CREATIVE CAPITAL IN THE NEWS
From Financial Times
July 02, 2007
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When philanthropy became an art form
By Deborah Brewster

Venture philanthropy - the idea that charitable donations should work a little like corporate investments - sprang up with the dotcom boom in the late 1990s and faded almost as quickly. Now, like the internet, venture philanthropy is resurgent, fuelled in
part by the rapid growth of microfinancing, which holds that making tiny loans to entrepreneurs is more likely to generate wealth amongthe poor than simple donations.

Creative Capital is a New York- based foundation that applies venture philanthropy to the arts in an innovative twist worthy of its heritage- it was seeded by the Andy Warhol Foundation, which still provides a chunk of funding each year, along with office space.

Drastic cuts in government arts programmes in the late 1990s left a funding vacuum, says Ruby Lerner, Creative Capital's director. The original idea was to award fellowships, but it had difficulty raising money for that. "We needed something that provided a more long-term commitment, and that had the potential to get something back, " shesays.

The key was to provide marketing, networking and financial services to artists, as well as just money. Because the foundation sees itself as a partner, the artist pays Creative Capital some of any profits that accrue from their project's success.

Creative Capital has distributed close to $5m to 242 artists, such as architect-trained duo Daniel Mihalyo and Annie Han, who used their grant to build an "artist's impression " of Maryhill Museum in Washington state. Another 1,200 have attended its professional development workshops, which were launched in 2003 to provide networking opportunities as well as information on marketing, financing and career planning.

Many grants require an artist to be nominated, but Creative Capital accepts applications from anyone. It has received 2,500 proposals for 30 slots this year.

The initial grant is typically $10,000, with a maximum of $50,000. Creative Capital then provides continuing support on the project, often providing more funding at a later stage. The group tries to choose projects that are catalytic or have the
potential to be a turning point in an artist's career. Often, says Ms Lerner, the artist is buying time. For example, the money can be used to pay for childcare, to hire an assistant or to buy materials.

One problem with artistic endeavours is that the project can change radically after being set out in the application. "We don't encourage people to do it, but we allow it. "says Ms Lerner. Creative Capital also learned to hold some funds back for follow-up once a project is completed.

Now, the group gets more involved in the end point of the project. For example, if the work is to be exhibited, Creative brings the gallery and artist together to discuss expectations. "We call it a rendezvous with reality, " Ms Lerner says. "We discuss what is actually going to happen, what the marketing plan will be and so on. "

The foundation's board is a mix of artists and business people, including Laurie Anderson, the performance artist; William Bowes, a founding partner of venture capital firm US Venture Partners; Peter Norton, the software entrepreneur; Catharine Stimpson, dean of the graduate school of arts and science at New York University and Michael Stipe of rock group REM.

Donors are mostly foundations, such as the Rockefeller Foundation, Ford Foundation and Broad Foundation (set up by billionaire art collector Eli Broad) along with some individuals, such as fashion designer Donna Karan.

However, Ms Lerner says individuals rather than foundations will be key donors in future. She is hoping to work with some of the new wealthy art collectors, such as hedge fund managers. Many of these come from financial backgrounds and already understand the venture capital model that Creative Capital has adopted.