Matthew Erskine is managing partner for Worcester law firm Erskine & Erskine. Reach him at (508) 753-7100.
Updated: November 23, 2020
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Museums can sell their collections? Lease them instead
By Matthew Erskine
On April 15, the American Association of Museum Directors board announced it passed two resolutions amending its ethical standards. These resolutions are a policy reversal on their prior position on meeting institutional operating costs both by accessing restricted endowments and by using the proceeds of selling items in the museum’s collection.
This is in stark contrast to the position the AAMD took in 2017 when the Berkshire Museum proposed the sale of artwork with the proceeds going towards capital needs and operating costs. Then the AAMD position was: “Selling from the collection for purposes such as capital projects or operating funds not only diminishes the core of works available to the public, it erodes the future fundraising ability of museums nationwide.”
In 2017 I felt the AAMD position was unreasonable. The Berkshire Museum was created by the philanthropy of the Crane family to bring art to Western Massachusetts at a time when there was no other cultural institution in the area. Since then, the world has changed, as has the cost of maintaining a cultural institution and the nature of philanthropy. No longer can, or should, a museum relies on one or a few large donors to maintain its operational existence. The reversal of the AAMD reveals its prior position for what it is, a position a cultural institution must close its doors and gift all of its assets to other institutions rather than sell art or other assets and keep its doors open. In other words, gifting art to a museum is a suicide pack.
At that time, I pointed out Dr. Erica Coslor, in her article “Art Investment Collections: A New Model for Museum Finance?” has a brilliant suggestion – that museums create an investment collection to be used to generate funds to meet operating and capital needs. There are issues, such as governance, accountability and conflicts of interests, but it is a realistic solution to the current financial crisis impacting museums across the country. This also does not have to be restricted to sale of assets, but could be extended to leasing of assets in the investment collection as well.
The use of leasing as an option has a number of advantages.
First, for those institutions with objects in storage in need of repair or restoration, one condition of the lease is that the lessee pay for the restoration and upkeep of the item.
The second is the lease could require the lessee to cover the annual operating costs, including insurance, otherwise the institution would have to cover.
Finally, by leasing rather than selling, the item does not go out of the public realm forever, indeed it could be said that for some items (such as a sailboat) having it out and used has it more in the public view than in storage.
For individuals who are leasing the item, the advantage is both they do not have to pay the acquisition costs of the item, and the restoration could be structured as a charitable donation. Indeed, in the era of the sharing economy, I can see younger individuals who do not want to own art or other items outright being willing to participate in clubs to allow them to use or display the item for a time as part of their membership.
This investment collection, and the leasing solution, is the viable alternative to both the complete ban on the sale of artwork and other items in museum collections and opening the entire collection for sale. It is something that museums, and the AAMD, should embrace.
WBJ Web Partners
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