Venture into the unknown
The Stage, 14/7/2011
As new ways of funding the arts are explored, Simon Tait explains the concept and impact of venture philanthropy and the financial advantages of such an approach
Fiery Dragons, the new West End producer, is being seen as the embodiment of a mysterious new funding model, venture philanthropy. Led by a high octane triumvirate of producers and entrepreneurs, Luke Johnson, Raymond Gubbay and Edward Snape, it corrals theatre angels who, historically, almost never see a return on their investments but happily lay out for the joy of making theatre happen, and most of their ventures fail. These dragons will add their investment expertise and producing nous to the mix, and the proof might be in its first production, The Ladykillers, in November.
But is it venture philanthropy?
The ungainly phrase – it could be worse, it is also known as “philanthrocapitalism” – was born in the United States in the mid-90s and is becoming more familiar here, through the charity sector. It is has begun to emerge in cultural circles thanks to Arts & Business and its chief executive Colin Tweedy who have been quietly promoting it.
Its meaning in the arts is obscure, though, and is not measurable yet. At first, it seems to be no more than a new portmanteau for a number of familiar sponsorship nuances. It might mean giving to a cause to enable it to become more self-supporting; or investing in a charitable concern that has resonances in one’s own business; it might be personal, collective or even corporate giving as long as there is no immediate benefit to the philanthropist; perhaps it is giving no money at all, just one’s skills that have a particular relevance to the beneficiary.
Confusing, but it becomes a more definable when you go back to its non-cultural origins.
The Nationalist Venture Capital Association, based in Arlington, Virginia, says venture philanthropy “focuses on leadership, bold ideas, developing strong teams, active board involvement, and long-term investment”, but on behalf of not-for-profit organisations. In this country, the banner has been flourished by the Impetus Trust, founded eight years ago and entirely self-financing.
Amy Stillman, Impetus’s director of communications and development, said the trust has a three-component model: core funding s; hands-on management support; and pro-bono expertise below board level. “What we haven’t done,” Stillman told The Stage, “is to address the arts and culture – yet”.
Theatre’s angels and dragons stand on a different plinth, as Paul Taiano, chairman of the Central School of Speech and Drama and an accountant who specialises in the theatre, explains. Attempts have been made for years to concentrate individual investment in productions, and Sally Greene’s Old Vic Productions has over 100 productions under its belt in its 18 years, including Billy Elliot the Musical.
But, says Taiano, it hasn’t had the success it might have had, and might yet have. Because Fiery Dragons has been born to take advantage of the new Enterprise Investment Scheme rules that came into force in April: investors paying tax at 50% can claim 30% a year, up from 20%, back on investments of up to £500,000.
“The concept of the angels still exists, but you get minimal relief for any losses,” Taiano says. EIS is safer, and even with a flop you need lose only 35p in the pound. It takes three years for a company – or production – to qualify for EIS status so considerable advance judgement comes into play, yet more producers are looking at the possibility and Taiano himself is working with ACT Productions on a portfolio of four EIS shows. It maybe venture, he says, but the endgame is profit, so it is not philanthropy.
For Colin Tweedy, the advance of venture philanthropy has been a creeping progression which began with A&B posting volunteer business people on arts boards, and it has progressed so that, for instance, Paul Ruddock has taken his acumen as a hedge fund financier to the chairmanship of the V&A, and several million pounds. Or Michael Hintze, another hedge fund magnate, who among things rescued Wandsworth Museum and recast its business plan as well as giving £2m.
There paradigms emerging of venture philanthropy in the arts that fit the Impetus criteria, though they probably would not recognize the label.
Sky Arts launched its Ignition programme in April, worth more than £1m over three years in which the channel will collaborate with six organisations to create new works of visual art, with how best to broadcast the arts a major part of the programme. With it, the Sky Arts Ignition Future Fund will offer five individuals bursaries of £30,000 each to help them move from art college to becoming full-time artists.
John Cassy, who was the Sky Arts director until recently moving on to head up Sky’s 3D operation, launched Ignition. “The arts are thriving creatively in the UK but money is tight, so if we can do our bit to help create new works and give them a platform, we’ll be happy,” he said.
For Tweedy, however, the thinking is being put into practice by arts foundations and charities like Hamlyn, Jerwood, Sainsbury, and particularly the Gulbenkian Foundation which last month launched its performance participation scheme. This offers £175,000, the biggest single arts award in the world, to “help artists develop the gleams in their eyes and bring them to reality”, in the words of the director, Andrew Barnett.
Awarded to National Theatre Wales just this month – Gulbenkian won’t tolerate words like “win” because, they say, there is no competition – after a painstaking process of recommendation by experts around the country, sifting, whittling and reassessing, NTW will get £75,000 to research and develop a street theatre project with Cardiff Bay Somali poets and musicians, and another £100,000 to put it on in 2013. They plan another four such grants in the succeeding years, and at least one of those considered this time will be nurtured by the foundation for a possible future grant.
“We were keen to do something that covers the social and cultural breadth of the foundation and at the same time supports and works with arts organisations to stretch their practice in new ways that could inform the way in which the arts are practiced in the UK,” Barnett said. “We wanted to take an approach that was innovative, moving beyond the mere transaction of writing a cheque but working with them from the beginning to explore different practices. But key is the insistence on uncompromisingly high artistic standards.”
That, says Colin Tweedy, is venture philanthropy, and if its real nature is obscured by other initiatives, it can only grow. “It is,” Tweedy says, “simply unstoppable”.
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THE IMPETUS MODEL
1. Strategic funding Long-term core funding to allow beneficiaries build their capacity, which can be used as leverage or additional funding from co-investors.
2. Hands-on management support An investment team with consulting, financial and voluntary-sector experience goes hands-on to support the beneficiary’s CEO.
3. Specialist expertise Experts volunteer their skills to specific, agreed, requirements in the beneficiary organization – senior management team coaching, for instance, or financial planning.
