Art & Philanthropyby Brigitte Des Rosiers
/ December 1, 2014
Do philanthropy and art mix? For some, they harmonize well. Symphony orchestras and national museums already benefit from a philanthropic tradition that is solidly established, with their fundraising luncheons, balls, and galas and the support they receive from major donors. But how can a small arts organization, required by the current fundraising system to increase revenues, develop the same advantages when management isn’t in the habit of rubbing shoulders with rich benefactors?
According to Joanne Villemaire of the philanthropy consulting firm KCI, you must first look to those closest to you, including members, friends, and existing donors who would be willing to give a little more to the cause. A change in attitude is necessary. For Villemaire, organizations should move away from a transactional approach to one focused more on individual relationships. Using a transactional approach, the donation process is limited to a closed exchange that begins with the donation and generally ends with a message of thanks. An interpersonal approach stretches out over time. It requires an interest in donors and the establishment of a long-term relationship. “You have to find the devotees and strengthen the link between them and your cause; you have to know how to inspire them,” Villemaire explains.
A small organization must have a good team. Members of the advisory committee should be major donors and should promote the company among their networks. “We bring in accountants and lawyers, but we sometimes forget that we need people who are good with communication, marketing, and fundraising,” says Villemaire. All this requires investment. Because of low salaries, staff turnover is significant, and relationships between the donor and the organization are sometimes interrupted.
Recently, we’ve been seeing another change. “Companies no longer want to talk about corporate philanthropy. They want a partnership that is mutually beneficial,” explains Villemaire. “The contribution can take many forms, but it’s a partnership. Those who succeed are those who have this openness and flexibility.”
Don’t small organizations then risk losing control or seeing their mission change? Will arts organizations have to gear their activities toward social or educational objectives in order to interest companies that wish to position themselves socially? According to Villemaire, such social activities could be a way forward. Organizations should reflect on these transformations in order to avoid jeopardizing their missions.
It Pays to Give in Quebec
Donors shouldn’t hesitate to ask for all the tax credits to which they’re entitled. Quebec has implemented the most generous tax incentives in the country, probably to create a philanthropic culture that the province still lacks.
Every Canadian donor has the right to tax credits, which lower the actual cost of the donation. The federal government offers a 15% credit on the first $200 of the total donation amount, and 29% for additional money donated. So $500 in donations means a credit of $117. On top of this are the various provincial tax incentives. Quebec looks pretty good: a donation in Quebec is less costly, offering 20% for the first $200 and 24% thereafter. For a $1000 donation in Quebec, the donor receives $450.77 in tax credits (after calculating both federal and provincial credits), while the credit would be $450 in Alberta, $422.80 in Manitoba, $389.72 in B.C., and $361.38 in Ontario.
The Super Credit
The Canadian government recently introduced the “First-Time Donor’s Super Credit”, which adds an extra 25% in supplementary credits to existing credits (for families who have not claimed any donations in the five preceding tax years). In 2014, over 95,000 donors were able to deduct a combined $20 million from their income taxes thanks to this super credit.
For example, imagine you want to make a donation for the first time and you give $1000 to the musical ensemble of your choice (or your favourite magazine!). By taking advantage of the super credit, you can help a cause that’s close to your heart while taking advantage of perks that some organizations offer to those who donate $1,000: as annual memberships, special events, offers to attend rehearsals, etc. Meanwhile, your donation probably only costs about $300!
For Imagine Canada, the scope of this measure is still too narrow. The organization is campaigning the government to adopt the “Stretch Tax Credit”. This measure would increase the tax credit if the amount donated in a year exceeds the amount given in the past. For less than $200, if the amount donated has increased from the previous year, the credit would increase from 15% to 20%. The measure would benefit small-time donors, and we’ve seen above how important they can be for small cultural organizations. To be continued!
Joanne Villemaire was a guest speaker at National Philanthropy Day, organized by the Foundation of Greater Montreal on November 13.www.imaginecanada.ca/thestretch
Sponsorship in Quebec
by Marcel Lemay
Certain measures were introduced to Quebec’s Taxation Act by the last government. The goal was to really encourage the practise of philanthropy, which is quite rare with regards to culture, and to encourage sponsorship. The most popular aspect might be a supplemental provincial credit of 25% for a first-time “important donation” to a cultural organization made between July 3, 2013, and January 1, 2018. For the purposes of this credit, an important donation is one of at least $5000 and not more than $25,000 given once in the same year. This supplementary credit reduces the cost of a $5000 donation down to $1371 and even to $1162 if the amount is eligible for the federal credit for a first donation. Therefore, taxpayers have an incentive to consolidate their charitable giving into a single cultural organization. Other measures encouraging sponsorship were announced in the same document, notably a tax credit for 30% for a donation of at least $250,000 given to a cultural organization, as well as increased credits for gifts of works of art and an improvement of the rules surrounding the gift of a building designated for cultural purposes.
Deductibility for Concert Subscriptions
When tickets to sporting or arts events are purchased and used by a taxpayer as part of business operations, the general rule is that only half the cost of these subscriptions is tax-deductible. But when it’s a subscription (three or more shows) to performances of a symphony orchestra, a classical or jazz ensemble, dance, opera, or theatre, or when 90% or more of the tickets to a single event of the above-mentioned categories are purchased in bulk, the entire cost of the tickets is deductible – but only in Quebec. This measure is a good way to motivate businesspeople to consume local cultural products for performance purposes. With regards to the tools of performance, they’re finally not just for the Montreal Canadiens anymore.
But beyond the costs and the incentivizing measures, the population and the world of business must realize that our culture belongs to us and we are all responsible for making sure that it is healthy and strong. We are collectively responsible for it. It won’t survive by itself, subject to the forces of competition and the free market; it’s everyone’s responsibility to help it move forward. And to all those who believe that we should cut funding to culture in order to support the “war effort”, I would answer with a quotation, falsely attributed to Churchill during WWII: “Then what are we fighting for?”
Marcel Lemay FCPA, FCA
President of the Board of Directors
Orchestre symphonique de Laval
Associate – financial services
Hardy, Normand, et associés SENCRL
Chartered professional accountants
Translation: Rebecca Anne Clark