Why is the

nonprofit
organisational form
dominant in certain
cultural sectors:
The case of film
festivals in Chile

Guillermo Olivares 1
1. Introduction

In this essay, the author will discuss the question

on why nonprofit sector is considered the

predominant organizational form in some cultural

activities, with an special emphasis in the

situation in Chile reviewing literature on the

topic. In the first part, the author will make a

general review on nonprofit sector, starting from

basic definitions and then focusing on some

economic and operative aspects that make it the

most used form of organization among cultural

entities. This chapter will also consider some

historic and social approaches to give an

overview on the topic from different points of

Guillermo Olivares 2
view. In a second part, the author will review the

Chilean experience relative to nonprofit sector,

stressing those historical and social factors that

promoted the adoption of this form of

organization in civil society, and specifically in

the cultural sector. In this part, will be also

reviewed the nonprofit from actual experiences

and research in the Chilean cultural context, with

an specific emphasis in film festival as cultural

events and its relationship with nonprofit. In a

third section, the author will discuss the idea why

the nonprofit organizations are the form preferred

by cultural entities in Chile, with special focus on

film festivals.

Guillermo Olivares 3
2. General context on nonprofit

There are several definitions for nonprofit

organizations, which use will depend on the

context in which they are being referred either

socio-political or national. Each one of these

definitions is based on specific characteristics

that allow us to explains their behaviour, their

funding policy, their social role or their

programmatic interest. Therefore, considering the

vast field of explanatory works on this subject, in

this essay the author will use the theoretical

approach made by Salamon and Anheier (1997),

who defined a set of shared characteristics among

these organizations. These features aim at their

basic form of operation, instead of being focused

on their purposes or ways of funding. This

Guillermo Olivares 4
definition states that a nonprofit organization can

be identified by means of five main features.

They are: Organized, Private, Nonprofit

distributing, Self-Governing and Voluntary.

Moreover, the author will also use different terms

to refer the notion of nonprofit. The first one is

“third sector”, which is broadly used to name

those entities conceived as neither public nor

private. A second term to be used in this work is

“civil society” which is a usual concept in

Chilean literature and also in social and political

contexts. Now that basic concepts on this subject

are established, it is possible to argument and

discuss the topic, in order to give an appropriate

answer, considering the case given to be

analysed.

Guillermo Olivares 5
As first argument, it can be argued that it is

generally accepted that nonprofit sector is the

dominant organizational from in the arts and

culture. This situation can be analysed from

different approaches depending on what feature

one wants to emphasise on the analysis. For

instance, paraphrasing Hansmann (1986) one can

express as an initial conceptualisation that an

organization which depends basically on

donations are in general due to be organized as a

nonprofit. So, this approach made considering

from where they receive funding can be taken as

a preliminary explanation to the question why

this form is the preferred in the cultural sector

(Hansmann, 1986). It is important to mention that

the concept of nonprofit is directly linked to

Guillermo Olivares 6
economic theories because clearly alludes to the

way how they manage their incomes, however

above all possible approaches, one of the

characteristics that make them unique among all

private entities “is the presence of strict limits on

the appropriation of the organization’s surplus in

the form of monetary gain by those who run and

control it“. (Ben-Ner and Gui, 2003: 5). This is

an interesting definitions of the so called non

distribution constraint, which is key to

understand the nature of nonprofit sector and also

allows the comprehension of other features of

this kind of organizations. Nevertheless, it is

important not to get confused by this general

definition, because “the non distribution

constraint does not prohibit nonprofits from

Guillermo Olivares 7
earning a “profit”; rather its prohibits individuals

(or corporate actors) from laying claims to any

surplus (or net income) or any revenues realized

from the sale of organizational assets”

(Galazkiewicz, 1998: 26).

In the cultural sector, the dominance of nonprofit

entities took place mainly during the last decades

and according to researchers is not yet complete

(DiMaggio, 1986: 4). In fact, Paul DiMaggio

support this asseveration, based on the U.S. case,

claiming on one article that “it is no accident that

interest in the cultural organization of the arts has

emerged at this point in our history. The past 30

years have been a period of dramatic flux in the

organisations of U.S. art, music, drama and

dance, as well as in the way we think about them

Guillermo Olivares 8
(DiMaggio, 1986: 4). This current interest is also

accompanied with a change in the usual policies

of management of the arts and cultural

organizations, which has been stimulated by the

progressive shift to private patrons instead of

large institutions as main founding bodies. This

change has also affected their internal

equilibrium of power and what aims are pursued

by them (DiMaggio, 1986). From an economic

perspective, the author want to stress, in this

essay, two theoretical approaches which will be

useful to understand the Chilean case which will

be reviewed in further pages and that are

essential to understand the essence of the work of

nonprofit organizations. The first one is the

Weisbrod model, which is also called the Public

Guillermo Olivares 9
Goods Theory, that explains the satisfaction

made by nonprofit organizations to a demand of

public goods which their provision is left unfilled

by the government (Hansmann, 1987). In this

model the government “tends to provide public

goods only at the level that satisfies the median

voter” (Hansmann, 1987: 27), so as a

consequence nonprofit organizations seek to

satisfy the residual demand for public goods,

which remained unfilled by government

provision. “These nonprofit organizations are

financed by donations of citizens who want to

increase the output of the public good”

(Hansmann, 1987: 53). Another theoretical

approach to be considered at this point is the

theory of Impure Altruism which “models donors

Guillermo Olivares 10
as receiving public and private benefits form the

act of contributing” (Kingma, 2003: 57).

According to this theoretical approach, those

benefits possible to be received by private donors

are expressed as prestige, status, access, and so

on. Furthermore, this theory is not inconsistent

with the public good theory. However it goes

beyond the original ideas provided by the public

good theory, because, theoretically, private

donors might be interested only in their own

goals than in receiving the public goods resultant

of their donation.

On the other hand, one historical approach to this

field, which has been very influential on research,

is the text written by Paul DiMaggio on the

culture sector in Boston in the nineteenth century.

Guillermo Olivares 11
In this text, the author stated the distinction

between high and popular culture which emerged

from the efforts undertaken by the Bostonian

élite in order to keep high-art expressions

separated from those considered as inferior.

(DiMaggio, 1986). In this sense, the U.S. version

of high and popular culture just could take shape

after both organizational forms (nonprofit and

commercial) were established completely. Then

those considered high culture started to be

organized under nonprofit entities; in contrast to

those considered popular that kept their

commercial organization. In the coming pages,

these approaches will be useful to put in context

the Chilean case in order to find similarities but

also differences.

Guillermo Olivares 12
3. Nonprofit sector in the Chilean context

In Chile, the nonprofit sector has a long history

closely related to the national independence from

Spain and its further republican development.

Even in the colonial period under the Spanish

crown existed some charities, mainly managed by

the Catholic Churchi. After the independence

struggle in the early 1800s, the new Chilean state

was focused on the political and economic

consolidation, so multiple charitable and welfare

tasks were undertaken by private organizations

basically administered by the church and the

aristocracy whose members served voluntarily in

them (Irrarazabal et al, 2006). During the second

half of the 1800s, the third sector in Chile is

Guillermo Olivares 13
given an important boost by a legal frameworkii

which recognised the existence of nonprofit

foundations and corporations, specially because

many of the public goods were not available for a

huge number of people and workers living in

precarious conditions. After some decades living

in political instability, in the 1930s the Chilean

state reached a threshold in its level of economic

and political stability which was expressed in a

growing provision of public goods and services

in education, health, housing, but also in a

protective economic system which tended to

favour the industrialisation and the substitution of

imports with local products (Irrarazabal et al,

2006). These factors were accompanied by a

progressive democratisation in the electoral

Guillermo Olivares 14
registry and process and the incorporation of a

growing middle class into the political system. In

that way, the nonprofit sector in Chile had the

opportunity to take advantage of new

prerogatives and develop different approaches to

those in use in the 1800s and early 1900s.

Nevertheless, this story ended abruptly in 1973

when general Augusto Pinochet seized Palacio

La Monedaiii and took over the government in a

military coup. After the coup, many nonprofit

organizations were intervened and kept under

surveillance in a process which ended in a

progressive lost of autonomy and prerogatives

(Irrarazabal et al, 2006). However, in contrast to

what one may think the dictatorship could not put

an end to a long story of participation in civil

Guillermo Olivares 15
society, but make it gave a step forward in a

different direction and another emphasis. As

Hugo Fruhling wrote in the 1980s “the work of

NPOs in Chile was also favoured by the nature of

the repressive policies implemented by the

regime” (Fruhling, 1986: 361), because just one

month after the coup, leaders from different

religionsiv created the Committee of Cooperation

for Peace which according to its founding act had

the mission “(1) to give material aid to people

affected by the present situation; (2) to provide

legal aid to defend personal rights; and (3) to

collect information on irregular situations "which

gravely affect personal dignity and which surely

are no desired by the Supreme Government"

(Fruhling, 1986: 361). So to a certain extent the

Guillermo Olivares 16
initial fear to the repressive actions likely to be

taken by security services, fuelled the work of

others to undertake similar projects. “Once a

human rights organization is established and

gains legitimacy and space for its activity, it

opens the road for the creation of new

institutions” stated Fruhling (1986: 364). Once

the dictatorial period was over, the sector that

was constantly under surveillance, had also

gained institutional strength, fundamentally those

devoted to the defence of human rights. The

subsequent democratic regimes started a process

which was focused in fostering and strengthening

those civil society organizations as a necessary

step to consolidate democracy (Irrarazabal et al,

2006). Government increased the expenditure on

Guillermo Olivares 17
social matters, improved the legal framework and

broadened the programmatic offer. This process

was deepened during the President Bachelet’s

administration who based the public

administration upon civil participation as main

axis in Chilean political process.(Irrarazabal et al,

2006). In that sense, the nonprofit sector, as

defined in the previous chapter and taking such

historic background, played a major role in the

social, economic, political and cultural

development in Chile in late 1990s and early

2000s.

Thus to a certain extent one can recognise two

main stages in the development of third sector in

Chile, the first one during the 1930s when the

political and economic life reached a threshold of

Guillermo Olivares 18
stability and it aimed to social issues but also to

new interests and, a second one, during the

Pinochet’s dictatorship when the nonprofit sector

lived a reactivation based on the defence of

human rights. In this fostering process of

nonprofit organizations, the cultural ones played

a significant role. In fact, some years after under

democratic regimes came an official recognition

to the outstanding role played by cultural

movements and artists in the recovery of

democracy (Consejo Nacional de la Cultura y las

Artes (CNCA), 2005). That recognition along

with the demands made from civil society and the

cultural community resulted in 2003 in the

implementation of a national cultural policy

regarding the democratic principles and a brand

Guillermo Olivares 19
new institutional framework for culture, which

tended to make the state to adopt an active role in

protecting heritage and in fostering both artistic

and cultural expressions (CNCA, 2005).

According to a document written then, one of the

main aims in this policy was to promote the

participation and decentralise civil organizations

for cultural purposes, but also to make local

governments to be involved in the cultural

development through the Regional Development

Plans for the short and medium term (CNCA,

2005). Along with the institutional framework

implemented by the government, there are two

important factors generated from the economic

field in the thriving of cultural manifestations in

Chile during the last 10 years. The first is the law

Guillermo Olivares 20
number 19.985 about donations for cultural

purposes broadly known as Leyv Valdesvi, which

allows tax exemptions to those companies that

make donations to cultural organizations. This

bill allows companies to deduct up to 50% of the

money donated from its annual tax declaration

(CNCA and Biblioteca del Congreso Nacionalvii,

2009). The second one is the so called FNDR

2%viii, which is the percentage of each regional

budgetix possible to be invested in cultural

activities and organizationsx. In both cases, only

nonprofit organizations and city governments are

allowed to apply for this funds. As possible to see

in these both legal frameworks, Chilean legal and

tax systems tend to favour funding of nonprofit

organizations in the arts and culture development

Guillermo Olivares 21
recognising their value as legitimate expressions

of civil society.

However, in spite of their political, historical and

social importance in Chile, never was undertaken

a systematic effort to research the actual outreach

of this sector in economy. To remedy this

situation, in 2006, the John Hopkins University

developed a massive research on the economic

impact of nonprofit sector in Chile as part of its

project Centre for Civil Society Studies, which

meant the first effort and the biggest one so far to

asses and understand these organizations in the

country. Naturally the study was not only focused

on cultural or artistic entities, but the global

context, nevertheless it allows to explain the

outreach of the civil society activities, that

Guillermo Olivares 22
includes them. In a first level, the study

concluded that in Chile, the main source of

funding in the third sector is the state, which in

different waysxi, provides the 45% of all its

incomes (Irrarazabal et al, 2006). According to

the research this level surpasses those of

developing countries and reaches those seen in

Western Europe (Irrarazabal et al, 2006). In

economical terms, the nonprofit sector in Chile

explains a 1.5% in the GDP and represent,

considering paid and unpaid workers, a 4.9% of

labour which in absolute terms meant 303.000

people working in this sector. From the cultural

perspective, 16% of nonprofit labour is employed

in culture and leisure sector. In terms of funding,

this sector get a 24% from public funding, a 12%

Guillermo Olivares 23
from private philanthropy, but mainly via own

resources (64%) which can be explained to a

certain extent through the selling of goods and

services, which are also exempt of taxes, so they

are considerably cheaper than commercial goods.

This figures do not seem to support the idea of a

close relations between arts-culture and

nonprofit, however in contrast to other countries,

the Chilean case shows an oversized Education

sector, due to a legal scheme that forces to all

educational organizations to be nonprofit, so the

figures looks relatively small in comparison to

other regions.

On the other hand, the legal system in Chile has a

series of regulations to establish a nonprofit

organization, which tend to become gradually

Guillermo Olivares 24
more complex in the way they are organized

taking into account, for instance, the patrimony

to be administered. Nonprofits, in the Chilean

context, are legal entities registered in the

Ministry of Justice or in Town Councils and

under this umbrella co-exists a series of

organizations of different kind, for instance, trade

unions, sports clubs, co-operatives, foundations,

corporations and community-based

organizations. Due to a series of legal constraints

or the nature of these organizations, those

focused on cultural or art activities are, in

general, corporations, foundations and

community-based organisations. In the first cases

we are talking about legal entities which

existence is granted by a Presidential decree by

Guillermo Olivares 25
means of the Ministry of Justicexii. In spite of this

commonalty, foundations are aimed to administer

and to develop a patrimony and, in contrast,

corporations are devoted to develop an end which

in called an ideal. Administratively, foundations

require a bigger patrimony than that required to

corporations to be created. Despite both of them

are constituted by a directory and a general

assembly, the big difference is that in

foundations, the founders name the directory

which is an autonomous body to the assembly,

whereas in corporations, the directory is named

by the assembly. The case of community-based

organisations is the simplest one, because they

are a sort of corporations established and

identified on a territory and that are constituted

Guillermo Olivares 26
voluntarily by a minimum of fifteen people and

which legal existence is granted by the town

councilxiii. Due to its simplicity and inexpensive

process of creation, this type of entity is preferred

by citizens who share common interests, because

it does not require the representation of a lawyer,

like the others types mentioned in order to be

created. Nevertheless, in general, both

foundations and corporations are more prepared

to face major projects than those possible to be

faced by community-based organizations, due to

the same complexities previously stated for their

creation, which tend to make them being

considered as more professional environments.

But regardless these considerations and according

to the law, all these organisation due to their

Guillermo Olivares 27
nature and the non distribution constraints are

due to reinvest their potential earnings, product

from their activities, services or goods into the

organisation in order to achieve their goals. In the

Chilean cultural sector one can see that those

policies tending to foster social participation have

been to a great extent successful, if one make an

initial review on the main cultural organisations

in Chile one can observe that in a vast majority

they are organised under a non-profit form or

sheltered under an umbrella organisation which

is, in general, non-profit. As defined in the

second chapter, to classify organisation between

for-profit and non-profit organisations, in this

case, I will use the structural-operational

definition given by Salamon and Anheier

Guillermo Olivares 28
regarding those 5 characteristics suitable to be

found in them (Salamon and Anheier, 1997).

Guillermo Olivares 29
Table 1: Cultural organizations in
xiv
Chile

Organization Sector Type

Santiago a mil Performing arts Foundation
Balmaceda Joven Music Corporation
Museo Interactivo Mirador Museum Foundation
Artesanias de Chile Craft Foundation
Teatro Municipal de Santiago Opera/ ballet Corporation
Orquestas Juveniles de Chile Classical music Foundation
Centro Cultural Palacio La
Museum Foundation
Moneda
Fundacion Pablo Neruda Museum/Heritage Foundation
Fundacion Violeta Parra Heritage Foundation
Fundacion Andes Education Foundation
Fundacion Vicente Huidobro Heritage Foundation
Centro Cultural Estacion
Venue Corporation
Mapocho
Cine Arte Alameda Film Corporation
Fundacion La Fuente Reading Promotion Foundation
Visual arts / Performing
Centro Cultural Matucana 100 Corporation
arts
Centro Nacional del Patrimonio
Photography Corporation
Fotografico
Fundacion Chilena de la Imágenes
Film/Heritage Foundation
en Movimiento
Sociedad Nacional de Bellas
Painting Foundation
Artes
Corporacion Cultural MetroArte Culture Corporation
Fundacion Telefonica Culture/ Education Foundation
Fundacion Amigos de las Iglesias
Architecture/Heritage Foundation
de Chiloe

Source: Organizations websites

Guillermo Olivares 30
In these cases, one can see that all these entities

are constituted and organized as a nonprofit

organization and it is also interesting to consider

that among them the preferred forms are

corporations and foundations. After reviewing

the information provided by these entities one

can express that mainly this situation is, in

general, produced due to the institutional

background of these nonprofits. The most of

them are linked to for-profit companies (i.e.

Metroarte – Underground company, Telefonica

Foundation - telecommunications company),

some others are linked to individual or legal heirs

(such as Pablo Neruda, Violeta Parra, Vicente

Huidobro), others to the government or political

Guillermo Olivares 31
institutions (i.e. Artesanias de Chile, Palacio La

Moneda, Museo Interactivo Mirador). They all

share that they are closed entities with close links

with these parent entities. So in a way they are

not open to share the control of these

organizations with outsiders and even to lose

control over its nonprofit ‘branches’.

In this sense it is interesting to review another

case, which is at the same time, similar and

different. One of the cultural activities that has

showed a dramatic development and growth is

that related to the film festivals in the last 20 and

10 years. In 1990 in Chile there were no films

festival in the countryxv, in 2000 about 10 films

festivals were produced in mainly in three

citiesxvi. However during the last 10 years this

Guillermo Olivares 32
number grew until reach more than 28 events in

the whole country, with at least one film event in

every region, in a way to democratise the access

to these cultural goods, which is coherent with

the policies implemented in the country during

the last five years (CNCA, 2005). In this sense,

this case is interesting to be analysed, because

film festivals are activities, as other cultural

events, that requires numerous teams which

develop several activities in different fields at the

same time. The activities involved in this kind of

productions include programming and curatorial

work, publishing and editing, fundraising,

logistics, print traffic, media and PR, executive

production and so on. So in this sense, the non

profit organizational form can eventually be

Guillermo Olivares 33
suitable to be adopted by large groups of

individuals who share their interest for the film

industry. To know about this industry in the

context of nonprofit organizations, it is

interesting to start a small research on the

organizational form used by all film festivals

based in Chile which have a webpage and give

organizational information about them.

The following table shows the 28 most important

film festivals and film events in Chile, which

websites were surveyed to obtain information

regarding the organizational structure, and in

which one can observe a sustained trend in

general under what kind of organization these

activities are developed and organized.

Guillermo Olivares 34
Table 2 : Film festivals by
type of organizationxvii

Festival Type of Organizer

organization
16 Valdivia International Nonprofit Centro Cultural de
Film Festival Promocion
Cinematografica de
Valdivia
DIFF - 8th Digital Nonprofit Centro Cultural Quinta en
International Film Festival Movimiento
2nd Festival de Cine de la Nonprofit Agrupación Patagonia
Patagonia Visual
2nd Rapa Nui Film For-profit Productora Audiovisual
Pueblo Cine
5th Festival de Cine de las Nonprofit Centro Cultural Cineideas
Ideas
SANFIC 6 Nonprofit Fundación CorpArtes
4th Festival de Cine Social Nonprofit Centro Cultural Colectivo
y de los Derechos Humanos Cine forum de Valparaíso
9th Festival Cine Las Nonprofit CorpArtes
Condes
8th Festival Cine Bajo las Public Municipalidad de Vitacura,
Estrellas Celfin Capital y El
Mercurio
21st Festival Internacional Public Municipalidad de Vina del
de Cine de Vina del Mar Mar
2nd Festival Internacional Public Siete Magias
de Cine Tarapacá
34th Festival Cine UC Nonprofit Pontificia Universidad
Católica de Chile
10th Festival Internacional Nonprofit Agrupación Cultural
de Cine de Lebu Festival de Cine Caverna
Benavidades

Guillermo Olivares 35
4th Festival internacional Nonprofit Kosmos Cultural - Berne
de Cine Región de Piñones
Coquimbo, “El encuentro
de las Civilizaciones”
6th Festival Internacional Public Municipalidad de Rengo
de Cine de Rengo
9th Muestra Cine de la Public Municipalidad de Puerto
Patagonia Natales
3rd Muestra de Cine y Public Municipalidad de Caldera
Creaciones Audiovisuales
de Atacama
2nd Festival Internacional Public El Tejón Films
de Cine Independiente de
Iquique (FICIIQQ)
10th Festival de Cine de Nonprofit Agrupacion del Amigos del
Ovalle Arte de Ovalle
18th Festival Chileno Nonprofit Corporación Cultural Arcos
Internacional del
Cortometraje- FESANCOR
13th FIDOCS Nonprofit CULDOC Corporación
Cultural Documental
4th Festival de Cine Social Nonprofit Several community-based
y Antisocial de La Pintana organizations
FECISO
6th Festival de Cine For-profit Catchil Producciones
Documental Musical: IN-
EDIT
6th Chilereality Nonprofit Centro Cultural Chilereality
13th Festival Internacional Nonprofit Corporación Cultural María
de Cine de Valparaiso Graham - Fundación Duoc
UC
9th Bienal de Video y Nonprofit Corporación Chilena de
Nuevos Medios de Santiago Video
2nd Festival de Cine Nonprofit Movimiento de Integración
Lésbico, Gay, Bisexual y y Liberación Homosexual
Transexual (LGBT) de (MOVILH)
Chile

Guillermo Olivares 36
12th Festival de Cine Nonprofit Centro de Extensión de la
Europeo UC Universidad Católica de
Chile
Source : Consejo Nacional de la Cultura y las Artes /
Organizations Websites

Guillermo Olivares 37
After seeing the data, it is evident to consider that

a outstanding majority of festival use the

nonprofit organization to undertake their projects,

basically due to the policies implemented by the

democratic regimes in order to foster social

participation by means of civil society

organizations, and that make these entities similar

to other in the cultural world. In addition, the tax

incentives offered to commercial companies

which support nonprofits were another

interesting tool in this thriving. The picture is

completed with public funding that is in charge to

supplement the budget , which are normally

given after a project-based application. However,

there are cultural and historic antecedents given

38
pages above that make this kind of organizations

more suitable in the Chilean context. I mean as

activities collective in nature, film festivals are

the propitious field to the development of

nonprofit organizations in the cultural sector,

mainly because usually they emerge from keen

and active communities or students societies in

film or communications. In this sense, it looks

interesting to note that a majority of these events

are organized under the form of community-

based entities, which means a contrasting

difference in comparison to the other entities

shown in the table one, which are basically

corporations and foundations with more

formalities perhaps due to its origin and nature.

As community-based organizations are the

39
simplest form to organize nonprofits in Chile,

groups of interests in the country tend to use it as

a platform for fundraising and also for production

purposes. As stated before, following the policies

implemented by the government in order to foster

social participation through this kind of entities,

these events tend to democratise the access to

cultural goods that in other circumstances would

not reached every administrative zone in the

country. It is evident that in early 1990s, the film

activity was focused in three cities in the country

and now, almost 20 years after, this activities

have reached all the country.

It can also be argued that in the cultural field,

specifically in that of film festivals, the

government assumes a kind of variation in the

40
public goods theory, which means that that

provision of culture that remains unfilled is due

to the fact that the government assumes that there

are organizations with both knowledge and skills

to undertake this kind of activities. Thus in other

words, it can be argued that the state makes sure

to fill the provision of these public goods by

means of expert entities.

4. Discussion on the reasons why cultural

sector in Chile prefer nonprofit to for-profit as

organisational form,

Chile has exhibited a long and consistent history

in the development of nonprofit sector, so it is

understandable that combining a government

interested in promoting this area along with

41
policies tending to support politically and

economically this growth would achieve the

flourishing that Chile has testifies during these

years. In the Chilean context as in the

international level, the use of the nonprofit sector

as form of organization in the culture sector is a

common practice. Nevertheless, the reason for

that are probably different in both cases. In that

sense, there is a trend in Chilean society given

historically since the country was ruled by the

Spanish crown to put certain social issues on

private hands on a voluntary basis, by then

specially on ecclesiastical and aristocratic

organizations. This trend was reinforced during

the independence struggle and directly

afterwards. The new government was completely

42
devoted to achieve the political consolidation of

the country and to give a structure to the new

independent state, so the provision of several

public goods were responsibility of private

charities. This process gave a new step during the

first half of the twentieth century, when in the

1930s the republican stability reached a

threshold, specifically in the provision of public

goods by a protective state, that allowed the third

sector to search different fields of action and use

new prerogatives which were made laws. The

democratic fracture in early 1970s by the military

coup gave the civil society a twist in its concerns

and during those years the focus was the defence

of human rights. Nevertheless since the first

efforts on this specific subject, the experiences

43
lived in those years meant an important boost to

the work made by nonprofit entities and allowed

the consolidation of this organizational form as

the preferred by civil society. As a result, since

the inauguration of the democratic

administrations, from 1990 on, the government

progressively, based on the decisive role played

by these organizations in the recovery of

democracy, started a process aimed to foster,

strengthen and support the third sector and

devoted to give the civil society political, social

and economic attributions in order the empower

it as a main character in the consolidation of

democracy. In fact, currently, the legal

framework in Chile favours this organizational

form, which is specially significant in the culture

44
and art sector due to a series of funding

constraints. In this sense for instance, the tax

incentives to private donations are only allowed

when given to nonprofit organizations and also in

the regional budgets only this type of entities are

entitled to receive public funds. Despite the

annual application for public funds granted by

the Consejo Nacional de la Cultura y las Artesxviii

is not discriminatory to individuals or for-profit

companies, it is usual that nonprofit

organizations receive a kind of special status of

preferencesxix, which is basically based on the

non distribution constraint, internationally

recognised as a key factor of interest in this

group of enterprises. As I wrote above, some of

the international economic theoretical approaches

45
possible to be applied in this case are the public

good theory, which can be expressed in a first

stage as a “compulsory” task for civil society in

different degree depending on the democratic

development, up to 2000s when the government

left – in a conscious way - to a certain extent

areas to the action of civil society as base of the

democratic consolidation and implementing a

framework to foster the creation of this kind of

organizations allowing them to thrive. So in a

sense, and reviewing some of the approaches

given in the first chapters one can express that the

government has opted voluntarily, specially in

the cultural field, to give civil society the task of

fill the provision of certain public goods, such as

culture, through a series of legal tools intended to

46
facilitate its work. Even more, historically the

state in Chile have tended to rest in the so called

Public Goods Theory by means of different

entities throughout its history and nowadays the

government have created a legal framework to

consolidate this historic trend, based on the

importance given by the government to the

participation of citizens in public and social life,

but also in a recognition that there are social

bodies which have a more appropriate know-how

to develop this enterprises.

A second theoretical approach we have talked

before and now it is interesting to analyse it

based on the given evidence is the so called

Impure Altruism, which can be analysed from the

point of view of a series of regulations tending to

47
stimulate commercial companies to donate to

cultural nonprofits based on tax incentives.

Actually, major companies has established

departments under the general label of corporate

social responsibility, which in general are internal

project-based entities with a budget given by

those legal tax incentives. In the Chilean context,

this entities have tended to use the tax

exemptions established by the government

mainly as a PR and marketing tool, because those

companies normally demand to be mentioned by

nonprofits and in some cases with technical

specifications. in the case of film festivals, there

is an interesting approach because these

corporate donors tend to use the media of these

events to market their donations, specially

48
because it is usual that film events have links

with media, in contrast to other cultural activities.

In summary, trying to answer the question, the

author can say that in the Chilean context,

cultural organizations have tended to adopt

nonprofits as organizational form based on

historical, social, political and economic reasons.

Those historical and social approaches are

strongly linked with the national history and

those economical have a political background,

but in this case can be explained using

international theories. So the understanding of

these entities in this context can be reached using

both national and international perspectives.

Nevertheless, it can be stated that in Chile in

general, cultural entities, have opted to use the

49
nonprofit form, and specifically, film festivals,

have chosen community-based organizations to

undertake their projects, so in this way they can

offer donors a legal entity suitable to be

supported, but also can develop themselves in a

flexible way.

i
For instance, the Society of Jesus was responsible for
education in Chile during the colony under the Spanish
crown.
ii
The Civil Code, published in 1855, gave the first
regulations for nonprofit civil contracts. (Codigo Civil, title
33)
iii
Presidential palace in Chile
iv
This committee was formed by leaders of the Catholic,
Methodist, Baptist, Greek Orthodox and Jewish churches
(Fruhling, 1986).
v
Ley is the Spanish word for Bill or Act.
vi
The bill was named after the Senator Gabriel Valdes, a
prominent politician and diplomatic who was its main
promoter.
vii
National Congress Library
viii
FNDR means National Fund for Regional Development,
which is the centrally-assigned budget for every one of the
15 regions in Chile.
ix
Regional budgets are assigned by law a year in advance
and it is approved by the National Congress
x
This allowance is established by the bill which defines the
fiscal budget every year. In 2010, the bill is the Bill 20.407

50
xi
State funding can be given by direct transfer, project-
based public bids, subsidies and so on.
xii
Legal entities are regulated by a series of legal
regulations such as Civil Code in its Title 33, Decree-Law
110 (1979) and Decree-Law 1183 (1975), and its further
modification by Decree-Law 1382 (1976)
xiii
The legal framework for the creation of community-
based organisations is given by the Bill number 19418
(1995)
xiv
These organization are among the main entities in Chile,
but this is not an exhaustive survey, This table can be
considered as a list of examples.
xv
The oldest film festival in Chile is the Festival de Cine
de Vina del Mar, which was founded in 1967. but was
closed after the coup. The festival was reopened during the
1990s.
xvi
The cities which started to develop their own film
festival were Santiago (the capital and main city), the
metropolitan area formed by Vina-Valparaiso and Valdivia
xvii
On April 14, 2010 using as reference a annual calendar
provided online by the Consejo Nacional de la Cultura y
las Artes, the websites of these festivals were surveyed in
order to provide information to complete the Table 2 “Film
Festival by type of organizations" as seen above.
Calendar available at:
http://www.consejodelacultura.cl/portal/galeria/text/text19
29.pdf
xviii
The Consejo Nacional de la Cultura y las Artes
(National Council for Culture and the Arts) is the Chilean
equivalent to a Ministry of Culture.
xix
For-profit companies have other sources of funding and
support which have been established by national economic
bodies tending to foster the creative industries in the
country.

51