Rethink Heritage

III. HERITAGE MANAGEMENT STRATEGIES

Financing is a key in the realisation of any heritage management models or schemes and the starting point of all actions delivered at any level. Naturally financing alone is not enough for any good results, but it has to be paired with valuable professional knowledge, a thoughtful management and elaborated programmes which create undisputed synergies and values in the field of cultural heritage, resulting in a good maintenance of heritage sites and objects or a meaningful development of these in the form of renovations, restorations or adaptive re-use. In general, the main financial responsibility in heritage-related questions belongs to the different levels of national governance: at country-level, at the level of the regions or provinces and finally at the local authorities, as defined and specified in the legal system of the individual countries. However this responsibility is shared with all the private owners of properties with considerable heritage importance and with all the important actors of civil society in the form of charitable trusts or other types of non-governmental organisations helping the state in heritage management topics either locally or with a state level approach. The ratio of state ownership over the private and civil sector greatly impacts the possibilities and tools available for the governance to achieve a considerable impact on the processes. In the phrases we are enumerating the most important financing and funding schemes that are in use by state authorities:

1. Funding within the state's institutional framework

Institutions of the state, including all the museums, archeology and heritage management departments of the different ministries etc. have their own share of the annual budget to deliver the required actions at heritage sites from maintenance and restorations to organising cultural events and issuing informative contents. The governance also has the ability to prioritise certain projects more in their own organisational framework by allocating more funds for specific tasks. 

2. Heritage grants

A part of the available financing can be distributed through heritage grants. In such cases the financing is used by other institutions, but completely in line with the approach and the funding rules defined by the distributor of the grant. Such grants exist in many European countries, offering grants for the preservation and restoration of monuments and for funding cultural and heritage projects. On a European level a number of grant types can fit into this category too, such as Creative Europe, Norway Grant, Erasmus+, Horizont Europe etc., though these are not specifically heritage grants only. 

3. Heritage tax

The possibilities of state financing described in Point 1 and 2 are always limited to the exact availability of the distributable monetary power, therefore the governments may introduce further tools to support the sector. One way to do this is to introduce a special tax that can directly support the field or just one dedicated institution. By using such a prioritising method the importance of heritage related topics can be significantly highlighted and the common responsibility of the public can be also emphasised. Following the same logic, heritage taxes are usually imposed on luxury goods and activities like tourism, as they are either not considered as valuable for the wider society or they have a continuous negative effect on the state of the monuments as it is true in the case of mass tourism. A good example for this kind of tourist tax is the 'Imposta di soggiorno' from Italy, which is officially declared to be used to support the conservation and preservation of cultural heritage.

4. Tax incentives

Tax incentives are a further useful tool through which the states can help reach better situations in the state of monuments. It is effective through encouraging the private sector (individual, institutional or corporate) to invest into the proper and honest maintenance and restoration of their listed properties. As an encouragement the investors might take advantage of a reduced tax on one or more of the following types: VAT, income tax, wealth tax, inheritance tax or gift tax. The idea behind such a rule is that the cultural heritage is of both social and economic significance, therefore those who are responsible for taking care of these objects deserve wider support from the society.

Different countries however face different challenges and can deal with possibilities due to their different history and cultural experiences. While in Western Europe over 65% of historic buildings are owned by private firms or individuals, in the countries of the former Soviet bloc the majority of monuments remain in state ownership. In the latter case taxation has much less effect, therefore using such tools cannot be as effective as in the west, where private ownership and contributions has a longer and richer tradition.

While tax incentives or credits might be attractive for the owners to invest on the proper maintenance of their properties, as a conclusion of resorting the tax reduction, they might also need to commit themselves to open their building of historic importance to the public for a specific amount of days (e.g. 80 days) annually. 

The main forms of tax incentives in use are the following:

• Tax exemptions: objects (e.g. listed monuments) can be fully exempted from being the objective of inheritance, wealth or gift taxes, thus there is no tax in case of certain objects within some certain conditions. E.g. in Poland 'inheritance tax on historic buildings can be 0%, if the owner contracts to maintain in accordance with the law of historic monuments and with the confirmation of the district conservator. In all other cases the rate of tax is 50%. Gifts of cultural property are charged tax at a lower rate of 15%. There is no wealth tax. Local property taxes for historic buildings not used for business purposes can be a rate of 0%.'

• Tax allowances (deductions): in case of this form the taxable income can be lowered by deduction if certain conditions apply. 'In Netherlands, for example, individuals owning a registered building of historical interest could deduct 80% of certain maintenance and restoration costs from their taxable income'.
  

• Tax credits: this form allows the reduction of the tax (usually the income tax) itself, not just the taxable income, therefore it is considered as a more effective way compared to tax deductions. 'In Spain costs of acquisition, repair, restoration and opening of historic buildings can be set against income tax at up to 25% of the tax with a 4 year carry forward on condition of opening free of charge four days per month.'

• Reduced tax percentages: in case certain conditions are met, a lower percentage of tax can be applied. It is popular to use such incentives in connection with the value added tax (VAT). E.g. in Spain all works to historic buildings are charged at a lower VAT rate of 7% (instead of regular 16%).

Donations and crowdfunding

Actors of heritage management - either arriving from the private or the public sector - cannot dispense with collecting donations directly from different sources, starting from individuals to great corporations. Such charity donations can take up a great part of the full budget on heritage works and can be valuable even for multinational global companies to take part in such a kind of charitable sponsorship.

A simple form of this can be also achieved through memberships which allows the members to get involved in the daily activities and events of the organisation more than regular visitors. From the institutions' perspective the membership fees can provide a useful regular income for heritage institutions, helping to deal with the operational expenses. Also, the trust gained through the greater involvement might allow members to occasionally donate greater amounts too for specific goals. 

In case a specific project needs some extra funding, it is an often used solution to start a crowdfunding campaign. It is by far not a new invention to collect funding from the public by specifying the exact target of the collected fund to be used at, but modern technology now provides a lot of new ways to effectively raise money for certain goals from publishing a new book to help restoring a monument building. What has not changed since the old days though is the great amount of effort, time and workforce one needs to put into a campaign like this to successfully reach as many supporters as possible. Web pages like GoFundMe, Kickstarter, Classy and many others significantly ease the way to run effective and successful crowdfunding campaigns in an online form - especially if professionals are involved in the delivery of the marketing work. The result is just the same as in old days, the backers can support a restoration project brick by brick. Naturally those who can allow it, might be able to support the project with more units, but every single brick counts and required for the success, every contribution is important.

Tax benefits are also available for sponsorship in the majority of the countries: 'the donors (individuals, entrepreneurs, companies etc.), who economically support activities of preservation and conservation of culture heritage goods by making donations, enjoy tax deductions in their individual / corporate income tax.' For instance,'in Italy, the Art Bonus regime grants a 65% tax credit to individuals, non-profit organisations and companies making charitable donations in support of the restoration and maintenance of public cultural goods (monuments, historical buildings, works of art, etc.) or public cultural institutions (museums, libraries, archives, archaeological areas, parks), etc.'