Tate chairman and crossbench peer Lord Browne has called for the introduction of a period of “super incentives” to increase giving to the arts and for contracts to accompany state grants to arts institutions so that philanthropists can be motivated to fill the funding gaps.
The ex-BP chief executive John Browne was speaking at an Art Fund event at the Royal Society of Arts last night where he outlined his vision of what is needed to create a 'new age of philanthropy'.
His speech advocated tax incentives for philanthropy over tax hikes for the rich, and put forward the argument that private philanthropy “fails” less often than government or market intervention in supporting the arts and society.
Arts funding has been badly hit by government cuts, with the Coalition government announcing in its first spending review in 2010 a 29.6 per cent cut to the budget of the Arts Council, which has subsequently reduced the number of institutions it directly funds.
In talking about the increased pressures on funding to the arts, Lord Browne said that the rich should be encouraged to redistribute their wealth towards philanthropy in this area.
Super-incentives to improve tax efficiency
He advocated the development of “a period of super-incentives”, which may introduce people to a habit of giving, such as exists in the United States, by improving the tax efficiency of donations. He added that philanthropy could also be boosted by increased recognition of donors.
The crossbench peer said that rather than tax the wealthy at a higher rate in order to plug the funding gaps in arts and culture, philanthropy can do a much better job.
“We need to compete to attract internationally mobile capital, and a tax rate that is too high would reduce the potential for entrepreneurial growth. Besides, against a backdrop of rising inequality, asking the rich to give more is a decent way of creating a more balanced society,” he said.
“In a competitive world, the power of taxation to redistribute to some of the greatly needed parts of a civilised society has run its course.”
He said philanthropy may also be encouraged by government placing stipulations in a contract as to what its funding to arts organisations can be used for.
Ill-defined link between grant and services
As Tate chairman since 2009, Lord Browne said that his organisation provided a wealth of public services, with the help of an annual state grant, but that “the link between the grant and the services provided is ill-defined”.
“A better way of doing this would be, therefore, to specify the terms under which payments are given for clearly identified public services, on a long-term fixed contractual basis,” he said.
This contractual restriction on what an institution may use its state funding for, Lord Browne argued, would create a clear space for philanthropists to intervene.
The additionality of what philanthropists create through their giving would then be so much clearer, and they would be more likely to give,” he said. “That is important, because while both governments and markets fail, a market of individual philanthropists would fail less often than the government in its choices.”
Lord Browne, who is also managing director of energy private equity firm Riverstone LLC, concluded: “Change will come by creating the space for private philanthropists, by providing the right incentive structures, by setting the right tone from the top, and by identifying and celebrating role models.”
