ANALYSIS OF THE INITIATIVE

METHODOLOGICAL ASPECTS

This is a qualitative analysis of a specific initiative from which the authors extracted lessons, principles and concepts applicable to other contexts. Its qualitative nature allows for exploration, not only of funding-related aspects, but also of other themes relative to the culture economy.

The study is based on an assessment of the documents that make up the initiative. It is an ex-ante analysis that considers the program’s potential impacts and effects, since it is still being implemented.

The results of the study presented in this article will be essential to establishing the expectations for the future monitoring and assessment of the BNDES Culture Matchfunding Program, as well as other expected developments based on this specific initiative.

THE HISTORY OF BNDES IN SUPPORTING THE BRAZILIAN CULTURAL HERITAGE AND THE OPPORTUNITY FOR NEW FUNDING CHANNELS

Throughout 20 years of ongoing work in the cultural sector, BNDES has built a broad and diversified portfolio of projects that aim to preserve and revitalize the Brazilian cultural heritage (the historical and artistic heritage, memorial collections, and the intangible heritage). During this period, 232 support operations have been carried out involving 180 monuments across the country, including museums, libraries, archives, archeological sites, churches and other assets, totaling over BRL 600 million invested.

Based on the experience accumulated over this period, adequate funding has proven to be essential to the transformation of the institutions responsible for maintaining the Brazilian cultural heritage and for the economic dynamics based on its uses.

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Currently, the heritage sector is funded based on the logic of cultural projects, usually through sponsorships, tax incentives or public budgets. As a consequence of this underfunding, the impact of projects in the area tends to be much less than their potential, with cultural institutions expending great efforts to obtain resources for the short term to cover costs relative to upkeep and basic activities.

Thus, the strategy of BNDES in recent years has given priority to encouraging and supporting the search for alternative sources of funding, whether from donations, box office sales, subscriptions, or sales of services and products inspired by the content or aesthetics of the heritage.

Evolution of ICT and maturation of the Internet represent a valuable opportunity to develop new financial instruments and new funding channels. According to a report developed by the Cambridge Centre for Alternative Finance of Cambridge University and The Polsky Center for Entrepreneurship and Innovation of the Chicago Booth School of Business, alternative funding channel trends, especially online channels, have the potential to reshape the foundations of financial services (Cambridge Centre for Alternative Finance – Cambridge University & The Polsky Center for Entrepreneurship and Innovation – Chicago Booth School of Business, 2016).

Between 2013 and 2015, the volume of online transactions tripled and reached US$ 36 billion in the Americas. Crowdfunding, peer-to-peer lending, and other online alternative funding platforms stand out among these technological innovations.

Crowdfunding platforms, which emerged in the mid 2000s, were responsible for raising US$ 16 billion in 2014 (Thuy, 2017). Projections point to US$ 90 billion in financial activities by 2025, with Brazil having the potential to represent at least 10% of this figure (Canteras, 2015).

The crowdfunding model is based on the dynamics of online and collective funding relative to a specific goal, granting creative rewards to collaborators and ensuring refunds in case the minimum amount needed to enable the project is not reached before the deadline. Thus, everybody wins or nobody loses – because collaborators can get their money back and the proponent does not have to carry out the project.

In addition to fundraising, crowdfunding contributes to the dissemination of ideas, products and services and testing their acceptance. Above all, it helps engage the public, because collaborators feel like they are an essential part of bringing something they believe in to life.

The structure of the BNDES Culture Matchfunding Program was based on this diagnosis of the cultural sector and the opportunity provided by online platforms, especially crowdfunding platforms.

THE BNDES CULTURE MATCHFUNDING PROGRAM

Through crowdfunding platforms, producers and cultural institutions can present their proposals and the public can make donations, usually in exchange for rewards linked to the projects.

Although they have been growing in Brazil, the cultural sector has tapped into only a little of this instrument’s potential.

As a way to attract and increase the public’s interest in certain topics, several enterprises and institutions have used matchfunding, in which those responsible for the initiative make a commitment to combine resources at the same rate as the public’s contribution. The idea is that

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each BRL 1 donated by the public will be matched by BRL X more by the enterprise towards the project. This leverage stimulates public donations and increases the chances of raising the necessary funds for carrying out projects.

The BNDES Culture Matchfunding Program will launch the first matchfunding channel in Brazil supported by the public sphere. It will be directed specifically to projects that leave a legacy for the Brazilian cultural heritage.⁸

The goal of the program is to support capacity-building actions for cultural institutions about crowdfunding as a financial tool and to structure and operationalize public calls for cultural projects to participate in fundraising campaigns. Moreover, it also aims to monitor the cultural initiatives that will be selected and funded by society through matchfunding.

The program will be coordinated and implemented by Sitawi Finance for Good, a civil society organization that operates in the field of social finance, with the technical partnership of Benfeitoria, one of the main crowdfunding platforms in the country and the first to carry out public calls for projects to receive support via matchfunding.

The project was approved and contracted with BNDES in December 2018, starting the preparation and pre-production phase of the call for proposals to be published in the first semester of 2019. BNDES contributes BRL 7 million, with resources from the Cultural Fund.

Of this amount, up to BRL 4 million will be given to projects that receive public donations through crowdfunding between 2019 and 2020.

In the selected cultural projects, each BRL 1 raised by the public will be matched with BRL 2 by BNDES until the minimum fundraising target is met. If the first target is reached by its deadline, the project can continue to raise public funds; however, these donations will not be matched by BNDES, just like a normal fundraising campaign.

In the first selection process, the projects may have goals between BRL 30,000 and BRL 300,000. In other words, projects must raise between BRL 10,000 and BRL 100,000 from the public, and BNDES can contribute between BRL 20,000 and BRL 200,000.

To receive resources from BNDES, in addition to meeting their fundraising goals, the initiatives must guarantee a minimum spread of these resources. The idea is to enable only actions that will broadly engage the public.

Considering that the expected amount of funds raised by the public is approximately BRL 2 million, the total amount given to the projects will be at least BRL 6 million, reaching a total of BRL 9 million of investment. A budget of up to BRL 3 million has been set aside to carry out capacity-building actions for the cultural institutions to learn how to create projects, engage the public, and adopt good sustainability practices (in addition to crowdfunding), among others. This amount also includes the operational costs of carrying out and publicizing the public calls, monitoring the implementation of the projects, and assessing the effectiveness of the program itself over the two years estimated for the initiative.

8 The Brazilian cultural heritage is defined by the Constitution (Article 216) as the tangible and intangible goods that carry references relative to the identity, actions, and memory of the different groups that make up Brazilian society. The concept includes the historical, artistic, and archeological heritage, as well as memorial collections and the intangible heritage, among others (Constituition of the Federative Republic of Brazil, 1988).

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The program is expected to support up to 80 projects selected throughout 2019 and 2020 through calls for proposals. Five calls will be carried out each year, and an average of eight projects will be selected for each. The management of the BNDES Culture Matchfunding Program will be responsible for the initial selection of proposals that show potential for leaving a legacy to the tangible and intangible Brazilian cultural heritage regarding themes such as digital/media/games, heritage education, tourism, and collections.

Those responsible for the selected projects will receive in-depth training focused on fundraising campaigns, so that they can raise enough resources to carry out their proposals. After this phase, the projects will be presented through the program’s channel, hosted on the Benfeitoria platform, so that the public can learn about and make donations to those they consider most interesting.

Tactical changes to the program may be made over time, according to lessons learned along the way, the scope of the projects accepted, maximum and minimum values, and fundraising deadlines, among others.

THE POTENTIAL OF ICT USE IN CULTURE AND ITS IMPACTS: AN EX-ANTE PERSPECTIVE The use of online funding platforms, especially crowdfunding, is innovative and relevant to the cultural sector and the public sector. In the BNDES Culture Matchfunding Program, opportunities for the cultural heritage sector are more immediate, considering the potential of ICT use as an alternative for funding and incentives for financial sustainability. It also represents a new way for cultural institutions to relate to different publics and the wider civil society, leading to long-lasting and very positive impacts on their future dynamics, and even on perceptions of their relevance. Finally, with its potential to shine a light on the theme of cultural heritage for digital culture actors, the program is expected to develop projects with a digital edge, including media and games. These experiences can demonstrate and materialize the potential of ICT use to expand access to, and consumption and production of, culture.

For the public sector, the program is a pilot experience in prospecting new sources of funding, and, once again, in developing new relationships with their publics and clients. Furthermore, society’s participation in cofinancing the projects ensures that only projects of collective interest will be considered, enabling the realization of proposals seen as most relevant by society, with the potential of return in the form of externalities and generating public value. In other words, the program involves proximity and partnership with society, which should result in greater efficiency and effectiveness of the projects, increasing sources of funding and favoring projects perceived by society as generators of worthy results and impacts. The proximity, partnership and scale allowed by ICT can serve as inspiration for the development of many other public sector initiatives, still underexplored even at the international level.

Another essential dimension is the potential for communication and dissemination based essentially on ICT applications. Three elements expand the initiative’s visibility and boost its effect on the entire production and cultural supply chain and for the public in general. First, calls for proposals will be announced. These public calls will have wide reach and mobilize a wide range of stakeholders. The second point refers to the actual fundraising campaigns, which depend on dissemination and persuasion to raise awareness in networks of collaborators. It is important to mention that this type of communication is different from the previous one, with

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more depth, aimed at engaging the public with the initiatives and resulting in the construction of a relationship of trust among participants. Last, the entire program is defined by its strong development in the digital environment. All of the materials produced, the fundraising campaigns, and the results of the initiatives and the program as a whole can be easily shared on the Internet.

Last, the BNDES Culture Matchfunding Program is a proposal for financing, disseminating, and carrying out theoretical and practical capacity-building activities about a new type of fundraising: crowdfunding. Its actions are expected to help initiative proponents develop high financial sustainability standards, which will translate into the gradual reduction of dependence on public resources. Based on this capacity-building perspective, the program’s development is strongly based on the digital environment. Webinars, web conferences, and online videos and tutorials are examples of ICT use that optimize human and financial resources and, consequently, expand the reach of capacity-building activities. Therefore, the lessons learned with this program can inspire other innovative education and capacity-building initiatives.

FINAL CONSIDERATIONS

The BNDES Culture Matchfunding Program has the potential to help the cultural sector create donation mechanisms and develop new skills to engage with its publics, leveraging fundraising.

In addition, the program aims to develop a more strategic view of diversification of resources and its links to the development of publics and digital communications.

The skills to be developed are important to the necessary autonomy and a qualitative leap for the Brazilian cultural heritage to reach its full potential. The experience may also serve as inspiration for other cultural sectors and for institutions and new ventures that generate impacts perceived as positive by society.

For BNDES, the program also proposes to develop a new model of operations, which can be replicated in other public policies and private initiatives to support culture and other sectors.

By using technology and social networking websites, this model increases the possibility of leveraging third-party resources, bringing in new, non-traditional supporters, to cofinance projects. Furthermore, the model has the potential to reach a much larger scale, volume and scope than that proposed in the pilot project.

The new model allows for the distribution of BNDES resources to a set of initiatives that would not usually have access to them and a qualitative change in the relationship between the bank and its clients and cofinancers. The experience of the BNDES Culture Matchfunding Program will be essential to provide lessons about this format, allowing it to be replicated in the future in other policies – in the cultural sector and other priority sectors for BNDES operations.

REFERENCES

Brazilian Internet Steering Committee – CGI.br (2017). Survey on the use of information and communication technologies in Brazilian cultural facilities – ICT in Culture 2016. São Paulo: CGI.br.

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