Culture Funding in Post-Communist Societies

[The case of Ukraine; with Polish and Russian comparisons]

 

Research Paper

 

Oleksandr Grytsenko

Kyiv, Ukraine

 

Introduction

 

Statements about “crisis of Ukrainian culture” or, at least, about it’s unexpected underperformance during the first decade of Ukraine’s independence, have been a commonplace in public discussions in recent years. In 1991, there were hopes that, with the end of Communism and the birth of the nation-state of our own, Ukrainian national culture would flourish. However, despite obvious positive changes such as the undeniable freedom of artistic expression, the end of  State monopoly on financing and administering of cultural organizations, and the unprecedented openness to the world, it is also a fact that, during the 1990s, financial conditions of the majority of Ukrainian cultural institutions have deteriorated dramatically, while the social status and the incomes of Ukrainian artists (and other professionals in cultural sector as well) became remarkably lower than, for instance, during Gorbachev’s “perestroika” period.  Several hundreds or even thousands of public cultural institutions (cinemas, local cultural centers, libraries etc) went out of business, Ukrainian’s book publishing plummeted, and domestic film production is almost dead now.

Participation in culture has been shrinking, too. Today, Ukrainians buy much less books and newspapers, less often visit cinemas, theaters and museums than twenty or even ten years ago. (Although a slight increase has been noticed in recent couple of years).

Some optimistic observers compare this situation to similar developments elsewhere in Eastern Europe and conclude that this is a result of changing cultural practices and the introduction of new communication technologies (the rise of video, personal computers, the Internet etc). But in a poor post-communist country like Ukraine, many argue, not the Internet and globalization should be blamed for the decay of public cultural sector, but deep economic crisis and bad government. An average Ukrainian simply does not have enough money for theaters, museums, new books and non-pirated CDs and videos, not to mention personal computers.

Many critics also believe that the State should be blamed in the first place, for its inadequate and inert cultural policy (or even absence of a sensible and articulated cultural policy at all). As the writer Oksana Zabuzhko said recently, “Anybody can see that our native Ukrainian State does not give a damn for our native Ukrainian culture”. She does not mean of course that it is desirable that the State returns to old Soviet practices of controlling culture, she merely expects that the Ukrainian nation-state gives not only freedom, but much more money than before to Ukrainian arts and cultural industries – if not directly, in cash, than at least indirectly, in tax exemptions. Statistics about budget expenses on culture seem to back this position: Ukraine’s public cultural expenditure has been remarkably lower (both per capita and as a share of total budget expenses) through the 1990’s than in virtually all neighboring post-communist countries,  not to mention EU member states. On the other hand, Ukraine’s financial resources are more modest than those of Poland or even Russia.

Alongside the allegedly apathetic State, there are other major factors blamed for a sorry plight of Ukrainian cultural sector: for instance, the rapidly increasing flow of mass-cultural imports from the West and from Russia. As a result, Ukrainian cultural markets and electronic media are dominated by Russian books, American films, Russian and Western pop-music. Some critics argue that this poses a threat to Ukrainian cultural development and, in the long run, to Ukrainian national identity.

The purpose of this study is not to find out whether there really is a crisis in Ukrainian cultural sector. Actually, I subscribe to the moderate opinion expressed by the prominent scholar and ex-minister of culture Ivan Dziuba, that there definitely is a crisis of public cultural institutions inherited from the  Soviet past, while the national culture in general undergoes a difficult transformation process in which positive and negative trends intertwine. Difficulties faced by independent cultural organizations, both non-profit and commercial, are mostly caused by general economic hardships and by low purchasing power of Ukrainian public. There are also “growing pains” of the still very young Ukrainian cultural industries, with their inexperienced managers and lack of investments. Virtual absence of state’s financial support to independent cultural organizations which is the case in Ukraine is not so unique to post-communist Eastern Europe and, having an NGO-friendly fiscal environment, can be compensated by earning and skilful fundraising.

Looking for scapegoats in this difficult situation is not a very interesting and promising task. One may assume from the very beginning that both corrupt cultural bureaucrats and culture-blind government leaders, greedy Russian and American mass culture tycoons and inert managers of public cultural institutions have made their contributions.

Therefore we will, first, try to demarcate economic and financial aspects of the current cultural situation in Ukraine, then analyze in detail both the financial situation of cultural sector and the existing policies, so as to find out whether these policies really address the existing problems. If they do, we will try to measure how effective and efficient they are in practice, and if something does not work, how can it be fixed. If certain problems are not addressed, we will attempt to propose some new policies to deal with such problems.

In such an analysis, comparisons with Ukraine’s post-communist neighbors seem extremely useful. Specifically, Russian Federation and Poland look very promising in this regard. They both are culturally close to Ukraine, they share a lot of common historical, political and cultural experience. The experience of the 1990’s, as the first post-communist decade in all three countries, is an especially useful ground for analytic  comparisons.

On the one hand, Russia’s public cultural sector, although much bigger in size, is very similar to Ukrainian in its structure, system of administration and funding: in fact, both were parts of the same state-monopolized Soviet cultural sector until 1991. On the other hand, Poland not only shares centuries of common historical experience and close cultural contacts with Ukraine, but is similar to Ukraine in its size and its position on  global cultural map (both can be regarded as “medium size” or even “minor” cultures, which no one would say about Russia, of course). What makes Polish cultural sector quite attractive to us Ukrainians, is the fact that it is more advanced in market reforms and more integrated into European cultural space than ours.

It is natural therefore to turn to Poland and Russia with questions like: how did they deal with cultural problems similar to ours, can their policy recipes be applicable to Ukraine?

Before we turn to detailed examination of particular forms of culture funding, we have to study the legal and institutional background. Specifically, general principles of public cultural policy should be studied. For instance, Ukrainian “Basic Law on Culture” defines funding of culture as a task of national budget and local budgets, while funding from other sources (businesses, private donations, earnings) is understood as secondary. In post-communist Poland, on the other hand, a key problem in cultural policy has been “defining the limits of state intervention in culture”[1]. This means, the state subsidizes particular cultural activity or institution only if such intervention is regarded as inevitable. This does not mean, however, that in Poland public cultural sector gets more money than in Ukraine – on the contrary, as we will eventually expose.

Other important aspects of national cultural policies to be studied and compared are: culture-related legislation (including legal regulations for non-profit organizations, for charitable activities, on quotas for domestic or imported products in the media, etc), and system of cultural administration (including institutional schemes of funding in cultural sector). After a general analysis of political and institutional environment we can turn to financial processes themselves. There is a broad consensus on the use of economic/financial indicators in cultural policy analysis; it has  been applied, for instance, in European Program of National Cultural Policy Reviews[2]; in a somewhat abridged version, it has been also used in the Compendium of Basic Facts on National Cultural Policies (www.culturalpolicies.net) from which some data on Russia and Poland where used in this research too.

As a brief formal description of a set of indicators to be used in cultural policy analysis, we can turn to a Polish study ‘Monitorowanie uslug publicznych w miastach’ (Red.M.Posern-Zielińska, Poznań, 1999). Here the authors propose the following indicators:

“…1) per capita budget expenses for culture [in national and local budgets]; this indicator can be used for measuring priority of society’s cultural needs in the eyes of [local/national] authorities;

2) share of public subsidies spent on particular kinds of cultural activities, or share of subsidies to particular type of cultural institutions in total amount of cultural expenditure (these indicators can reveal government’s priorities in cultural policy);

3) number of residents per one public cultural organization (library, museum, theater etc); number of books or periodicals published per capita in particular year; these indicators help us to measure available cultural offer [in public sector] and thereby evaluate effectiveness of public cultural policy;

4) number of people participating in particular types of cultural activities (also, participation numbers per capita); these help us in measuring level of the use of available cultural offer by local community;

5) number of cultural actions and events (theater shows, concerts, exhibitions etc) per one person employed in cultural institution of respective type (theater, gallery, museum etc); where it is relevant, box office sum can be used instead of number of actions; these indicators can be used in evaluating effectiveness of the work of employees in cultural sector;

6) production (prime) costs of a cultural institution per one show or per one customer; these indicators measure efficiency of cultural goods/services delivery;

7) shares of earned income, of sponsorship income, and of charitable donations in total income of an institution or average share of each type of income for particular type of cultural institutions; these indicate how active and effective cultural organizations are in seeking funds other than those from public budgets...”.

This list can be amplified by adding some other indicators and approaches, for instance:

-         behavior of values of particular indicators through time periods (most often, through 1990-2000), it reflects trends either in cultural situation or in cultural policy;

-         differentials between planned values of certain indicators (for instance, amount of budget subsidy) and performance, where they are significantly different (which is often the case in Ukraine), they illustrate the quality of cultural planning and, sometimes, intentions of the planners;

-         regional (local) differences in certain indicators, since differences in local policy priorities (or perhaps in local funding potential) are reflected in them;

-         breakdown of cultural expenses among different levels of administration (national, regional, local), which help to measure level of decentralization in cultural policy and illustrate the distribution of financial responsibilities among different levels of cultural administration;

- structure of expenses of cultural institutions; it’s helpful in studying how efficiently/effectively the money is spent, how adequate the funding is to the needs of both the institution and the public.

Unfortunately, getting complete statistical information required for a detailed analysis of financial situation in Ukrainian cultural sector turned out to be virtually impossible. The amount of official cultural statistics is rather unsatisfactory (especially when we compare it to Polish cultural statistics available to general public); Ukrainian Ministry of Culture and the Arts does not possess much information on cultural processes in the regions, while regional statistics are sometimes in accessible and often incomplete.

There has also been the problem of compatibility of cultural statistics from different countries, caused by differences in budget system, administration system etc. To be correctly compared, data from Ukraine, Poland and Russia often had to be reshaped and even recalculated. This made us very cautious  about international conclusions and recommendations based on foreign experience.

Once we have a more or less detailed analysis of financial situation in cultural sector, we can turn to a critical appraisal of particular schemes of funding. Here, the following aspects should be analyzed: 

- legal regulations related to the funding scheme;

- sources of funds; their capacity;

- who funds & whom using a particular scheme (in other words, description of institutions involved);

- decision making routines, formal and informal; influence groups involved; typical reasons behind funding decisions;

- accountability; effect evaluation;

- future perspectives for this funding scheme.

In such an appraisal, not only results of statistical analysis and policy documents should be used, but also interviews with people involved in culture funding and policy making processes, from Government officials to rank-and-file culture managers. As the result of such critical appraisal, concrete recommendations can be designed, and on the basic of recommendations concerning particular funding schemes, a set of more general recommendations on culture funding policy as a whole can be build. We are fully aware that the research presented in this paper does not exhaust the problem, but the goal seems to be nearer now.

 

1.     Cultural sector in Ukraine:  a brief overview

 

1.1. The existing cultural infrastructure

 

As a result of Soviet ‘civilizing’ cultural policy, a massive public cultural infrastructure was created in Ukraine, totally administered and funded by Soviet party-state. On the other hand, this infrastructure was weaker than, for instance,  those of neighboring  Soviet Russia or ‘socialist’ Poland (see Table 1).

Still, even this not-so-dense public cultural infrastructure (or, more correctly, its pre-electronic sectors – performing arts organizations, museums, libraries, heritage institutions, book publishing, the press etc) reached its peak in the ‘70s, and then there was, basically, a long stagnation. There was effectively no growth  in Ukrainian book publishing until perestroika, while Soviet Ukrainian-language press was in fact shrinking in the ‘70s  and early ‘80s. The number of Ukraine-made  film productions may seem impressive comparing to other small national film industries, but in terms of cultural contents these productions were, save for a handful of titles, undistinctive (and mostly mediocre) part of mainstream Soviet film production.

After the fall of the USSR, the process of the build-up of independent Ukrainian nation-state has began, and a Renaissance of Ukrainian national culture has been expected by many patriotically-minded Ukrainians. 

However, with ideological freedom and market reforms, something  unexpected has been happening, namely: expansion of Russophone cultural industries, now mostly private. As it is clearly seen from Tables 1 and 2.1 ‘conventional’ cultural practices were shrinking in the ‘90s,  print runs of newspapers and magazines were plummeting.

As Table 1 shows, cultural participation (at least in public cultural sector) fell dramatically in Ukraine and Russia in the 1990s, so did the number of libraries, cinemas and ‘houses of culture’ (local cultural organizations which have been founded from local budgets). On the other hand, the number of theatres and museums even increased (despite plummeting number of visitors).

Experts give two major reasons for this: first, post-communist transformation of cultural practices in much more open and free societies; second, dramatic decline in people’s incomes (Ukraine’s GDP fell by more than a half in 1991-97; Russia’s did only slightly better). Poverty coincided with the influx of Western mass culture, and young generation of Russians and Ukrainians now prefer TV and [cheap pirated] videos to theaters and cinemas, discos to concerts, computer games to museums, while elderly people do not have money for any of these.

We can see brighter picture when we turn to Poland: the decline in cultural participation was much less dramatic there, perhaps because it began earlier, and more radical and effective Polish market reforms of early 1990s made economic decline rather short-lived. 

 

A great number of vibrant non-state cultural industries evolved in Ukraine during the ‘90s which resulted in radical change of the ratio between public and private sectors in culture, especially in popular and mass culture industries. It is especially visible in electronic media. There are numerous private local TV and radio stations who manage to get along with virtually no funding or investments from the state. Similar situation can be seen in book publishing. There are several hundred independent (mostly small in size) publishing houses in Ukraine which publish more new book titles  than state publishers do since early ‘90s,  and, since 1999, they also print more copies of books. Actually, book publishing deserves more detailed discussions offered in a separate case study that follows this chapter. During the initial period of independence characterized by deep economic crisis, most of the old state-owned entertainment industries all but collapsed. On the other hand, numerous private show-business structures came along, although not many of them proved their sustainability during the 1990s.

However, since the state’s financial support to non-public show-business and music industry is negligible, we will not focus on them here.

 

Case Study 1: Book publishing

 

When we take a look at the developments in book publishing and book market in Ukraine, Poland and Russia in 1990s (see Tables 2.1, 2.2, 2.3) we can see that these decade can be divided in three uneven periods:

1990-1995: slow recession arguably caused by painful market transformation (in the industry) and by general economic decline (and accompanied, especially in Poland, by growing diversity of market offer);

1996-1999: period of more dramatic changes caused by active protections policies (especially in Russia) and by the financial crisis of 1998;

1999-till now: gradual stabilization.

Of course, each country shows its peculiarities. In Ukraine, the decline in book publishing during the first period was the worst among the three: total amount of printed books fell from 170 millions in 1990 to 52 millions in 1994-96 (and even lower, to 22 millions copies, later in 1999). There was similarly dramatic decline in Russia, only the scale was different (1,55 billions in 1990, 475 millions in 1995), while in Poland it was relatively mild: 170 millions to 115 millions copies. (see Graph 1 and Graph 2).

The specifically Ukrainian phenomenon was the shrinking of the share of books and periodicals in Ukrainian language in early 1990s. The reason for this, at least in part, is believed to be that domestic printed matter  in Russian language has been replacing books and periodicals printed in Russia. Another reason was apparently the reduction in subscription of periodicals by public libraries  and other public institutions which previously provided perhaps a lion’s share of subscription of Ukrainian-language Soviet press in Eastern and Southern Ukraine.

On the other hand, Russian press was making substantial progress since the  times of perestroika, and was widely read in Ukraine both before and after independence, by both Russophone and Ukrainophone audiences.

 

Table 2.1 Book publishing & the press in Ukraine in the ‘90s

 

 

1990

1993

1994

1996

1999

2000

Books published, titles

7046

5002

4752

6084

6282

7749

Books published,    mln copies

170

88

52

52

22

44

Of these, in Ukrainian Language

95

40

21

31

12

29

Magazines & Journals, titles

185

522

461

717

778

757

Annual print run, mln

166

33

19

20

33

46

Of these, in Ukrainian

150

30

13

12

 

 

Newspapers, titles

1787

1757

1705

2206

2639

2667

Total single issue print run, mln

25

40

21

23

31

35

Of this, in Ukrainian

17

26

10

9

 

 

Total annual print run of newspapers, mln

4652

2843

1593

1544

 

 

 

Table 2.2 Books, publishing and the press in Russia

 

 

1980

1990

1995

1997

1999

2000

Books:

Titles (thousand)

50.0

41.2

33.6

 

45

47.7

 

50.1

in Russian

n/d

37.7

31.3

 

45.4

 

Copies (mln)

1393.0

1553.0

475.0

1998

421.5

404

in Russian

n/d

1500.0

449.0

 

397.7

 

Periodicals:

Titles

3960.0

3681.0

2471.0

 

3358.0

 

in Russian

n/d

3389.0

2343.0

 

3223.0

 

Copies per year  (mln)

2488.0

5010.0

299.0

 

601.0

 

in Russian

n/d

4915.0

289.0

 

596.0

 

Newspapers:

Titles (thousand)

4413.0

4808.0

5101.0

 

5535.0

 

in Russian

n/d

4488.0

4779.0

 

5258.0

 

Copies per year  (billion)

29.0

37.7

8.8

 

7.1

 

in Russian

n/d

37.4

8.6

 

7.0

 

 

 

Table 2.3 Book publishing in Poland

 

 

1990

1995

1999

2000

Titles:

10242

11925

19192

21647

100%

of which:

 

 

 

 

 

Scientific publications

3571

3065

6466

6840

31,6%

University textbooks

1230

1205

1823

1785

8,25%

Professional publications

1040

881

1244

1704

7,9%

School textbooks

384

991

1342

1410

6,5%

Popular science

2444

3227

4757

5890

27,2%

Fiction

1573

2556

3560

4018

18,6%

of which for children and youth

336

491

805

810

3,7%

Number of copies (mln)

175.6

115.6

78.1

102.8

100%

of which:

 

 

 

 

 

Scientific publications

6.6

3.6

5.8

6.0

4,7%

University textbooks

1.6

1.6

2.0

1.7

1,6%

Professional publications

4.4

2.7

2.8

5.8

5,6%

School textbooks

38.7

44.0

24.4

41.4

40,2%

Popular science

59.1

23.0

21.7

23.6

23%

Fiction

65.2

40.7

21.4

24.3

23,6%

of which for children and youth

19.0

5.3

4.6

5.6

5,5%

 

Table 2.4 Newspapers and magazines in Poland

 

Specification

1990

1995

1999

2000

Newspapers

 

 

 

 

Titles

130

108

74

71

Number of copies in mln

1390.5

1433.7

1190.0

1181.9

Total single circulation (average) in thousand copies

6947

6114

4592

4566

Magazines

 

 

 

 

Titles

3007

4340

5518

5314

Number of copies in mln

679.3

1776.8

1526.5

1616.4

Total single circulation (average) in thousand copies

41194

77720

65997

68368

 

Table 2.5 Structure of book publishing in Ukraine, 2000

 

Specification

 

Share, %

 

Titles

Copies, thousand

Titles

Copies

Official publications

277

1251,4

3,6

2,9

Sciences

1561

1018,8

20,1

2,3

Popular sciences

414

1875,1

5,3

4,3

Applied sciences

144

209,0

1,9

0,5

Professional

284

749,7

3,6

1,7

Textbooks,

of which:

2407

26350,1

31,1

60,5

for schools

989

23495,6

12,8

53,9

for universities, colleges

1296

2255,4

16,7

5,2

Political

249

1680,4

3,2

3,9

Reference books

618

4392,0

8,0

10,1

Leisure publications

87

1639,8

1,1

3,8

Advertising

55

194,3

0,7

0,4

Fiction,

Of which:

986

2896,3

12,7

6,7

    For adults

826

1697,3

10,7

3,9

For pre-school age 

66

647,7

0,85

1,5

 For school age

94

551,3

1,2

1,3

Total

7749

43562,9

100,0

100,0

 

Table 2.6 Structure of Book Publishing in Russia, 1990-2000

 

 

Titles

Share  %

 

1990

1997

2000

1990

1997

2000

 

Textbooks

7801

14879

14540

18,9

33,0

29,0

 

Fiction

6101

9713

10981

14,8

21,6

21,9

 

Science

9467

7581

9569

23,0

16,8

19,1

 

Professional

9323

3745

4650

22,6

8,3

9,3

 

Popular science

2268

3240

3571

5,5

7,2

7,1

 

Reference books

1861

2046

2196

4,5

4,5

4,4

 

Political

1684

313

169

4,1

0,7

0,3

 

Other

2729

3509

4409

6,6

7,8

8,8

 

Total

41234

45026

50085

100,0

100,0

100,0

 

 

Books and periodicals were VAT-exempt in Poland since early 1990s. In 1995, similar protectionist regulations were introduced in Russia, which arguably resulted in rapid growth of the market: number of books published grew almost by four times in just two years. However, when the rouble collapsed next year, book publishing began to fall again and after two more years it was even below the level of 1995. Perhaps it was also a result of previous overproduction of books which could not be absorbed by neither Russian market, nor by neighboring Russian-reading markets of Ukraine and other post-soviet countries. This roller-coaster development was not accompanied however by similar changes in number of titles published: it has been constantly growing since 1995. This perhaps means that Russian publishing industry became much more market-oriented than ten years ago.

Ukraine and Poland faced similar crisis (although smaller in scale) in 1998-99. Actually, the year 1999 was the worst in book publishing in all three countries. There was also similar stability in number of titles published. But the structure of market supply and demand in each country is different. Ukrainian book market was the smallest in size in 2000 (7,75 thousand titles in 43,5 million copies); while Poland with its 38 million people (compared to Ukraine’s 48 million) published 21,6 thousand books in 102,8 million copies, which means  Polish book market is almost three times bigger. However, these statistics do not include book import: experts believe that Ukraine imports several times more books from Russia than it prints itself, which means that book consumption in Ukraine can be similar to that of Poland or Russia (140 million people, 50 thousand books published in 404 million copies in 2000).

Hence Ukrainian book publishing can be regarded as to some extent “supplementary” to imports: textbooks for schools and colleges (which cannot be replaced by imported Russian textbooks) make almost two thirds of total book printing in Ukraine (Poland – 43 %); science and popular science publications make 6,6% (Poland – almost 30%), while fiction makes only 6,6 % comparing to Poland’s 24,3%. Ukraine also publishes much less books for children (2,8 % comparing to Poland’s 5,6%).

Since Ukrainian school textbooks are commissioned by Ministry of Education, it makes Ukrainian publishing industry much more dependent on public budget money than Russian or Polish. On the other hand, governments of Russia or Poland proved to be much more active and effective in protectionist policies: tax exemptions  for books and periodicals which exist there for several years make Polish and Russian publishing industries much better off than ours.

This does not mean, of course, that the lack of governments active support (and constraints on privatization of publishing houses, as we will see) is a brake on the development of private sector of book publishing. For instance, all publishing houses remaining in state property published only 10% of total number of titles and 20 % of total number of copies in 2000, while private publishers delivered 60 % of titles, and 70 % of copies.

 

1.2. Public cultural administration

 

The system of cultural administration  in Soviet Ukraine or, rather, in the USSR as a whole (that is, Ministry of Culture, other culture-related State  departments in charge of the press or of  radio & TV) was virtually unfit for independent policy making for the simple reason that it wasn’t meant for this. It was a task for proper departments in the Central Committee of the Communist Party,  to determine goals and design means for cultural policy.

Since 1991, culture-related government agencies have had to learn how to design and fulfil national cultural policy by themselves.

In contemporary Ukraine, cultural sector in broader meaning is administered on the national level by several government agencies (Ministry of culture and arts, State Committee of information policy, television and radio; State Committee for youth policy, sports and tourism; National Council for television and radio broadcasting). Most of them are coordinated by Vice Prime Minister of Ukraine for Humanitarian Affairs, and each of them (and some other government bodies) have budget expenses for culture and arts. (See Table  3.1)

 

Table 3.1 Expenses for culture, arts and mass media in State budget of Ukraine

 

Government agency

Comments

Amount of expenses

2000

2001

2002

Ministry of Culture and Arts

Expenses for education and academic research not included

131137

170807

196040

State Committee for information policy, TV and radio broadcasting

Funding of State TV and Radio-channels 

121618

117283

134601

Administrative Department of the Parliament

Purchase of air time for media coverage of Parliament work, subsidies to ‘Holos Ukrainy’ daily; and ‘Ukraina’ Concert Hall

8066

10764

11069

Administrative Department of the President of Ukraine

Subsidies to the ‘Kyiv Camerata’, the Ukrainian House cultural center, National Exhibition Center*

1381

1868

2204

Ministry of Foreign Affairs

Promotion of Ukrainian culture in the world

75

95

153

Ministry of Education and Sciences

Pedagogical Museum, Museum of Aviation, subsidies to educational periodicals

89

120

589

Ministry of Health

National Medical Library, National Museum of Medicine

1250

1984

2175

Ministry of Agriculture

Promotion of culture in the countryside

1729

2160

2333

Ministry of Finance

Museum of Treasures

951

1123

1215

State Committee for Nationalities and Migration

Support to cultures of national minorities

-

400

1000

 

*in December 2002, Ukrainian cultural center in Moscow also was transferred to the jurisdiction of the  Administrative Department of the President’s Office.

Source: Committee for Culture of the Supreme Rada in Ukraine

 

Although it looks natural that some Ministries fund related public museums, it is rather strange that two biggest cultural venues in Kyiv, the ‘Ukraina’ Concert Hall and Ukrainian House cultural center, are administered and funded neither by Ministry of culture, nor by culture department of Kyiv city administration, but by administrative departments of the Government.

The Ministry of culture and the arts, although declared the main government agency for cultural policy, is in fact in charge of cultural sector in narrow meaning (music and performing arts, plastic arts, film, libraries, cultural heritage, artistic education). The Ministry administers nearly 130 state-owned cultural organizations and has some recommendational power over all  other public cultural organizations. These organizations (over 45 thousand of theaters, museums, libraries, cinemas, artistic schools, community cultural centers, or ‘houses of culture’) are administered and funded by local government bodies (Oblast administrations, Raion administrations, city councils, town and village councils) (see Table 3.2 ).

 

Table 3.2 Public cultural organizations in Ukraine, 2001

 

 

Owned by the state

Owned by regional and local authorities

Theaters

4

116

Performing arts organizations

17

71

Circuses

16

-

Libraries

9

18654

Museums

13

545

Cultural heritage reserves

13

23

Cultural centers (‘houses of culture’, ‘clubs’)

548

18054

Artistic schools and colleges

12

1487

Film studios

5

-

Archives

12

10

Other

4

971

Total

655

45803

Source: State Committee for Statistics of Ukraine, 2002

 

Regional government agencies (Oblast Administrations, Raion Administrations) and local Councils have Directorates for culture or Departments for culture in their structure to take care of local public cultural organizations and cultural activities. The system of public administration in Ukraine has its peculiarity: Oblast and Raion Administrations are subordinate not to the Cabinet of Ministers of Ukraine, but to the Administration of President of Ukraine. This is why the influence of the Ministry of Culture on local cultural administration is rather weak.  It seems that the Ministry of Finance is a more powerful actor in regional (local) cultural policy, because it defines the recommended levels of culture funding in Oblast budgets (this important issue will be discussed later in more detail).

As mentioned earlier, since late 1980s, several thousands independent cultural organizations have been developing in Ukraine (theaters, publishing houses, musical collectives, recording studios, art galleries, etc.). However, public agencies in charge of cultural sector don’t feel obliged to help them, financially in particular. The only funding scheme designed for non-public artistic organizations or individuals that exists in Ukraine today is the President’s grants for younger artists.

Traditionally, so-called  ‘Creative Unions’ founded in Stalinist 1930s have been major legitimate representatives of the artistic community in Ukraine. Before 1991 virtually all professional artists have had to be members of the ‘Creative Unions’. The latter also received remarkable financial support from Soviet Government. Nowadays, many artists either don’t join the traditional artistic unions or create artistic associations of their own. However, Ukrainian government still treats the traditional Unions (they have adopted the title of ‘the National Creative Unions’ now) as legitimate representatives of the artistic community and still provides same financial support to them, while the recently founded artistic associations get none.

 

1.2.1. Cultural administration systems in Russia and Poland

 

The Russian Federation, as its name suggests, is a federate state consisting of 89 ‘subjects of Federation’, including 21 republics with their own Presidents, Parliaments and Ministries of culture. Similarly to its Ukrainian counterpart, the Ministry of culture of the Russian Federation carries out federal policy on cultural heritage, on libraries management, the arts, film production and distribution (since 2000), folk arts and crafts, cultural recreation, and professional cultural and artistic education. It regulates and finances federal cultural organizations, provides funds from the federal budget to regional cultural administrations and institutions. This support is provided through Federal programs for the preservation and development of culture and the arts.

The latter function makes a difference from Ukrainian system of state support to culture in the regions, where the only way to do so is through budget transfers from National budget to Oblast budgets, and the amount of transfers is decided by Ministry of Finance, not Culture. Another difference in Russian system is lack of formal subordination of regional (Republican) cultural administration bodies to the Federal Ministry of culture. As the National Report on Cultural Policy in Russia (Strasbourg, 1996) describes it, “At present, government departments at different levels are not subordinate to each other. Regional authorities regulating culture are subordinate to higher authorities only when the latter possess resources  which can be distributed and the former have to ask for material and moral support.

Subjects of the Federation themselves determine the structure of regional and local executive powers. As a rule, executive structures imitate the federal structure. For example, in some areas, cultural departments within area administrations regulate film distribution and tourism, whereas in other areas, separate departments perform these functions.

In 1991, the Russian government established the Federal Council for Culture and the Arts to co-ordinate the activities of the Ministry of Culture and territorial departments regulating culture. The Council includes the ministers for culture of the republics of the Russian Federation and the administrators of territorial and area departments of culture”. In  2000, it merged with Federal Council for Cinematography into the coordinating Council for Culture and Film.

Federal (National) cultural institutions in Russia include 19 theaters, 27 concert organizations and performing arts groups, 43 museums, 9 libraries and 74 artistic schools and colleges. Many of these institutions are considered “particularly valuable objects of the cultural heritage” of Russia. They include such prominent institutions as the Bolshoi, Mariinsky, Maly and Khudozhestvenny theatres, the Hermitage museum, the Tretiakov gallery, the Russian museum of arts, the National library, Moscow  and St. Petersburg conservatories.

The Ministry of Culture funds them from federal budget. The federal budget also provides funds for projects included in the federal program for the preservation and development of culture. The majority of public cultural institutions are under the control of municipal administrations and are financed from municipal budgets.

Museums, artistic organizations and major libraries are under the control of regional administrations and are financed from regional budgets.

Although not a federate state, Poland seems to be even more decentralized than Russian Federation in its system of public administration, due to the intensive process of integration into EU. At first glance, its cultural administration looks quite similar to those of Ukraine and Russia: there is the Ministry of Culture and National Heritage (formerly Ministry of Culture and Arts), with several national cultural organizations it funds; there are cultural administration bodies at regional (Voivodships) and local level, which care about the vast majority of public cultural organizations. However, this system underwent several reforms during the 1990s, the main of which have been administrative and financial decentralization and privatization of major cultural industries (film and book publishing).

Polish scholars Dorota Ilczuk and Anna Wieczorek in their detailed discussion[3] of public funding of culture in Poland conclude that the decade of transformation resulted in: “ – withdrawal of the state from super-patronage of culture and of the Ministry of Culture from direct administration of public cultural sector. Within the Ministry’s competence, we see now only not so numerous but important public cultural institutions as well as tasks of national character. Instead, the Ministry got a very important task of framing legal, financial and program conditions for support of cultural development;

- the shift of the implementation of state patronage of culture from national to regional level;

- the decentralization of cultural administration which resulted in the majority of tasks and public cultural institutions being shifted to the local level and funded by local authorities;

- adoption of the idea of public-private partnership in culture funding; support to the development of NGO in cultural sector. The system of indirect funding [through tax incentives] shaped in the 1990s serves this purpose”.

 

1.3.         Culture-related legislation

 

1.3.1  General overview

 

Few years ago, Ukrainian culture-related legislation was evaluated as deeply heterogenous, incomplete and lacking conceptual integrity (O. Grytsenko, Kultura v Zakoni, 1999). The reasons for these conclusions were that,

first, while there has been a number of recently adopted, modern and liberally looking culture-related bills, too many aspects of daily activities of public cultural institutions (especially funding) still has been regulated by old sectoral by-laws (so-called ‘normative documents’) inherited from the USSR;

second, many new developments of post-communist cultural life (for instance, private artistic organizations and cultural NGOs) are still not supported by appropriate legal base (state support to independent cultural organizations is never mentioned in Ukrainian culture related bills);

third, ineffectiveness and internal contradictions of some culture-related legal acts can be understood as a result of confusing mix of different ideologies  and values underlying them: modern democracy and market  liberalism coexist with XIX-century-style nation-building; state paternalism - coexists with laissez-faire approach to cultural industries, not to mention some elements of multiculturalism coexisting with basically ethnocentric notion of Ukrainian nation.

A good example of this ideological mix is The Basic Law of Ukraine on Culture (Osnovy Zakonodavstva pro Kul’turu). This act became the main official cultural policy document of the initial period of independence. The Basic Law was adopted by Supreme Rada (Ukrainian parliament) in February 1992, soon after the proclamation of independence, in the midst of so-called ‘state build-up period’ (rozbudova derzhavnosti).  The Basic Law  itself  is far from consistent or sound in its provisions. In fact, it mirrors both Post-Soviet bias and romantic post-independence expectations  of its authors and [implied] readers/subjects[i]. Although the cultural policy principles and the State’s  goals and priorities  the Basic Law proclaims seem to fully correspond to modern democratic standards, the concrete mechanisms of state support for culture The Basic Law prescribes are clearly oriented towards continuation of  the familiar  budget allowance funding.

As for public financing of culture, some articles in Basic Law are directly related to it:   «Article 23. Financing of culture.

The financing of culture is based upon the official funding norms and shall be  provided by the [State] budget and local budgets, by means of enterprises, organizations, civil associations, and from other sources, as well.

The State guarantees subsidies necessary for development of culture in the amount no lower than 8% of Ukraine’s national income (...)

Article 24. Foundations for Cultural Development

(...) Civil associations (Creative Unions, corporations, foundations, associations) as well as enterprises and citizens may independently or on the ground of treaties, establish charitable foundations for financing of cultural programs, development of literature and the arts, for promotion of talented persons or for creative initiatives in cultural sphere (...)

Article 26. Taxes in cultural sector

The State  carries out the policy of tax benefits in cultural sector.

It exempts Creative Unions, [ethnic] cultural associations and foundations, other cultural civil associations from taxes. Exempt from taxes are also cultural organizations which are subsidized by [State] budget, by [public] enterprises or  by trade unions.

[The State] establishes tax exemptions for those incomes of enterprises, organizations and individuals which are donated for cultural needs...

The regulations for tax exemptions for cultural organizations as well as concrete tax incentives for those who donates to culture shall be drawn by acting Laws of Ukraine».

Apparently, no state in contemporary world ever spent as much as 8 % of its national income on culture. Neither Ukraine’s budget ever confirmed to this requirement since 1992. This, of course, undermined the Basic Law as a whole.

In the 1990s, several culture-related bills were adopted: «The Law on Museums» (1995), «On Libraries» (1997), «On Charities and Charitable activities» (1997), «On Cinematography» (1998), «On Protection of Cultural Heritage» (1999), «On Professional Artists and Artistic Unions» (1997) and some others. In all these bills, issues of financing of cultural organizations are rarely touched.

In 1997, an important amendment to Article 7 of «The Law on Income Tax for Enterprises» was made. It provided some tax exemptions for non-profit organizations (for which certain types of cultural organizations are also eligible).

Unfortunately, no clear legal definition of the non-profit organization accompanied the amendment, which resulted in common interpretation of the NPO by tax officials as organization which carries out no entrepreneurial activity at all.

The amended Article 7 of the Bill on Taxing of Profits of Enterprises (specifically, its sub-paragraph 7.11.1) lists six groups of NPOs eligible for tax relief. For instance, group ‘a’ includes some types of budget-funded public organizations regarded as NPOs; group ‘b’ includes «charitable foundations and civic associations established with the goal to carry out environmentalist, athletic, amateur artistic, cultural, educational, academic activities; Artistic Unions» - all these are free of tax on their incomes derived from «core activities».

Group «c» includes «legal entities other than those mentioned in groups «a» and «b» whose activities do not result in obtaining profits according to the acting law». This definition is rather confusing and can be interpreted so that any NPO (including those ascribed to groups «a» and «b») shall not carry out any activity which can result in obtaining profits. Unfortunately, this is precisely how many tax inspectors interpret this article of the bill.

To be eligible for tax relief, an NPO should be registered at local Taxation Administration (according to the Regulations of Registering of Non-profit Organizations and Institutions issued by the State Administration of Taxation, 11.07. 1997). The latter may either include  an NPO in its Register or refuse (if, for instance, it finds something «untypical» for non-profit activities in the NPO’s  Statutes) and the applicant have no right to appeal to the court.

This legal structure results in small and weak «third sector» in Ukraine.

A new Budget Code was adopted in 2001. According to it, State budget and local budgets have to be designed according to the principles of program budgeting which means that, on the national level, sectoral ministries and departments should design «target programs» for the development of corresponding sectors of national economy as the ground for calculation of budget expenses.

The very wording of corresponding articles of the Budget Code apparently signifies a controversial compromise between the explicitly stated principle of program budgeting and the still valid principle of permanent financial support to the existing network of public cultural organizations.

Article 87 of the Budget Code deals with «expenses to be covered by State Budget of Ukraine». Specifically, it mentions:

«… 10) Culture and arts:

a)                             State programs of cultural enlightenment (state libraries, museums, exhibitions, historic reserves of national importance, international cultural contacts, major cultural actions of the state);

b)                            State programs of development of theatrical and performing arts (national theaters, national philharmonic institutions, state organizations of music and dance, other public cultural organizations and actions, according to the Inventory approved by Cabinet of Ministers of Ukraine);

c)                             State support to civic artistic and cultural associations which have the status of National Unions;

d)                            State programs of development of cinematography;

e)                             State archives».

Article 89 of the Code regulates expenses from local budgets (those of towns, cities, villages). Specifically, it mentions:

«…5) public programs of cultural enlightenment and of theatrical and performing arts (theaters, libraries, museums, exhibitions, houses of culture, artistic schools for children)».

Article 90 regulates expenses from «Budget of Authonomous Republic of Crimea and Oblast budgets». It mentions:

«…5) culture and arts:

a)                             State programs of cultural enlightenment  (Oblast libraries, museums, exhibitions);

b)                            State programs of theatrical and performing arts (philharmonic organizations, ensembles of music and dance, theaters, houses of culture of regional importance, other artistic organizations and actions);

c)                             other  state programs supporting culture and arts…»

 

The term «state programs» as applied to regional cultural programs means that, if a regional budget has not enough revenues, a «state program» can count on a subsidy from the State budget. Otherwise, such programs are called «cultural and artistic programs of local importance» and have to be covered by local budget revenues alone.

Although the Budget Code speaks about cultural/artistic «programs» as the grounds of funding, it in fact obliges the State and local authorities to fund existing public cultural organizations (even those which may seem to be commercial enterprises, like circuses or some musical organizations). On the other hand, it effectively prohibits to finance from State budget those independent cultural organizations which are not included in the «Inventory» approved by the Government. This results in the situation when an independent cultural organization can get some funds from the state only if it takes part in a major state-sponsored cultural event.

The articles of the Budget Code cited above can be interpreted as the demarcation of the limits of financial intervention of the State in culture. In other words, the ‘third sector’ wound up beyond these limits.

How much money the State has to give to culture (or, more precisely, to public cultural organizations)? The Budget Code does not specify it, but «The Law on Social Welfare  Standards and Social Guarantees of the State» gives a detailed definition of «State social standards in cultural services» (Article 13):

«State social standards related to services of cultural organizations include:

the inventory of free-of-charge services provided by cultural institutions, organizations and enterprises;  quality requirements with regards of services provided by cultural institutions, organizations, enterprises; [quantitative] norms of provision of population with cultural organizations, institutions, enterprises”.

Article 21 of the Law on Social Welfare Standards regulates norms  of financial provision assuring State social standards and guarantees in practice. It mentions three kinds of such norms:

Norms of per capita financing of particular services from State budget or from local budget;

Norms of financial provision for particular types of public institutions and organizations (educational, cultural, medical etc.);

Norms of the State’s capital investments in development of public cultural organizations.

The Article also rules that the mentioned financial norms should be specified in the Law on State Budget of Ukraine for each particular year. Unfortunately, the reality is different. The most powerful player in the process of budget-making is the Ministry of Finance; and it uses only one kind of norms: those of per capita cultural expenses for each region (Oblast) of Ukraine.

These norms, calculated by Ministry of Finance itself, tend to strongly underestimate real demand for public funds in cultural sector, so that budget performance in most of Ukraine’s Oblasts shows that actual cultural spending is often 2-3 times higher then proposed by Ministry of Finance (see Table 9.2). 

 

1.3.2. Regulations on earned income

 

The majority of public cultural organizations in Ukraine (even libraries and archives) have earned incomes. How much (little) they earn and why, will be discussed later in detail. This source of financial means for public organizations is regulated by The Inventory of paid services that may be provided  by public institutions of culture  and arts, confirmed by Cabinet of Ministers of Ukraine in its Decree dated 05.06.1997. The Inventory includes a broad range of cultural services, from theatrical and musical shows, through paid courses in music, dance and acting, festivals, exhibitions of arts or books, to dance  parties and discotheques. Each public cultural organization is supposed to have its Regulations confirmed by appropriate cultural administration body (in case of independent cultural organization, its regulations have to be registered at local self-government body), and all kinds of paid and unpaid services it provides should be listed there.

Public cultural organizations also have to plan their earned income for each year. The amounts of their planned income are used by cultural administration bodies to design their budget programs; they also can be used as a reason for cuts in budget subsidies to those organizations who are better off. To avoid such cuts, cultural organizations tend to underestimate their expected/planned earned incomes.

Independent cultural organizations don’t have to have such plans, but they have virtually no public funding too. If a cultural organization is not a non-profit organization (NPO), its activities are treated by Law on Enterprise and corresponding taxation Laws as «usual business activities», with no tax relieves or incentives. Their earned income depends on paid capacity of the public  (which is far from high in contemporary Ukraine) and on its ability to avoid some taxes.

If a cultural organization is registered as an NPO, tax officials tend to fully tax most of its incomes save for charitable donations (referring to the mentioned ambiguous formulation in Article 7.11 of The Law on a Taxation of Profits of Enterprises). This in fact forces many cultural organizations to choose between disguising their earned incomes as donations and abandoning their NPO status.

 

1.3.3. Legal provisions for cultural sector in the Russian Federation 

 

Similarly to Ukraine, Russia also have its  Basic Law of the Russian Federation on Culture’ (1992). The Basic Law describes human and civic rights as well as cultural rights of ethnic groups and minorities; it determines the state’s responsibilities in cultural sphere; it also divides jurisdiction in this area between federal authorities, regional authorities of the Russian Federation and institutions of local government.

Chapter IV of The Basic Law on Culture describes “Obligations of the State in Cultural Sector”. Here are some of the most important with regard of public funding:

Article 29. State programmes for preservation and development of culture in Russian Federation.

Government of Russian Federation shall design Federal Programmes of preservation and development of culture, which embody the State’s cultural policy and its implementation, and provides funding for such Programmes (…)

Article 30. Obligations of the State on assuring access of citizens to cultural activities and cultural goods.

The State is responsible before its citizens for assuring  general access to cultural activity and cultural goods.

To do so, State authorities and local self-government institutions shall, within limits of their competence:

(…) provide conditions for general esthetic education and basic artistic education, …assure free access to library services and amateur artistic activities;

- establish and support, through tax incentives and financial credits, public and independent cultural organizations and their activities;

- provide budget funding for public cultural organizations and, where necessary,  provide matching funding for independent cultural organizations.

Article 37. Competence of the Federal Government of Russian Federation in cultural sphere.

The competence, as described in this article, includes:

“…drawing federal budget, specifically its parts related to cultural expenditure, creating federal funds for cultural development;

- introducing tax incentives for cultural development, defining minimum levels for budget funding of public cultural organizations;

- assuring direct funding for federally administered public cultural organizations”.

Article 39. Competence of Republics and Oblasts of Russian Federation.

(…) drawing regional programs of protection and development of culture, assuring their funding and implementation;

- establishing regional funds of cultural development…;

- introducing regional norms of budget funding for cultural activities.

Article 45. Financing of culture and cultural activities.

Public funding is the basis of State guarantees of protection and development of culture in Russian Federation.

No less than 2% of federal budget expenses of the Russian Federation shall be assigned to these goals.

Amounts of subsidies for culture in budgets of the Republics of the Russian Federation and in local budgets shall be no less than 6% of total budget expenditure.

…Special regulations for profit taxation of non-commercial cultural organizations shall be introduced”.

Thus the Basic Law of the Russian Federation on Culture attempts to fix federal spending on culture at the level of 2% of all spending and recommends that regional authorities raise this amount to 6%. However, these regulations have not been enforced.

The Law on Taxation  and many other general laws regulating various aspects of economic life, exempt state cultural institutions almost entirely from all kinds of taxes. Federal law on non-commercial organizations was adopted in 1996 adding private and independent institutions to tax exemption practices. However, in late ‘90s financing difficulties of the state limited or even abolished tax exemptions for culture.

In 1995, book publishing and some related activities were made VAT-exempt; in 2002, this exemption was prolonged.

 

1.3.4. Cultural legislation in Poland

 

It is well known that political and economic reforms in Poland began earlier than in post-soviet countries and were more radical. This is true also with regards of cultural legislation. In 1991, a new Bill on organization and carrying out of cultural activities (Ustawa o organizowaniu i prowadzeniu dzialalnosci kulturalnej) was adopted by Solidarity-dominated Parliament (Sejm). It made all legal entities and individuals eligible for carrying out cultural/artistic activities freely, as well as for public financial support of such activities. As a legal ground for decentralization of cultural policy, all public cultural organizations were divided into two groups: state organizations (to be funded from National budget or from regional budgets) and local (community) organizations (to be supported from local budgets).

Among the first group,  the narrower circle of the most important cultural institutions was selected. These were subordinated to the Minister of culture and financed directly from National budget. By 1999, there were 48 National institutions (museums, theatres, libraries, performing arts organizations, historical reserves etc.), 17 artistic colleges, 304 artistic schools.

Voivodships owned and funded 323 cultural institutions (112 museums, 51 libraries, 37 theatres, 52 cultural centers and ‘houses of culture’, 20 philharmonic institutions and symphonic orchestras. Several thousand other public cultural organizations (predominantly libraries and community cultural centers) were funded from budgets of municipalities and communities (Gminy).  

The prominent policy culture theorist professor Kazimierz Krzysztofek in his article “Ewolucja zalożeń i programów polityky kulturalnej w Polsce w latach dziewiecdziesiatych”[4] (The evolution of principles and programs of cultural policy in Poland in the 1990s) notes that:

“The changes [that took place in 1989-2000] in thinking about cultural policy and in its practical implementation were, first and foremost, results of the transformation of the state and the economy, and of their adaptation to EU standards.

The decade of transformation is ending now, and it seems that we have to change the perspective, because we see that the transformation is not heading toward some particular goal. It is obvious that such final goal does not exist, or more precisely it is movable because the modern capitalist world of which Poland is now a part, is inconstant transformation itself”.

 

K.Krzysztofek concludes on the trajectories of Polish cultural policy in the 1990’s:

“First, a common denominator for all governmental cultural programs seems to be sets of priorities, like protection of heritage and cultural education of the society…

Second, each new program showed an increase in the number of priorities, each of them quite right and correct, but the more priorities we have, the lower the rank of each of them;

Third, the area of the state’s patronage over culture has also been increasing with each new program, starting from the doubts about the need of the state’s cultural policy, to the extensive set of obligations and tasks, many of which remained empty declarations because the increase in number of policy priorities has not been followed by increase in financial means;

Fourth, in drawing each new program, an approach of “beginning from zero” is visible; there has been no critical evaluation, negative or positive, of previous program”.

Beside direct funding of public institutions, there is a legal mechanism of budget support to independent cultural organizations: it is called ‘cultural tasks of state importance (“zadania panstwowe w sferze kultury”) and regulated by the corresponding Decree of the Council of Ministry of Poland issued in July 1992. According to the Decree, state may fund following tasks performed by either public or independent actors:

- festivals, artistic competitions, conferences of national importance;

- non-commercial book publishing;

- purchase of works of art for museums, purchase of books for public libraries;

- preservation of historical monuments;

- production of documentary and educational films;

- support of amateur creativity;

- support to Polish culture abroad;

- support to cultures of minorities in Poland.

However, according to experts, both the State and the voivodships do not make broad use of this funding instrument.

The government program document adopted in 1993, Polska polityka kulturalna. Zalożenia. (Polish cultural policy. Foundations) contains a warning against “total commercialization of culture” and proclaims that the state shall not surrender its role as the major donor of culture. However, “moderate commercialization is not a threat to culture”.

The program set forth the following policy principles: decentralization (of both administration and funding); devolution (certain responsibilities have been shifted from national to regional and local level); demarcation of “protected areas” in culture (this means protection from free market forces); direct financial support to the most important cultural institutions. At the moment, heritage and book publishing were defined as the main “protected areas”.

Taxation of cultural organizations in Poland is regulated by a set of bills related to particular taxes.

Income tax is regulated by the Bill on taxation of incomes of legal entities (1992).

Normal taxation rate is 32% since 2000, but earning of cultural organizations are made exempt from this tax by article 17.4 of this Bill. Also, donations of legal entities for cultural purpose are made income tax exempt (up to 15% of total income). Memorial buildings are exempt from tax on real estate as well. Taxation of income of individuals also may be regarded as artists-friendly. The general scale of taxation is 19%, 30% and 40%. However, royalties of artists and authors are subject to special regulation: it is ruled that the amount of expenses that can be deducted from taxation base shall be counted as 50% of the total amount of earned royalties, unless the actual expenses are higher than 50% (in this case, the actual amount is deducted), after which the remaining amount of income is taxed.

Another important legal instrument of indirect financial support of culture is reduced or even zero rate of VAT. The VAT in Poland was introduced in 1993; its normal rate is 22%. However, the following cultural activities are VAT-exempt:

- publications of books and newspapers (save for commercial catalogues and advertisements);

- production of documentaries and educational films;

- screening of films (cinema tickets);

- routine activities of theatres, libraries, museums, galleries, cultural centers, philharmonic institutions, circuses;

- protection and restoration of historical monuments.

 

1.3.4. Conclusions

 

Summarizing this brief review of culture-related legislation in the three countries we can conclude that Ukrainian law is perhaps the least culture-friendly: it provides very little tax relief for earning of cultural organizations and very weak incentives for private donors to culture and the arts.

Ukraine also lacks a specific law on non-profit organizations while in Poland and Russia such laws have been acting for quite a while.

Legal protectionism for cultural industries in Ukraine is also the least developed among the three countries.

 

1.4. Stockholders in cultural policy

 

A discussion of policy-making in cultural sector is supposed to include not only cultural administration (on the national, regional and local level) and representatives of cultural community, but also major government institutions  (the President, the Cabinet of Ministers, regional authorities), as well as the Parliament with its major political groups. Major stockholders in cultural industries with their diverse and sometimes opposite interests should also be included in the analysis. Apparently, the interests of Ukrainian content-providers  (artists, writers, publishers, filmmakers, show business-managers, etc.) rarely overlap with those of import-oriented show business and book trade, as we have seen in our discussion on State policy in book publishing.

Of course, interests and demands of mass consumers of cultural goods and services (in other words, of larger groups of Ukrainian public) should be taken into account as well. The role of the Ministry of Culture and of regional/local authority was discussed before.

Here we will take a look at the positions of major political forces in Ukraine on cultural issues. Once we do this, it is not difficult to come to the conclusion that the absence of broad  consensus on basic principles and concrete mechanism of public cultural policy is not accidental.

To make things less complicated, let’s use the already traditional approach to political groups in Ukraine whereby they are divided into: the left, the national democrats, the liberal reformers, and the ‘centrists’ a.k.a. ‘the party of power’. We have to admit in the first place that for each of these major political forces cultural issues are not of foremost importance and usually a means of achieving more important political goals, particularly those related to nation-building or identity-shaping.

National culture issues used to be especially prominent  in political programs and actions of the national democrats (the label often used for those parties and groups which are now united in Victor Yushchenko’s block ‘Our Ukraine”). Among their cultural-political priorities we see the goal of strengthening National identity of contemporary Ukrainian’s through the development of national culture, return of the previously neglected or even prohibited cultural heritage into active use, and of course the demand to firmly establish Ukrainian language in all key spheres of public life has always been among their political priorities. Not all of this has been achieved so far. And the traditional questions arise: why so, and who is to blame? 

For the national democrats, the usual answer goes that the state has not been firm and persistent enough in pursuing these policy goals. The state didn’t provide enough money for Ukrainian film production and book publishing; the government fell short of enforcing the Law  on Ukrainian language and the Law on Broadcasting which says that 30% of music and 30% of TV programs should be Ukrainian, etc.

Ironically, concrete measures proposed by national democrats so as to achieve their cultural goals and to strengthen Ukrainian identity, very often resemble those practiced by Soviet regime in its latest, mellow  phase. These are mostly administrative, paternalistic ‘affirmative actions’ aimed at ‘Ukrainianization’  of public services, the media, and education. Among the more modern measures proposed by national democrats as we have seen earlier there are legal proposals aimed  at limiting free market influence on national cultural industries by introducing protectionist laws favoring domestic cultural products (films, books, music). Still, they regard state budget as the main source of funding for cultural sphere.

The ‘liberal  reformers’ (for instance, the ‘Reforms and Order’ party led by Victor Pinzenyk) who often act as natural allies of the national democrats against the left and, against ‘the party of power’, are rather indifferent to cultural issues. They seem to either believe that free market reforms, once conducted ‘properly’, should also solve many problems of cultural industries, and increase in budget revenues will hopefully solve the remaining problems of artistic institutions, or perhaps they are not sure whether a free market democracy is supposed to meddle with the arts at all. However, as allies of national democrats, they tend to back policy proposals of the latter.

The left-wing parties (Communists and their smaller allies) traditionally raise a number of cultural issues in their political programs, too. The most important among them are, or course, the role and status of Russian language  (they insist that Russian should be second official language in Ukraine) and the notorious Western pop cultural invasion which allegedly corrupts our people and undermines our values.

They (and not only they) tend to use for their own political purposes the nostalgia for the late Soviet period (a popular feeling among millions of our compatriots of older age), when movies, books and magazines were so nice and decent.

This nostalgia has been often instrumentalized as pro-Russian political and cultural orientation, which turned out to be a mixed blessing for the left. Indeed, there are strong Russophile sentiments in Eastern Ukraine and especially in Crimea, which can be and are used during elections, but cultural proximity and recollections of common past don’t necessarily mean readiness to sacrifice national independence. On the other hand, for Western Ukraine and for urban intelligentsia virtually everywhere in Ukraine, this orientation shaped a strong stereotyped image of Communist Party of Ukraine as an anti-patriotic political force.

There is a number of political groups (or, rather, of business-administrative-political  syndicates) with rather blurry ideologies and controversial public images   who call themselves ‘centrists’ but are often called ‘the party of power’ by observers and journalists. During the 2002 parliamentary elections, these parties and groups merged into pro-presidential block ‘For United Ukraine’ and today,  they  form a shaky majority in the Parliament.

Their ideas about culture and cultural policy seem to be as blurry and opportunistic as the political ones. After a period of  ‘cultural apathy’ which followed President Kuchma’s famous remark that ‘National idea didn’t work’, there has been  a short-lived ‘new wave’ of the government’s interest in national culture. As manifestations of this ‘new old approach’, I can mention increased number of folklore festivals, several restored historic buildings (including two historic cathedrals in Kyiv ruined by the Soviets in 1934 and in 1941), and a number of newly created monuments to prominent national leaders of the past.

There was also a number of Presidential Decrees allegedly aimed at supporting the arts and culture, but concrete measures provided by these decrees (scholarships and stipends to prominent artists, etc) were of limited importance.

The role of regional and local authorities and regional elites was touched already in our discussion of culture funding in the regions. We can only add here that they very seldom take an active in cultural policy issues of national scale (perhaps the only such case has been the radical position of regional elites in Lviv on music FM stations airing predominantly Russian music).

The groups that can be called ‘industrial lobbies’ (those representing the book industry, the film industry, the musical industry and the show business in Ukraine) tend to be much more active in policy making process. For instance, major Ukrainian book publishers, in alliance with the Ministry of Information Policy, initiated virtually all protectionist bills related to book publishing. Ukrainian Filmmakers Union, in alliance with Film Department of the Ministry of Culture, initiated the bill on dedicated tax on cinema tickets. These industrial lobbies usually interpret their initiatives as serving best interests of Ukrainian economy and society as a whole, although this is not necessarily so. For instance, the proposed 10% tax on cinema tickets will almost inevitably make them more expensive and less accessible to general public. Since the revenues raised from this tax will be spent on Ukrainian film productions, this will serve only those cinema goers who prefer Ukrainian films.

The interests of industrial lobbies and of different groups in cultural/artistic community are represented by several NGO’s, including the traditional (national) artistic unions and the newer ones, like the Association of Ukrainian book publishers (very active in promoting the 2002 bill ‘On State support to book publishing’), or the recently created umbrella group Young Artists’ Forum. However, as the story with the book-protecting bill demonstrates, these groups are still much less powerful than government bodies in promoting the interests in cultural sector. 

 

2.     The existing policy of culture funding

 

2.1. Direct Public Funding of Culture  

 

As was mentioned before, public subsidies to cultural organizations still remain the major source of their funding in all three post-communist countries covered by this analysis, which makes their public cultural sector very vulnerable in times of budget difficulties.

As financial statistics show, public funding of culture in Ukraine plummeted in 1993-1998, and although the nominal amount increased in 1999-2001, it has been declining both as a share of Ukraine’s GNP and as a share of State budget (see Table 4.1).

We can see that in 1999 (the next year after the deep financial crisis) actual public expenses on  culture and the arts were slightly above 60% of the 1996 level, and this level has not been reached even today. Ukraine’s cultural expenditure as a share of GDP have hardly reached 1/3%, and as a share of consolidated public budget expenditure, it has been slightly above 1%. When we turn to Poland and Russia for comparisons, we see that, while Ukrainian public cultural expenditure in relative terms is only slightly lower than in these countries, in absolute per capita figures it is much lower ( Table 5).

 

Table 5.  State support to culture in some post-communist countries,  2000

 

 

Ukraine

Poland

Russia

Share of cultural expenses in National and Federal budgets

0,53 %

0,8 %

 

Share of Federal (National) budgets in total public expenses for culture

15 %

15,4 %

16 %

Per capita public cultural expenses, total

$1,8

$17

$5

Share of cultural expenses in regional and local budgets

3%

3,12%

2%

Per capita income (1995)

$1630

$2800

$2240

 

Although Ukraine’s per capita GDP has been almost 75% of that of Russia, Ukraine’s public cultural expenses per capita (approx. $ 1,8 in 2000 and $2 in 2002) are disproportionately lower than those in Russia ($5). The comparison with Poland is even more striking: Ukraine’s per capita GDP is almost 60% of the Poland’s, still its cultural expenses are almost 10 times lower.

 

Table 5.1. Share of culture expenditure in total expenditure of State budget of Poland

 

Year

1991

1992

1993

1994

1995

1996

1997

Share, %

1.0

0.81

0.76

0.75

0.77

0.76

0.82

 

However, the data in the Table 5.1 show that even in better-off Poland, it has been hardly possible to keep the share of cultural expenditure at the 1991 level of 1%.

Looking at the distribution of public funding of cultural sector between the national level and the local levels (see Table 5), we find the figures for the share of the national budget in all three nations  almost identical (15-16%). One may conclude from this that, in Ukraine, the degree of underfinancing is spread over all levels of cultural infrastructure.

In Poland, on the other hand, the share of local administration in cultural expenditure has been continuously increasing through the 1990s (see Table 5.2), as a result of the policy of consistent decentralization.

 

Table 5.2 Breakdown of public cultural expenditure in Poland 1991-2000 (%)

 

 

1991

1992

1993

1994

1995

1996

1997

2000

Ministry of Culture

17.4

18.5

19.5

19.9

20.1

19.4

17.3

15.4

Other Government departments

4.9

2.7

1.0

0.9

0.9

1.1

1.2

 

Voivodships

36.0

35.1

32.5

30.0

30.5

28.5

29.9

20.2

Communities (Gminy)

41.7

43.7

47.0

49.2

48.5

51.0

51.6

26.5 – powiaty

37.9 - gminy

 

Cultural funding priorities in the three countries are also to some extent similar.

It is visible from Table 6, that Poland spent 14% of its cultural budget on museums in 2000; Russia spent 34% ; while Ukraine - only 5,6%! As for performing arts, our neighbors spent several times less on them than Ukraine. Why  so? Since performing arts and mass entertainment events do not belong to explicit priorities of Ukraine’s cultural policy, we can only speculate about it. One possible reason is, that Ukrainian government likes grand pompous actions. Another possible reason is, that big performances are a convenient tool of money-laundering.

 

Table  6.  Breakdown of cultural expenditure in national budgets of

some post-communist countries, 2000

 

 

Ukraine

Poland

Russia

Museums, galleries

5,60 %

14 %

34,0 %

Heritage

8,50 %

13 %

6-9 % ***

Libraries

8,04 %

4,6 %

8,3 %

Artistic associations

2,6  %

2,4 %

 

Theaters

 11,10 %

8,1 %

 

Performing arts (musical) organizations

  38,60 %*)

2,1 %

11,7%**)

Film

 10,20 %

0,5 %

8,8 %

Artistic education (schools, colleges)

 15,60 %

47%

9,7 %

*) «National-scale mass cultural actions» included.

**) All performing arts.

***) Estimated as 1/2 of expenditure of the Federal Program of Protection and Development of Culture in RF.

 

Financial responsibilities of the Ministry of Culture and of local cultural administration are rather different Table 7 The Ministry’s care focuses on National cultural organizations (theaters, opera houses, museums etc), artistic colleges and circuses. It also dedicates nearly 40% of its expenses to performing arts, festivals, exhibitions of national importance. On the other hand, local authorities fund most of public libraries, theaters and museums. Let’s look at the breakdown of cultural expenses at national level, in other words, at the expenses of the Ministry of Culture (see Table 8.1) for the dynamics of funding in 1993-2001, and Table 8.2 for a more detailed picture of the Ministry’s expenditure in 2001 and 2002. At least two questions arise from first-glance analysis of Tables 8.1, 8.2.

First, once we know that there were no serious changes in public cultural infrastructure during the 1990s, why shares of funding for particular types of organizations has been so unstable (for instance, «museums and exhibitions»: 1993 - 9,7%; 1996 - 6%; 1999 - 7,5%; 2001 - 14,5%; 2002 - 6,8%). For libraries, the amount of funding oscillated between  10,5% (1993) and 4,3% (1998); for film productions between 1,3% (1998) and 10,2% (2000).

Second, why as much as 40-48 % has been spent on performing arts (in 1998-2000, this item included «mass cultural actions» as well)?

Unlike budget subsidies to public cultural organizations, funding of major cultural events (festivals, big shows during national holiday celebrations, big exhibitions etc) is formally based on competitive tendering. This form of funding is also known as «targeted funding» because the money must be spent on achieving particular «targets». As can be seen from Tables 8.1, 8.2, the share of «targeted funding» can be as high as 25-30% in some years.

One may argue that, once this funding is competition-based and non-public organizations also may be eligible, this form of funding presents an alternative to traditional yearly subsidies to public cultural organizations.

However, the procedures of competition are not transparent and there are usually no more than 2-3 competitors (and the future winner is usually known from the beginning). Also, only pre-planned events (projects) may be funded in this way.

Recapitulating the problems of direct budget funding, we must note that it is not the instability of the structure of cultural expenditure in the National budget, or its arguable disproportion, or the marginal role of project-oriented funding schemes, that can be defined as the biggest shortcoming of Ukrainian state’s cultural budgeting. Perhaps the most depressing effects have been caused by periodical budget underperformance which has become almost a rule in the 1990s.

The data on public funding of culture in Table 4 are a little bit misleading in this regard, for they represent consolidated budget of Ukraine (that is, total amounts of public cultural funding on all levels of administration – national, regional, local). The figures of “planned amount” have been calculated by the Ministry of Finance, while the amounts planned by local authorities themselves are usually remarkably higher (see also Table 9.2). So, when we compare the actual cultural expenses on the national level to the planned amounts (see Table 8.2 for 2001 and 2002) we can see that the level of actual budget subsidies tends to be around 70% of the planned level.

Still worse, this underfunding is not spread over all major items more or less equally; it usually differs remarkably for different groups of organizations which can be interpreted as the use of underfunding as a kind of policy tool.

For instance, in 2001 (see Table 8.2) actual budget subsidies given through the Ministry of Culture were only 150 mln. UAH (planned amount 215 mln.). Artistic colleges and schools got almost 100% of the planned 38,9 mln., while theaters and other performing arts organizations got 41 mln. (instead of 49,7 mln UAH). “Non-artistic” organizations (libraries, museums, heritage) got less than  half of the planned (27,37 mln. instead of 62,5 mln.).

Similar practice continued in 2002: artistic colleges and schools got 92,5% of the planned; National creative unions got 99%, while libraries and museums got only 38% of the planned subsidies.

It is hard to guess which policy goals, if any, stand behind this re-shaping of cultural budgets, but the results for those who seem to be “black sheep” are undeniably depressing.

Let’s take film making. Table 8.3 shows the levels of budget underfunding for filmmaking and the number of full-length films released each year (production usually takes 2-3 years, because of irregular funding).

The statistics in Table 8.3 show how dramatic has been the impact of bad funding (in the absence of private investors) on Ukrainian film.

 

Table 8.3 Film production and its funding in Ukraine

 

Year

Level of actual budget funding, %

Number of full-length films released

1991

 

68

1993

 

47

1996

68,7%

8

1997

71%

7

1998

27,2%

4

1999

14%

7

2000

95%

4

2001

66%

8

2002

38%

7

 

2.2. State budget funding of culture in Russia and Poland

 

The financial crisis in Russia of 1997-98 gave way to periodical sequestering of the budget, culture expenditure included. As a result, financing for public cultural institutions was limited to salaries and even those were paid with several month’s delay. In 1997,  the underfinancing of culture reached the record low level of 12% of the approved budget, which deprived of all financing several cultural projects included in  the Presidential program for cultural development.

When we take look at a more detailed account of Polish cultural expenditure on the national level (see Table 8.4, 8.5), we see numerous similarities with Ukraine, but also a few significant differences.

 

Table 8.4 Breakdown of  expenses of Ministry of Culture of Poland in 1991-1997

 

Expenditure

1991

1992

1993

1994

1995

1996

1997

Total expenditure of the Ministry of Culture and the Arts

PLN            %  of  previous year*

155        

 

290

227744

 

102.6

304399

      98.8

419170

    104.2

537758

    100.4

657832

    102.0

782984

    103.6

Structure of expenditures by budget classification (% from total expenditure)

Of which:

100.0

100.0

100.0

100.0

100.0

100.0

100.0

‘Material services’**

4.3

4.7

4.3

3.5

3.0

2.8

2.8

Education ***

28.7

30.9

30.9

31.2

27.8

27.5

31.1

Higher education

15.2

15.5

14.6

13.2

13.8

15.6

16.4

Culture and the arts

46.7

44.8

46.2

48.2

51.2

50.0

47.3

Other activities

0.5

0.5

0.3

0.3

0.3

0.4

0.4

Administration

4.6

3.6

3.7

3.6

3.9

3.7

2.0

* corrected by inflation rate

** predominantly film production

*** artistic schools

 

As Table 8.4 shows, since 1994, there has been a slow increase in real culture expenditure  each year. However, the breakdown of expenses has been almost as unstable as in Ukraine (for instance, expenses for filmmaking varied between 2,8% and 4,7%; total expenses for education – between 41% and 47,5%; expenses for museums and heritage – between 32,5% and 53%; for theatres – between 9,4% and 16,1%, etc.). However, there has been a general trend of constant increase of expenses for heritage-related items (museums, libraries, heritage sites): from 45% of total expenses for “Culture and the Arts” in 1995 to 65% in 2000.

 

Table 8.5 Dynamics of expenditure of Ministry of Culture of Poland for the item “Culture and Arts”, 1991-2000

 

Expenditure

1991

1992

1993

1994

1995

1996

1997

2000 *

Total expenses, thousand PLN

72500

101993

140598

202079

275194

329037

370012

433534

As % of previous years

100

98.38

101.89

108.72

106.56

99.72

97.87

 

 Structure of expenditures for culture and arts (as %)

 

Museums

32.3

31.2

29.4

25.4

23.9

26.5

31.3

28.5

Heritage

3.7

3.5

3.1

13.4

11.3

14.0

18.7

24.6

‘Zacheta’ art gallery 

1.2

1.9

1.4

2.1

1.6

1.6

1.7

1.1

Filmotheque 

0.4

0.4

0.3

0.3

0.3

0.4

0.4

0.6

Centers of Arts

2.6

2.1

1.8

1.9

1.5

1.4

1.5

2.7

National library

8.6

10.8

9.0

9.5

9.7

8.1

8.6

9.2

National arts and cultural organizations

3.8

3.3

2.8

2.8

4.0

3.6

4.0

4.6

Theaters

10.4

10.2

10.6

10.3

9.4

12.5

16.1

16.1

National philharmonic

2.8

2.7

2.9

2.5

2.6

2.4

2.99

 

State concert department

0.1

0.1

0.1

0.1

0.1

0.1

0.18

4.1

Cinema organizations

4.8

3.4

3.4

2.5

1.6

1.3

1.25

0.3

Other expenditures

29.3

30.3

35.1

29.2

34.0

27.9

13.8

 

* WWW. CULTURALPOLICIES.NET /PROFILES/ POLAND

 

However, clear comparisons between Ukraine’s and Poland’s cultural budgets are somehow complicated by the fact that, in Poland, education and filmmaking do not belong to “Culture and the Arts” expenditure (see Table 8.4),  while the latter cover 47-51% of the Ministry’s expenses. That is, heritage-related expenses actually make not 65% but 31% of the Ministry’s total expenses. Still, it is remarkably more than in Ukraine (15%-18%).

 

2.3. Funding through targeted programs

 

There are no explicit legal regulations for contents, design and implementation of targeted programs in Ukrainian law so far (the Cabinet of Ministers presented the draft bill “On State Targeted Programs” to the parliament, recently and the latter already included it in its agenda).

However, targeted programs are mentioned in the Law “On State Forecasts and Programs of Economic and Social Development in Ukraine” (approved in 2000). This bill rules that the Cabinet of Ministers shall design and present for the parliament’s approval, alongside the draft National budget for each year, the draft State Program of economic and social development of Ukraine which must correspond to the draft budget.

Article 8 of this bill defines that the State Program must contain, among other elements:  “…a list of state targeted programs to be financed from the National budget in corresponding year. (…)

State targeted programs must contain:

- main phases and deadlines for their implementation;

- amounts of funds necessary for each program (total funding and funding for each particular year), and sources of the funding;

- concrete results of each targeted program;

- amount of funds needed by each targeted program in the planned year; including the amounts needed from National budget;

- state Administration bodies which commission each particular targeted program”.

There are four main reasons for the use of targeted programs as cultural policy tool:   - first,  targeted programs serve as a means of making the Government’s  work more effect-oriented and evaluable;

- second, with the routine one year budgeting spin, only targeted programs (for a period of 3,5 or more years) can serve as a means of planning and accomplishing something which can not be achieved in one year period;

- third, national (federal) targeted programs usually combine national, regional, local funding with non-public resources, which cannot be provided by routine budget funding process;

- fourth, specific targeted programs seem to be indispensable if there is a large-scale problem which cannot be solved in a routine way, that is, if much more than usual amount of public resources is needed to cope with it.

It should be noted, however, that targeted programming as a method of planning and investment was also used in the former Soviet Union (but not in the cultural sector). This perhaps explains why there are so many elements in the targeted programming in Ukraine which remind us of old Soviet times.

To have an idea on how targeted programs are being used in cultural sector, let’s take a look at the list of culture-related targeted programs approved in Ukraine in 2002 (Table 8.6).

 

Table 8.6 Culture-related State targeted programs approved in Ukraine in 2002

 

 

Program name

 

Approved by:

Funding, mln. UAH

Total

National budget

All-State program of the development of national film industry in 2003-07

Law of Ukraine

¹ 361-IV, 25.12.2002

609,69

130,6

State program for the development of social infrastructure of the country-side till 2005

The President’s Decree ¹ 640, 15.07.2002

60,8

(for cultural aspects)

20,4

(for cultural aspects)

Program of development of extracurricular school education in 2002-2008

Decree of the Cabinet of Ministers  ¹ 378, 28.03.2002

46,5

1,4

Program of the development of museums till 2005

Decree of the Cabinet of Ministers**

¹ 442, 30.03.2002

130,4*

57,6*

Program of the development of local lore studies till 2010

Decree of the Cabinet of Ministers**

¹ 781, 10.06.2002

0,475*

0,475*

“for each year”

Program of replenishment  of public library stocks till 2005

Decree of the Cabinet of Ministers ¹ 900, 1.07.2002

28,1*

19,14*

Complex program of the preservation of cultural monuments of the State Reserve “The Hetman’s capital” and development of social infrastructure of the town of Baturyn

Decree of the Cabinet of Ministers ¹ 1123, 17.08.2002

38,4*

21,6*

Program of technical modernization of National O.Dovzhenko Film Studio

Decree of the Cabinet of Ministers ¹ 1294,

20.08.2002

20

19,7

Complex program of certification of cultural heritage objects for 2003-2010

Decree of the Cabinet of Ministers ¹ 1330, 9.09.2002

183,5* (appr. 22 mln. for each year from region. budgets)

8,6*

State program of support of National creative unions for 2003-2005

Decree of the Cabinet of Ministers**          ¹ 1398, 19.09.2002

0,835

0,535 (including 0,3 mln. for grants to first stage of Ukrainian plays).

 

* “Estimated costs”

** The Decree specifies that the funding for this program should be within the limits of funds provided by National and local budgets for corresponding years.

 

However, one has to see culture-related programs in the broader context of target programming in public budgeting in Ukraine to be able to locate the place of culture among the state’s priorities (see Table 8.6a)

 

Table 8.6a. State targeted programs included in the National budget for 2003

 

 

Number

Total funding,

 mln.

From National

budget, mln.

All targeted programs

182

23 434,8

11 102,3

Culture-related programs

18

88, 54

29,7

Share of culture-related programs (%)

9,9%

0,4%

0,27%

 

We see that, despite the remarkable number of culture-related programs, their share is almost negligible.

The lack of general rules on composition, contents and certification of state programs is clearly visible in the contents and the legal status of the 10 programs listed in Table 8.6.

Most of them were approved by the Cabinet of Ministers and contain only estimated amounts of funding (however, some of the programs contain no explicit figures of total expenses at all); one program was approved by Presidential decree, and the program for development of film industry was enacted by a special law in December 2002, and therefore is obligatory. There is some confusion caused by the latter program, however: it seems that the “smaller” program of modernization of National film studio approved by the Cabinet of Ministers in August, 2002 has been overlapped by the “bigger” program approved later by the Parliament. But since there are no rules to deal with such situations, the “smaller” program was not been cancelled yet.

We know that to be enacted and funded, all programs approved by the Cabinet need including in the National budget; otherwise their character is only recommendational. According to the Ministry of Economy, there have been 206 approved state targeted programs covering the year 2003; but only 182 of them were included in the budget for 2003; the remaining 34 exist only on paper. The recommendatory character of the majority of targeted programs can be seen in the Cabinet’s Decrees they were approved by. Concerning the funding, the Decrees usually use the cliche phrase: “the funding shall be within the limits of allocations provided by National [local] budgets for corresponding years”.

This means, as a matter of fact, that those implementing the programs have to compete for funds with those doing routine work in the same sector of public cultural infrastructure.

For instance, the “Program of the development of museums till 2005” (total expenses 57,6 mln. UAH from National budget in 3 years) can count on a share of the usual amount of allocations to state museums which has been at the level of 20-25 mln. UAH in 2000-2002 (see Table 8.1, 8.2). This makes the implementation of the program rather problematic.

By comparing the amounts of funding needed for targeted programs in Table 8.6 with the actual amounts of state subsidies to corresponding sectors of culture sphere Table 8.2 we can amplify this pessimistic conclusion over the majority of targeted programs. The only exclusion is perhaps the Program of support to National creative unions (with 0,535 mln. UAH for 3 years, comparing to 5,17 mln. UAH given to the same National unions in 2002 alone) it doesn’t seem too difficult to accomplish. But the question arises: if only 0,535 is enough to support the National creative unions for 3 years, what the remaining 4,6 mln. are spent for?

Even a brief study of the contents of the programs listed in Table 8.6 allows us to make some more observations. First, there is a number of strictly sectoral programs which deal with the [under-] development of certain sectors within culture (libraries, museums, local lore studies, institutions of extracurricular education) and are rather limited in their score and goals. For instance, the Program of the development of local lore studies consist mostly of educational and research activities in which several government and academic institutions are engaged (Ministry of Education and Science, Ministry of Culture, National Academy of Science etc.).

The Program of replenishment of the stocks of public libraries is even more narrow in its means and goals; it consists completely of the tasks which seem to belong to libraries routine activities, while any new general approach to the mechanisms of replenishment of library stocks is absent.

The Program of development of museums also consists mostly of museums’ core (or even routine) activities (repair, renovation of the displays, acquisition of new exhibits). However, there are some non-routine tasks in it, for instance:

- creation of ten new public museums in different cities of Ukraine (funded from local budgets, not from national budget);

- development of the State Register of Objects of National Cultural Heritage;

- “comprehensive investigation of the situation of museums’ stocks”.

It seems that the main reason for the emergence of these programs was precisely the insufficient budget funding of museums and libraries: year after year they have had enough money only for salaries and maintenance of buildings, and no funds to buy new books or to renovate museum displays.

Another type of targeted programs is presented by the Program for “Hetman’s Capital” historical reserve in the town of Baturyn (which includes a set of tasks aimed at the renovation and development of both the historical site and the town itself) and by the Program of technical modernization of National Dovzhenko Film Studio. Both programs are of rather limited character, and the reason for state intervention (in Baturyn’s case, also for the intervention of the regional administration in Chernihiv) is perhaps the lack of necessary resources both in Baturyn and in the film studio.

On the other hand, there is an example of a more elaborated, strategic and comprehensive approach to targeted programming: the Program for development of National film industry which will be analyzed later in more detail and in comparison with the similar Russian program.

 

2.3.1.  Targeted funding of culture in Russia

 

Targeted programs are not unique to Ukraine, though. Targeted support for culture has become common in Russia in the 1990s. The development of targeted programs is considered a means for more effective and efficient funding of cultural public sector, in the regions especially.

The emergence of the targeted support of culture in Russia was stimulated by changes in the  system of budget expenditure on culture after the collapse of the USSR in 1991. Because the Ministry of Culture of the RF no longer approved local budget’s expenses for culture and the arts, it attempted to regain its former influence on local cultural policy, in part, by obtaining funds from the federal budget to do so, in addition to funds for organizations under its direct control. These demands became the rationale for targeted programs.

Initially, targeted programs for culture have been designed and implemented according to the old Soviet planning techniques, but in 1993, there was an attempt to change the procedure for developing targeted programs by introducing a competition for federal grants to cultural projects. Independent board of experts was created to evaluate applications for funding.

The Ministry of Culture of the RF launched the competition and selected a number of projects to receive state funding. However, the federal government failed to live up to its financial commitments. Initially, 108,400 million RUR were allocated for the Federal program for the preservation and development of culture and the arts. In the autumn 1993, the allocation was reduced to 97,100 million RUR, although only 83,100 million had been effectively allocated by the end of 1993. Unsurprisingly, all available funds went first of all to cover the expenses of public institutions under the direct control of the Ministry of Culture. More than half the funds were directed towards the restoration of historical and cultural monuments, and support to library and museums collections. The targeted programs were financed according to the residual principle. The selection of projects thus lost its meaning.

In 1997, the Presidential Program for the development of culture was adopted. The major tasks facing cultural development in Russia for 1997-99 were set in this program as follows:

- to create conditions necessary for the widest possible access for all social groups to national and international artistic and cultural works, assure freedom of creativity, cultural and spiritual development of individuals;

- to preserve the historical and cultural heritage of the peoples of Russia as a factor for unifying different social and cultural groups;

- to develop the principle of federality, that is to implement cultural policy at territorial and local government level, where the state and the people interact more naturally.

Due to the economic crisis, these goals, especially that of development, have not been entirely achieved.

In 1998, the level of budget funding of the Presidential Program fell to 12% of the planned amount.

However, the idea of the targeted program as a key instrument of culture funding has not been abandoned.

In 2000, the Federal targeted program Culture of Russia 2000-2005 was adopted.

The ‘strategic goals’ of this Program were articulated as follows:

- preserving cultural potential and heritage of the country, providing continuous development of Russian culture and diversity of cultural life;

- maintaining unity of Russia’s cultural space, providing equal access to cultural activities and goods for the inhabitants of different territories and those belonging to all social groups, promoting cultural dialogue within the multiethnic state;

- shaping individual and group orientations towards values which promote successful modernization of Russian society.

Among the “main tasks” of the Program were:

- providing logistical, legal and financial support for professional creative activity and development of the market for professional artistic products;

- preserving national artistic traditions and assuring development of Russian theater, music and fine arts, sustainable development for film industry by reorganizing state sector and promoting of market interaction between film production, screening and audio-visual presentation;

- in 5 year period, radical change in the infrastructure and technological resources of federal cultural organizations should have been achieved.

The Program’s total budget was established at 49,1 billion RUR (around $ 1,6  billion; see Table 8.7).

The Federal Program consists of several subprograms:

“Development of culture and preservation of heritage of Russia” (total funding 27,8 billion rubles, from federal budget – 19,9 billion rubles);

“Film of Russia” (total funding 19,7 billion rubles, federal budget – 7,45 billion rubles);

“Archives of Russia” (total funding 1,5 billion rubles, federal – 0,98 billion rubles).

 

Table 8.7 Expenses for the Federal Program ‘Culture of Russia 2000-2005’

 

Source

Total (bln RUR)

2001

2002

2003

2004

2005

All sources

49,15

5,07

8,3

9,8

12,04

13,95

Federal budget

28,4

2,23

4,84

5,84

7,24

8,26

Regional and local budgets

7,84

1,15

1,33

1,52

1,78

2,05

Non-budget sources

12,9

1,7

2,12

2,44

3,02

3,64

 

Since the scheme of targeted programming has had such an important place in Russia’s cultural policy, and since the similar targeted program of development of National film industry was adopted in Ukraine recently (January, 2003), we found it relevant to analyze comparatively in more detail the Ukrainian program and the “Film of Russia” subprogram of the federal program “Culture in Russia” discussed above.

 

Case Study 2: Targeted programs for film industry in Ukraine and Russia

 

All-State Program for development of National Film Industry in 2003-2007

 

The program was designed by Ministry of Culture and the Arts of Ukraine (as a matter of fact, by the Ministry’s department of cinematography in association with National O.Dovzhenko film center) and approved by the Supreme Rada (Parliament) of Ukraine on December, 2002.

The legal status of this program is therefore unique among culture-related targeted programs activated in 2002, because only this one was enacted by the special law.

This is how the current situation in Ukrainian film industry is described in the introductory part of the Program:

There are 5 state-owned film studios and more than 20 private studios in Ukraine (…) Ukrainian film production plummeted in the 1990s: only 4 full-length feature films and 29 documentaries and animated films were produced in 2001, which makes about 10-15 % of the production level of late 1980s (…)

Today, approximately 6,8 thousand “film-screening units” (that is, halls equipped with film-screening equipment) exist in Ukraine, including over 500 cinemas. The rest are mostly halls in the village clubs (houses of culture) possess film-screening equipment. Among the cinemas, only 62 have been modernized and technically re-equipped recently (…)

Cinema attendance has also dropped dramatically through 1980s-1990s and is now at the level of 0,15 visits per capita per year. However, there has been a tendency to slow increase in film attendance during the last 2-3 years (mostly in big cities). The majority of public cinemas make losses from core activities and are able to survive only due to lease of their premises to other businesses.

 Film market and TV in Ukraine are 95% dominated by exports, mainly from the US and Russia.

The National Program defines its main goal as follows:

“The key goal of the Program is the provision of conditions necessary for development of national film industry in market environment, as well as for the restoration of the role and the impact of Ukrainian film on the society”.

The Program envisages the following set of targets to be reached:

- “assure State protectionism of domestic film productions;

- shape a modern national film industry, including priority development of the producer-led scheme for film production;

- assure state support to all businesses, public or private, active in Ukrainian film industry;

- reform the existing technical infrastructure of the industry;

- implement the regional programs for development of cinema services for the population;

- reach the following target levels in yearly film production (after 5 years of the Program’s implementation):

- 30 full-length feature films;

- 120 episodes of TV series;

- 30 animated cartoon films;

- 500 min. of animated series for TV;

- 5 000 min. of documentaries.

However, no direct funds for support of film production is provided in the program, which of course make these targets quite problematic.

In the cinema infrastructure, 250 cinemas should be renovated and technically modernized during the 5 year period (almost 60% of the Program’s total budget is allocated for this, but there are no funds from national budget in this amount).

Increase in cinema attendance shall be assured so as to reach the level of 2,5 visits per capita per year by 2007;  revenues from ticket sales shall reach the level of 200-250 mln. UAH (40-45 mln. USD) by 2007.

There is also a number of concrete tasks to be accomplished so as to achieve the goals of the Program:

- a set of new legal regulations for the industry should be designed and introduced so as to provide relevant legal environment necessary for the success of the Program;

- privatization (désétatisation) of film enterprises and cinemas shall be promoted, assured that the privatized businesses don’t change their activity profile;

- regional programs for development of cinema services shall be carried out in all regions of Ukraine;

- public TV channel “Culture” should be developed (23% of total Program budget);

- market mechanisms in film industry should be actively promoted;

- film/video piracy should be eradicated;

- technical modernization of public film enterprises (studios, cinemas) should be carried out.

As for the sources of funding, the Program envisages improvement of the tax system, including introduction of tax incentives for businesses active in film industry, the creation of supportive market environment”, and support to public-private partnership schemes in funding of film productions.

It is also stated that “public funding for the Program in 2003-2007 will be assured by including the necessary amounts of budget allocations [for the tasks defined by the Program] in State and regional budgets for each year”.

 

Table 8.8 The All-State Program of development of the national film industry in 2003-2007

 

 

Program tasks

 

Years

Funding

Total

State budget

Other sources

Program as a whole 

   %

2003-07

609,7

100%

130,6

21,4%

479,1

78,6%

of which, in each year:

 

 

 

2003

2004

2005

2006

2007

100,56

89,9

122,26

133

163,9

13,56

18,2

29

40,9

28,9

87

71,7

93,26

92,1

135

Development of the “Culture” TV channel;

as % of total expenses of the Program

2003-07

140

 

23%

61,7

 

10%

78,3

 

13%

The restructuring of the Institute of Drama and film arts into the Academy of theater, film and television;

as % of total expenses of the Program

2004-07

 

 

 

 

5,15

 

 

 

 

0,85%

5,15

 

 

 

 

0,85%

-

Repair and technical modernization of no less than 2 cinemas in each of 25 regions per year;

as % of total expenses of the Program

2003-07

 

 

 

 

 

368

 

 

 

60,4%

 

-

368

 

 

 

60,4%

Technical modernization of state-owned film studios (the National Dovzhenko studio, the National Cinematheque);

as % of total expenses of the Program

2003-07

99,56

 

 

 

 

16,3%

56,7

 

 

 

 

9%

42,86

 

 

 

 

7,3%

Technical modernization of the National Dovzhenko Film Center; creation of the Museum of audio-visual culture;

as % of total expenses of the Program

2003-07

6,68

 

 

 

1,05%

5,42

 

 

 

0,9%

1,26

 

 

 

0,15%

Other (legal improvements, development of the network of centers of Ukrainian film, etc.)

2003-07

Funding will be provided by other programs, including the regional programs for development of cinema services for the population.

 

The Program envisages the introduction of the [dedicated] film tax (10% of film ticket price), revenues from which will be spent on public financial support to domestic film productions.

As its funding priority, the Program envisages the technical renovation of the three “basic national film institutions”:

- the National Dovzhenko Film Studio (for feature film production);

- the National Cinematheque (for documentaries and animated cartoon production);

- the National Dovzhenko Film Center (research center and film archive).

More than 16% of the Program’s budget (mostly from the State) shall be spent on the renovation. A more detailed picture of how the Program’s budget should be formed and spent is presented in Table 8.8.

 

“Film of Russia” subprogram

 

This subprogram is a part of the Federal program of development of culture and the arts for 2000-2005.

Its introductory chapter says it is based on the “Concept of the development of film industry in the RF till 2005” adopted by Russian Government on 18.12.1997. This Concept understands “the national character of Russian film as an artistic genre which plays special role in the audiovisual communication system; and as a means of the state’s social policy”.

Main goals of the Film of Russia subprogram are defined as follows:

“ - stabilization of domestic film production at the level which assures permanent presence of Russian films in the country’s cinemas;

- preservation of viable infrastructure of film industry, both public and private, which would assure normal development of Russian film, with certain support from the state;

- assuring effective cooperation between federal administrative bodies, administrations of the subjects of the RF, and local self-government, in state regulation and state protectionism policy in film industry”.

Main tasks of the Subprogram are defined as follows:

“- increase film production and the competitiveness of Russian films, under the circumstances of the massive presence of imported film production in Russian cinemas;

- assure the shift in the structure of film market in favor of Russian films;

- improve the mechanisms of distribution of domestic films;

- provide state support for the investment program in the film industry;

- increase the presence of the Russian films in international cultural space”.

The Subprogram gives a grim description of the current situation in film production:

“In recent years, Russian films, produced with very low budgets, have been unable to compete with foreign products which dominate the cinemas (in 1999, the share of foreign, predominantly American, films has been more than 93% of Russian markets). As a result of insufficient funding, the subprogram “Development of domestic film” of the Federal targeted program “Development and protection of culture and the arts in RF” (1997-1999) has not been accomplished.

Current situation suggests that the perspectives of Russian film industry depend on the renewal of the interest of the broad public in the phenomenon of Russian film. This is why the Ministry of Culture and the Union of Filmmakers of Russia insist on the necessity of restoration of state’s commissioning of film productions”.

The Subprogram proposed the following strategies in the development of film production:

“the renaissance  of domestic film industry, its technological modernization;

increase in film production, so as to reach the level of 457 feature films per year (of these, 202 films funded by the state); 8647 episodes of non-fiction films (3147 funded by the state); 514 episodes of animated cartoons (314 funded by the state); 60 TV series”. To achieve this, more than 60% of the Subprogram’s total budget will be spent (see Table 8.9).

The Subprogram also provides serious measures aimed at reforming film distribution and projection. There have been 1539 cinemas and over 19 thousand public halls equipped with film projection units in the RF in 2000. Of these, only 80 cinemas have been modernized and possessed Dolby Stereo equipment (31 modernized cinema halls are in Moscow, the remaining are in 29 other Russian cities). During the 1990s, federal and regional administration created the network of Centers of Russian Film (CRFs) where only domestic productions are shown. The Subprogram’s authors believe that the CRFs are a relative success: the attendance in the CRFs grew by 20% in 1999 comparing to 1998. However, Russian movies rarely appear in “normal” cinemas, other than CRFs.

The Subprogram envisages the following goals to be achieved in public film distribution:

- further development of the CRF network; creation of the network of federal cinemas (owned and administered by the Ministry of Culture of the RF);

- introduction of electronic system of ticket sales in all cinemas, so as to provide credible film statistics;

- introduction of certification of cinemas and licensing of certain film-related activities.

Almost ¼ of the Subprogram’s budget will go for the support of film distribution.

The Subprogram also states that the industry’s demand in capital investment in 1997-99 was satisfied by as little as 0,4%, and puts forth the following investment priorities:

- the development of federal cinema network;

- the renovation and modernization of the existing cinemas to be converted into CRFs;

- technical modernization of public film production facilities.

In the realm of international contacts, the Subprogram envisages the following priorities:

- development of a “united film space” of the Commonwealth of Independent States (ex-Soviet states);

- promotion of Russian film abroad, especially in “promising regions of the world”.

Total funding for the Subprogram in 2001-2005 is 19,728 billion RUR in 2001 prices (equivalent to $ 0,7 billion), of which 7,457 billion ($ 270 mln.) will be provided by the federal budget; 3,148 billion by regional and local budgets, and 9,124 billion RUR is expected from non-public sources.

The detailed picture of the Subprogram’s expenses is presented in Table 8.9

 

Table 8.9 Subprogram “Film of Russia”

 

 

Tasks

 

Year

 

 

Funding

 

Funding sources

Federal budget

Regional & local budget

Other sources

Film production: “support to artistically significant works, to problem films, (…) films of popular genres,  debut films, action movies for young audiences”, commissioning of films for mass audiences which  meet the interests of the state and the society”.

as % of total expenses of the Program

2001-2005

 

2001

2002

2003

2004

2005

 

12061

 

1544,7

2201,1

2392,5

2768

3154,7

 

 

61,1%

 

3971

 

476,7

840

881,5

878

894,7

 

 

20%

 

50

 

2,7

4,7

8,0

13

21,6

 

 

0,3%

 

8040

 

1065

1356

1503

1877

2238

 

 

40,7%

Protection of film archives.  As % of total expenses

2001-2005

40,8

0,2%

40,8

0,2%

-

-

-

-

Development of film distribution: modernization of the network of cinemas,  the Federal cinema network &  the CRFs.

as % of total expenses

2001-2005

 

 

 

 

 

 

4867,7

 

 

 

24,6%

 

810,7

 

 

 

4,1%

 

3052

 

 

 

15,4%

 

1005

 

 

 

5,1%

Investments:  Federal cinema network, modernization of public film enterprises.

as % of total expenses

2001-2005

 

1620

 

 

8,2%

 

1589

 

 

8,05%

 

-

 

 

-

 

31

 

 

0,15%

International contacts: film festivals, promotion of Russian films abroad.

as % of total expenses

2001-2005

 

904

 

4,6%

 

810

 

4,2%

 

46

 

0,2%

 

48

 

0,2%

Research

as % of total expenses

2001-2005

53,1

0,3%

53,1

0,3%

-

-

-

-

Other

as % of total expenses

2001-2005

229,5

1,2%

229,5

1,2% 

-

-

-

-

Total

as % of total expenses

2001-2005

19728

100%

7457

37,8%

3148

15,95%

9124

46,25%

 

Some conclusions from the Case Study 2

 

a)     The situation in film industries in Ukraine and Russia

 

There are several common features: decay in film production and distribution in the 1990s, technological backwardness and lack of investments, dramatic cuts in state funding for film production, decline of incomes of public cinemas; dominance of western products in the film market (over 90% in both countries), decentralization and désétatisation at least partial of public system of film distribution.

The situation in Russia has its peculiarities: Russian film as an art and as an industry has been relatively highly developed in the former USSR; it dominated Soviet cinemas and was very much present in Eastern Europe; unlike Ukraine, Russia has developed virtually all necessary elements of national cinematography (professional education, research, film journalism, archives etc). The level of privatization of Russian cinema has also been much higher than in Ukraine, so was the amount of private investment in film production (mostly in TV series, however).

Russian cinematography tried to get rid of State control and to create self-regulatory market environment in their film industry as early as in mid-1980s; they decentralized film distribution, eliminated censorship and state commissioning of film productions. Their reform projects were based on the assumption that “free Russian film” will be economically sustainable and even profitable. This never happened, however, and the dramatic socio-political transformations of early 1990s, accompanied by deep economic crisis, made the situation only worse.

Ukraine also decentralized its film distribution system and attempted to introduce market mechanisms in film production (so-called “producer-led funding scheme”), with similarly little success. However, Ukrainian peculiarities in cinematography begin with much less favorable (sometimes even hostile) conditions for the development of Ukrainian national film art in the Soviet period. Film institutions have also been relatively underdeveloped here (film-related professional education consisted of a single film department in Kyiv Institute of Theater and Film for the whole country; there was no national film archive till late 1990s etc). That is the starting point for reforms in Ukrainian film industry has been much lower that in Russia. There have been some private investments in film production in early 1990s; but they virtually evaporated by today. The privatization of cinemas attempted in some cities in recent years can be recognized a failure (only a handful of the privatized cinema halls still show movies).

Ukraine tried to protect its film production by introducing minimal 30% quotas for national film production in cinemas and on TV; these quotas turned out to be virtually impossible to enforce so far, because of insufficient supply of domestic products and weak control mechanisms.

 

b)    Comparisons of the policies proposed by the two state programs

The essence of both programs can be described as an attempt to give a powerful impulse to the film industries of the two countries, so as to get out of the crisis and assure sustainable development of the industries. In certain sense, both programs can be called “disposable” because it is hardly possible to increase state funding of film production by 20-25% each year (as the Russian program suggests) or renovate 50 cinema theaters every year, as Ukrainian program promises for the period of 2003-2007.

Diverse policy instruments are engaged in both programs: budget subsidies, investment, state commissions of film production, protectionist taxation, institutional measures (creation of new cinemas etc.), promotion of public-private partnership in film industry. However, it seems that neither the designers of the programs nor the policy-makers have enough control over some of these instruments (especially when it comes to assuring private investments in film industry), therefore some targets put forward in the programs (like film production levels) look more like optimistic forecasts than like feasible goals.

In the Russian program, the clear tendency toward increase in state intervention in film industry is very visible, the tendency that may even be called re-nationalization (for instance, the dramatic increase in budget subsidies to the industry, the return to state commissioning of film productions; the creation of the network of “federal cinemas”, the plan to introduce licensing of some film-related activities etc.). There is also the attempt to retake on important position for domestic productions in Russia film market.

In Ukrainian case, the tendencies to increase state intervention is also present, but its aim is much more moderate: to assure survival of Ukrainian film as an art and as an [downsized] industry, to keep it visible on the cultural map of Europe.

Some target figures in both programs seems to be based on optimistic forecasts or on financial and technical requirements rather than on financial/investment capacity of the economies or on market capacities (for instance, planned amounts of investments in film production and renovation of cinema theaters, or increase in cinema audiences). This makes the feasibility of such targets doubtful.

The evaluation of effectiveness/efficiency of both programs also becomes difficult: one can easily guess that even the authors of the programs understood that many goals are hardly achievable, hence both programs (and their goals) can be better assessed by dividing them into two parts: the ideological and declaratory ones, and the specific and concrete ones, the latter really meant to be implemented.

The goals to raise considerable non-public funds for Ukrainian film production and dramatically increase this production seem to belong to the first part, while the goal to modernize public film studious using budget subsidies belongs to the second.

If we take this into consideration, then both programs may be evaluated as relatively effective (although not very efficient) means of helping the industries to get out of the crisis and assure further development.

The trajectories of this development, it is understood, will be different in Russia and in Ukraine.

 

2.4. Funding from regional and local budgets

 

As was previously noted, Ukrainian local administration’s financial priorities in public cultural sector are libraries (19-20%), museums (8-10%), theaters (10-12%) and local cultural centers known as “clubs” and “houses of culture” (23-24%). Performing arts organizations (other than theaters) get only 3-5 % of public subsidies of the local level Table 9.1

Again, comparison with Poland shows certain similarity in the breakdown of local cultural expenses, unlike on the national level.

 

Table 9.3 Subsidies for cultural organizations

from the budgets of voivodships of Poland, 1992-2000

 

Organizations and activities

Structure of subsidies from the budgets of voivodships

 

1992

1993

1994

1995

1996

1997

2000 *

Total subsidies (mln PLN),

of which in %:

193.78

233.66

304.34

415.94

482.83

641.04

2389.5

Theatres

32.5

34.5

33.8

32.5

28.8

28.4

17.6

Philharmonic and Symphony orchestras

7.7

7.5

7.1

7.2

6.8

6.9

3.3

Museums

21.3

20.4

20.7

19.9

19.6

18.8

11.4

Heritage

2.5

3.2

3.6

4.3

5.0

3.9

3.2

Arts exhibitions

2.8

2.7

2.3

2.3

1.2

1.1

 

Libraries

16.2

16.4

16.9

19.0

23.1

24.4

24.3

Cultural centers

8.7

8.7

9.1

8.8

8.9

8.1

12.0

Other organizations and activities

8.1

6.4

6.4

5.8

6.3

8.1

 

* Gminy included,

WWW.CULTURALPOLICIES.NET/PROFILES/POLAND

 

On the level of voivodships (see Table 9.3), Polish theaters used to get 28-32% of public subsidies in the 1990s; museums 19-21%; libraries 17-24%; cultural centers 9-12%. However, on the level of local communities (where theaters and museums are rather rare), libraries and houses of culture consume the lion’s share, from 54% in Lower Silesia to 85% in Carpathian mountain region (Podkarpackie and Swietokrzyske voivodships, see Table 9.4). The average share of cultural expenses in local budgets in all three countries is also similar: 2-3%. However, the absolute per capita amount of local funds for culture in Poland in 2000 was approximately 5 times higher (45,5 PLN) than in Ukraine (12,1 UAH). Ukraine’s richest region, the capital city of Kyiv, with its 31,2 UAH of cultural funding per capita, could only compete with Poland’s poorest voivodship, Swietokrzyskie, with 28,3 PLN (with the ratio 1 PLN = 1,2 UAH).

The data on per capita cultural spending in Ukraine’s regions Table 9.2 not only show that we are much poorer than Poland in this regard, but also illustrate the relevance and effectiveness of the government’s policy in this sphere. In Table 9.2, actual per capita spending in each region is compared to budget spending norms recommended by the Ministry of Finance of Ukraine for each year. As it can be easily seen, actual figures are usually remarkably higher (for Kyiv, for instance, almost 5 times higher) than recommended ones. Nevertheless, for the next year the Ministry of Finance changes their “recommended funding norms” only slightly. What is the purpose for these “recommendations” then? Actually, the “norms” are used in calculation of general amount of transfer subsidies from the national budget to regional budgets (for health care, education, culture, pensions, etc). But the norms arguably also “stimulate more rational and balanced cultural expenditure in the regions”. Do they?

A detailed analysis of the dynamic changes in both actual amounts of cultural spending in the regions and in the “recommended funding norms” in 2000-2002 Table 9.2 brings us to a number of pessimistic conclusions.

In the first place, the “recommended funding norms” promoted by the Ministry of Finance are insufficient and unrealistic: the ratio between “norms” and actual amounts was 1:2,1 in 2000, and 1:2,105 in 2001; while the gap between the minimal and the maximal ratios only grew:

2000: Zaporizhzia – 1,32; Kyiv – 4,72;

2001: Vinnytsia – 1,42; Kyiv – 5,33.

This means that the “norms” perhaps have no stabilysing effect. Neither they have levelling effect: for instance, the difference between actual expenses in Chernivtsi and Cherkasy was only 16,2% in 2000 (8,6 UAH and 7,4 UAH), while recommended norms for these two regions differed by 63% (3,5 UAH and 5,7 UAH). The same conclusion can be done about Transcarpatian region and Zaporizhzia:

recommended norms: 3,3 UAH and 5,8 UAH;

actual expenses: 8,7 UAH and 7,6 UAH.

In this case, the actual budget capacity of agrarian Transcarpatia turned out to be even higher than in industrial Zaporizhzia (while the Ministry’s norms evaluated them vice versa!). By the way, the norm for Transcarpatian region was the lowest in Ukraine in 2000 (3,3 UAH) but suddenly became the highest in 2001 (6,3 UAH).

The Ministry of Finance’s funding norms also look quite illogical: although the budget performance in 2000 has shown that the norms are 2 times lower than actual spending, for the next year – 2001, the norms were made much higher for some regions, while for other regions, they became even lower, for some strange reason.

 

Table 9.5. Comparison of Ministry of Finance’s funding norms and actual cultural expenses in some regions

 

Region

Ministry of Finance’s funding norms

Actual expenditure

2000

2001

2000

2001

Donetsk

5,6

5,3

8,0

10,6

Chernivtsi

3,5

6,1

7,4

11,5

 

We can see from Table 9.5 that actual funding tendencies in both regions have been similar, while the Ministry of Finance tried to impose quite opposite trends through their “recommended funding norms”.

All this brings us to the conclusion that the Ministry of Finance’s “regional cultural policy” embodied in the “recommended norms” is, to put it mildly, counterproductive.

Why the average level of actual funding in Ukraine’s regions has been 1,5-2 times higher than the level recommended by the government in Kyiv?

On the local level, deficits of budget revenues can be even higher than in the national budget, yet (recommended) cultural expenditures is usually so intolerably low that cultural organizations simply can’t survive with the planned amounts of subsidies, and local administrations must increase these amounts.

 

Table 9.6 Expenditure for culture and the arts in the budget of Kyiv (in thousand UAH)

 

 

2000

2001

Planned amount

Correct. plan

Perfor

mance

Perform to plan,

%

Planned amount

Correct. plan

Perfor

mance

Perform to plan, %

Amount recomm. by Ministry of Finance

12834

 

 

 

15410

 

 

 

‘Culture and arts’

50731,0

60138,6

60551,0

119,4

73883

84231,0

82151,0

111,2

Creative unions

-

-

-

-

2000,0

1031,0

1031,0

51,5

Theaters

7074,2

7955,0

8025,5

113,4

9495,0

10412,4

10002,0

105,3

Philharmonic, musical collectives, other cultural organizations and activities

 

7916,6

 

12136,0

 

11669,6

 

147,4

 

13291

 

20739,6

 

20416,0

 

153,6

Libraries

6448,0

6774,0

7044,0

109,2

8051,0

7734,3

7568,5

94,0

Museums, exhibitions 

8918,0

10163,0

10404,6

116,7

12597

11523,4

11224,4

89,1

Heritage

2428,0

2760,0

2833,5

116,7

7666,5

6708,5

6511,0

84,9

Houses of culture

8360,0

8478,0

8627,0

103,2

10587

11069,2

10861,0

102,6

Art schools

5893,0

7060,6

7136,0

121,1

7678,0

11200,4

10863,0

141,5

Cinema

938,0

1195,4

1190,0

126,9

1017,0

1075,0

1060,0

104,2

Archives

323,0

323,5

344,0

106,5

323,4

484,0

440,0

136,1

Other cultural organizations and activities

 

2432,5

 

3291,2

 

3276,0

 

134,7

 

1176,5

 

2253,0

 

2173,0

 

184,7

 

Source: City Administration of Kyiv

 

The data on cultural expenditure in Kyiv and in the Autonomous Republic of Crimea presented in Tables 9.6 and 9.7 illustrate this phenomenon quite well.

The capital city of Kyiv is a relatively  well-off region in Ukraine (Table 9.6), therefore it can afford the level of cultural expenses (60,5 mln. UAH in 2000, 82,1 mln. in 2001) much higher than the amounts recommended by the Ministry of Finance (12,8 mln. and 15,4 mln. UAH respectively). However, Table 9.6 also shows the not-so-simple process of cultural planning. The initially planned funding for 2000 was only 50,7 mln., it was corrected (increased) later by almost 20% (because it was realized after a few month of the year 2000 that the city’s actual revenues are higher than predicted, but the actual amount of subsidies was even higher than that). In 2001, on the other hand, the correction (84,2 mln. instead of 73,9 mln.) turned out to be over-optimistic, and the performance wound up slightly below the corrected target.

 

Table 9.7 Cultural expenditure in the budget of Autonomous Republic of Crimea

and in local budgets of Crimea (in thousand UAH)

 

 

2000

2001

Planned amount

Corrected plan

Performance

 

%

Planned amount

Corrected plan

Performance

 

 

%

Amount recommended by Ministry of Finance

 

 

 

12596,3

 

 

 

 

 

 

11290,6

 

 

 

Culture and arts, total

30432,9

29563,7

23727,6

78,0

38672,1

38184,6

31483,1

81,4

Creative unions

 

 

 

 

 

 

 

 

Theaters

3716,8

3763,5

3346,9

90,0

4274,6

4741,1

4216,8

98,6

Philharmonic, musical collectives, other art org. and activities

 

4308,8

 

3538,2

 

2964,9

 

68,8

 

4688,6

 

4674,7

 

4001,6

 

85,3

Libraries

4800,2

4726,8

3873,3

80,7

6148,5

5924,9

5129,3

83,4

Museums, exhibitions

3509,6

3418,6

2905,9

79,9

3381,2

3294,9

2365,5

70,0

Heritage

1643,3

1495,0

881,1

53,6

2077,9

1693,4

1239,7

59,7

Houses of culture

6600,5

6657,3

4987,0

75,6

9452,4

9321,5

7030,7

74,4

Art schools

4127,4

4053,7

3464,8

83,9

6650,9

6548,1

5763,4

86,7

Cinema

413,0

413,0

201,1

48,7

174,4

251,4

175,6

100,7

Archives

274,0

274,0

259,2

94,6

324,0

324,0

306,1

94,5

Other cultural organizations and activities

 

1039,3

 

1223,6

 

943,4

 

90,8

 

1499,6

 

1410,6

 

1254,4

 

83,6

 

Source: Ministry of Finance of Ukraine

 

Crimea (Table 9.7) is, however, a much poorer region, and this also shows in culture funding. The originally planned amounts of cultural expenditures here also were much higher than the Ministry of Finance’s recommended funding norms (30,4 mln in 2000; 38,6 mln UAH in 2001). However, these amounts soon proved to be unfeasible, and the corrected levels became slightly lower. The actual levels of subsidies, alas, were almost 20% lower than that.

These examples also show us, among other things, how difficult it is to define how much money culture actually “needs”: it needs all we can give it, and if we cannot give much, culture is supposed to be satisfied with what it gets.

The data in Table 9.8 and 9.9 illustrate yet another aspect of cultural funding in the regions: the distribution of financial responsibilities between different levels of local administration.

 

Table 9.8 Share of cultural expenditure (in %) in budgets of different levels of administration in Kyiv, 1998

 

 

Consolidated budget of Kyiv

City budget

District budgets

Share of total budget

expenditure

Share of cultural expend.

 

Share of total budget

expend.

Share of cultural expend.

 

Share of total budget

expend.

Share of cultural expend.

 

Culture and arts total

2,88 %

100,00%

3,48 %

100,00%

1,93 %

100,00%

Theaters

0,39 %

13,54%

0,63 %

18,1%

0,03 %

1,5%

Philharmon. and musical collectives

0,09 %

3,1%

0,15 %

4,3%

-

-

Libraries

0,32 %

11,1%

0,11 %

3,15%

0,66 %

34,2%

Museums and exhibitions

0,60 %

20,8%

0,97 %

27,9%

-

-

Heritage

0,11 %

3,8%

0, 18 %

5,2%

-

-

Houses of culture

0,01 %

0,3%

-

-

0,03 %

1,5%

Art schools

0,39 %

13,5%

0,11 %

3,15%

0,84 %

43,5%

Cinema

0,09 %

3,1%

0,15 %

4,3%

-

-

Other cultural activities

0,86 %

29,9%

1,17 %

33,6%

0,38 %

19,7%

 

Source: City Administration of Kyiv

 

For Kyiv, the picture is relatively clear: the city budget cares about theatres, performing arts, museums and heritage; while city districts fund libraries, houses of culture and artistic schools for children.

 

Table 9.9 Breakdown of culture expenditure between budgets

of different level of administration in Lviv region, 1998

 

 

Consolidated oblast budget

Oblast budget

City budget of Lviv

Budgets of districts

Town budgets

Village budgets

‘Culture and arts’

  of which:

100,00 %

34,26 %

25,18%

25,77 %

5,51%

9,28%

‘Arts’

100,00 %

79,73%

20,27%

0,00%

0,00%

0,00%

‘Culture’

100,00%

21,49%

27,08%

31,73%

7,33%

12,37%

 

Source: Ministry of Finance of Ukraine

 

In Lviv region, where we see six levels of local budgeting (Table 9.9), the situation is fuzzier. What is certain, however, is that districts, small towns and villages don’t fund “the arts” (theaters, musical organizations, dance, film, etc), while the main financial burden for “culture” (libraries, museums, houses of culture) is met mainly by city budget of Lviv and by district budgets of Lviv region. This situation can be compared with that of Polish capital city of Warsaw (Table 9.10).

 

Table 9.10 Public expenditure on culture  in Warsaw, 1999 (thous. PLN)

 

 

Ministry of Culture (for Warsaw)

Mazowsze voivodship

City council of Warsaw

Gminy of Warsaw

Total

Museums

36567

25928

290

650

63435.0

Heritage

9995

378

10

-

10383.0

Arts centers, galleries

2620

1311

-

-

3931.0

Libraries

31348

7713.6

-

35417

74478.6

Houses of culture

1653

2442

100

11813.6

16008.6

Theaters, opera, operetta

 

68390

25384

27000

500

 

124896.8

Performing organizations

2862

-

-

Concert organization

760.8

-

-

Cinematography

1200

-

-

-

1200.0

‘Dissemination of culture’

 

-

3477,7

 

3477.7

Artistic prize’s

 

-

350

-

350.0

Other activities

 

1066

 

11180

12246.0

Total for culture and arts

151773

67845.4

31227.7

59560.6

310406.7

Same, in %

49%

22%

10%

9%

 

 

Source: D.Ilczuk, “Finansowanie kultury w Warszaw³e” – Kultura w Warszaw³e, 2000

 

We can see that the situation is similar here (however, we didn’t have the data on the Ministry of Culture’s expenditure in Kyiv, and this makes our comparison incomplete).

Similar problem of federal-regional policy relations exists in the Russian Federation. According to Russian experts, actual policy of public financing of culture “has not changed there to any significant degree” (The 1997 National Report).

Until 1991, funding for culture and the arts from local budgets was approved first by the Ministry of Culture of Russia, then by the Ministry of Finance. Since 1991, local authorities make decisions on the distribution of their local funds independently. However, taxation in Russia remains highly centralized. For most regions, the part of tax revenue that remains in their possession cannot cover their expenses. 77 out of 89 “subjects” of the Russian Federation receive subventions (transfers) from the federal budget.

In 2000, the estimated average cultural expenditure per capita was 115 roubles (about $ 5) that differs greatly in particular “subjects of Federation” (from 56 roubles in the Rostov area to 167 roubles in the Tatarstan Republic).

In the 2000, the share of cultural expenditure in consolidated budgets of the subjects of  Federation varies from 1,14% in the Yamalo-Nenets Autonomous District to 4,82% in  the Komi-Permyak Autonomous District. On the whole, the average cultural expenditure in consolidated regional budgets remain at the level of 2%. 

The amount of budget transfers is determined by the Russian Duma (Parliament) on the basis of proposals made by the government. Thus, most regional administrations request transfers from the federal Ministry of Finance after drafting local budgets and realizing that they have not enough funds, again. This process inevitably involves the approval of a local budget by the federal Ministry of Finance. Thus, although public finances are formally decentralized, centralization actually persists in Russian budgeting.

Federal cultural authorities do not participate in this process, while the Ministry of Finance plays the major role. Therefore funds for culture in local budgets are ultimately determined by the Ministry of Finance which does not care much about cultural policy priorities.

We can see that the system is in fact more restrictive and centralized than that of Ukraine where the Ministry of Finance can assure too small amount of budget transfers for regions but cannot prevent them from spending much more on culture than the Ministry of Finance recommends.

 

2.5. Earned income & donations

 

Although budget funding remains the main source of income for public cultural organizations, earned income is also very important for many of them. Table 10.1 illustrates how vital earned income is for state-owned performing arts organizations in Ukraine. Let’s take the theaters. Although it was planned for 2000 that they would get 6/7 of their revenues from state budget and earn only 1/7, in fact they earned almost 1/3, while  state subsidies were lower than planned and covered only 2/3 of their expenses instead of 6/7. In 2001, the difference was also remarkable: earned income was expected to cover only 16,7% of the expenses; in reality it covered 28,5 %.

With remarkable under-payments from state budget to state-owned cultural institutions in Ukraine in 2001 and 2002 (for museums, it was as low as 26% of the planned amount in 2001), earned income has become a crucial source of income even for libraries and museums whose earning capacity has been traditionally low. State-owned museums earned 17 % of their total revenues in 2001. In 2002, the share of earned income in total revenues of heritage institutions (libraries, museums, historical reserves) reached as high as 30% (mostly due to bad public funding: the actual level of budget subsidies to them was only 42,6 % of the promised). 

Table 10.2 further amplifies this picture over several types of Ukrainian  public cultural organizations, both state-owned and community owned.

 

Table 10.2 Earned income of public cultural organizations, 2001

 

 

Planned for 2001, mln. UAH

Performance, mln. UAH

Performance as % of the plan

Artistic organizations

1, 646

5, 87

356,4

Cultural organizations

73, 06

104,26

142,2

Other

2,3

4,04

181

Cultural and Artistic, total

77

116,55

149, 9

 

Table 10.3 gives a detailed data on subsidies and earnings of  National institutions of performing arts – theaters, choirs, orchestras, dance ensembles etc. These data only confirm the general conclusion: the state tends to give less than promised, so the organizations have to earn as much as they possibly can. This can be seen especially in Graph 3. When we compare the data on earned income (plan and performance) on 2000, 2001 and 2002, a question arises: why public cultural organizations tend to underestimate their future incomes in their plans? For instance, state-owned theaters earned 16,8 mln UAH in 2000, yet they planned the amount of earned income at  4,69 mln UAH for the next year (no wonder they actually earned almost two times more).  The most probable reason is: they are afraid that, once they promise higher earned income, they will get smaller budget subsidies.

As for general picture of sources of income other than public subsidies, we can look at Table 11.1. We must admit, however, that statistics on charitable donations and on sponsors’ donations are scarce and incomplete in Ukraine. Public cultural organizations have to report to cultural administration about their earned income, but not about funds raised in other ways. Independent cultural organizations report only to taxation bodies about their incomes. Nevertheless some data on share of grants and donations in total revenues of public cultural organizations have been accessible. We can see that this share seldom reaches the level of 1%. It must be told, however, that real amounts of donations can be  much higher than the officially reported levels. For independent cultural organizations which get no public subsidies, grants and donations often remain the main source of income. All this  brings us to the conclusion that, although cultural organizations try hard to earn their living, and although some of them earn much more today than they did 5-6 years ago, public subsidies remain the  main source of income for virtually all public cultural  organizations, while independent cultural organizations mostly rely upon grants and donations.

When we turn to Russian comparison Table 11.2 we can see similar picture: through 1990-1995, the share of public subsidies in the incomes of cultural organizations grew remarkably, although the amount of public subsidies plummeted (earned income fell even more drastically). Although in the following ten years the general economic situation has been changing for better, both in Ukraine and Russia, and amount of earned income in their cultural sector also grew, this didn’t undermine the dependence on public subsidies.

 

Table 11.3 Breakdown of incomes of Polish artistic organizations in 1997, %

 

 

Budget subsidies

Earned income

 

Cultural and artistic organizations

From Ministry  of culture

From voivod-

ships

From local self-govern-

ment

Box office

Private donations

From non-related activities

Other

Theaters:

 

 

 

 

 

 

 

               Drama

4.01

49.90

19.49

16.93

1.62

3.87

4.05

               Opera

0.31

79.24

0.86

10.35

1.40

3.64

4.18

                Music

0.00

48.00

26.87

17.75

0.24

4.10

3.04

Philharmonic

8.99

36.36

38.58

8.00

3.51

1.93

2.41

Museums

9.50

62.14

13.06

6.58

2.22

4.02

3.69

Art galleries

12.21

1.03

58.84

4.11

2.72

14.10

7.32

 

Table 11.3 shows similarly high level of dependence of Polish cultural institutions on public subsidies. What should be mentioned, however, is that exemption of earned incomes of cultural organizations from VAT in Poland and Russia makes their real earned incomes 20-22% higher!

However, as Table 11.4 demonstrates, earning possibilities are quite different in different regions of Poland.

 

Table 11.4 Earned income of cultural organizations in Polish cities