Policy Guidance Tool


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Repayable contributions

1. Introduction

Goals, results, timeframe, context and relevant actors.

This is a new tool for project finance in the cultural sectors that intends to push the shift in the companies mentality from subsidy to shared risk between public and private, improving competitiveness and responsability among the CCIs. The main characteristics are the following:

1. The cultural interest of the projects is taken into consideration in terms of valuation, but the key factor for getting finance it is the viability of the project in terms of market success.
2. If the project is approved will get simultaneously a double financing: a loan with no cost and a “repayable contribution or grant”: depending on the sales performance during the exploitation period this contribution will either be paid back totally or partially by the beneficiary company.
3. The amount of the contribution depends on the attributes and points of interest referring the cultural project
4. In terms of valuation the key question is: will the project be able to reach the break even if they get this repayable contribution? If this is not probable, the project won’t get neither the loan nor the contribution.
5. The overall public financing (loan and repayable contribution) will reach a minimum of 30% and a maximum of 70% of the project budget. Usually the 25-30% is a repayable contribution and a loan for the rest.
6. The return of the financial aid is based on the exploitation results of the project, and will never subsidize the benefits of the projects. Therefore, this financial instrument is designed to act as a financial driver and expects to recover the subsidy part according to the commercial performance of the project.
7. 6 different typologies of projects (record and musical industry, festivals and or music, performing arts, book and editorial cycles, videogame industry, and other sectors and/or projects).
8. Variable guarantee percentages directly proportional to the risk of the company and the previous performance with prior repayable contributions.
9. Different percentage caps for the concession of cultural financing (contribution) based on budget, with a maximum of 35% of the accepted budget.

2. Cluster connection

This paragraph is to determine whether the project is linked to a creative cluster in this region and whether there is a link with other clusters.

Is this case part of a cluster?

Unknown

What type of cluster (digital, fashion, creative general etc), does the cluster consist of one type of (sub)sectors or is it heterogeneous?

Unknown

What actors does the cluster consist of?

Repayable contributions are addressed to the cultural sector: Performing arts, visual arts, audiovisual, books, music, video games and cross-media projects.

Who is responsible for this cluster? Is there a cluster organization?

Unknown

Are there other strong clusters in the area/region, and if so: are there exchanges between the creative clusters and the others?

Unknown

3. Role of government

This paragraph is to determine the role of (local/regional/national) government and policy in this case.

How important is the role of the government in this case?

The RC are fully funded by the Catalan Government (local). The RC funding available for 2013 is €8 million (6,27 million as of loan and €1,784 million to be spent as of grant). Any money that is not used from the RC will be returned to the Catalan Government budget.

Regarding to the policy background, the RC are the key financing tool used by the Catalan Goverment to shift from non refundable helps to strongly based credit funding aimed to be used for SMEs in Creative and Cultural Industries with business driven goals. This tool, among others, is on function to better adjust public funding to the problems encountered by those companies to have access to credits by the reluctant private financial market.

What are the relevant policies that contribute to this case?

Unknown

What are the policy instruments used?

Unknown

Please pay attention to financing (total budget relevant to the cluster), percentage of government funding in the total budget available for this case and any other resources made available.

Unknown

4. Role of private sector

This paragraph is to determine the role of private actors in this case.

In your case, what role(s) do private actors play and how important are they?

As stated above, the funding from the RC is supplied by the Catalan Government in its totality. Regarding to the funding of an individual project, ICEC is financing from 30% to 70% of the total amount of costs, whether the private sector is engaged to provide the rest of the amount needed to cover the total budget. There is a private participation in the Evaluation Committees, assuring market conditions in terms of viability analysis of the projects.

The risk is being shared between the Public and the Private sector, but never is one of the agents taking care of all of it.

Please pay attention to financing (total budget relevant to the cluster), percentage of government funding in the total budget available for this case and any other resources made available.

Unknown

5. Role of knowledge institutions

This paragraph is to determine the role of Knowledge Institutes (aka Schools, Universities etc) in this case.

Are knowledge institutions involved?

Unknown

If knowledge institutions are involved, please describe their contribution (including financial).

Unknown

6. Successes and failures of the case

This paragraph is to determine what the success and fail factors are in your case. Please keep in mind that it is important for ECIA to find out whether it is context, financing, the various actors, change of policy etc.

Please describe the main success and fail factors, provide a clear description, limit the use of bullet points.

To date, the main figures related to the performance of the RC for the last 4 years are:

2009: 35 projects; €1.814.693 total; €512.344 contribution; €1.302.349 loan.
2010: 36 projects; €3.126.244 total; €742.730 contribution; €2.383.514 loan.
2011: 51 projects; €3.521.241 total; €834.077 contribution; €2.687.164 loan.
2012: 59 projects; €3.617.260 total; €897.616 contribution; €2.719.644 loan.

The above mentioned results prove that there has been an increase in the projects funded and that it is a useful tool for the CCIs. Speaking in average terms, RC have become a key factor in funding publishing houses projects and performing arts, which means 63% and 8,5% respectively in the total amount of projects submitted on 2012.

The RC are currently providing funding for projects in fields which subsidies are being suppressed due to public budget shortage.

The difficulties encountered are:
- Access to private funding in order to get the bank endorsement.
- Due to the requirement of minimum 2 years of prior expertise, start-ups meet difficulties to fit into the RC system.
- Difficulties in evaluation of the viability of new business models.

7. Replication potential

This paragraph is to determine if this case could be copied by another region, country or even Europe.

Would it be possible to replicate this case in another region? If so, in which region?

The tool is suitable for the transition from subsidy based policies to other type of policies that are based on shared risk and responsibility between private and public.

What would be the conditions to do this?

Unknown

8. Finance model

Please pay attention to financing (total budget relevant to the cluster), percentage of government funding in the total budget available for this case and any other resources made available.

Unknown

If knowledge institutions are involved, please describe their contribution (including financial)

Unknown

9. Contact

Unknown



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