Culture Support Fund – about Count Barry Kent’s last sausage

There has been a huge amount of criticism in the media of the support to cultural operators from the Cultural Support Fund.

This criticism relates to several aspects of the support provided from the CEF. Who received this support, and in what amount. It is also claimed that the funding granted is too much and should be calculated in a different way. The names of more well-known celebrities are plucked from the list of beneficiaries and then questions are asked as to why such and such a person has received such a large amount.

One can, of course, discuss whether the amount of this support is higher or lower in relation to other programmes, but one is astonished by arguments such as „instead of funding culture, we could give pay rises to doctors or paramedics” or „how can some artists be supported with such amounts”. Implicitly, the authors of the articles suggest that the political connotations of individual artists would determine the amount of support.

On the other hand, as Deputy Prime Minister Piotr Gliński pointed out, „Who got support was not decided by sympathies, but by an algorithm showing who lost revenue as a result of pandemonium”.

What does operational support for culture really look like? Did the Cultural Support Fund programme really deserve such criticism? A few words about this below.

It is important to start with the fact that support for culture, like other business support instruments in times of pandemic, is state aid. Unlike many of the current instruments, the support programme for cultural activities was prepared on the basis of the European Commission’s Block Exemption Regulation 651/2014 (so-called GBER) and therefore did not require a separate notification to the European Commission. The basis for the support programme is the Ordinance of the Council of Ministers on financial support for entities performing cultural activities in the field of theatre, music or dance of 30 September 2020.

The Regulation defines:

• the circle of beneficiaries [(1) local government art institutions 2) non-governmental organisations carrying out activity in the field of theatre, music or dance, 3) entrepreneurs carrying out economic activity in the field of theatre, music or dance, including services supporting this activity by organisation of technical facilities)];
• the basis for calculating the amount of aid for individual entities;
• the conditions of support to be met by the units;
• the destination of the support (categories of expenditure to be financed).

What is noteworthy is that aid to promote culture and heritage conservation is listed as a separate permissible category of aid in the Treaty on the Functioning of the European Union itself (Article 107 TFEU).

What is causing controversy in the media is „why so much” (amount of support) and „they granted their own” (criteria for support).

Was this really the case?

According to Article 53(7) of the GBER, in the case of operating aid for culture, the amount of aid shall not exceed what is necessary to cover operating losses and a reasonable profit for the period concerned. The above must be ensured on an ex ante basis, on the basis of reasonable forecasts, or using a claw-back mechanism.

The support regulation assumed that the support will compensate for the lost revenue from 12 March this year until the end of 2020, with the amount not to exceed 50% of the net revenue from the sale of services related to cultural activities from 2019. (support limit), and the amount received should be used to cover certain expenses.

In detail, the amount of support was to be calculated on the basis of the eligible costs presented in the application, as well as the score received – based on a ranking list. The list of eligible costs is also defined by the GBER indicating that funding may be subject to:

The level of support of individual units is one thing, but other criteria and conditions of the competition remain a separate issue. As far as the support criteria are concerned, it is certainly impossible to say that they were all well-written or that they are all necessary from the perspective of the purpose of the aid measure, and this is important because the amount of support received – within the 50% revenue limit referred to above – was ultimately determined by the score awarded and the place on the ranking list.

According to the Regulations (§ 7(12)), the Commission recommends to the Director the amount of Financial Support on the basis of the ranking lists presented and taking into account the volume from the pool of funds earmarked for Financial Support.

Here, there are indeed questions about the purpose and sense of some of the competition criteria.

Some criteria remain clearly underdeveloped or detached from the purpose of the competition. There are also no clearly indicated scoring criteria or scoring weights.

Such criteria as: „Correctness of allocation of the amount of financial support”; „Impact of financial support on the local community”; „Structure of funding sources”; „Number of artistic events”. – clearly look like they were prepared in haste and not thought through. They actually fit more into a grant application competition than into operational support.

Scoring some entrepreneurs for the fact that they have additional debt, for the number of artistic events they realised in the crisis months of the year, or for the fact that their activity is of greater or lesser importance to the local community seems unjustified or too evaluative in a situation in which support to entrepreneurs is directed at improving their liquidity and maintaining their business, and the pandemic has affected these entrepreneurs to varying degrees – independent of their level of debt or their importance to the local community.

In addition to these criteria, there are, of course, criteria that can or should be scored, such as the criterion concerning the degree of decline in turnover – but here, too, questions arise as to why such scoring weights? Was it not possible to apply a more detailed algorithm, as was the case e.g. in the Kujawsko-Pomorskie Voivodeship, where the range of points in the criterion of decrease in turnover was much higher and there were no arbitrary thresholds of decrease in turnover (why, for example, should a person whose turnover dropped by 69% get as many as 5 fewer points than a person whose turnover dropped by 70%?) Points could be awarded for each hundredth of a percentage point decrease in turnover, which would make it possible to avoid unjustified differentiation.

I have written about this before, for example in the entry WARP application competition – that is, the duel in the OK Corral – in different cases, of course, the best will mean something different, in one case the best will be the one who presents the most innovative project, the most interesting service, the most promising research project or, as in the case of covidova application competitions, will suffer the greatest damage or deserve the greatest support – taking into account criteria such as the branch of activity and the effects that the pandemic has had on it. Certainly, the applicant who applies in a certain nanosecond or who „means more” in the local community will not deserve the highest support. Differentiation of the situation of applicants in a given coronavirus-affected industry should be characterised by objectivity. Hence, support should be determined primarily by financial criteria, i.e. how badly a given entrepreneur has been affected by the pandemic.

Unfortunately, the Ministry of Culture has not finally published the ranking list of beneficiaries, which undoubtedly increases speculation and conjecture as to the amount of support granted to individual entities. The list of beneficiaries is ranked only by amounts – so we will not know from it who received how many points and, therefore, why such a different amount of support was granted in the end.

Alongside the argument that they got 'too much’, there is also the argument that 'they got their own’. Did only 'their own’ really get the funding? Probably not. According to information from the Ministry of Culture, all entities that correctly applied received support . 2246 entities applied for financial assistance. 2064 correctly filled in and submitted applications were subjected to substantive assessment and all these applicants received support.

And although, as I wrote above, one may have doubts as to whether all criteria for substantive assessment of applications were necessary/proper, the substantive assessment of applications for support was positive for all applicants who filled in their applications correctly.

Defects in the evaluation criteria mentioned above did not affect the receipt of support, but its final amount. In this situation, saying that only „their own people” received support verges on demagogy.

Has the Cultural Support Fund really done well? The answer to this question is: It is complicated.

The fundamental flaw in the competition conducted was the lack of precision in the criteria set out in the proposal. The consequent lack of transparency in the results of the competition (no ranking list indicating the scores obtained in each criterion) only adds to the bad impression and fuels speculation as to the amount of support awarded to specific entities. And although the room for discretion in the criteria adopted is small, it remains.

Surely a solution to this situation would be to publish the total amount of support applied for by all the units and the amount of support finally received. Similarly, the publication of the ranking list itself would help fend off accusations of a lack of fairness in the assessment.

On the other hand, unlike in the case of other 'covidova’ competitions, in particular for covering working capital in the case of support from the Cultural Support Fund, ambiguities in some of the competition criteria should not ultimately result in the invalidation of the entire competition since everyone with correct applications received support. The score determined the amount of support and this was undoubtedly important. Therefore, the competition organiser should once again verify the scoring results, taking into account the remarks I made above. According to the announcements of the Ministry of Culture – such verification – the question is to what extent – is currently taking place.

However, the naked eye can see that certain 'soft’ measures in the form of information policy for potential beneficiaries, as well as for the public preceding or accompanying the competition, have been abandoned.

Above all, in at least a few cases, the beneficiaries of the support are related entities, although the Regulation, as well as the GBER, explicitly stipulates that only one entity can receive support.

Probably also the question of the correct description of the planned expenses to be covered by the transferred funds will prove problematic for many entrepreneurs and cultural organisations that have received support. However, this is a worry for months to come – the correctness of the use of the support will be verified in the future and entrepreneurs should not forget this.

The support contract itself also does not look solid and not all its provisions have been well thought out.

Obviously, in my opinion, it is also not the case that since the organiser of the competition wrote in the Rules that there is no appeal procedure, applicants who were deprived of support for formal reasons cannot, for example, use the court route to finally receive this support, showing that the formal assessment of their project was wrong. This is what I wrote about, among other things, in the post Subsidies in the Financial Shield vs. the KPA.

In conclusion, while refuting many of the demagogic arguments that have been raised against the – mostly completely lip-service – accusations of support from the Cultural Support Fund, it is worth relating the amount allocated to support entrepreneurs and organisations active in culture once again to other forms of support received by entrepreneurs.

Aid programmes that fund entrepreneurs in the era of the pandemic will necessarily be underdeveloped to the end, which is of course a disadvantage, but also a major advantage compared to ossified and bureaucratic support instruments from, for example, EU funds. This does not mean, however, that they deserve such a negative assessment as was the case with CDF support.

The very system of awarding funds in covid competitions based on statements and online forms, in some cases automated even in terms of the evaluation process (the PFR Financial Shield) is undoubtedly revolutionary.

Irregularities and abuses also occur in extremely formalised competitions, which shows that the way to remove them is not through ever more stringent criteria, but through a flexible and wise administration and cadres that will be able to proactively correct and detect these irregularities.

Certainly, the author of the competition could have done many things better – such as the few described above – on the other hand, I do not believe, unlike in the case of several other covid competitions where support was determined by the speed of the revolver, that in this case the entire recruitment should be cancelled.

Photo, source: gala.pl