The art of cashing in

THE ECONOMY of Salzburg, like that of New York City, is directly linked to the arts. Similarly, the marketing and promotion efforts of large global corporations rest in large part on their participation in and funding of the arts.

What could be more fitting, therefore, in this era of drastic international cutbacks in arts funding, than to gather in the small 18th-century castle of Schloss Leopoldskron, former home of Count Laktanz, one of the first patrons of Mozart, and of Max Reinhardt, the celebrated theatre director who co-founded the Salzburg Festival, to discuss the economics of the arts.

The marketing of Mozart in concert with the Salzburg music festival represents almost dollars 30m ( pounds 20m) to this Austrian city.

The New York metropolitan area has also found that art exists not just for art's sake. A study commissioned by the city found that in 1992 the arts and related cultural events generated nearly dollars 10bn in economic activity in the region and accounted for more than 100,000 jobs. New York gained dollars 3.5bn in arts-generated wages, salaries and royalties.

As the New York Times observed: 'The arts are clearly a major economic sector . . . their health should be treated with care.'

The facts are otherwise, however, as London's orchestras can attest in their fight for funds to survive. Public funding for the arts in the US, Europe and Asia has been declining for almost a decade, and arts organisations everywhere are contracting, merging and disappearing. This is a time of 'Solomon's choices', particularly in eastern and central Europe and the former Soviet Union. Even such national treasures as the Bolshoi Ballet and the Hermitage Museum in St Petersburg are struggling. There has been a 'fire sale' of artistic crown jewels, as individuals and institutions chase scarce foreign exchange. State officials, trying to negotiate standby agreements with the International Monetary Fund, have little time for the arts.

Enter the corporation. Marilyn Laurie, senior vice- president and director of public relations for AT&T in addition to heading its foundation, reports that only a few artists will strike it rich. The private sector can never replace public-sector funding for the arts or even 'pick up the slack' when public funds shrink.

Put bluntly, corporations are interested first and foremost in enhancing their images and influence. If this also meets society's needs, that is well and good. In Ms Laurie's words: 'AT&T seeks an intersection between its corporate interests and society's needs.' It does so by forging partnerships with arts organisations that fit the bill - by outright cash grants and contributions, sponsorship of big events, and 'in-kind' donations of products and time. It dispenses approximately dollars 50m annually for events as diverse as the MacNeil-Lehrer news hour on US public television and a large David Hockney exhibition in London and Los Angeles. This is big money, but it is budget-driven - based on profits and therefore no replacement for public-sector funding.

Mobil Corporation has a similar story to tell. Its corporate philanthropy budget is dollars 32m annually, of which art and culture account for 46 per cent. The rest goes to education, healthcare and other social causes. Mary Springer, a senior Mobil official, points to a big exhibition of Indonesia's art treasures in Washington to illustrate what motivates her company's giving. The sponsorship and exhibit were initiated by a request from Indonesia's foreign minister. Mobil has extensive oil exploration interests in Indonesia and was interested in gaining access to as many influential Indonesians as possible. The exhibit accomplished this as well as providing cultural and educational benefits to thousands of people.

US corporations spent dollars 720m on philanthropic activities in 1992, up sharply from dollars 190m in 1986. However, the rate of growth is slowing dramatically during a period when public funds are also drying up. Recently, Europe and Asia have moved closer to the US model, but corporate giving is still very small in Europe and Asia. It is not likely to rise dramatically unless there are significant changes in tax laws. Given the economic activity generated by the arts, such changes seem long overdue.

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