Arts Minister Simon Crean released the Mitchell Review into arts philanthropy this week. Chaired by marketing guru and noted philanthropist Harold Mitchell, it “aimed to identify any barriers or impediments that may exist in Australia with respect to private sector support for the arts”.

Private giving is a significant and growing contributor to the arts in Australia. Using Australian Business Arts Foundation figures, the review estimates it was worth $223 million to the sector in 2009-10. Of this, $123 million was philanthropic income and $98 million was corporate sponsorship. In contrast, government funding across local, state and Commonwealth levels stretches into the billions — but even so, the review thinks that private support represents perhaps 10% of the total income to the sector.

Mitchell has found that, at least in the overall architecture, the policy settings are already working. “One of the overwhelming messages to emerge through the review’s consultation process is that Australia has a strong, internationally competitive framework to encourage private sector support for the arts,” the report states. There is clearly a reasonably healthy level of arts philanthropy already occurring, as can be seen in recent high-profile donations to arts institutions such as the Art Gallery of NSW, the Sydney Theatre Company and Opera Australia.

That’s not to say we live in the best of all worlds. Donations tend to flow to high-profile institutions that already enjoy substantial infrastructure and public support, rather than the struggling small-to-medium sector — let alone individual artists slogging it out in their studios and rehearsal spaces.

One of the review’s most interesting findings is that many arts organisations are simply not equipped to pursue sponsorship and giving opportunities, because they are already so cash-strapped and time poor. “The limited funds available to many arts organisations creates a situation where they cannot afford dedicated staff to drive a strategic approach to fund-raising,” the review writes. Another problem is that well-qualified sponsorship and development staff are thin on the ground, and are quickly snapped up by wealthier organisations in other sectors such as higher education. In many cases, development staff are paid more than the creative leaders of small organisations, which the review says causes tensions.

In response to these and other issues, Mitchell recommends the federal administrative infrastructure dedicated to helping arts organisations source gifts and sponsorship should be beefed up. It thinks the Australian Business Arts Foundation should be merged with Artsupport Australia “under the auspices of a new body with responsibility for all private sector support for the arts in Australia”. This would remove duplication and better serve the sector, Mitchell says. The new body should provide more support to small-to-medium organisations, particularly in regional and remote areas, and should work to develop expertise in building relationships with givers, particularly for board members of these organisations.

Several new initiatives are recommended. One is a new program to recognise “testamentary giving”: a tax deduction for wills and bequests. The Myer family and the National Gallery of Victoria both pointed out in consultations for the review there is a mis-match between the tax status of gifts given during an individual’s lifetime and those bequeathed to a cultural organisation in a will. Mitchell thinks the government should “introduce the capacity for private donors to provide a cash gift through their will to an arts organisation, and to receive an immediate taxation benefit to the present value of the gift”.

A couple of other recommendations are also intriguing. The review recognises the growing importance of crowd-funding and micro-finance to the sector, particularly for start-up cultural projects and independent and DIY endeavours. Crowd-funding is particularly useful for individual artists hoping to raise small amounts to finance specific cultural projects. Mitchell reckons the government could be chipping in, providing matching funds for crowd-funding projects on a 20:80 ratio (one dollar from Canberra for every four dollars crowd-sourced).

Mitchell is also enamoured of cultural micro-finance, observing that the government is currently trialling a micro-loans project in the contemporary music sector. If the trial succeeds, the review thinks it should be extended across the cultural sector.

The review also notes a few minor but painful flaws in the current system. One is the exclusion of languages from the rules governing the register of cultural organisations, which is the main pathway for arts organisations wishing to achieve tax-deductible status. Apparently this oversight is making it difficult for indigenous language centres to attain deductible gift recipient status. Mitchell wants this fixed. He also identifies a red-tape burden imposed through the Cultural Gifts Program — the review thinks this role, currently undertaken through the Office of the Arts, should be moved to the Australian Tax Office and administration slashed where possible.

Overall, the Mitchell Review recommends no sweeping changes to a system it clearly thinks it working well. But the tweaks and improvements it recommends should be welcomed by the sector. Some of its ideas, such as micro-finance and matching funding for small crowd-sourcing projects, are new and potentially revolutionary for the smaller end of the sector. Let’s hope most of these recommendations make their way into the final National Cultural Policy, to be released (we are told) before the May budget.