The Japan Foundation
Performing Arts Network Japan
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Artist aAn Ovewview.
2005.4.17
The recent state of corporate philanthropy in South Korea  
 

The present status of corporate support for the arts
In South Korea today, corporations are involved in the arts and culture in a wide variety of ways. This involvement in and support of cultural and artistic activities by corporations began in the 1970s with the advent of a period of high economic growth rate known as the "Hangan Miracle." This was not simply a matter of the high economic growth rate giving corporations the financial means to become involved in the arts. It was also the result of the South Korean government's economic policies that encouraged the formation of large corporate groups (chaebol) as the building blocks of the country's economic growth strategy. This led to the subsequent spread of the idea that these large corporate groups had the responsibility to return to society a portion of the wealth they had amassed under these policies. From the corporate side, there was also recognition of the usefulness of corporate philanthropy as a means to dispel some of the negative image they had acquired as corporations during the period of high economic growth. At the same time, another factor contributing to the spread of corporate support for public services was the same type of tax allowances granted to corporations for such contributions by governments in the West at the time.
As we have seen, the concept of corporate patronization of the arts began to spread in South Korea in the 1970s, but it was the Asian Games of 1986 and the Seoul Olympic Games of 1988 that really provided the opportunities for Korean corporations to explore more active ways of becoming involved in the arts and culture. These large international events brought with them a sudden growth in corporate interest in cultural programs. And in fact, corporations supplied a large portion of the budgets for the cultural events taking place in South Korea around the time of these two international sporting events.
However, as the Korean economy went into decline later, a shift began in the direction of corporate philanthropy, away from purely public service activities and toward activities that contributed directly to actual revenue for the companies. Although some aspect of making a contribution to society by returning profit for the social good remained, marketing strategies that used the arts and culture activities in ways that contributed directly to corporate revenue became dominant. This shift reflected a change in the way corporations saw arts and culture activities. Instead of seeing support for the arts as simply a byproduct resulting from budget surpluses, they began to see arts and culture as potential partners that could help in their pursuit of profit. Among the areas of marketing where arts and culture can be of use are publicity, advertising and sales promotion activities that contribute to the company's corporate image. In the case of South Korea amidst the shift toward a consumer society since the 1990s, companies that wish to position themselves as luxury or quality brands have made successful use of this type of marketing to promote a quality image to customers in the middle class and above.
In light of this trend, the "Korean Business Council for the Arts (KOBCA)" was launched in 1994 to serve as a pipeline between corporations and the arts. At the time, the Ministry of Culture (present Ministry of Culture and Tourism) and the Korea Culture & Arts Foundation actively sought out successful companies to become members of the Council, and at its launch the Council had 167 corporate members (as of Mar. 2005 there are 119 corporate members). The Korean Business Council for the Arts functions primarily in the areas of information supply and as an intermediary for the expansion of corporate sponsorship of the arts and culture, concentrating mainly on its corporate members. However, despite being in existence for more than ten years now, there are still many arts and culture organizations in South Korea that are not even aware of the Council's existence. Many people also point out that, just as the Korean economy has been formed under government direction, the Korean Business Council for the Arts was established in line with the government's culture policies. This fact is evident in the Council's 2004 budget. Of the 2004 budget of 6.1 billion won (approx. 6 million USD/610 million yen), some 1.1 billion won (approx. 1 million USD/110 million yen), comes from the corporate members and 5 billion won (approx. 5 million USD/500 million yen) comes in the form of support from the government. In other words, only one fifth of the budget comes from the corporations. For this reason, there are hopes that concerted efforts will be made to boost corporate participation from now on.
In South Korea, most of the support for the arts comes from the large corporations and corporate groups, and many of these have their own arts and culture foundations and have established and operate cultural facilities of some kind. This is a result of the fact that the government moved at the time corporate philanthropy was getting started to provide tax exemptions for both corporations and individuals regarding heavy inheritance taxes, which could run anywhere from 5% to 50%, and donation taxes. This move led to the establishment of arts and culture foundations by big business as a form of support for the arts in the 1970s, just at the time when the second generation of corporate leaders were inheriting assets from the first generation that had been the backbone of South Korea's economic growth. Most of the arts foundations that exist today had been formed by the time that wave of inheritance reached its peak in the 1980s. Entering the 1990s, we began to see corporations building cultural facilities in addition to running their arts foundations.
Despite a miraculous recovery from the 1997 monetary crisis thanks to the help of the International Monetary Fund (IMF), however, South Korea is still in the midst of recession and a period of economic restructuring. You might say that the honeymoon between corporations and the arts is long ended but the two parties remain at a standstill in the process of beginning to build a true partnership. Also unsolved is the problem of the arts and cultural organization themselves, which were not able to make mature responses in the face of corporate support efforts for the arts. Thus, one of the biggest issues confronting corporate support for the arts in South Korea is finding a way for both parties two enter into a mature relationship.
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