The role of governments in conserving and funding cultural institutions

Over the past two decades spending for cultural activities (for example, cultural heritage conservation) in Austria has significantly increased. This concerns government bodies no less than private organizations. However, the role of the state in providing for cultural institutions (for example, national museums, theatres and cultural monuments) has been widely debated. Part of this debate is the question of whether there should be more involvement of private actors (donors, sponsors, visitors). This chapter examines in detail cultural spending for different types of cultural institutions over time. In a second step it shows how cultural institutions in their different forms provide diverse goods and services to the public: conserving cultural institutions can be a public good, but personally enjoying an exhibition or a theatre and opera show is also a club good or a private good, with possibly some features of merit goods. Based on (positive) empirical analysis and a description of the different types of goods and services ‘produced’ by cultural institutions, the chapter discusses a normative model for state intervention in the cultural sector, with specific reference to cultural institutions. In the conclusion it discusses the range and extent of possible government instruments, including provision of goods and services, and their funding.