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Cultural Sponsorship

Cultural sponsorship can be broadly defined as being a means for private bodies to support cultural agents, in exchange for tax benefits granted by the Government. This type of support is in the spirit of corporate social responsibility.

Cultural sponsorship has had a steady growth in Portugal in the past years, being a significant source of direct or indirect funding to cultural institutions in general.

There has been a change of paradigm in the nature of corporate investment in the community that is positively affecting their involvement with the Heritage and the Arts.

As investments in the community increase, cultural projects begin to be regarded as commitments to society. This means that there is clearly a shift from philanthropy to a strategic business-minded responsibility. For cultural organisations, this tendency represents a rather interesting opportunity to approach the entrepreneurial sector.

According to the legal framework that set up sponsorship in 1986, and later amended it, sponsorship is subject to specific national budget provisions associated to tax benefits.  Broadly speaking, sponsorship is based on the following principles:

·         It follows an informal self-regulation principle as far as the relationship between cultural agents and economic agents is concerned, by which only the State can grant tax incentives.

·         It may be practiced by both natural or legal persons, as long as they have an entrepreneurial nature; as a rule, all public bodies, foundations, associations and cooperatives developing cultural activities may receive donations or benefit from sponsorship;

·         Tax benefits refer to the acceptance, as costs, of any donations or itemized deductions, in case of natural persons; when donations are granted to the State or to public utility bodies (some foundations are an exception), tax benefits are automatically granted; as regards donations to private bodies, tax benefits will depend on whether or not there is cultural interest in particular cultural initiatives, i.e., if the so called “Manifest cultural interest” applies; 

·         Finally, and still on the basis of the aforementioned self-regulation, sponsorship may include additional benefits other than the tax benefits referred to above.

Briefly speaking, cultural sponsorship, as a means of fund raising, refers to the application of a communication technique, a public relations strategy or an adhesion to the event/institution (“opportunism”); it may also be an attempt to boost a company’s image (notoriety, prestige), to make its products more popular, or even to improve a company’s work atmosphere or the relationship with opinion makers.

Legislation applicable in 2009:
Decree Law no. 108/2008, of 26 June, makes amendments to many articles of the Tax Benefits Statute, and includes its republication (vide preamble of the abovementioned Decree Law). Its Chapter X, article 61 onwards, makes provisions for Sponsorship. 

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