Sometimes the concept of non-profit is confused with free. Every year I speak with festival directors who tell me they cannot generate income because the projects they manage are non-profit.
When we talk about non-profit entities, associations, or foundations, it means that income must be allocated to the organization’s objectives, and that they cannot distribute profits. But it certainly does not mean that they cannot generate income.
Economic sectors, from an institutional and organizational point of view, are divided into three:
- First sector, formed by public administrations and organizations.
- Second sector, formed by private companies whose purpose is to seek profit.
- Third sector, which comprises non-profit associations, foundations, and NGOs. These entities carry out social and cultural projects necessary for society, which the public sector cannot cover. Therefore, they operate like private companies, but without being able to obtain profits, as is the case in public administration. The third sector observatory is an independent organization that works to promote this sector in our country.
In cultural management (and in film festivals), the total cost of a project includes the salaries of the team and programmers. These salaries are not profits.
Profits are the difference between project costs and the income it generates. In the case of third sector entities, these “profits” are reinvested in the activity itself, which allows for the improvement of ongoing projects or the creation of new ones, that is, generating benefits for society.
Therefore, a professionalized third sector is very important for the cultural development of a country; it is fundamental to guarantee the freedom and independence of cultural projects from political changes and market laws.
If we analyze the two cultural and economic powers of the world, both are characterized by a very important third sector: the United States and France.
In the United States, most festivals are organized by “non-profit” entities. Many of them are called “Film Societies” (equivalent to film clubs in Spain). An example of these entities would be the Film Society Lincoln Center, which organizes the New York International Film Festival, manages the Lincoln Center’s screening rooms, and 13 other festivals, in addition to educational projects.
There are other festivals in the United States organized by non-profit entities, such as the Sundance Institute or the American Film Institute. These entities are financed by their own activities and by public and private sponsors.
In France, there is a very significant development of associations and non-profit entities, which are the fundamental axis of the cultural sector. We have the paradigmatic case of the Clermont-Ferrand International Short Film Festival, organized by the association Sauve qui peut le court métrage. In recent years, the team members who created the festival in 1979 have been retiring. The festival has naturally been renewed by its workers and collaborators, thus maintaining the good health and continuity of the project.
This association has grown thanks to public support, but above all, to its own activity. It has generated projects that have made this festival the most important in the world in its segment (short film market, documentation center, online distribution platform, co-production forum, etc.).
In Spain, the lack of development of the cultural third sector is at the root of the crisis in film festivals. Most of them are directly managed by the public sector. Very few are managed by foundations or associations; the cases of the Sitges Film Festival Foundation or the Huesca Film Festival are exceptions.
It is urgent that all involved sectors, both public and private, work to strengthen the cultural third sector and make it increasingly free and independent. But, above all, it is essential that cultural managers in the film industry understand that they must make their projects profitable.
Continuing to consider that a non-profit cultural project cannot generate economic income means condemning the cultural sector to its disappearance.