Context and background

The last two decades marked by the growing liberalisation and globalisation of the economy and the active technology development lead to the re-examining the role and function of the country concerning the culture and the financial sources.
In the period of constrain budgets, there is a strive for reduction of the direct budget expenditure and searching alternative financial resources for the development of the culture and arts. The drawing closer of the market and the mixed model of financing aims: to establish a more realistic link between the expenditure and revenue of the subsidised organisations and to avoid the appearance of an “uncompleted” markets of art forms with high fixed costs. In Europe, including the so-called “emerging markets” of the Central and Eastern European Countries (CEEC), this leads to the preference of indirect support and regulation (quasi-market principals, based on tax revenues and legislative regulations). The purpose is that the funds to pass through the market, as new market principals and stimulators are introduced.
 

Present situation

The general tendency in almost all CEE countries is the presence of restricted, non-stimulating macroeconomic conditions. That leads to a stable decrease of public expenditure for culture and cultural consumption.
The pressing need for financial stability is the reason for the introduction of the currency board in Bulgaria, Lithuania and Estonia. The regulative functions of the state budget have increased. Practically they have turned into the most important instrument for the governmental influence on economic processes of the country.  This became a restriction for the arts organizations in the time of implementation of new, mixed model of organization and financing, but still stimulating in the search of market solution.
For example, in Bulgaria in the transition period the following important changes took place in the model of the management and financing:
 

• At the Ministry of Culture were established five National Centers for Arts with the intention that they worked as “arm length”
• In the case of the performing arts a mixed model that includes financial participation of the municipalities substituted the centralized model of financing. This new approach exists only as a good will performed by the municipalities and does not include legislative engagements.
• Initiated were project subsidies, which is a competitive model of independent support outside the ownership form of financing.
• Besides the corporate sponsoring, private donations and foundations /according the expert estimation ranging from 3 to 10%/ new moment is the starting of the “Loan fund” for art.
• The establishment of the National Fund “Culture” is the first attempt for accumulation and distribution of financial resources by public funds.

In the CEEC from 1989 till now the governments gradually retreat from the owner model  (especially in the cultural industry) and develop mostly regulatory functions by the means of economical and legislative instruments. In the field of cultural industries the governments refuse support for organizational structures and are mostly orientated towards subsidizing the product.  This refusal of protectionism in some countries was sudden and created markets symbolic.  It was impossible to administrate market structures in the culture in situation of immature market relations of the national economy.

Withdrawal of the government without creation of stimulating economy environment led to loss of cultural capital and that means loss of public welfare.
 

EU dimensions

The economic and social significance of art and culture is constantly increasing in Europe. There are 7,2 millions employed in this sector with tendency to come at 22 millions in 2011 /in the broader cultural domain - by CEREC’ information/. The stimulating role of this sector concerning local and regional growth, stable development and social cohesion is widely acknowledged.

At the same time, the restrictive EU budgets are looking for alternative financing of the culture. The realization of this not easy goal begins with improvement of the legislation frame and reach to creation of special funds and lotteries. The big old problem is - there is no solution of the new model of partnership with business.

 The enlargement of Europe, besides stimulation, arouses the following criticism and challenges:
 

• The EU regulation concerning candidate countries has not specific cultural maters;
• There are some doubts about the effectiveness and financial provision of EU program for culture /Culture 2000/;
• The dimensions of the structural funds are not very clear in their part concerning the possibilities of the cultural projects to apply for funding;
• Project Aim:
• To determine the level of implementation and effectiveness of the market methods for financing culture in accession countries, and to formulate tendencies for their development in the process of EU enlargement.

TO:
1. Study and analyze the established market and quasi-market methods, forms and mechanisms for financing the culture of the CEEC.

1.1. Identify the specific tools and to evaluate the level of efficiency and effectiveness:
 

• tax based revenues and stimulative and protective legislative regulation;
• tax revenue accumulated by mechanism of special funds;
• revenue from special lotteries and other games;
• corporate sponsoring and individual donations;
• private and mixed funds supporting  art and culture;
• specialized loan funds provided by the third sector and banks;
• debt instruments, in which credit or guarantees are provided;

1.2. Study the perspectives for their development and possible barriers. In this aspect - to analyze the role of currency board /by comparative analysis Bulgaria – Lithuania/.

2 Collect and analyze examples of good practices for alternative financing of the culture of member countries from the European Union.

3. Evaluate the possibilities for the market principals’ implementation in the CEEC and to formulate the expected national specifics that are due to:
 

•  level of market structures and institutions, opportunities and barriers in the condition of currency board;
•  stage of formation of civil society – the effectiveness of the public opinion as cultural and political mechanism;
•  level of realization the significance of the culture as social and economical factor for sustainable development;
•  level of development of national strategies for cultural policy;

4. Analyze the impact of EU enlargement on national cultural strategies by evaluation of:
4.1. Potentialities for creation of European cultural area “example of the new business-arts paradigm” – joint research network, database, responding to the new needs of the enlarging EU;
4.2. Role of the multilateral bodies - Commission, Counsel of Europe, UNESCO for supporting the emergent cultural industries, encouragement for common project, development of comparative cultural studies;

5. Formulate scenarios and prognostic tendencies for development of new alternative structures and mechanisms of financing in the CEEC.
 

Fulfillment

For realization of the research objectives of the project it is recommendable that the scope of the concept “culture” is limited to the selected art sectors – performing arts and cinema & audiovisual sector. Thus the analysis would include not only living arts, which because of “Baumol problem” rarely survive on the free market, but also the cultural industries that are in many cases private market goods.

The countries chosen for comparative analysis belong to the category of the small European countries - small market – difficult economy of scale for cultural industries, closed linguistic society, common political priority /integration with EC/, different degree of readiness. These characteristics are good base for cross-country analyses.
 

 Activity Methods

A/
Investigation and data collection.
Analysis of statistic documents, reports, relevant publications by national and international NGOs, governmental cultural strategies and political programs.
B/
Comparative analysis, SWOT analysis.
Personal and E-mail interviews with focus groups, experts, and governmental officials, responsible for political decision making about financing culture.
C/
Policy proposals

Pfases

1. Elaborating typology of the basic market mechanisms, methods and instruments for financing of the culture.
2. Developing cross-country analysis of the established alternative sources in chosen CEEC.
3. Researching good examples for alternative financing in the EU countries.
4. Conducting analysis of the possibilities for applying in CEEC – evaluation of possible hybridization.
5. Realizing analysis concerning EU enlargement and possibilities for increase of the alternative (market&quasi market) sources accession countries.

6. Formulating prognosis and recommendations.
 

Implementation of the project results
 

• Policy paper for the Ministries of Culture in the respective countries, National Civil Forum for Culture, Parliamentary Culture Committee;
• Articles on the topic in selected Bulgarian cultural journals;
• Case studies and other materials based on the project findings, to be used in arts’ management and cultural policy programs in universities in Bulgaria and other CEEC;
• Summary of the main findings distributed throughout the cultural network CIRCLE;
• Round table with experts in the field and media representatives. Presentation of the results;