Corporate sponsorship or philanthropy is no longer the only private means of supporting arts and culture or social projects. Today, crowdfunding platforms enable individual people to become sponsors or patrons of such initiatives. So what are the main features of these ‘crowd patronage’ platforms and what is their business model?
Interview, during a L’Atelier numérique (L’Atelier Digital) broadcast on the BFM Business channel, with Thérèse Lemarchand, founder and President of Culture Time, an online crowdfunding platform designed to provide sponsorship for cultural or entertainment events, which made its first appearance two months ago, and Fabien Vie, a consultant working in the cultural sponsorship sector in France and Italy.
L’Atelier: So, Thérèse, why did you set up Culture Time? And what does this new crowdfunding platform actually do?
Thérèse Lemarchand: Culture Time is a crowdfunding sponsorship platform whose purpose is to allow anyone and everyone to sponsor arts and culture or educational projects. Culture Time emerged from our analysis of three observations. Firstly, in an economic climate where budgets are tighter, cultural events organisers need to broaden their sources of funding. In fact French tax legislation is one of the most favourable regimes in the world towards philanthropy and companies use this avenue a great deal, but as yet it is very little used by private individuals. Secondly, we noticed that recently there has been a tremendous surge in crowdfunding, which encourages people to get involved in a project and help finance it. We felt that we ought to be capitalising on this trend. Our third observation was that French people are rather enthusiastic about their culture and heritage.
You’re talking there about sponsorship, but what’s the difference between sponsorship and a philanthropic donation? What does Culture Time enable people to do?
Thérèse Lemarchand: Culture Time comes under the French legislation on philanthropy. The cultural organisations which display their projects on our platform are recognised as providing a public service, so the donations made by participants are tax-deductible. It’s a very favourable system; 66% of the total amount of your donation can be offset against your tax liability.
And does that encourage people?
Thérèse Lemarchand: Well, the fact that it’s tax-deductible is of course not the deciding factor when it comes to making a donation. You get the tax break afterwards. But worthwhile-looking projects will attract people and stir their desire to provide support.
Could you give us some examples?
Thérèse Lemarchand: Culture Time is still a very new platform. At the moment we have two permanent sponsorship projects running, plus we had a crowd patronage campaign for the Théâtre des Champs-Élysées [a theatre in central Paris]. For the Emperi music festival, a wonderful singing festival at Salon-de-Provence [in the south of France], online visitors are now being asked to sponsor the festival with amounts starting at €10. Depending on the amount you donate, you get in return a specified ‘reward’. Under the philanthropy legislation this reward is limited to €65 in value or 25% of the amount you donate. Rewards range from a ‘thank you’ to a lunch with the performers, a ticket to a rehearsal, and such things.
Fabien, do you think the tax breaks granted to philanthropists are a decisive factor?
Fabien Vie: No, as far as the general public or festival audiences are concerned I don’t really think so. I don’t think you can pitch your crowdfunding request on that basis. People who give 30, 50,100 or 150 euros aren’t going to be won over by a tax deduction. I think it’s more about striking a chord with people, arousing their interest. And it’s basically all about the online community, which isn’t talked about very much. We talk about ‘Everyman’ but actually it’s Internet Man – and Woman – who are behind this movement. So what we have to do is reach out to an increasing number of people, bring them together, unite them. We need to arouse their desire, the impulse to get involved. So crowdfunding depends a lot on communication.
Thérèse, do you agree?
Thérèse Lemarchand: Yes I do. It’s the project and the way we present and share the project with the general public that encourages people to get involved. And that’s the great strength of crowd patronage.
It’s much more than a financial gesture. It’s also about showing that you want to be part of somebody’s project. You’ll want to share your enthusiasm with your neighbours, who’ll tell themselves: “Hey, this is another way of buying into a cultural event.” And this synergy around a cultural experience is a key aspect. The promise we make to potential sponsors is: “Grasp your heritage, experience it from the inside. Be a citizen who gets involved. Participate!”
So don’t you tend perhaps to highlight organisations that have the skills to set up an incisive campaign? At the end of the day doesn’t this squeeze out all those who are organising their own little projects who have neither the time nor the skills to really promote their projects and so perhaps garner less money than the larger bodies?
Thérèse Lemarchand: Oh, there really is room for everybody. Crowdfunding is a real phenomenon. There’s a tidal wave of finance available nowadays, with an estimated increase of 2.1% in France this year. In 2013 €20 million was pledged on reward-based crowd sponsorship platforms in France and $5 billion was raised worldwide from the various forms of crowdfunding – credit finance, equity finance or rewards-based funding. The general crowdfunding platforms are there to promote projects run by individual entrepreneurs who are looking to unite a specific community to help drive their project forward. We decided to create a specific cultural sector platform because we believe this will add value in terms of community spirit. We thought it was perfectly feasible to create a patronage community around arts and culture. These two concepts – one based on a particular field or sector and the other a more general platform – can happily exist side by side.
Fabien Vie, do you agree that a platform focusing on a particular sector is likely to be more effective than a general platform?
Fabien Vie: Well, that‘s something we don’t yet know. We’re still experimenting. This is what’s so interesting about it. I think that part of the crowdfunding movement will move in this direction. But in France today there are over 200 crowdfunding platforms. So there’ll come a moment when there’ll be some consolidation. Personally, I would prefer to see people with worthwhile business projects getting together, working together, collaborating rather than each person working in his/her own little patch.
And you think this is what’s needed to ensure a viable business model in the long term?
Fabien Vie: Today France is very well-placed in terms of crowdfunding. The major platforms such as Ulule, KissKissBankBank and others are starting to become known internationally. But there’s a huge cannibal around in the United States by the name of Kickstarter, which is behaving rather along the lines of Google, Amazon, Facebook, and Apple. So we’ll really need to strengthen our major platforms in France if we want to ensure they remain viable.
But isn’t crowdfunding just a second-best option to traditional financing that’s available today? Don’t people decide to go on to crowdfunding platforms because they haven’t managed to raise the funds they need from traditional financial sources?
Fabien Vie: Not at all. Crowdfunding should be seen as a supplementary instrument, an instrument which is available to owners of cultural or entertainment projects, organisers, or established companies in the entertainment field to appeal to the public. It’s a way of attracting people, getting a reaction. It could be used as part of a cross-media project. We need to see crowdfunding as part of a communication strategy.
Thérèse, do you agree?
Yes, I really believe this is a new form of financing which complements other current sources of funding. It’s another way of getting to the same objective. It helps to create relationships and promotes synergies between corporate sponsorship and personal patronage. What I would underline is that crowd sponsorship is three things: a source of finance, a sort of public election process, and a communication tool. The project-based approach is very different from the way things have been done previously because major arts and entertainment firms take a much more ‘corporate’ approach to communication. Cultural patronage creates a much stronger link between the contributor and the cultural heritage project that s/he decides to support.