to them. Even indirect gains, such as improving employee
morale or community relations, may be just means to the end of rent
seeking, and profit raising, respectively. In this context, corporate arts con-
tributions improve the employee’s quality of life, enhance the employee’s
bond to the company (‘corporate identity’), promote working morale in the
company and, thus, increase the effectiveness of the company in yielding
profits. Owing to its narrower business nature, corporations often omit this
concept of corporate arts support when talking about these activities. The
‘bottom-line’ deliberation is sometimes indistinguishably exchangeable
with commercial advertising. Therefore, in many countries, these ‘chari-
table’ contributions are not tax-deductible but business expenses, and they
are often also taxable revenues for the non-profit organizations (and there-
fore costly to some degree for the receiving side).
The ethical model emphasizes corporate social responsibility in a world
increasingly steered by powerful businesses. The ‘good corporate citizen’
146 A handbook of cultural economics

idea becomes the cornerstone of a management culture, mostly induced by
corresponding personal attitudes of the senior management, the chief exec-
utive officers (CEOs) of a company. The personal value orientation of the
CEO is the traditional factor in the decision to support the arts. Moral obli-
gations to support the geographically closest population, a personal satis-
faction gained from helping, and the wish to have contact with a vital,
creative world outside business are impulses for the decision. This individ-
ual value orientation is often shaped by the local social network of corpor-
ate leaders. The influence of the CEO in the final decision for corporate arts
giving has not diminished, but it is rarely a decision taken alone. The dis-
tinction between corporate (management) and individual (CEO) behaviour
is often difficult to establish. All in all, by creating or maintaining the image
of a sponsoring company as a ‘good corporate citizen’ this model empha-
sizes that corporations enrich the local cultural landscape and strengthen
corporate community relations with the local government, the other eco-
nomic actors, and with the population that often is also the potential
customership. The overlap of the ethical and the neoclassical models is,
therefore, obvious. By creating or strengthening the positive image of a
‘good corporate citizen’ for employees, customers and other business clien-
tele, it also works outside, creating the image of a successfully run company
for the market, that is, supporting the motives described by the neoclassi-
cal model.
The political model understands corporate arts sponsorship as a means
to create and preserve corporate power and autonomy, for example, from
other publicly controlled bodies and also from other powerful corpora-
tions. Corporations strive to limit governmental control over their activi-
ties by building and maintaining a positive climate for free enterprise.
However, this model includes a grain of social coercion. It includes adjust-
ments especially to peer company pressure regarding alignments in the
shape and scope of corporate giving, for example, to the arts, to a specific
‘donation standard’ of the local business world. Corporate giving accultu-
rates in a mimetic process to the norms of the dominant local business
network. This network as reference group is based on local corporate
leaders and it is more important for the shape and scope of corporate dona-
tions than the donation patterns of other companies in the same industry
somewhere else. The significance of this local mimetic adjustment, the
process of keeping up with the other corporate Joneses in the neighbour-
hood, can be illustrated by the development of Whitney Museum branches
as corporate art galleries in New York City:
It started eleven years ago, when [we] ...installed a satellite museum, the
Downtown Branch of Whitney. Then Philip Morris began to plan for a Whitney
Corporate arts sponsorship 147

branch in its new headquarters....When Champion International learned of
this plan, they decided to do the same....Now Equitable Life is planning to
install a Whitney branch in its new headquarters’ building, and ...another one
in a new Philip Johnson building. One branch begets another. (Business
Committee for the Arts, 1984)
In line with this acculturating function of local corporate networks is the
emphasis on the image as a ‘good corporate citizen’ in the home commu-
nity. The relations of corporations to the communities become more and
more important. For a long time, community effects of corporations were
seen only in the function of providing jobs. Now, corporations get actively
involved in community affairs. This involvement can be in open and trans-
parent ways, but also in hidden ways when community politics and plan-
ning issues are to be influenced.
Corporate support of local art facilities is considered as having an overt
and positive impact on the community, although there may be also some
covert and detrimental impact, especially if an oligopolization of local
power is the goal. For instance, Whitt (1988) shows the overlap of member-
ship on corporate boards of urban development organizations with corpor-
ate boards of urban arts organizations. With 85 per cent of the members
being on the same boards, this proportion is higher than among other
umbrella organizations such as health, community affairs or education.
Corporations do not just give money, they also seem to connect these chari-
table contributions with an influence in urban development decisions.
Subsequently, the distinction between, for example, the political model and
the stakeholder model vanish, especially when being applied to the impacts
on a specific locality. The main rationale behind the political model is the
influence on political community decisions through the support of arts
institutions. Support for art facilities and artists does not only enhance the
cultural life of an urban setting but also affects the economic and social
structuring of communities. This may shape, for example, the broader
service job-oriented post-industrialization of a region, larger urban devel-
opment projects, the renewal of smaller neighbourhood areas, or so-called
‘business improvement districts’ (BIDs). The moment major corporations
no longer regard urban planning as the exclusive domain of elected govern-
ments (especially if headquarters of these corporations are located in the
area under consideration), the difference between the political and the
stakeholder models blurs.
The stakeholder model emphasizes the perception of corporations as
being influenced in a feedback loop by their own corporate behaviour
towards the outside world. Corporations do not only seek to influence, they
are themselves influenced by other interest groups. This model particularly
has a substantive overlap with the political model. Corporate arts support
148 A handbook of cultural economics

is never a one-way street. Since arts organizations raise creativity and com-
munity images, this improvement also benefits the supporting local corpo-
ration. As a consequence, the community, for example, provides a better
skilled personnel basis, a better outside (regional, national, or interna-
tional) reputation for the corporate location, or – because of an attractive
cultural environment for more affluent residents – customers with a higher
purchasing power. Local business uses the promotion of this positive com-
munity image – specifically the image of an attractive cultural landscape –
to attract a highly skilled labour force to the corporate location. A qualified
labour force is necessary for a company that wants to stand in a competi-
tive national and international high tech and service sector economy.
Educated employees demand not only a satisfying working environment
but attractive cultural and recreational offerings near to their residences.
The ‘new urban sociology’ can contribute to the knowledge about this strat-
egy behind corporate arts contributions. Competing for qualified labour in
a ‘high tech’ and ‘high service’ environment, the business world today is
increasingly interested in ‘urban amenities’. An urban environment with a
high quality of life – including cultural amenities – will lure highly qualified
people (that is, potential personnel) close to the corporate location.
Thus corporate arts support is a strategic means of improving the pool
of potential qualified employees by enhancing the economic and cultural
situation of a locality via improvement of the attractiveness of urban arts.
Apart from this rationale there is also a more direct corporate reason to
support the local arts: investing in real estate and improving yields from this
economic activity with the help of the arts. Arts organizations are a means
to this end, rather than partners in economic growth and urban develop-
ment. However, the Business Committee for the Arts (1984) claims that this
interaction is a partnership that ‘animates and enlivens dead and otherwise
negatively perceived areas’. Non-profit leases of inner-city warehouses, for
example for theatre groups, artists and craftspeople, ‘brings hundreds of
“new” people a week in our area of town. [This revitalization] ...helps us
lease . . . office space a block away’. Subsequently, local corporate boards,
urban development boards and boards of major arts institutions are
strongly intertwined. Thus corporations connect their art contributions to
an influence in urban development networks that decide community devel-
opments.
The interconnection of political and stakeholder motives in a specific
locality needs more consideration because corporate arts support is not
equally disseminated across the country. Not only the big metropolitan
areas along the East Coast are places with many high arts facilities (relative
to the population size); specifically, smaller metropolitan areas in the
West and South of the United States have a high density of higher arts
Corporate arts sponsorship 149

institutions because, in these locations, the decision-making local elites
prefer certain high arts institutions. But not all businesses everywhere are
equally committed to this pursuit. What lessens or even precludes the
involvement of corporations in the arts in some places? On the topic of
general generosity, Wolpert (1993) shows why some places in America are
more generous in a secondary data analysis of local generosity that includes
corporate giving as the dependent variable and population size, wealth,
employment, corporate presence and welfare ideology as independent var-
iables. He concludes that generosity is higher where larger corporations are
prominent, income is greater, unemployment is lower and the welfare ideol-
ogy is more liberal.
According to Useem (1988), the significance of the local economy is
more important than the significance of national or international influenc-
ing factors for corporate arts contributions: ‘Perhaps the most significant
...factor shaping a company’s giving level is the local attitude of busi-
ness toward contributions. Regional business communities evolve distinct
climates of giving among their members’ (ibid., p.83) A comparison of
company ratings of corporate giving criteria reveals that the local geo-
graphic impact of an arts institution significantly increased in importance
as a corporate criterion for evaluating arts requests.
An examination of the scope and structure of local corporate arts support
has to include local economic factors because they affect the local ability and
desire of companies to support the arts. One important economic factor
affecting local corporate arts support is the degree of post-industrialization,
that is, the transition from a manufacturing sector economy to a service
sector economy. Corporate arts support is higher in metropolitan areas
where the population is better educated and the local service sector generates
more income than the local manufacturing sector. Corporations of the man-
ufacturing industries are mostly indifferent towards arts support. In con-
trast, corporations of a highly qualified service sector are supportive of the
local arts (Kirchberg, 1995).
All models of motives for corporate arts contributions have considerable
overlaps. Corporations themselves are not always aware of them, or do not
mind (at least not openly) these ‘academic’differences among their motives.
They often do not even distinguish between charitable contributions and
taxable sponsorship expenses. For instance, in Germany, in a survey of 204
big corporations on social cause sponsorship, more than 90 per cent did not
distinguish charitable contributions from commercial sponsorship because
they regarded their activities as meeting both objectives (Kirchberg and
Reibestein, 1999).
150 A handbook of cultural economics

Notes
1. Source for US data: AAFRC Trust for Philanthropy (1990–2001). The share of corporate
contributions to the arts is primarily based on Conference Board data reported in
AAFRC Trust for Philanthropy (1990–2001).
2. Source for German 1989 and 1995 data: ifo (1995); source for German 2000 data:
Arbeitskreis Kultursponsoring (2000). Additional data on European arts sponsorship are
available in Sauvanet (1999). For an international comparison of corporate arts sponsor-
ship, see Martorella (1996).
3. Young and Burlington (1996), quoted in O’Hagan and Harvey (2000), have developed these
categories. Galaskiewicz and Sinclair (quoted in AAFRC Trust for Philanthropy) have
developed a similar four-tier model of motives. While Young and Burlington talk about a
‘neoclassical model’, Galaskiewicz and Sinclair talk about ‘commercial partnership’. The
equivalent to Young and Burlington’s ‘ethical model’ is Galaskiewicz and Sinclair’s ‘civic
partnership’. Young and Burlington’s ‘political model’ is similar to Galaskiewicz and
Sinclair’s ‘strategic partnership’, and Young and Burlington’s ‘stakeholder model’ is some-
what similar to Galaskiewicz and Sinclair’s ‘philanthropic partnership’.
See also:
Chapter 38: Marketing the arts.
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Corporate arts sponsorship 151