Many legitimate questions arise with the closure of the Just for Laughs Group. One of them could be stated as follows: how can a non-profit festival backed by a multinational go bankrupt?
On a second level, how is it that a multi-billion dollar for-profit company can own a non-profit company? Technically and legally, an NPO is owned by its members who appoint a board of directors. Any surplus is kept within the company and is not distributed to members. A for-profit company distributes its profits to its shareholders.
The structure of Just for Laughs, and that of the Jazz Festival, Francofolies, Osheaga, are the same, the non-profit company asks for subsidies, the for-profit company recovers everything that makes money money (capture of shows, sale of drinks on the site, etc.) and pays a fee to the NPO. Profits are kept in the for-profit company and expenses are allocated to the NPO.
If the Just for Laughs NPO had retained control of recordings and other paid products, would it be bankrupt today? Basically the question is why this dual structure. There are several hundred festivals and events in Quebec and none other than those I have named have this dual structure.
What is paid for at festivals and events supplements the subsidies received. In the case at hand, as the profits go to the for-profit entity, the NPO does not make a surplus. If she did, she wouldn’t need to ask for government assistance to offer free shows. She could afford it.
I’m happy for those who sold out their festivals for tens of millions. But why do our governments accept this structure which violates the spirit of the law? How do they accept that a non-profit company is owned by a for-profit company where everything that is paid goes to the first and not to the NPO?
The argument of asking for subsidies to give free shows does not hold water. If what is paid for had remained in the NPO, it would have had the money to offer these free shows, without subsidies. In any case, is it the government’s mandate to offer free leisure to its citizens? If the answer is yes, why then does it not do the same thing for cinemas which show Quebec films?
As for the economic benefits argument, that’s rubbish. When we calculate these benefits by counting those who come from 40 km from Montreal, we might as well say that we undress Pierre to dress Paul. Spectators from Trois-Rivières, Drummondville, Saint-Hyacinthe, Granby, Sherbrooke impoverish these cities when they spend instead in Montreal.
In any case, even if we only counted visitors entering Canada the case would not hold either. The majority of Canadian manufacturing companies export products and therefore bring foreign currency into Canada, which is very profitable for our economy. Why then do they not have access to public subsidies annually to offer some of their products free of charge to the citizens of Canada?
In summary, if the Just for Laughs Festival had had total control of all its activities rather than a royalty on some of them – the paid products – would it be bankrupt today? The question is valid.