Any taxpayer resident in Estonia, be it an enterprise or a private person, is allowed for deducing the money used for private sponsoring of culture from the taxable income. However, there are upper limits for the tax-exempt donations. As to physical persons, they may not exceed 5% of the tax payer’s total taxable income. For legal persons, the upper limit is either 3% of all payments liable for Social Security Tax, or 10% of the year’s profits. The organisation to be sponsored should be included in the government’s list of public benefit organisations. These organisations are also allowed to pay tax-free grants that are based on a competitive application procedure.
Among the private organisations funding culture, the most important is the Estonian National Culture Foundation (Eesti Rahvuskultuuri Fond). It administers a number of donations made for specific purposes; the total sum granted for 2014 was 122 614 EUR. During latest years, this sum has been on the decline. The Open Estonia Foundation, financed by George Soros, has besides its other activities also granted some money on cultural projects.
In addition, there is a number of local and / or more specific cultural foundations, whose own capital, however, tends to be negligible. They act mainly as operational foundations, either as arm’s length bodies of local governments, schools and universities, or as financial administrators for private cultural initiative.