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Alex Pi: ICEC's Repayable Contributions

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Presentation by Alex Pi during the Parallel Session on Access to Finance @ ECIA Closing Conference on November 27 2014 in Amsterdam (The Netherlands).

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Alex Pi: ICEC's Repayable Contributions

  1. 1. 1 DGCEC REPAYABLE CONTRIBUTIONS: A CASE STUDY TO DEMONSTRATE CCI VIABILITY ICEC’s “Repayable Contributions (RCs)” ECIA Amsterdam, 27 November 2014 Mr. Alex Pi Hernández Business Development Catalan Institute for the Cultural Companies (ICEC) Directorate General for Creation and Cultural Companies Ministry of Culture, Government of Catalonia
  2. 2. 2 DGCEC REPAYABLE CONTRIBUTIONS: A CASE STUDY TO DEMONSTRATE CCI VIABILITY The singularity of Repayable Contributions (RCs) RCs are a form of aid that seek to provide financial support to cultural companies so that they can move forward with their projects, provided these are market-oriented, that is, they are planned with economic objectives and are investment recovery-focused. This financial instrument is based both on the idea of transparency and co-responsibility between the cultural company and the government funding the project, as it seeks to fund projects in an efficient way from the outset, and determine the amount the project really needs in the event of losses being incurred.
  3. 3. 3 DGCEC REPAYABLE CONTRIBUTIONS: A CASE STUDY TO DEMONSTRATE CCI VIABILITY Repayable Contributions How do RCs work? 1. If the project is approved will get simultaneously a double financing: a loan -with no cost- and a subsidy. 2. In terms of valuation the key question is: will the project be able to reach the break even if they get this subsidy? 3. The overall public financing (repayable contribution=loan + subsidy) will reach a minimum of 30% and a maximum of 70% of the project budget 4. Depending on the sales performance during the exploitation period this contribution will either be paid back totally or partially by the beneficiary company 5. Variable guarantee percentages directly proportional to the risk of the company and the previous performance with prior repayable contributions
  4. 4. 4 DGCEC REPAYABLE CONTRIBUTIONS: A CASE STUDY TO DEMONSTRATE CCI VIABILITY Success of a key tool by the sector and for a new return culture Analysis of RCs granted 2009-2013 Year Cases closed Granted Returned % 2009 24 Loan € 696.583 € 696.583 100% Subsidy € 352.281 € 75.810,29 22% TOTAL € 1.048.864 € 772.393,29 74% 2010 20 Loan € 1.176.942 € 1.176.942 100% Subsidy € 430.594 € 340.184,86 79% TOTAL € 1.607.536 € 1.517.126,86 94% 2011 18 Loan € 984.458 € 984.458 100% Subsidy € 362.679 € 202.598,29 56% TOTAL € 1.347.137 € 1.187.056,29 88% 2012 8 Loan € 673.400 € 673.400 100% Subsidy € 254.863 € 239.286 94% TOTAL € 928.263 € 912.686 98% TOTAL 70 Loan € 3.531.383 € 3.531.383 100% Subsidy € 1.400.417 € 857.879,44 61% TOTAL € 4.931.800 € 4.389.262,44 89% Repayable Contributions
  5. 5. 5 DGCEC REPAYABLE CONTRIBUTIONS: A CASE STUDY TO DEMONSTRATE CCI VIABILITY The challenge of repayable contributions RCs pave the way towards a change in philosophy from a subsidy culture to a funding and returns culture within Catalan cultural companies. RCs help recover part of the subsidy granted at the outset, and therefore, feed those returns back into the Ministry budgets. Repayable Contributions
  6. 6. 5 DGCEC REPAYABLE CONTRIBUTIONS: A CASE STUDY TO DEMONSTRATE CCI VIABILITY The challenge of repayable contributions RCs pave the way towards a change in philosophy from a subsidy culture to a funding and returns culture within Catalan cultural companies. RCs help recover part of the subsidy granted at the outset, and therefore, feed those returns back into the Ministry budgets. Repayable Contributions

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