Artist Bernar Venet poses at the Bernar Venet Art Foundation in Le Muy, France. Photograph: Didier Baverel/Getty

 

Last month, the Bernar Venet Foundation opened in the artist's beautiful home in Le Muy, an hour from Nice. Among the works on view – by appointment only – is a metal chain sculpture by Arman in the beautiful grounds, pieces by Richard Long and Frank Stella in the spacious hall, and a painting by Sol LeWitt in the living room.

 

Although Bernar Venet has lived in New York since 1967, he established a foundation in his native Provence in order to house his own works as well as his collection of minimal art. His foundation is unusual in that it was set up under US tax law, with 100% of the value of the donated works and funds to be deducted from income tax. Along with the Portuguese Calouste-Gulbenkian Foundation, his foundation is one of few in France to operate under a foreign tax regime.

 

There are some 3,220 foundations that operate under the French tax system. According to a study by the Observatoire de la Fondation de France, an independent body that monitors charitable and philanthropic institutions, the number soared by more than 60% between 2001 and 2010 as a result of tax breaks introduced in 2003. Companies benefit from a 60% tax deduction on donations up to 0.5% of annual turnover, while individuals can deduct 66% of their donation to a maximum of 20% of their taxable income. According to Laurence de Nervaux from the Observatoire, "French tax measures in favour of sponsorship are the most advantageous in Europe."

 

The legal framework is, however, extremely complex. State-approved foundations benefit from the most favourable tax regime. "That status inspires confidence. It's a guarantee of sorts, but it's a long and expensive business," said Eve Séjalon, from the French Foundation Centre. "First you must make a donation of at least €1.5m [$2m] that you won't be able to recover, and then you have to wait patiently for a year and a half until you obtain the approval of the council of state."

Of the 626 state-approved foundations, 100 are devoted to culture. They include the Maison Rouge, a private contemporary art foundation established in Paris in 2004 by the collector Antoine de Galbert, and the Hippocrène Foundation, a family foundation, which donates €500,000 a year to some 40 European projects.

 

Another method is to set up a foundation under the auspices of an existing state-approved foundation. Some 200 companies in France opt for this system, which requires a minimum endowment of €200,000 spread over five years. The founder is free of administrative management and benefits from the legitimacy of the "parent" foundation.

 

Most companies prefer the corporate foundation system, which requires a minimum endowment of €150,000 spread over five years. It takes only four months to set up but the disadvantage is that it cannot call on the general public for funding, or obtain donations or legacies from anyone but the founding company's employees. Guillaume Houzé, chairman of the Galeries Lafayette Foundation, which has an endowment of €21m over five years, believes that this format enables a company to "lay down its commitment in stone" — in other words, to make it professional and lasting.

 

Setting up a foundation is good for a company's image, including the way it is perceived by employees. "When we established our foundation it changed the way people saw us. It shows that we're serious," said Colette Barbier, director of the Ricard Foundation, which has been supporting emerging artists since 2005. "It has been a breath of fresh air to the company," added Louis Roederer, deputy CEO.

 

Another type of foundation, which looks likely to grow in popularity, is the regional corporate foundation, which can be set up jointly by a group small and medium-sized companies. "It's difficult to carry out corporate sponsorship on your own when your company only has an annual turnover of €1m," said Robert Fohr, in charge of the sponsorship unit at the French ministry of culture. "By getting together, companies can do more and do it better."

 

Since 2009, a new system has proved very popular: the French version of the US endowment fund. This can be set up within a fortnight at the prefecture headquarters, has no minimum financing requirement and only minimal governance. It has proved very successful with 1,660 such funds set up in just four years, more than 20% of which are involved in the cultural arena. The François Pinault Foundation, established in Amsterdam by the eponymous millionaire, may soon switch to this highly flexible format. These funds were designed first and foremost as vehicles for individual philanthropy but are increasingly attracting companies, including the property development group Emerige, which has just set up its own contemporary art fund.

 

For the hypermarket magnate, Michel-Edouard Leclerc, chairman of the Hélène and Edouard Leclerc Fund for Culture in Landerneau (Brittany), the endowment fund guarantees independence. "We can move faster because we don't have to answer to the government," he said. "The only shortcoming is that the word 'fund' doesn't carry as much weight as 'foundation'". But the Bordeaux wine magnate, Bernard Magrez, believes that enthusiasm for these funds will die down. In 2012, 36% proved to be inactive, and 60% were just empty shells without any funding at all.

 

The biennial survey carried out by Admical, an organisation that promotes the development of corporate sponsorship, highlighted a snag in this apparent profusion of funds and foundations. Cultural sponsorship, which totalled nearly €500m two years ago, has dropped to €364m.

 

The survey showed that in 2012 more than 25% of corporate sponsorship was devoted to culture. But now it stands at 13%. The companies questioned, especially the smaller ones, stated that they had no short-term outlook on whether or not they would pursue their commitment. About 10% were considering reducing their sponsorship budget and 8% were thinking pulling out altogether.

 

The reason, in addition to the economic crisis, which has hit small and medium-sized companies hard, lies in the current uncertainty over taxation. Since François Hollande was elected in 2012, the government has regularly stated that it will reduce tax vehicles and companies fear they will bear the brunt. "We need a clear message," said Stéphane Martinez, chairman of Fondation Mécènes et Loire. "The government can't keep changing its mind, or telling us that sponsorship is a tax shelter. It's annoying."

 

Béatrice de Durfort, chief representative of the French Foundation Centre, agrees. "We have good sponsorship measures here that need to be grounded. Otherwise we'll lose everyone on the way."

 

How different luxury brands approach sponsorship

Luxury groups tend to set up foundations to promote contemporary art. Cartier was a pioneer in 1984 when it established its own under the auspices of the Fondation de France, an independent agency set up by the government in 1969. The Cartier Foundation has an annual budget of €10m ($13m).

 

Although Cartier is synonymous with high-end watches and jewellery, the foundation promotes and supports popular art and emerging artists. "We don't go in for sponsorship to the greater glory of Cartier, even though the name is useful because it is so well-known and respectable," said the foundation's chairman, Alain-Dominique Perrin. "My first action was to forbid us from commissioning artists supported by the foundation for Cartier creations."

 

The LVMH group, on the other hand, has asked artists such as Takashi Murakami and Yayoi Kusama to design leather goods, and in 2006 set up the Louis-Vuitton Foundation for Creation. The foundation's premises, designed by Frank Gehry, will open in October.

 

LVMH has been a corporate sponsor since 1991 and has built up a contemporary art collection as well as sponsoring exhibitions.

 

Hermès came onto the scene in 2008, focusing on contemporary artists and artisans. "The family was against the idea of a foundation at first," said Pierre-Alexis Dumas, chairman of the Hermès Foundation. "It wasn't the done thing to advertise any support we were giving, it was seen as boasting. And anyway Hermès didn't need a foundation to exist as a brand."

 

Public institutions, which often depend on donations from these groups, fear that these will be diverted to their foundations. "Obviously choices have to be made," admitted Guillaume Houzé, chairman of the Galeries Lafayette Foundation. "But our group continues to support public projects." RM

 

This article appeared in the Guardian Weekly, which incorporates material from Le Monde