Relief plan in the works for the “entertainment industry” and other funding for arts, culture, and sports organizations

22 avril 2020 | Nicole K. D’Aoust

( Disponible en anglais seulement )

On Friday, April 17, federal Heritage Minister Steven Guilbeault announced that the Government plans to give $500 million to the “entertainment industry”, which he defined as including arts, culture, and sports organizations.  The Minister specifically mentioned “non-profits” as being possible recipients of this funding; however he did not refer to registered charities.  Since many arts and culture organizations are registered charities, we would expect them to be eligible although we will need to wait for more details.  Similarly, many sports-focused organizations that could be defined as being in the “entertainment industry” are also charities, including many hall of fame museums and sports archives.  While this “entertainment industry” relief plan is still being finalized, below we have described what we know to date.

The Minister indicated that the funding “has in mind … non-profits, national sports organizations, television production houses, publishers, music associations, and media organizations”.[1]  Based on this description, it appears that eligible recipients will include organizations in the non-profit and charitable sector, and could also include for-profit businesses, all of which participate in the “entertainment industry” in Canada.  We note that an increasing number of start-up arts and culture businesses are being structured according to “social enterprise” models, which are designed to deliver profits for the owners like traditional businesses, but also benefit the community at-large in some way, such as by supporting up-and-coming artists who would not otherwise have the financial means to produce works of art.[2]

At this time, we do not know what form this funding will take: either grants, loans, or other forms of funding.  The wording of the initial announcement suggests it will take the form of grants, but that is not entirely clear.  We do not know whether there will be conditions or restrictions attached to the funding, or how and when the funding will be distributed.  We do know from the announcement that Heritage Canada plans to assess where the funding can have the most “beneficial impact”.  We expect that this analysis will include a consideration of whether other financial support is available to an organization through the Government’s overall Covid-19 relief package.

It is also unclear whether charities that employ arts and sports as a means of delivering their charitable programs (such as, for example, a charity that provides opportunities for at-risk youth to participate in music or sports) will be eligible for this funding.  As the announcement suggests, the funding appears to be reserved for organizations in the “entertainment industry”, such as, we assume, organizations that offer public entertainment, including performances, exhibits, and other public events.  This could include organizations that provide such entertainment for free or for a fee, or a combination thereof.

Since the announcement was made, Heritage Canada’s website has been updated to provide that the funding is in response to the cancellation of events and the closure of organizations.  More specifically the website states that “due to the unexpected cancellations of cultural and sporting events, as well as the closure of facilities, many cultural, heritage and sport organizations, their workers and their families are grappling with extraordinary financial pressures.”[3]

The Minister indicated that Heritage Canada is currently consulting with the Canada Council for the Arts (“CCA”), a registered charity and federal crown corporation, on how to administer this funding.  The fact that the government is consulting with CCA is a promising sign that funding will be available to a broad range of organizations, and potentially individual artists as well (we note that the well-being of individual artists and their ability to survive this period is of great concern to arts and culture charities, some of which are exploring various ways to assist artists directly).  The Minister indicated that Heritage Canada plans to hold further consultations with the industry before finalizing this plan.  Given the speed with which Covid-19 relief is being organized and distributed, we anticipate that these consultations will be by invitation and may not be open to the general public.  This does not prevent organizations from speaking with their elected representatives and otherwise advocating for government support.

While organizations in the sector will undoubtedly be grateful to receive this urgently-needed funding, $500 million is not enough to stabilize the arts and culture sector as a whole.  That being said, it can be helpful to remember that the Government funding during the Covid-19 crisis is meant to help all of society weather the storm, as opposed to provide a permanent solution or redress back to one’s position before the crisis.  In this regard, we continue to help organizations explore a wide variety of funding opportunities and cost-saving measures in order to ensure their survival through this difficult time.[4]

This funding announcement is significant from the perspective that it is the first Covid-19-related relief measure specifically aimed at providing relief for arts and culture organizations, as opposed to their employees or contractors.  Charities and non-profits may also potentially be eligible to access the previously announced wage subsidy program and the small loan program (in our view, in its present form, the loan program is currently only available to charities in limited circumstances).[5]

Other subgroups within the non-profit and charitable sector that have been earmarked to receive specific funding as part of the Government’s Covid-19 relief package are certain organizations in the housing sector, women’s shelters, food banks, and organizations working in First Nations, Inuit, and Métis communities.  These measures were announced by the Government in March and early April, but have yet to be fully implemented.

Finally, after much anticipation, on April 21, 2020, the Government announced $350 million in funding specifically for registered charities.  Imagine Canada and other charities have been working very hard to help secure this funding for the sector.  There may be further funding opportunities for arts and culture charities in this new plan; however, at first glance, the funding appears to be designated for front line health organizations, United Way organizations, and The Canadian Red Cross Society.

We will continue to analyze the Government’s funding measures and provide further details and clarifications as they become available.  This $500 million in funding will be administered by Heritage Canada and, therefore, organizations should continue to monitor Heritage Canada’s website.  If you have any questions about these measures, or your arts and culture organization requires advice during this time, please do not hesitate to reach out to our Social Impact team.

 

1 We note that on April 17, 2020, the Department of Finance released draft legislation to implement new support measures for the Canadian news and broadcasting sector; the $500M funding plan in this article is a separate measure.

2 We note that the reasons why an entity in the entertainment industry is structured as a for-profit, non-profit, or charity essentially depends on its activities and revenue model.

3 See Heritage Canada, online:
https://www.canada.ca/en/canadian-heritage/services/funding/information-covid-19.html.

4 We continue to host webinars and publish articles on how we are seeing clients and the sector generally deal with cash flow issues during the crisis.  Please see our website for those materials under our general “Covid-19 Resources” and particularly under the “Social Impact” heading of that page: https://www.millerthomson.com/en/covid-19-resources/.  For example, one of the things we may see in the near future is more large charitable foundations set up funds to assist other charities during this time.  We understand that this is already happening in the U.K. and the U.S.

5 For more information on these programs, see our website: https://www.millerthomson.com/en/covid-19-resources/.  See also Imagine Canada’s chart with a summary of the relief measures available for sector organizations: https://docs.google.com/document/d/e/2PACX-1vQbkT4Zr5isIGl6EAluwm0-eO8-Y7xP8KNVMXasavT4DlolL8QIdcrxPKMt_4p_LApkYCpdcSvriJps/pub.

 

Miller Thomson is closely monitoring the COVID-19 situation to ensure that we provide our clients with appropriate support in this rapidly changing environment. For articles, information updates and firm developments, please visit our COVID-19 Resources page.

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