Pearle* Conversations: Isabel Vidal from FAETEDA on sponsorship and patronage

The federation was established in 1996 with the aim of structuring the sector and becoming an essential interlocutor with public administrations, at the state and European level. It is currently composed of 19 associations that represent more than 500 companies, production companies, private theatres, and dance venues throughout Spain. 

Isabel talked to us about the mechanisms of patronage and sponsorship in Spain, how it is embedded in the cultural sectors’ funding mechanisms and the recent developments on the reform of the law on patronage in Spain. 

Spain has a strong sponsorship policy. Could you briefly explain the mechanisms of arts patronage in Spain, including the role of the private sector and cultural institutions? 

In Spain, patronage of the performing arts is a fundamental part of cultural funding and is based on collaboration between the private sector and cultural institutions. 

You can describe the mechanisms of patronage as follows: companies and individuals can provide financial support to the performing arts through donations, sponsorships or direct collaborations with theatre, dance or music companies. This support can include funding theatre productions, music festivals, dance performances or other performing events. In return, companies may receive recognition in event programmes, presence in advertising and other forms of visibility, which can contribute to the promotion of their brand. 

Cultural institutions, such as theatres, concert halls and dance companies, also seek sponsorship to finance their activities and productions. They may enter into partnerships with companies or individuals to obtain direct funding or in-kind support. Cultural institutions and the private sector are often the driving force behind culture in Spain and play an important role in attracting private sector investment and guaranteeing the quality and diversity of stage productions. 

To sum up, patronage of the performing arts in Spain involves close collaboration between the private sector, which provides the financial support, and the cultural institutions, which are responsible for the creation and execution of the performing productions. This collaborative approach is essential to maintain the vitality and diversity of the performing arts in Spain. And yet, we don’t have a patronage law that is useful, ambitious and that causes a real boost in the sector. 

What incentives are there to encourage greater private sector support for the arts in Spain?  

The Corporate Income Tax law (Law 27/2014, Art. 36.3) establishes the right to apply a deduction for investments in live performances of performing arts and music. In the case of live music and performing arts, the production and exhibition of these cultural shows at the risk of the producer generates a tax deduction of 20%. The basis for the deduction will be the direct artistic, technical, and promotional costs incurred in these activities. 

To be able to apply tax deduction for performances, sponsors need a certificate from the Ministry of Culture and Sports. They also need to reinvest profits: when they make money from these cultural activities in a given year, they need to put at least 50% of those profits back into activities that qualify for the deduction for cultural events. 

A third requirement is the reduction of the amount received for subsidies. An amendment to Article 39 of the Corporate Income Tax Act allows the transfer of these deductions for cultural events to third companies, in a transparent and clear manner. Sponsoring companies benefit from these incentives in exchange for their financial support for the production of culture.  

This new model of fiscal patronage has been in force since January 2021, and it is inspired by the system already applied by the autonomous community of Navarre for cinema. Under the new rules, the investor of a cultural event can deduct 120% of the amounts they have contributed to the producer of the event. This means that they get back all the money they have contributed, together with a capital gain. This new model allows large business groups, micro-SMEs and freelancers to participate as patrons of culture. 

You recently worked on a new law on patronage, what areas or aspects of the current legislation needed to be updated to further strengthen the relationship between the private sector and the arts in Spain? 

The reform of the law on patronage in Spain, was approved by the Finance Committee of the Spanish Congress of Deputies in April 2023 and is expected to come into force in January 2024. It introduces a number of significant changes to the legal framework for patronage. These changes are aimed at modernising and improving support for cultural and social activities through tax incentives. There are a few key aspects in this reform: 

- Stimulating Micropatronage and Increasing Deductions: the reform incentivises micro-patronage by raising the limit for tax deductions on donations by individuals and increasing the deduction percentage. To encourage sustained patronage, the deductions are increased even higher if the same amount has been donated to the same entity in the previous two years.  

- Extension of the Concept of Donations: the concept of donations is extended to include donations of services like advice and consultancy, advertising space in the media, donations for the rehabilitation of assets of cultural interest and donations of protected natural spaces or cultural assets of recognised authors, among others. This brings Spanish legislation in line with that of other European countries. 

- Exemptions for Non-Profit Entities: the reform expands the types of economic exploitation exempted when they are developed by non-profit entities in activities such as development and innovation, social and labour insertion and vocational education and training. 

The reform is fundamental for the third sector and non-profit organisations in Spain, as it recognises and supports the essential work they do in areas such as medical research, education, culture, environment and more. The approval of this reform is the result of the joint work of the Third Sector, which has been advocating for these changes for years and has worked closely with Congress and the Ministry of Finance and Public Function. The reform benefits non-profit organisations, but also gives citizens and businesses new incentives to contribute to causes of general interest. Such a change is expected to increase the level of contributions and support for these organisations, but the private sector demands greater ambition.