Dale Chihuly benefits from his own philanthropy

Dale Chihuly started Seniors Making Art in 1991 on a shoestring budget, with a four-member board of directors and a simple mission: provide free art classes to senior citizens.

Now a nonprofit corporation with a $1.5 million annual budget and a 25-member board, the charity last year ran 93 art programs in 78 locations around the country.

But in addition to providing art classes, the charity sells Chihuly's work in an unusual arrangement that helps fund the group's program and has put at least $1 million into the artist's pocket over the past five years.

Chihuly has used the group to find new customers, paying it much the same way he would pay a commission to a gallery for referring clients.

Tax returns show that Seniors Making Art paid Chihuly $509,500 for his art from 2003 to 2004, an amount Chihuly said could "give you a pretty good feeling" for what the group has paid him each year. Conservatively, $200,000 a year would translate into $1 million over five years.

The group also agreed to pay $200,000 for one of his chandeliers in 2000.

Like a gallery, the charity makes money by pocketing the difference between what it pays for Chihuly's work and what it sells it for at an annual fundraising gala, a massive end-of-the-year sale of his work at prices below retail. The gala provides the bulk of the group's operating funds, which subsidize classes offered in senior centers, nursing homes and retirement communities. Individual seniors pay nothing for the classes. Each facility that hosts a class pays a fee, and the group's other funds come from private donors and foundations.

While serving 33,000 people since it was founded, the group also has become an effective marketing and sales tool for Chihuly. To keep its income stable over time, the charity relies on a network of rich and connected board members to find new buyers for Chihuly's work. Directors include former Boeing Chairman Phil Condit and arts philanthropist Sally Skinner Behnke.

Since its inception, Seniors Making Art has sold only Chihuly's work, and the gala is advertised as an opportunity to buy Chihuly glass at "special prices."

Chihuly's relationship with the charity is unusual in two ways, said Daniel Borochoff, a national expert on charities. Artwork typically is donated to a charity, not sold, and usually it is auctioned off to the highest bidder, not sold at a fixed price for less than its value. Borochoff said the sale aspect raises the prospect that Chihuly could be profiting from the charity — or that his goals might conflict with the group's. For the group's own credibility, he said, it should disclose details about the arrangement.

But neither the group's executive director nor Chihuly would provide details on what the charity has paid Chihuly for his art or what it has made reselling it over the past 10 years. Julie Lakey, the charity's executive director, said she did not want to release that information out of deference to Chihuly's studio.

Tax returns show that the $509,500 the group paid Chihuly — $271,000 in 2003 and $238,500 in 2004 — was for work with a total retail value of nearly $1.76 million. The group gets retail values from Chihuly Inc. and has no way to verify them, the group's tax accountant said.

If the values are accurate, Chihuly has received about 30 percent of the retail value for his contribution. Typically, when he sells through galleries, he gets 50 percent.

"We help underwrite some of his costs, but it's a huge donation," Lakey said.

Karen Lytle, the charity's board president, said, "He basically covers his overhead."

Chihuly, who remains the group's honorary board chairman, said he had not profited from the relationship. He said the payments covered only part of his costs. Yet he also said he didn't know how much it cost him to produce the work. The figure would vary, he said, depending on the portion of rent, staff and materials he assigned to the work.

"It's like any other business," he said. "What is the cost?"

Chandelier on display

Beyond the purchases for the gala, the group in 2000 agreed to pay Chihuly at least $200,000 for a 197-piece chandelier to use as a fundraiser.

Chihuly's studio financed the purchase with a no-interest loan, requiring Seniors Making Art to give the studio half of all donations raised by the group until the chandelier was paid off, according to tax returns. In practice, however, the group has paid Chihuly a fifth of every large donation received — $2,000 of every $10,000, Lakey said.

The charity's plan was to induce people to give $10,000 by offering to etch their names on one of the chandelier's pieces. The group intended to keep the chandelier to honor donors. But as of 2004, the group had paid the studio only $8,000 — the equivalent of four donations — according to its most recent tax return.

After acquiring the chandelier, the charity displayed it for more than five years in the lobby of the Alexis Hotel, a boutique property in downtown Seattle frequented by business travelers and rock stars.

"It became an icon for the hotel," said general manager Andrew Wright. "People would come from all over the place to see it and have their picture taken in front of it."

The chandelier was removed in March for a hotel remodel and was returned to the studio, Wright said. Lakey said the group expects to erect it elsewhere.

Chihuly's organization

Chihuly has turned over the running of Seniors Making Art to others, but there is no doubt that it is still his organization.

The executive director he handpicked in 1995 remains at the organization's helm. His pick for board president has served in that capacity for a decade. And the group's annual gala, where only his work is sold, has changed little since he first approved of the concept about 10 years ago.

Chihuly's name and picture are prominently featured on the group's brochures, and even the organization's business cards remind people that Seniors Making Art is a nonprofit organization "pioneered by Dale Chihuly."

Chihuly said the gala features only his work because he didn't think he could in good conscience ask other artists to donate. Last year, 104 of Chihuly's works — 76 glass pieces and 28 drawings — were offered for sale at the gala, Lakey said. Prices ranged from $5,000 to $70,000.

The group does not have access to Chihuly's mailing list, so Seniors Making Art has to find buyers for the artist's work, said board president Lytle.

"We have a lot of people who attend the gala. They have all the Chihuly glass they could possibly own," said Lytle, who with her husband, Chuck, owns about 60 of the artist's works.

"The glass is probably sold to less than 15 percent of the people who attend the gala," Lytle said. "We figure each year we need to introduce 15 percent new potential buyers to keep the revenue base successful in the gala."

Lytle said the charity has introduced "quite a few" collectors to Chihuly's studio.

"If we connect anyone from the gala who does not have a [prior] contact with Dale, and if the project is commenced within six to eight months," the charity receives a portion of the sale, she said without elaborating.

Such connections have been made two or three times, according to Lytle.

But if a collector buys other work from Chihuly, Seniors Making Art gets nothing.

Borochoff, president of the American Institute of Philanthropy, a nationally regarded charity watchdog service, said he was perplexed by the group's decision to sell the work at a discount — and by the organization's reluctance to say how much money the work has raised.

"If they're aware it's worth a lot more money, why are they selling it for so much less?" he asked. "Surely those wealthy people could offer what it's worth. In the art market, maybe it's not worth that much or it's hard to find someone to buy it at that price."

Susan Kelleher: 206-464-2508, or skelleher@seattletimes.com.

Sheila Farr: 206-464-2270 or sfarr@seattletimes.com