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Sponsorship is Dead! Long Lives Corporate Cultural Responsibility

How are companies earning trust through cultural engagement? Money for “publicity”: this over-simplistic marketing principle that underlies any sponsorship agreement is increasingly losing its attractiveness for corporate communications. Here’s the thing: today, entrepreneurial cultural engagement is less about image or about customer loyalty than it is about the central asset of trust. Hence, the idea of corporate cultural engagement has to be rethought. Business logicians of capital have to learn to think in culturally relevant terms and the artists have to see the economic externalities of their actions as a means of securing subsistence.
 

The astonishment was great in Great Britain, the European mother country of sponsorship: this January, following the revelations of a multiyear lawsuit concerning the obligation to provide information, The Guardian found it was still worth publishing a particularly alarming analysis two months later: on average, the oil giant BP had paid a mere 245,000 pounds (338,169 euros) to the Tate Modern between 1990 and 2006 for logo placement. Per Year!

The retrospective publication of the contribution by the unloved raw material multinational, which shocked the British for its measly sum, led to a complete evaluation of funding in the United Kingdom. The results seemed to confirm the worst fears: “The sector is beginning to drift away,” analyzed Arts- Business & CEO Colin Tweedy about the delicate matter in an interview with The Guardian, and Claire Titley, Philanthropy Director of the Arts Council England, confirmed the diminishing role that sponsorship seems to be playing in financing culture: "[Sponsorship isn’t] a particularly booming market.”

The Sponsorship Market is Shrinking

Indeed, as a part of shrinking state budgets – caused by the finance, banking, state and monetary crisis – not only can a definite trend be established to reduce public cultural budgets, business enterprises are also demonstrating a new cost consciousness. The consequence in Great Britain: if not already entirely cancelled, public sector cuts of up to 30 percent (such as at the Science Museum Group) makes a sponsorship payment of less than 0.5 percent of the total revenue (such as the Natural History Museum) an exemplary and, at the same time, a quite frightening scenario. However, it is also one that has been well known for a longer time in mainland Europe (in quite other sums).

The sponsorship barometer of recent years has accounted for, at best, a standstill for culture, and this shrinkage alone makes reports like these significantly more memorable: Siemens discontinues its sponsorship in Bayreuth, Montblanc its sponsorship at the Salzburg Festival and the energy provider RWE AG pulls out of the Traumzeit-Festival Duisburg; IBM and UBS terminate their commitments at the Bregenz Festival, the telecom company A1 pulls out of the Diagonale and Crossing Europe film festivals, the shoe manufacturer Diego Della Valle threatens to exit the Colosseum in Rome; Kohlpharma completely withdraws its cultural sponsorship in Saarland, as General Motors does everywhere; Daimler AG discontinues support for the Staatsgalerie Stuttgart and the Ludwigsburg Festival, L-Bank withdraws its support for their Friedrichsbau-Varieté in Stuttgart; Deutsche Bank ends its partnership with the Guggenheim, the energy company BKW ends its partnership with the Stade de Suisse; VW discontinues its support for the Deutsche Oper, the Biennale and Art Cologne, BMW for the Berlinale ....

Money for “publicity”: this over-simplistic marketing principle that underlies any sponsorship agreement is increasingly losing its attractiveness for corporate communications. At times like this, it isn’t surprising. On the one hand, we are namely witnessing, determining the crises, a runaway as well as a comprehensive loss of confidence that not only embraces the financial system, but also the entire economy, politics, management elites, the church, the media as well as culture (as a result of raging budget problems, the case of Matthias Hartmann and the Wiener Burgtheater will have similar underlying consequences). On the other hand, almost all classically and hectically applied communication initiatives between advertising and sponsoring are collapsing.

Cultural Commitment is Communication based on Trust

Here’s the thing: today, entrepreneurial cultural engagement is less about image or about customer loyalty than it is about the central asset of trust. Our current crisis of confidence cannot be overcome with programs for the needy, nor by logo placements.

Hence, the idea of corporate cultural engagement has to be rethought. Business logicians of capital have to learn to think in culturally relevant terms and the artists have to see the economic externalities of their actions as a means of securing subsistence. The objective should be that corporate cultural commitment is verifiably correlated with the economic profit. The implicit thesis is as follows: just as the state allows the homo oeconomicus by law a sufficient degree of budgeting reliability in the market (fair trade is worth it), a broadly cultivated corporate communication only contributes to the long-term success by clarifying its moral integrity and consolidating trust.

Art and culture have the particular advantage that, on the most part, they generate a basic element of trust. Trust and confidence are crucial for securing the stability and legitimacy of the economic system, but they must be produced discursively. The disadvantage of culture lies in the fact that art and culture are viewed as being marginally important and therefore have to fight for their social relevance. Culture can introduce the ability to discuss and to reflect into the economy. Thus, culture adds new meaning to economic structures and it can try, in this way, to change this in order to initiate new economic and cultural dynamics. The economy can bring structural expertise and practical participation to social and political contexts. In turn, it can attempt, as a mediator, to create a broader acceptance - a reciprocal deal at eye level.

Corporate Cultural Responsibility

In public discourse, the crises since 2008 have particularly focused public attention on a responsibility where companies freely engage themselves in solving social problems. The concept of CSR (Corporate Social Responsibility) has, as a principle of communicative guiding principle (what is being discussed also has to be demonstrated in a trustworthy manner), had an enormous impact. Corporate Cultural Responsibility (CCR) now expresses nothing less than cultural responsibility for culture in the context of CSR. CCR is therefore part of the social (= societal, not charitable) responsibility of a company. And that in one sector, as we've mentioned before, is regarded as particularly credible.

This approach has decisive advantages. While cultural involvement is not directly a core activity of a company, the standpoint that the key tasks of a company are to provide high quality and highly sustainable products and services at a best possible price, and at a profit, is also not questioned. However, in context of precisely this very entrepreneurial self-interest, it is essential to understand that corporate responsibility towards its stakeholders, existing on the basis of cultural governance, is a part of the self-sustenance that determines its success. It is simply part of corporate governance to ensure that the stakeholders of a company, in particular customers, employees, investors, owners, etc. are doing well, because - as Francis Fukuyama correctly pointed out - only then economic success and growth, from which a society and in turn the "sponsor" itself profits, are possible. The evident factor of an increasing mediatization and medialization of society plays, in terms of communication strategies, no significant role, because both phenomena allow easier access to public control, as well as criticism.

CCR therefore also reclaims a genuinely communicative approach, which aims to define the relationship between economy and culture anew. Because trust, as an important economic commodity, cannot simply be bought but must be earned, "good capitalism" is only possible through the participative interaction with social issues. And by the fact that UNESCO’s definition of culture (culture = sports, social, environmental, science, art) is extended so much that economics is also perceived as culture, the CCR concept is also subject to (and that's the really good news) a business logic that goes beyond the communicative function, where both the corporate benefits, with regard to returns, which want to be seen as sustainable, as well as equal partnership, take center stage. In short, cultural engagement of a company has to follow the belief that the support of arts and culture is not simple fun and communicatively truly brings all that which impact research and marketing departments have so eagerly argued for in the past (image, customer loyalty, employee motivation, etc.). Above all, it is an important contribution to social responsibility that a company should, if not must, provide to maintain a balanced and civilized society, as well to the long-term sustainability of its own success.

Corporate Cultural Responsibility denotes, as a complementary form of cultural promotion in the framework of CSR, the values- and norm-guided management of economic activities of the voluntary cultural commitment of a company / corporate citizens. Through the partnership-based investment in artists, scientists, cultural groups, cultural institutions, cultural projects, cultural enterprises, or of those in the creative industries (in short: culture carrier), using the allocation of money or material resources, services, network or expertise capacities, and taking into consideration the compliance with respect to a self-serving financial return on investment (FROI), a basic (internal or external) communicative return on investment (CROI) from the broadest possible public, a self-serving business return on investment (BROI) or a social return on investment (SROI) that is based on contractual restraints, it is committed to communicational-strategically sustainable goals for the common good of all stakeholders and society.

As it used to be the case, a key advantage of the model described here is no longer the need to decline and perpetuate the terminologically worn demarcations (CCR measures) between sponsorship, patronage, donations, etc. as a prerequisite for entrepreneurial legitimacy of individual cultural support measures within the CCR, but instead, from now on, to be able to additively regard the individual measures in the context of a higher level CCR idea and communication strategy. The goal remains the same: against the backdrop of a massive lack of trust through saturated markets and products that are similar, corporations are, in the competition for clients, forced to approach their stakeholders differently than by common means. CCR presupposes the desire to stand out from the competition and, particularly in the field of corporate communication, to secure confidence, competitive advantages and verifiable income. The following measures have been defined for CCR: corporate sponsoring, corporate giving, corporate secondments / corporate volunteering, events, cultural commissioning, product-/image placement, cause-related marketing, public private partnerships, impact investments. For the cultural enterprise this means a clear commitment to a business partnership that, if necessary, also doesn’t stop at (relevant) investments (at least in terms of rights). Against the backdrop of shrinking cultural media spaces - or the unwillingness of the media to name culturally engaged corporations in their reports- one doesn’t need to be clairvoyant to forecast that media analysis alone (as the most widely applied form of control) will not halt the cutting of classic sponsorship budgets.

Moreover, CCR ultimately serves to understand economic and social (as well as cultural) aspects not as contradictory, but as complementary (communication) goals of a company. The basis for this – taking into account the purely economic reports – are figures that regularly and systematically inform about the company’s social responsibility, services and activities as well as of its positive and negative effects. CCR figures and reports not only openly disclose the company's activities for stakeholders or impact investors, they can be used both internally as well as source material for CSR reports (legally required in some countries), cross-national guidelines and initiatives that serve increasingly important ICRs, corporate trust, creative and satisfaction indices and internal CCR reports, thereby accumulating a communicative benefit for culture as well.

In the relationship between organizations and society, CCR communication can therefore be regarded as a trust generating form of experience and negotiation, always set against the backdrop of social change. Ultimately, one cannot only speak of trust with CCR communication, but also of communicational responsibility, which a company that is committed can both profit and earn from.

Author: Wolfgang Lamprecht, Head of Corporate Communications at the Kunstforum Vienna, advisor for Corporate Cultural Responsibility at, among others, UniCredit Bank Austria AG, lecturer and member of the research advisory board of the university master's program ‘Cultural Communication’ at the Department of Communication at the University of Vienna; founding member of the Institute of Communications Diagnostics.

Translation: Erik Dorset

 

This article has first been published in German in KM Magazin 04/2015.

Management Topic: Financing & Sponsorship
Cultural Area: General
Submitted by editor-in-chief on Apr 29, 2015