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The Financial Crisis and its Effects on Public Arts Funding

Observations by Andreas Joh. Wiesand (updated in July, 2011)

Is it pure coincidence that, 5 years after the General Assembly of UNESCO adopted its Convention on the Protection and Promotion of the Diversity of Cultural Expressions, one of the cornerstones of this document is already put into question by many of the signatory states? I'm referring to their "sovereign right to formulate and implement cultural policies" that include, in particular, "measures aimed at providing public financial assistance" and "establishing and supporting public institutions" (Art. 5 and 6). To defend this principle - or "exception culturelle" - against the World Trade Organization (WTO) and others who insist on a pure free-market system without financial action or interference on the part of public authorities, may indeed become redundant if it is not invigorated by corresponding practice. Recent severe cuts affecting cultural budgets in a number of European countries seem to point in that direction. On the other hand, we cannot really speak of a uniform trend here: many countries and cities actually report increases, despite (or even because!) of the global financial crisis...

In 2009, the CultureWatchEurope platform of the Council of Europe conducted a survey among Member States on funding trends for culture, asking also about possible strategies to safeguard cultural budgets in times of crisis. Results of the survey, covering 21 countries, were summarized as follows:

"13 of 21 countries envisage an overall reduction of budgets for culture and heritage as a possible short or medium term consequence of the financial crisis, and one country partial reductions. 52 % (11 countries) envisage cuts in budgets of major cultural institutions, and nine mention reductions to subsidies of independent art and cultural organisations. Twelve countries envisage cuts to cultural infrastructure projects. On the other side, eight countries could imagine additional finance for infrastructure projects to stimulate employment, whilst only 17% (5 countries) could see an increase in the investment in creative industries to help generate employment.

The saving policy in cultural institutions may be implemented at the expense of reducing the number of activities and events, and diminishing quality, impacting on the consumption of culture and decreasing possibilities for Europeans to participate in cultural life."

However, the trend does not seem to work in the same manner across Europe. The CultureWatchEurope survey demonstrated already that some countries, e.g. Finland, France or Slovakia, actually planned to financially stabilise the cultural sector. As described in the Report, "in Luxembourg some new projects will be launched earlier than initially envisaged, in order to strengthen the cultural sector during the crisis."

At the 2010 CultureWatchEurope Conference in Brussels, Péter Inkei (The Budapest Observatory) sketched a broader picture [] of the effects that the economic crisis might have on the European cultural landscape, including on the different branches of the arts and cultural industries. For him, "the real issue is to find out whether the effects will lead to fundamental, lasting changes in Europe's cultural environment." He concludes:

"We can hope less and less for the simple re-establishment of the status quo. Is then the crisis evidence of a crucial, decisive period in the life of western civilisation, an end of an era, the phasing out of some of the basic features of capitalism, especially its liberal, postmodern variant? If this is the case, then the question is not just how culture will survive the transition period, but rather whether culture is an actor in these historic transformations."

Back to the state of public budgets: The monitoring data that are available from the Council of Europe/ERICarts Compendium of Cultural Policies and Trends in Europe [Chapter 6.1 and 6.3 in the Country Profiles] are based - for methodological reasons and in order to sustain comparability - on official statistics, both from the national and regional/local levels. The inevitable consequence is that these are, in most cases, two or three years old. More recent data are, nevertheless, provided by some of the authors as indicators of latest trends: They show, for example in the Czech Republic and in Portugal (state level), that in some countries cuts came already into effect before the global crisis really started to influence national public budgets. Legally established arts funding bodies did not escape the current austerity measures as demonstrated in the country profile from Ireland, where the Arts Council faces a 12% reduction of its budget.

Another, more descriptive overview of the situation in different European countries was published, in October 2010, by SICA, the Dutch Centre for International Cultural Activities. It arrived at a pessimistic outlook:

"None of the countries is currently in a position to provide a full picture of the impact of the economic crisis on cultural budgets. Cultural platforms, networks and observatories, including Lab for Culture and IFACCA, are monitoring developments, but much of the information available dates from the first half of 2009. Even then, prospects were far from positive, but the general expectation was that the subsidised sector in particular would see only limited effects. One year on, the situation appears to have worsened although hard evidence is still thin on the ground. What is certain is that cuts have been announced across the board, but these have not all been implemented so far. The sword of Damocles is threatening the whole of European culture and in some countries it is hanging from a particularly thin thread in view of the (impending) elections.

Cost-cutting can be direct or indirect. Almost everywhere, ministries are cutting their subsidy schemes for cultural institutions. At the same time, cultural budgets are threatened by cuts in the government funds used primarily by lower government authorities to finance their cultural policy, as is the case in the Netherlands with the Municipalities Fund (Gemeentefonds). Local government authorities face difficult decisions: should libraries stay open? If so, the swimming pool must be closed. For politicians, culture is just one of many areas where savings can be made. Those in favour of government support for the arts are few and far between and tend to keep their heads down when every vote counts."

Experienced observers [Christopher Gordon and Peter Stark in a supplementary report to the House of Commons inquiry into "The Funding of the Arts and Heritage", November 2010] describe similar negative tendencies from the UK, where the share of public resources attributed to culture - which has increased over the last 15 years, but now experiences dramatic 25-30% cuts following the last elections - focuses increasingly on major institutions and activities based in London, at the expense of the rest of the country. This case as well as the budget policies for the arts and/or media announced after recent elections in the Netherlands and in Hungary even suggest that some of the cuts are less a result of the financial crisis and more one of political or ideological preferences (as pointed out in the title of a report on the Dutch situation, published July 8, 2011, by the Frankfurter Allgemeine Zeitung: "High culture? That's just a leftist hobby").

While cuts in public budgets for culture are, obviously, on many agendas, there are other countries which currently even report an increase, despite the financial crisis. A new report - Results of a 2011 Survey with Governments on Culture Budgets and the Financial Crisis and Culture - presented by Péter Inkei in April 2011 at the Council of Europe Steering Committee for Culture indicates that the impact of the crisis on public budgets for culture is indeed less uniform than expected. 9 out of 21 countries with comparable results stated, between the years of 2009 and 2011, losses in their regular budget plans ranging from -4% (Austria) to -26% (Greece). On the other hand, 9 countries actually reported increases in their financial appropriations for the arts and heritage, ranging from +5% (Belgium, French Community) to +38% (Ukraine). In three countries, the regular budgets remained approximately at their previous level.

For example, increased revenues from lotteries in Finland enabled an augmentation of the current budget of the Ministry. Less surprising is that the government of oil-rich Norway tries to maintain its self-proclaimed goal of spending 1% of its budget for culture - one of the highest per capita in Europe. One could add the German example where, at least on the national level, the Federal budget for culture has constantly increased during the past decade and again in 2011, since the State Minister for the Arts and Media at the Chancellor's Office succeeded to secure a 27m Euro or 2.4% raise. Clearly, things look different in some German cities and on the regional level (Länder), which account for a much larger share of the overall cultural budget. Here and in other countries, cuts tend to hit non-established activities harder than those that are budgeted regularly. On the other hand, as could recently be seen in Hamburg, prestige infrastructures such as the new Elb-Philharmonie - planned during the "fat" years mainly for the purpose of "city branding" - can have cruel effects also for the city's traditional arts institutions such as theatres and museums.

Let's stay, for a moment, at the local level: At its Turku Forum in March 2011, the Eurocities network discussed a survey that was conducted earlier this year. 16 cities answered the survey, including Bergen, Bologna, Copenhagen, Dortmund, Dresden, Ghent, Gijon, Gothenburg, Helsinki, Krakow, Leipzig, Nantes, Newcastle, Novi Sad, Rotterdam and Torino. The main result has been that in a majority of these cities, the cultural budget did not significantly change or even rose from 2008 to 2011; only 4 cities reported a decrease. While the future of public funding is seen a bit less optimistic, the general experience during the past difficult years has been that the cultural budgets did not experience disproportional cuts, on the contrary: in many cities the share for culture in the overall city budgets - ranging between 3% (Rotterdam) and 14% (Nantes) - actually rose. This should indeed be the yardstick to use in future discussions about budget developments, whether on local, national or European levels.

Needless to say, budget figures such as those just mentioned do not exclude sudden emergency cuts of public expenses. For example, recent amendments prepared by the Slovenian Government foresaw cuts in the budget for culture amounting to € 38 million (or 18%). While in this case, protests and intense lobbying will probably result in less dramatic reductions in September 2011, a general problem mainly in parts of Central and Eastern Europe seems difficult to solve, especially in the performing arts: How could public institutions - which are often artistically "static" and still state-controlled - come to better terms with a growing and more vivid, but financially weak, independent arts scene, as is increasingly the case in some Western countries (which have of course other problems to solve, including but not limited to the current economic functionalisation of the arts or the massive growth of fund-seeking initiatives during the last three decades)?

On the one hand, this would involve solving legal, administrative and fiscal issues, including granting more artistic and financial autonomy also to public institutions as well as reducing the number of "state servants" with lifetime contracts. On the other hand, the whole concept of public service in the arts and media may have to be revisited, however without endangering important infrastructures and its main mission: the provision of professional quality output that contributes to both identity and innovation in a society, independently of political or market constraints. Clearly defining cultural financing as a positive task of national governments, which is to be shared with local / regional authorities and complemented by project funding from private or European sources as well as entrepreneurial activities in their own right (e.g. in the book, music or art market or in film production), may help to clarify things further, particularly if this will be backed up by professionalisation strategies.

Assessing the overall trends and proposed remedies, we cannot escape two conclusions:

  • First, the ongoing financial crisis cannot be taken as an excuse for above-average cuts in the arts and heritage (under the motto: "All do it, so let's do it too"). We clearly see quite a number of state and city governments acting "countercyclical", because they know that a diverse and productive cultural environment can provide the spirit and important tangible contributions towards overcoming the present difficulties faced by governments, civil society and economic players.
  • Secondly (and probably more important): The future of cultural budgets clearly depends on the backing "culture" is able to get from larger parts of the population and, consequently, in political circles. Where cultural policy is not firmly rooted in the multiple demands of the public - or where the arts are still being conceived as "elitist" - and where the important role of arts, media and heritage activities for the social, educational and economic development of a society is not fully recognized, a change for the worse cannot be excluded, even after the current financial storm calms down.

As Péter Inkei reminded us, a change for the better may only be achieved if artists and other cultural professionals, together with an informed 'culture public', accept to play a more active role on the diverse political stages.

Andreas Joh. Wiesand - Executive Director, European Institute for Comparative Cultural Research (ERICarts)



Added: Thursday, 21 July, 2011 12:22 GMT+2

Great, very understandable article, and the conclusion, although a little obvious, is dead on. There's no avoiding politics these days as it has invaded our daily lives on all levels. Some would even call it a culture war, and I find that for the most part accurate. We have to fight to preserve and cultivate our cultures on all levels, articulating our values especially when they contrast with the dominating values of the well-moneyed interests, who frankly have caused and continue to cause so much misery for so many people on nearly all levels. One important question that is always overlooked in the midst of this crisis when people talk about budget shortfalls and monetary crisis is: Where did all the money go? It didn't just disappear, did it?

tom lee, Shanghai, China

Added: Tuesday, 14 December, 2010 0:32 GMT+2

Dear Andreas, I m just back from Berlin - quite a rumor mill. The German government decisiveness to reduce the public debt will force the Laender and the cities to eliminate their debt in the next 4-5 years. Even if this is a plausible goal (????) it cannot be achieved without substantial cuts in the cultural subsidies. Thus, are the German cultural organisations to bleed in 2013-15 just as the Dutch counterparts, to be hit by the 200 mln eur reduction of the national cultural budget in 2014-15? The Irish , Portuguese, Greek and probably Spanish cultural institutions will suffer much sooner, joining the protracted agony of the Italian public culture. Does it mean that the economic crisis might become a vague memory in a few years but by then the cultural crisis will become a dramatic reality? Kind regards Dragan Klaic (Amsterdam)

Dragan Klaic, Netherlands