CREATIVE CAPITAL IN THE MEDIA

excerpt from
Capital Gains
By Michelle Falkenstein
January 2001
From ARTnews

When Creative Capital was founded in May 1999, it was heralded as the first real private-sector alternative to the national Endowment for the Arts. Not only did the New York-based nonprofit seek to fund innovative art without content restrictions, but it was to do so by means of a creative funding concept: in return for getting a grant, artists would sign a contract stating that if their project eventually made a profit, a percentage of that profit would go back to Creative Capital. "We offer artists a new framework for thinking about their own possibilities," says executive director Ruby Lerner.

While members of the first grant-winning group may not yet have turned a profit, they have secured some measure of success. Jason Salavon. For example, a faculty member at the Art Institute of Chicago, received $8,000 to complete A Thousand Butterflies, an interactive installation based on chaos theory. At a retreat sponsored by Creative Capital, the work caught the eye of Christian Haye, founder of The Project art gallery in Harlem. Haye began representing Salavon and landing him a spot in a group show of digital art called "Bit Streams," opening March 22 at the Whitney Museum of American Art.

Here’s how the profit-sharing formula works: say a project costs $100,000 to execute, including the artist’s time and equipment deprecation, and Creative Capital contributes $10,000. After the project earns $100,000 for the artist, Creative Capital begins to take whatever percentage it contributed of the original cost (in this case, 10 percent) until it gets its $10,000 back. Therefore, a $100,000 project would have to generate $200,000 in revenue before Creative Capital would recoup its initial investment. After the $10,000 was returned, Creative Capital would get half of that original percentage (now 5 percent) in perpetuity from any future revenues that the artist earns on this project alone.

Gillies and Lerner insist that the projects are not selected based on future earnings potential and that the ultimate success of a project is measured in more than dollars and cents. "If they’re using the venture capital model, they’ve certainly not approached it like, ‘Will this make money or not?’" says Wendy Jacob of Cambridge, Massachusetts. "That would be the death of it." Jacob, 42, received the 2000 maximum grant of $20,000 to explore commercial production of the "Squeeze Chair," a big velvet and mohair chair with a pneumatically operated system that can be activated to hug sitters—in particular, autistic children, who, Jacob has found, seem to find the chair soothing. Jacob, who is currently working on a business plan, has used some of her grant to pay for reengineering the chair.

Along with funds, Creative Capital offers access to a network of advisers who specialize in publicity, financial planning, and other concepts that may be alien to many artists. "We expect a certain level of engagement with the artists we’re funding," Lerner says. To help insure that the artists are looking for more than simply cash, second-rounders in the 2000-01 cycle will be asked how they would use the addition services that Creative Capital provides: their answers will be considered by the evaluators during the final selection process. Says Lerner: "We’re marrying these projects, and we’re a high maintenance spouse."