1. Culture change takes time
Prof. dr. René Bekkers
Center for Philanthropic Studies
VU University Amsterdam

2. Belastingfaciliteiten Creatieve Industrie
12 oktober 2017
Belastingfaciliteiten Creatieve Industrie

3. What can other countries learn from the Dutch Experiment?
Prof. dr. René Bekkers
Center for Philanthropic Studies
VU University Amsterdam

4. Charity law reform
In 2012, a charity law reform in the Netherlands (“Geefwet”) enhanced the deductibility of donations to cultural nonprofit organizations and the freedom for organizations to earn commercial income.
The stated objectives of the legal reform were:
To increase donations and income raised from commercial activities;
To decrease dependence on government funding.
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5. In theory…
The charitable deduction reduces the price of giving. The charity law reduced the price of giving to cultural nonprofit organizations even further, for both individual as well as corporate tax payers. The price was not affected for other nonprofits. The European High Court approved the law in March This seems like a natural experiment.
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6. Potential effects for donors
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7. Potential effects for corporations
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8. Price effects in previous research
Price effects on total giving range between -0.2 and -1.1.
The price effect on the amount deducted among itemizers in the Netherlands is -0.9.*
No study to date has specifically investigated price effects on giving to culture
It is likely that giving to culture is more price sensitive because it is more prevalent among the wealthy
* Source: Bekkers, R. (2012). The Limits of Social Influence on Giving. Paper presented at the workshop “Social influences and charitable giving”, Centre for Market and Public Organisation, University of Bristol, February 24,
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9. But at the same time…
A cut of €220 million in government subsidies for cultural nonprofit organizations was accounced in 2011.
By 2013, €253 million had in fact been cut.
40% of 346 government funded cultural nonprofits lost their subsidy.
17% of the 137 organizations that lost their subsidy went out of business.
Local governments also cut >€90 million.
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10. So…
The price reduction for cultural donations may have increased donations, but at the same time the cuts may also have affected the amount donated.
This may have resulted in a positive effect (“crowding-out”), but also in a negative effect (“crowding-in”).
The Ministry of Culture has called upon the cultural nonprofits to become more entrepreneurial, and raise more donations.
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11. CROWDING-OUT EFFECT: EMPIRICS
Experimental studies: -0.64
Non-experimental studies: +0.06
De Wit, A. & Bekkers, R. (2016). Government support and charitable donations: A meta-analysis of the crowding-out hypothesis. Conditionally accepted by Journal of Public Administration Research and Theory
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12. Is a crowding out effect likely?
In the Netherlands, the cut in government contributions to cultural institutions is likely to have had very little effect on the willingness to donate.
An overwhelming majority of donors to cultural institutions, also the wealthy, said they were unwilling to compensate for government cuts.
But perhaps a change in the behavior of institutions occurred, increasing solicitations and the sophistication of fundraising efforts.
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13. Entrepreneurship
The cultural sector has been criticized for not being creative in earning income.
Skills and capacity for fundraising and commercial activities were lacking.
The Ministry of Culture subsidized the creation and participation of two programs, one in cultural leadership, and another in fundraising.
Also a public awareness campaign was designed to inform the public about the Charity Law Reform.
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14. Our research questions
After the Charity Law Reform,
how did fundraising by cultural nonprofit organizations in the Netherlands change, and
how did giving to cultural nonprofit organizations change?
In addition,
Which organizations reaped more benefits of the Charity Law Reform?
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15. How it could work July 11, 2018 13th ISTR Conference Investment in
Fundraising
income
Charitable deduction reform
Investment in
fundraising
Organizational
capacity
sales
Sales
Structural characteristics
Cultural
characteristics
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16. Program theory July 11, 2018 13th ISTR Conference
Charitable deduction reform
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17. Program theory July 11, 2018 13th ISTR Conference Investment in
Charitable deduction reform
Investment in
fundraising
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18. Program theory July 11, 2018 13th ISTR Conference Investment in
Fundraising
income
Charitable deduction reform
Investment in
fundraising
July 11, 2018
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19. Program theory July 11, 2018 13th ISTR Conference Investment in
Fundraising
income
Charitable deduction reform
Investment in
fundraising
sales
Sales
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20. Reform rewards investments
Fundraising
income
Charitable deduction reform
Investment in
fundraising
sales
Sales
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21. Before Reform July 11, 2018 13th ISTR Conference Investment in
Fundraising
income
Investment in
fundraising
Organizational
capacity
sales
Sales
Structural characteristics
Cultural
characteristics
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22. After Reform July 11, 2018 13th ISTR Conference Investment in
Fundraising
income
Charitable deduction reform
Investment in
fundraising
Organizational
capacity
sales
Sales
Structural characteristics
Cultural
characteristics
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23. “unto every one that hath shall be given” (Matthew 25:29)
The Matthew effect More successful organizations become even more successful
Organizations that raise funds and develop sales activities generate income
Prior experience and current income allow organizations to build capacity and invest in fundraising
These investments generate income
“unto every one that hath shall be given” (Matthew 25:29)
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24. Giving to Arts & Culture
Source: Giving in the Netherlands 2015
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25. Donations to culture Random sample of households
Source: Giving in the Netherlands 2013, 2015 and 2016
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26. Donations to culture Among high net worth households
Source: Giving in the Netherlands HNW oversamples
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27. Share of culture in total giving
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28. What citizens think about the multiplier
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29. How the deduction reform could affect fundraising and earned income of cultural nonprofits
Charitable deduction reform
Investment in
fundraising
Organizational
capacity
sales
Sales
Structural characteristics
Cultural
characteristics
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30. Results to be presented today
Fundraising
income
Charitable deduction reform
Information
to donors
Organizational
capacity
Investment in
sales
Sales
Structural characteristics
Cultural
characteristics
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31. Total revenue rises Source: Fundraising by Cultural Nonprofits
Figure shows proportion of institutions of varying size reporting increase in total revenue. 12% report no income at all in both years.
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32. Fundraising income increases
Source: Fundraising by Cultural Nonprofits
Figure shows proportion of institutions of varying size reporting increase in fundraising income. 40% report no income from donations.
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33. Larger institutions were more likely to inform donors about the Charity Law Reform and participate in the training program
Source: Fundraising by Cultural Nonprofits
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34. Institutions telling donors about the legal reform were more likely to see donations increase
Figure shows proportion of institutions of reporting increase in fundraising income. 63% report not providing information to donors about the legal reform.
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35. Changes in income x communication
Figure shows average amount received in € from various sources.
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36. Investment in marketing + fundraising
Source: Fundraising by Cultural Nonprofits
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37. Investment in marketing + fundraising
Interns
Volunteers
Paid workers
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38. Has the charity law reform made the Dutch cultural sector more entrepreneurial?
Probably yes.
And more so for institutions that invested in fundraising and invested more.
But total giving has not (yet?) increased.
This could be a displacement effect within the cultural sector.
We found no evidence for a substitution effect from other causes to cultural giving.

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40. What can other countries learn from the Dutch Experiment?
Do not expect miracles.
Inform donors about the legal reform.
Teach institutions how to be entrepreneurial and raise funds.
Experiment: Design, Test, Learn, Adapt, and Share.

41. Requirements Investments in fundraising and alumni relations.
Create networks of friends.
Generate pride, commitment, group cohesion.
Reciprocity: make friends feel they ‘owe’ you.
Patience. It takes at least 30 years.
Use insights in donor behavior and strategic partnerships.
Develop propositions that are appealing to prospective donors.
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42. Eight Mechanisms in Philanthropy
Awareness of need
Being asked to give
Costs and benefits
Altruism: how much others are giving
Reputation: social pressure and rewards
Psychological costs and rewards
Values
Efficacy
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43. Eight Mechanisms in Philanthropy
People give more (often) when
There is a clear need need
They are being asked solicitation
Costs are lower, and benefits are higher costs/benefits
They care about the recipients altruism
They receive social benefits reputation
They receive psychological benefits self-rewards
The cause matches their values values
Donations are perceived to be efficient efficacy
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44. Contact
René Center for Philanthropic Studies VU University Amsterdam renebekkers.wordpress.com
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