INTRODUCTION
The museum as an American institution is at a crossroads. A large number of major US art institutions are facing financial difficulties, caused by the lasting effects of the 2008 stock market crash and subsequent economic decline. The economic downturn continues to negatively affect museum endowments and limit new donations and funding from private individuals, corporations, and government entities. In such a climate, the option to deaccession Footnote 1 pieces from a museum’s collection as part of a ‘corporate restructuring’ in order to enable the institution’s survival is becoming increasingly attractive from an economic point of view. Museums hold tremendous financial resources in the form of their collections. From a purely corporate and economic standpoint, the first step to save a floundering institution is to trim the non-essential elements in order to sustain the principal of the corporation. In the case of art institutions and museums, such practice amounts to trimming pieces from the collection or deaccessioning them.
Recent events in the United States demonstrate that twenty-first-century museums must be prepared to confront the legality and ethical complexities of deaccessioning. Over the past few years, three arts institutions captivated the public’s attention as they grappled with this concept. The City of Detroit’s financial difficulties, and the accompanying possibility of mass deaccessions from the Detroit Institute of Arts (DIA) to provide funds to sustain the city, was followed by an outpouring of public indignation at the mere suggestion of such a sale. Similar censure followed the Delaware Art Museum’s (DeAM) deaccession of paintings to raise funds for operating costs. The Corcoran Gallery of Art (Corcoran) in Washington, DC, faced its own set of economic challenges, with its trustees initially considering deaccessioning works from the collection to raise funds and hopefully reestablish a sustainable path for the institution. Ultimately, however, the trustees approved a complex set of arrangements with the National Gallery of Art and George Washington University, thereby avoiding the criticism that would follow deaccessioning masterpieces for purely monetary reasons.
But what about next time? What will happen the next time a US arts institution finds itself in a hopeless financial situation? Will it simply sell off its masterpieces one by one? These three case studies, chosen both because they are recent examples of arts institutions that considered or faced deaccessioning in times of extreme financial distress and because these situations fascinated the public as the institutions grappled with the complexities of deaccessioning, illuminate the unregulated nature of current deaccessioning practices. Legally enforceable governance rarely exists in this area. Most often, nothing but public sentiment and guidelines from various overarching institutions stand in the way of a museum selling pieces from its collection to confront economic hardships and thereby possibly eliminating public access to such pieces. Museum art collections in the United States are thus in a precarious and arguably unprotected state today. When the next “Corcoran” situation arises, what will prevent the trustees of that institution from parceling out and selling off irreplaceable parts of the collection, thus likely removing the works from public view?
Considering this troubling question and the serious possibility that the economic challenges facing museums may worsen, this article explores the question of whether binding rules should be enacted to guard against the maximum commoditization of an institution’s collection, if it would occur at the expense of the public’s access to that collection. This question is examined in the context of information gathered through interviews and discussions with five prominent museum professionals. Evaluation of the ethical and judicial mechanisms currently in place to govern deaccessioning highlights the risk of privatization that museum collections face, as these mechanisms do not always effectively control the practice. Legislation already governs aspects of the art field and the “fringe” of deaccession practices. This article argues that new legislation will be the most effective way to govern the US deaccessioning process.
This article also calls for consideration of the principles to be codified. Current deaccessioning practice guidelines, perpetuated by many museum professionals and professional organizations, generally focus on the deaccessioning institution. These guidelines govern the reasons for deaccessioning and how the proceeds can be utilized. There is, however, another aspect of deaccession practice that should be considered: the purchaser. In keeping with the idea that museums serve the public trust—a basic tenet of the conceptualization of the US museum Footnote 2 —this article considers the importance of the nature of the purchaser or purchasing institution. New legislation, while remaining mindful of museum autonomy regarding decisions to deaccession, should be enacted to provide an increased opportunity for works of museum quality or that are otherwise suitable for public display to remain in the public sphere and accessible to the public.
While the case studies and suggestions put forth in this article relate primarily to American museums, these general considerations may prove useful for other jurisdictions. The risk of privatization facing museum collections in the United States today, as shown through the lens of the DIA, the DeAM, and the Corcoran, will be most effectively countered through legislation designed to help retain museum treasures in the public sphere.
A BRIEF BACKGROUND ON THE ISSUE
While European museums are often owned, financed, and administered by national governments, “[t]he typical American museum ... is a largely autonomous institution loosely tied to other similarly autonomous museums through membership in service organizations such as the Association of Art Museum Directors and the American [Alliance] of Museums (both of which are also private, non-profit organizations).” Footnote 3 There is tremendous variety in the structure of American museums, Footnote 4 with governance afforded by cities, government, universities, and internal regulations inherent in private nonprofit institutions, to name a few. The overarching governing organizations of the Association of Art Museum Directors (AAMD) and the American Alliance of Museums (AAM) “lack formal authority.” Footnote 5 Since membership is purely voluntary, Footnote 6 the AAMD and the AAM possess no legal power of enforcement over their member museums.
Deaccessioning is a term that refers to the process by which a museum removes a piece (which had already been accessioned or accepted into the museum’s permanent collection) from its collection. Footnote 7 The museum then can transfer the piece in a multitude of ways, including by sale, exchange, grant, and disposal. Footnote 8 Deaccessioning is not illegal in the United States, provided that any conditions or restrictions imposed by the donor (and any other legal obligations) are respected. Footnote 9 A number of reasons for deaccessioning have proven uncontroversial. Examples include deaccessions to transfer duplicates; Footnote 10 redundant works that are not necessary for educational or research purposes; Footnote 11 dangerous or hazardous items, forgeries, or works of questionable authenticity; Footnote 12 stolen items; Footnote 13 severely damaged objects; Footnote 14 and works outside the scope of the museum’s collections. Footnote 15 Deaccessioning is also usually viewed as “an appropriate way of improving the quality of [a museum’s] permanent collection.” Footnote 16 Additionally, museums deaccession with differing frequency. Veteran museum general counsel Stephen Clark, previously the deputy general counsel at the Museum of Modern Art (MoMA) in New York City and currently the general counsel at the J. Paul Getty Museum (Getty), noted that the Getty does not deaccession pieces regularly, partially because it maintains a limited collection and holds little in storage. Footnote 17 MoMA, on the other hand, deaccessions frequently; as Clark noted, MoMA’s founding director Alfred H. Barr, Jr., believed MoMA should be like a “torpedo moving through time,” Footnote 18 collecting and releasing pieces along the way. Footnote 19
Although the majority of deaccessions are uncontroversial, disagreement arises regarding a specific type of transaction: the deaccession of works via sale (collectively referred to as a “deaccession” throughout this article) and the subsequent use of the generated proceeds. Figure 1 illustrates the spectrum of differing opinions on the use of proceeds from deaccessioning. On one side of the spectrum is the belief that pieces of art can be sold and the proceeds from that sale used for any museum need. Footnote 20 The DeAM ostensibly subscribed to this principle, and numerous articles have been written supporting the unrestricted use of deaccession proceeds. Footnote 21 Some may find this approach to be particularly compelling when the piece would otherwise remain in storage indefinitely, since while the piece is in storage it is inaccessible to the public. Footnote 22
Figure 1. Spectrum on the use of proceeds from deaccessioning
Moving along the spectrum, there is a belief in increasingly strict regulations on the use of proceeds from deaccessioned works. Some experts, for example, believe in selling a piece and using the proceeds for any museum need only when there is an emergency or serious financial crisis, such as a choice between selling a piece and thereby raising the money to keep the museum’s doors open versus closing the museum forever. Footnote 23
The other end of the spectrum embraces the strict principle accepted by a large portion of the professional field, namely that proceeds from the sale of a work from a museum’s permanent collection “should never be used to pay for operating expenses, additions to the physical plant, or building repairs but instead, should be used only to acquire other works.” Footnote 24 This principle applies even when the institution is experiencing profound economic hardships. The AAMD, Footnote 25 the AAM (with slight variation), Footnote 26 and museums whose collections policies or deaccession policies adhere to the guidelines put forth by these governing institutions stringently conform to this principle. Museums that deviate from these deaccession principles typically find themselves subject to censure and condemnation, sanctions, suspension, or expulsion/loss of accreditation from the AAMD and the AAM. Footnote 27 As a result of the divergence between the vigorously held ethical positions on this spectrum, none of which are independently legally binding, the deaccession of works and the subsequent use of the generated proceeds often prove enormously controversial.
THE THREAT OF DEACCESSIONING
Given the fiscal and economic strain of recent years, an increased number of museums in the United States are facing financial challenges. Footnote 28 Three dramatic situations involving deaccessioning as a possible solution to financial hardship have caught the public eye over the past few years: that of the DIA, the DeAM, and the Corcoran. The DIA is relevant both because of its part in the larger issue of the City of Detroit’s bankruptcy and because of the enormity of the risk posed to its large, iconic collection. Footnote 29 The DeAM’s significance hinges on the fact that it actually sold pieces of its collection. The Corcoran’s importance lies in its original consideration of deaccessioning to raise funds, which was ultimately rejected in favor of an acquisition of sorts by two other institutions.
Detroit Institute of Arts
Faced with insurmountable financial problems and a debt measured between $15 and $17 billion, the City of Detroit filed for bankruptcy protection in July 2013. Footnote 30 This event, startling in and of itself, was even more salient to various communities (local, state, national, and artistic) because it placed the DIA’s art collection, which was owned by the city, at potential risk. Footnote 31 In 1919, the City of Detroit and the Founders Society of the DIA had merged. Footnote 32 At that time, the Founders Society ceded the existing collection to the city, a transfer that was the source of the argument that the art collection was city property. Footnote 33 A 1997 operating agreement explained that the Founders Society managed the museum, although the City of Detroit maintained legal title to the art collection. Footnote 34
In the financial crises of the 1930s and 1970s, there was no mention of selling the DIA’s art. Footnote 35 With this most recent financial disaster, however, nothing was off limits. Faced with the city’s impending bankruptcy and the accompanying consequences of receiving pennies back on their dollars, the City of Detroit’s creditors insisted that the city put all of its assets on the table, Footnote 36 including the DIA’s lucrative art collection. Kevyn Orr, Detroit’s emergency financial manager tasked with addressing Detroit’s financial problems, Footnote 37 hired Christie’s to evaluate the DIA’s collection and provide recommendations for alternative options to realize value from the collection without liquidation. Footnote 38 According to Christie’s, the fair market value of the city-owned portion of the DIA’s collection totaled between $452 and $866 million. Footnote 39
When the possibility of selling the art was first mentioned, the future of the DIA and its collection became the subject of intense speculation. The AAMD often reacts vocally when museums embark on a path that will conflict with the AAMD’s accepted policies and tenets of practice. This was no exception; the AAMD issued a letter to the governor of Michigan regarding Orr’s question as to whether the collection of the DIA (whose director was a member of the AAMD Footnote 40 ) could be sold to pay for the city’s operating expenses and debt obligations. Footnote 41 The letter explained that such a step would “violate fundamental principles long recognized by the museum community ... as well as constitute a breach of trust with the generations of donors ... to the DIA.” Footnote 42 It argued that because a museum’s service to its community is centered on the “fundamental responsibility museums have for the stewardship of the cultural assets they hold in trust for present and future generations,” “it is a fundamental professional principle” that deaccession proceeds be used only to enhance the museum’s collection. Footnote 43 The AAMD’s letter stated in no uncertain terms that the proposed sale would be a violation of the AAMD standards and “nationally accepted professional principles.” Footnote 44 A sale to provide funds to aid in remedying the city’s financial problems would also “represent a breach of the City of Detroit’s responsibility to maintain and protect an invaluable cultural resource that has been entrusted to its care for the benefit of the public.” Footnote 45
Michigan Attorney General Bill Schuette articulated similar sentiments on the importance of this cultural resource in his detailed formal opinion dated 13 June 2013, in addition to discussing his conception of the sale proposal’s legality and advocating that the DIA’s collection could not be sold by the City of Detroit to settle its debt because the collection was held in charitable trust for the people of Michigan. Footnote 46
The Grand Bargain
Though for many months Detroit’s bankruptcy situation seemed hopeless, a plan known as the Grand Bargain emerged in the summer of 2014. Under the Grand Bargain, a group consisting of nonprofit foundations, the State of Michigan, and the DIA (through donors) would pay the City of Detroit $816 million over the next 20 years to reduce cuts to the city workers’ pensions and to allow the transfer of the DIA’s collection and building from the city to the museum’s own nonprofit corporation. Footnote 47
The State of Michigan endorsed the Grand Bargain on 3 June 2014, approving its contribution of $195 million toward aid for Detroit pensioners and “long-term oversight of city finances.” Footnote 48 Pension beneficiaries voted over the summer of 2014, approving the Grand Bargain by an overwhelming margin: “More than 82 percent of those eligible for a police or fire pension who voted supported the plan while 73 percent of the voters eligible to receive benefits from the other pension fund supported the plan.” Footnote 49 Then came the need for court approval.
Federal Bankruptcy Court
Federal bankruptcy Judge Steven W. Rhodes approved the Grand Bargain on 7 November 2014. Footnote 50 In a portion of his oral opinion, Judge Rhodes detailed “[t]he DIA Settlement.” Footnote 51 In conjunction with the DIA’s responsibility to arrange payment of $100 million over the next 20 years to the General Retirement System and the Police and Fire Retirement System through donor contributions, “[t]he City will transfer the art to the DIA Corp., which will hold the art in a perpetual charitable trust for the benefit of the people of the City and the State.” Footnote 52 He specifically mentioned the “nationally accepted standards for museums [that] prohibit the de-acquisition of art to pay debt.” Footnote 53 He concluded his discussion of the DIA settlement by noting that it was “a most reasonable and favorable settlement for the City and its pension creditors” and that “[t]he Court readily approves all aspects of the grand bargain.” Footnote 54
When discussing the best interests of the creditors, Judge Rhodes departed from a discussion purely of the law to elaborate on the art at stake. He stated that, legally speaking, the city’s decision “not to sell or monetize the DIA art in the art market” is “off-limits to the Court.” Footnote 55 However, even if the court had legal authority, Judge Rhodes adamantly stated that it would not have interfered with the city’s decision, as it was “the only appropriate decision” to be made. Footnote 56 He emphasized that “the DIA stands at the center of the City as an invaluable beacon of culture. ... To sell the DIA art would only deepen Detroit’s fiscal, economic and social problems. To sell the DIA art would be to forfeit Detroit’s future. The City made the right decision.” Footnote 57
Raising the Money
In early 2015, the DIA announced that it had raised its $100 million portion of the Grand Bargain (the present value equivalent of its promise to raise $100 million over the next 20 years). Footnote 58 Large donors included the Detroit Three automakers and their charitable foundations, with $10 million each from General Motors and Ford and $6 million from Chrysler. Footnote 59 In addition, the Andrew W. Mellon Foundation pledged a maximum of $10 million, and the J. Paul Getty Trust promised $3 million. Footnote 60 Donations from these national organizations, based in New York and Los Angeles respectively, illustrate the magnitude and importance of the DIA’s collection—it is not just a city’s museum but also a “national treasure.” Footnote 61 Thanks to the Grand Bargain and the outpouring of financial support, the DIA’s collection is free from ties to the City of Detroit and its financial troubles.
Delaware Art Museum
On 26 March 2014, the DeAM’s Board of Trustees announced its decision to deaccession up to four works of art from the museum’s permanent collection. Footnote 62 The subsequent sales were predicted to generate approximately $30 million, which would both repay the museum’s $19.8 million bond debt and replenish the museum’s endowment. Footnote 63 Mike Miller, the DeAM’s chief executive officer at the time, explained that after extensive consideration of all possible options, the only two choices before the trustees were to sell works of art or to close the museum’s doors. Footnote 64 He noted that, “[w]hile [this] decision is certainly hard to bear, the closure of this 100-year-old museum would be, by comparison, unbearable.” Footnote 65
One day later, on 27 March 2014, the AAMD issued a rapid response to the DeAM’s decision. Footnote 66 Similar to the sentiments it expressed in its letter addressing the DIA’s situation, the AAMD stated that “[s]elling works of art held in the public trust and using the proceeds [to retire debt and pay for operating expenses] would represent a direct and serious violation of AAMD’s Code of Ethics and the professional standards of the museum field.” Footnote 67 The AAMD explained that their policy prohibiting the use of funds acquired through deaccession practices for any purpose beyond the acquisition of works of art was itself “developed to protect museums from pressure to monetize their collections to support operations.” Footnote 68 A practice of deaccessioning with unconstrained use of proceeds could encourage museums to liquidate their collections as a first resort whenever they need funds. Footnote 69 As Tim Rub, then president of the AAMD, explained, “[o]ne can imagine instances where a collection would be cannibalized.” Footnote 70
Further, the statement again emphasized that deaccessioning not in accordance with the established principles regarding the use of proceeds “represents a violation of the public trust.” Footnote 71 The AAMD argued that such action can seriously discourage donors from supporting art museums. Footnote 72 The organization then issued a thinly veiled warning that, if the DeAM pursued such sales, the AAMD would have no choice but to take the “strongest possible response to this action, including the censure and, if necessary, the sanctioning of the Museum.” Footnote 73 The statement concluded with the admonition that the sales would be a great loss to the community. Footnote 74
It is important to remember that the AAMD has no legal power of enforcement. It can only sanction, suspend, or expel members and sanction non-members who act in a manner contrary to the ethical standards and best practices established and embraced by the organization. Footnote 75 Sanctions consist of the AAMD encouraging its members not to loan works to, or participate in, exhibitions with the sanctioned museum, Footnote 76 which can have a great effect on the sanctioned museum. The DeAM was not a member of the AAMD at this time; Footnote 77 as such, the AAMD could only censure or sanction it but had no other (legal or otherwise) means of recourse.
While not a member of the AAMD, the DeAM was a member of the AAM. Footnote 78 On the same day that the AAMD issued its statement, the AAM also denounced the DeAM’s plan, calling such action “a flagrant violation of the AAM standard for US museums, succinctly embodied in this enduring principle of our field: the museum is there to save the collection; the collection is not there to save the museum.” Footnote 79 The statement ended with a firm condemnation of the DeAM’s intentions Footnote 80 but stopped short of expelling the DeAM from the AAM. Footnote 81
Miller stated that the museum was prepared to accept the possible consequence of loss of its AAM accreditation, but he emphasized that when a museum is facing financial distress that could result in its closure, exceptions to strictly enforced ethical principles should be made. Footnote 82
The AAMD issued another letter on 14 April 2014, reiterating its opposition to, and displeasure with, the DeAM’s proposed deaccessions. Footnote 83 The AAMD explained that it believes strongly that such sales are the quintessential type of transaction that “will violate the trust in which the works of art in [art museums’] collections are held.” Footnote 84
Art Sales
Censure by the AAMD and the AAM ultimately had no lasting preventative effect as the DeAM moved forward with its plan. The DeAM deaccessioned its first piece, William Holman Hunt’s Isabella and the Pot of Basil (1868), in March 2014. Footnote 85 This piece carried a presale estimate of between $8.4 and $13.4 million but was expected by some to earn much more. Footnote 86 The museum had purchased it using general art acquisition funds, thus conforming to the promise in its press statement on 26 March 2014 that no works of art acquired through gift or bequest would be sold. Footnote 87 Still, Rub continued to decry the “dangerous precedent” the sale would set. Footnote 88
On 17 June 2014, Isabella and the Pot of Basil sold to an anonymous buyer for just $4.24 million. Footnote 89 This shockingly low price ignited a flurry of speculation that the museum would have difficulty raising the desired $30 million from the sale of just four works. Footnote 90 That same day, the AAM “unanimously voted to remove the [DeAM’s] accredited status.” Footnote 91 Although the DeAM had not been a member of the AAMD since the departure of its previous director in August 2013, Footnote 92 the AAMD instituted sanctions against the museum, thus “damaging [the DeAM’s] national exposure.” Footnote 93
The DeAM refused to let the responses of the AAMD and AAM affect its deaccession plans moving forward. It officially removed Winslow Homer’s Milking Time (1875) and Alexander Calder’s Black Crescent (1959) from its collection. Footnote 94 Neither piece was a gift or bequest to the museum, Footnote 95 thus eliminating the potential of a lawsuit from donors or their heirs. The DeAM sold the Calder piece in a September 2014 private sale for an undisclosed amount Footnote 96 (estimated $10.6 million). Footnote 97 Milking Time and a fourth piece, Andrew Wyeth’s Arthur Cleveland (1946), were both sold privately in 2015 for undisclosed amounts. Footnote 98
Retiring the Debt
The DeAM reported in 2015 that it had fully repaid its $19.8 million bond debt using the proceeds from these four completed sales and “without ‘significantly depleting its endowment.’” Footnote 99 When the DeAM first announced its plan to deaccession and sell up to four works, it projected that these sales would generate $30 million, which would be used to repay the full balance of the bond debt and replenish its endowment. Footnote 100 However, after the conclusion of these four sales, news sources reported that the works had sold for less than $19 million in total, instead of the projected $30 million. Footnote 101 Not only did this sum not replenish the DeAM’s endowment as the museum had hoped when it began its deaccessioning process, but almost $1 million of the endowment’s funds also had to be used to fully repay the bond debt. Footnote 102
Regardless, the museum announced that it had “close[d] one of the most difficult chapters in the story of the” museum. Footnote 103 Miller emphasized that the DeAM would never “resort to selling art again.” Footnote 104 And though the DeAM appointed a new executive director and chief executive officer, effective 1 July 2016, Footnote 105 there has been no indication that further deaccessions for monetary purposes are in the works at the DeAM.
Corcoran Gallery of Art
One of the most recent institutions to face severe financial strain is the Corcoran in Washington, DC. On 10 May 1869, William W. Corcoran deeded the building and grounds in Washington, DC, and his private collection to a newly created and self-perpetuating Board of Trustees. Footnote 106 The next year, the institution known as the Corcoran Gallery of Art was chartered and exempted from taxes by an Act of Congress. Footnote 107 The Corcoran faced a series of controversies over the years, especially in the last 25 years of its existence as an independent institution. Perhaps the most significant was the Corcoran’s decision to cancel a Mapplethorpe exhibition in 1989 due to the political controversy surrounding the homoerotic and violent nature of the works, which raised issues around the intersection of art and the First Amendment. Footnote 108 The Corcoran suffered another embarrassment in the form of its failed 2005 fundraising effort to create a wing designed by Frank Gehry (which coincided with an economic recession). Footnote 109 These two controversial negative events, in conjunction with serious management problems and the impact of the 2008 recession, left the Corcoran extremely vulnerable. As an article in the Washington Post aptly stated, “[t]he loss of morale, prestige, goodwill and money was disastrous.” Footnote 110
This somewhat controversial history, coupled with recognition of the significant and increasingly urgent building maintenance costs of approximately $100 million, which had been deferred for decades, Footnote 111 presented a stark economic reality to the Corcoran’s Board of Trustees several years ago. The combination of the building maintenance costs, the institution’s vulnerability due to failed endeavors in the past, difficulties with management, and the nature of being a museum with a ticket price in a geographic area inundated with free-to-the-public museums Footnote 112 led to a consensus amongst the trustees, in approximately 2010, that the Corcoran was headed down a dramatically unsustainable path. Footnote 113 The question became what would be the next step forward.
The trustees considered a number of alternatives, including the possible solution of deaccessioning to raise operating funds early in the process. Footnote 114 The Corcoran, like most museums, has an immensely valuable asset—its collection. Footnote 115 Most museums hold a huge percentage of their collection in archives. Footnote 116 Thus, pieces could be sold to account for the economic realities and challenges of the time without pulling pieces directly off of the museum walls. Footnote 117 The value of the Corcoran’s collection was estimated at between $1 and $2 billion. Footnote 118 When a corporation or business faces financial difficulties, one of the first steps is to evaluate the assets, identify those that are not critical, and determine what can be sold to provide the resources necessary to sustain the corpus. Footnote 119 The Corcoran considered this business-like approach, in terms of selling works of art to sustain the museum as a whole. Footnote 120
From a purely financial perspective, the Corcoran could, in fact, have raised enough money to care for the building and create an endowment to sustain the operations of both the Corcoran College of Art + Design (Corcoran College) and the museum by selling pieces of its collection. Footnote 121 Such a sale would have been in direct conflict, however, with the Corcoran’s own comprehensive deaccessioning policy, which was in line with the standards advanced by the AAMD: “Sale proceeds of all deaccessions will be restricted to the acquisition of works of art that support the mission of the Corcoran.” Footnote 122 The Corcoran policy was thus tailored even more narrowly than the AAM policy, which allows the use of funds for direct care of the museum’s collection. Footnote 123
Although the financial benefits from a hypothetical sale of art must have been attractive, the Corcoran’s trustees ultimately did not want to violate the standards of the field’s overarching organizations. Footnote 124 Instead of selling works to keep its doors open, and instead of allowing its doors to close without a fight, the Corcoran pursued a collaborative arrangement with the National Gallery of Art (NGA) and George Washington University (GW) in an effort to keep the Corcoran’s collection in the public sphere.
The Collaboration
On 15 May 2014, leaders of the Corcoran and Corcoran College, the NGA, and GW signed the final agreements for their “historic collaboration,” which was first announced in February 2014. Footnote 125 Pursuant to the agreements, most of the assets of the Corcoran and Corcoran College would be distributed between the NGA and GW. Corcoran College, its assets, and the real estate consisting of the Corcoran building in Washington, DC, and the Fillmore building in Georgetown would be transferred to GW. Footnote 126 GW would incorporate Corcoran College within its university structure and assume responsibility for the renovation of the Corcoran building. Footnote 127 In addition, GW planned to sell the Fillmore building. Footnote 128
The NGA would take custodial possession of the Corcoran collection at the closing of the agreements and decide which pieces to accession into the NGA’s collection over the following months. Footnote 129 These chosen pieces would feature the identifying credit line “Corcoran Collection” as well as the historic donor credit line. Footnote 130 Any items that the NGA chose not to accession would be distributed to museums and other appropriate venues, primarily, but not exclusively, in Washington, DC, and its environs. Footnote 131 No works of art were to be sold. Footnote 132 The NGA intended to accession a significant number of the Corcoran’s works into its own collection. Footnote 133 Under the agreements, the Corcoran entity would continue to pursue its original mission statement, “Dedicated to Art and Encouraging American Genius,” through consulting and advising on programs and activities in the Corcoran building and promoting contemporary art and artists. Footnote 134
The hope of the Corcoran with this arrangement was twofold. First, the college, the collection, and the building would all be placed on sustainable paths for the future. Footnote 135 Second, through displays in the NGA and in the Corcoran building (such as the Corcoran Contemporary National Gallery of Art and the Legacy Gallery) as well as the distribution policy for works not accessioned into the NGA, more of the Corcoran’s collection would be available to the public than was possible in the past, and the Corcoran legacy would be preserved. Footnote 136
The AAMD and the AAM Take a Stance
The AAMD and the AAM both issued statements approving the Corcoran’s plans. On 15 May 2014, the AAMD termed the Corcoran’s arrangement “an orderly solution that preserves the Corcoran’s collections and is in the best interests of arts audiences and current and future students.” Footnote 137 The AAMD noted that the Corcoran had been a member of the AAMD for decades and, though saddened that the Corcoran had arrived at this “juncture,” expressed appreciation that this solution that continues to support the public interest proved to be achievable. Footnote 138
The AAM issued its statement on 20 February 2014, immediately after the initial announcement of the collaboration between the Corcoran and Corcoran College, the NGA, and GW. Footnote 139 Although it was presented before additional developments regarding the merger between these institutions, this letter offered enthusiastic praise for the arrangement and appreciation that the collection would avoid the auction block. Footnote 140 The AAM emphasized that such a trip to auction would “violate every museum standard and the public service mandate of all museums,” providing Randolph College’s sale of George Bellows’s Men of the Docks (1912) as an example of such violation. Footnote 141 The AAM was careful to not advertise this solution as perfect but considered it “a win for art, [and] for ethics.” Footnote 142
An Effort to “Save the Corcoran” and the Subsequent Cy Pres Proceeding
Although the Corcoran, the NGA, and GW mutually agreed to the terms of the collaboration, there was one final hurdle. This collaboration did not technically follow the original intent and purpose set forth in the Corcoran’s deed (which “was to create a gallery of fine art, along with a college of art and design, located in the District of Columbia, and to encourage the production and preservation of fine art through both the gallery and the college”). Footnote 143 Courts may, under the cy pres doctrine, “modify a trust when a charitable purpose of the trust becomes impossible or impracticable to achieve,” as long as the court modifies the trust “in a manner that is as near as possible to the trustor’s original intent.” Footnote 144 Thus, in order to move forward with the collaboration, the institutions needed the court to grant the Corcoran trustees’ cy pres motion. Footnote 145
The Attorney General, tasked with “defending the public interest and the charitable intent of donors,” Footnote 146 agreed with the Corcoran’s collaborative plan and supported the cy pres motion. Footnote 147 However, the situation became increasingly complicated when a group called Save the Corcoran opposed the Corcoran’s dissolution. Footnote 148 The battle over the legal standing of this group to participate in the court proceeding—standing that the court ultimately denied Footnote 149 —and the subsequent trial filled the news during the summer of 2014.
The Corcoran’s legal battles concluded on 18 August 2014, when Judge Robert Okun of the District of Columbia Superior Court granted the trustees’ cy pres petition. Footnote 150 Judge Okun held that it was impracticable for the Corcoran to continue under the existing deed of trust, citing the fact that the Corcoran had been operating at a deficit for the majority of the last 13 years, needed at least $71 million to renovate the Flagg Building (a part of the Corcoran building), and did not have sufficient funds available. Footnote 151 Judge Okun also agreed that the proposal was the closest substitute for the original intent of William Corcoran, as “the Flagg Building will be renovated, the school will continue and be strengthened by its partnership with a financially sound university, both the school and a significant portion of the collection will remain in the Flagg Building, and a gallery, although smaller, will remain open to the public” in the Flagg Building, all results that “are consistent with Mr. Corcoran’s intent.” Footnote 152 The court recognized the argument that selling an institution’s artwork to improve its financial situation is unacceptable, a central point of the Corcoran’s case and an argument that mirrors the rules advanced by the AAMD and the AAM. Footnote 153 The collaboration first announced in February 2014 could now move forward.
The Months Following the Cy Pres Decision
Following the granting of the Corcoran’s cy pres motion, the Corcoran’s art collection was transferred to the NGA, whose curators began working tirelessly to evaluate the Corcoran’s holdings. Footnote 154 The depth and breadth of the Corcoran collection became fully apparent, with the NGA receiving custody of over 17,000 Corcoran works. Footnote 155 On 5 February 2015, the NGA announced that 6,430 works of art from the Corcoran had been selected thus far to join the NGA’s collection of European and American art. Footnote 156 The pieces included a de Kooning, a Rothko, and a Warhol. Footnote 157 The selection was “based on criteria such as aesthetic considerations, art historical importance, and relevance to the areas in which [the NGA] collect[s].” Footnote 158
The NGA’s Board of Trustees approved the acquisition of an additional 1,541 works from the Corcoran on 1 October 2015, bringing the total number of accessioned works to nearly 8,000 of the approximately 17,000 total works from the Corcoran’s collection. Footnote 159 Following this acquisition, the NGA planned to begin making recommendations to the Corcoran trustees in 2016 for the distribution of the remaining Corcoran works in the NGA’s custody to other museums and cultural venues in the Washington, DC, area. Footnote 160 The Corcoran has received requests from Washington, DC, museums and universities for these remaining works and proposals for how these institutions would preserve the Corcoran legacy through related curatorial support, exhibitions, and programming. Footnote 161 Final decisions on distribution are scheduled for 2017. Footnote 162
In the meantime, the Corcoran entity continues to engage with the Washington, DC, community. The Corcoran sponsors the William Wilson Corcoran Visiting Professor in Community Engagement, a teaching position at the Corcoran School of the Arts and Design at GW (Corcoran School at GW). Footnote 163 Artist Mel Chin received the inaugural appointment to this position from the Corcoran School at GW in 2016. Footnote 164 The Corcoran is also exploring the support of art education projects throughout the Washington, DC, area and additional projects related to the Corcoran School at GW, and it remains committed to serving the Corcoran’s original mission. Footnote 165
A New Era
The Corcoran exemplifies what might be the beginning of a new era for museums and museum management and administration, in that, when faced with insurmountable financial obstacles and questionable long-term viability as an independent institution, the Corcoran chose neither of the two relatively known options: sell a few pieces from its collection in order to survive, or simply close its doors. Instead, the Corcoran instituted a merger of sorts, an acquisition by the NGA and GW, with the goal of keeping the Corcoran’s collection in the public sphere.
The Corcoran transaction presents interesting options for ensuring museum sustainability and inspiring future collaborations. In fact, soon after the Corcoran/NGA/GW arrangement became final, the University of Maryland (UMD) and the Phillips Collection (located in Washington, DC) announced a collaboration of their own. Footnote 166 These partners plan to reach new audiences and increase access to the museum’s collection through a new gallery and open storage facility that they will create in Prince George’s County, Maryland, free museum admission and research access for UMD affiliates, and internships for UMD students. Footnote 167 UMD will also be the primary presenter in the Phillips’s series of contemporary art exhibitions. Footnote 168 There is no indication that either institution was struggling financially prior to the partnership, and UMD will invest $3 million in this partnership over the next six years. Footnote 169
Another partnership was forged in March 2016, with the Massachusetts Museum of Contemporary Art (MASS MoCA) and the Crystal Bridges Museum joining forces to develop arts programming at a decommissioned Kraft Foods plant in downtown Bentonville, Arkansas, which is expected to open in 2018. Footnote 170 In this case, unlike the UMD/Phillips partnership, one of the players “sometimes skates on thin ice” financially, as MASS MoCA has occasionally found itself facing economic challenges, while Crystal Bridges is very well resourced. Footnote 171 However, the point of this collaboration is the development of new programming rather than the provision of economic support. Time will show if museums will embrace the option of merger and collaboration as they continue to confront their financial challenges.
BUT WHAT ABOUT NEXT TIME?
As the three case studies in this article illustrate, US museums in the twenty-first century are at risk, facing daunting financial challenges that affect their ability to maintain and sustain their existence and finance their daily operations. Footnote 172 The 2008 recession and subsequent economic decline fundamentally affected the museum community, with about 70 percent of museums that responded to the AAM’s surveys reporting moderate to very severe economic stress from 2009 to 2012. Footnote 173 During this period, museums experienced substantial decreases in funding from a number of sources, including government support, private individual donations, private corporate donations, and investment income. Footnote 174 These decreases led to compounding decreases in museum total revenue over the years. Footnote 175 For example, 53 percent of responding museums reported a decrease in 2010 total revenue, and nearly 40 percent of responding museums reported a decrease in 2011 total revenue, which indicates that many museums have experienced compounded years of decreased total revenue since the start of the economic downturn in 2008. Footnote 176
There is more competition for the limited funds that remain available due to the expanding number of museums and other nonprofits. Footnote 177 Museums in 2010 also noted a shift in philanthropic focus “from history [and culture in general] towards social services, environment and other causes.” Footnote 178 Millennial donors are part of “a larger trend towards ‘strategic’ or ‘outcome-oriented’ philanthropy,” meaning that donors will increasingly demand to see proof of effectiveness and impact before donating. Footnote 179 These concepts are not inherently easy to measure in a museum context, and a desire for these metrics places museum funding further in jeopardy.
The elevated market prices for certain works of art have created the tempting option for museums to raise funds to combat these financial challenges relatively quickly by selling pieces from their collection, despite objections to sales driven purely by market value Footnote 180 and in conflict with the ethical standards of the field. As Frank Robinson, an esteemed retired art museum director, Footnote 181 noted in the context of the DIA, when an institution is faced with such daunting and overwhelming financial challenges, “[t]here is always the temptation to cash in your assets.” Footnote 182 Sometimes potentially devastating financial situations can be resolved without the sale of art, as exemplified by San Francisco’s complex agreement to renegotiate the Asian Art Museum Foundation’s bond in 2011 to combat the existing $120 million debt. Footnote 183
The sales from the DeAM and the threat of deaccessions from the DIA, however, illustrate the troubling possibility that museums may respond to the economic challenges of this time by selling their masterpieces to the highest bidder to finance their day-to-day operations, thereby removing art from the public sphere. As reported by the AAM, the DeAM is not the only museum to have met economic stress by deaccessioning items from its collection. Footnote 184 Further, the situation surrounding the Corcoran could have ended much differently, with one of Washington, DC’s finest collections marching to the auction block to be dispersed throughout the world and vanishing from public view. These cases thus leave a lingering question: how can the uncertainty surrounding the future of museum collections best be addressed and the public’s continued access to the works in these collections best be ensured?
Existing Methods Governing Deaccession Practices
No methodology or organization currently exists with the power to legally enforce guidelines or requirements to govern museum deaccession practices. Deaccession practices have generally been addressed in nonbinding codes of ethics, as “judges have been reluctant to second-guess the decisions of museum trustees.” Footnote 185 As John Henry Merryman explained, ethics serve as a “body of nascent law,” “fill[ing] the gap” and governing the art world in which the law is still relatively undeveloped. Footnote 186 And while deaccession practices occasionally receive judicial review, the resulting decisions are binding only on the parties involved in that specific case.
Self-Enforcement and Existing Organizations
As discussed above, the overarching “governing” museum bodies that currently advance certain ethical principles are consent based—in other words, the museums and their directors must volunteer to join and affirmatively consent to follow the policies espoused by the various organizations. Thus, these existing organizations, including the AAMD and the AAM, are legally powerless to enforce guidelines, resulting in an arguably unregulated and unprotected environment. The most these organizations can do is to censure or condemn the offending institution, issue sanctions, suspend or expel the member institution, or revoke accreditation; they have no way to force museums to comply with their ethical standards.
Sanctions imposed by the AAMD and the AAM do affect the penalized museum in terms of its “ability to secure loans [of other works] for exhibitions as well as funding,” as illustrated by the sanctions against the National Academy Museum from 2008 (when it sold two Hudson River School paintings and utilized the proceeds for operating expenses) until 2010 (when the sanctions were lifted). Footnote 187 Sanctions also prohibit collaboration on exhibitions and programs with the offending institution. Footnote 188 Although such sanctions are potent, Footnote 189 they do not always prevent museums from violating the ethical principles espoused by these voluntary groups. Footnote 190 Randolph College’s Maier Museum of Art, for example, sold Rufino Tamayo’s painting Trovador (1945) in 2008 and was subsequently censured by the AAMD in order to discourage the college from further sales to support its operations; the college responded by selling another work, George Bellows’s Men of the Docks (1912), in 2014. Footnote 191 The AAMD then sanctioned the Maier Museum (a more stringent step than censure), encouraging AAMD member institutions to suspend any loans to, and collaboration on exhibitions or programs with, the museum. Footnote 192 And yet the Maier Museum of Art then sold two more works to raise funds for the college’s operating endowment. Footnote 193
Self-policing may not work, as there is arguably no lasting, catastrophic effect on museums that fall into disfavor—they can limp along for a few years, then rejoin the organization Footnote 194 or have the sanctions lifted. Footnote 195 Danielle Rice, former director of the DeAM, noted that museums that disobey the ethical standards promulgated by the AAMD (or like organizations) “endure ‘the usual brouhaha and sanctions, and ... get over it ... in the end, as with the National Academy, you’ve got the money in the bank.’” Footnote 196 Further, professionals in positions of power in many state, city, and municipal museums remain uninterested in changing their museum’s governance structure to prevent the chance that the government entity’s possible future fiscal instability could affect the art collections through forced deaccessions. Footnote 197 They explain that their locality is financially stable and receives positive support from government officials and the public. Footnote 198 But this is a precarious position. Those in charge of the DIA likely had similar thoughts, until it was almost too late to save the DIA’s collection. Thus, the self-enforcement of ethical principles and the status quo leaves museum collections without legally enforceable governance with respect to deaccessioning.
Judicial Involvement
Two of the three case studies highlighted in this article received judicial determination. The bankruptcy judge in Detroit fortunately agreed to the Grand Bargain and, thus, the salvation of the DIA and its collection. Footnote 199 His opinion spoke compellingly to the importance of the art, both in the sense that it must be held in the public trust for future generations and that it would prove invaluable to the preservation and improvement of Detroit’s future. Footnote 200 But the happy ending in the DIA’s tale by no means guarantees the safety of other art collections owned in whole or in part by cities or municipalities. The next time a city declares bankruptcy, if there is an art collection at stake, it might not receive the same outpouring of financial support as did the DIA. Alternatively, the presiding judge may not feel that a proposed arrangement (like the DIA’s settlement) is fair to creditors, or he might not see a legal way to save the art, in which case the art collection could be marched to the auction block and lost to the public forever.
The Corcoran court proceedings were similar to the deviation proceedings of the Barnes Foundation Footnote 201 and the cy pres proceedings of the Fisk University Galleries, Footnote 202 in that the court granted the Corcoran’s cy pres motion to deviate from the written instructions of the collection’s donor. These cases, while not binding over the United States as a whole, illustrate that courts are willing (in some situations) to liberally interpret donor intent. Footnote 203 Further, as shown in the Corcoran decision, there is “no case law in [the District of Columbia], or elsewhere, that explicitly establishes a particular standard for reviewing a trustee’s cy pres proposal.” Footnote 204 This trend of liberal interpretation of donor intent, coupled with a lack of firm judicial standards, will likely concern donors since it may affect the future of their donations.
Even though most controversial deaccessions, such as those of the DeAM, often intentionally involve only pieces purchased with museum funds and not donations or bequests, this trend of liberal interpretation indicates the possibility that in the future a similar motion could be brought for a specific piece, ultimately resulting in a court finding that it is impossible or impracticable to conform with the donor’s original instructions and allowing the sale of the piece. Footnote 205
The overarching theme of judicial involvement in this area is that it produces uncertainty. On the whole, judicial analysis currently lacks a cohesive approach, as “[c]ourts have used different standards and legal doctrines to examine deaccessioning decisions and the use of deaccessioning proceeds, including donor intent, cy pres and fiduciary duty standards.” Footnote 206 Although the courts in the DIA and the Corcoran cases both recognized the importance of art and the institutions, there is no guarantee that future judicial action will shield art from a city’s creditors, consistently evaluate cy pres motions, or maintain art in the public sphere.
Contract Law
Traditional principles of contract law will not be implicated in all controversial deaccessions. Museums could deaccession pieces purchased with museum funds and without restrictions rather than pieces donated or bequeathed to the institution that may have gift restrictions, as done by the DeAM in 2014. Footnote 207 Alternatively, museums could deaccession donated or bequeathed works unencumbered by donor restrictions. Footnote 208 These categories of unrestricted works render a discussion of general contract law as a means of enforcing restrictions on proposed sales unnecessary, as no restrictive contract provisions would pertain to such pieces.
Proposal of Legislation
In light of the continued (and perhaps even increasing) economic threat museums face Footnote 209 and the risks accompanying both a “peer pressure”-based system of ethical standards, as is currently in place, and individual judicial determination, firm guidance and codified requirements should be considered for the benefits they could provide. Legislation could create a uniform methodology for museum deaccessions, provide an enforcement mechanism for these guidelines, Footnote 210 and help to preserve masterpieces in the public sphere. At a time of increased ethical scrutiny directed at nonprofit organizations and a profound demand for transparency and accountability driven by the Internet, social media, and online public participation, Footnote 211 legislation would also offer guidance to, and protection for, museums and museum officials and trustees making the decision to deaccession and would help ensure that the deaccession is in the best interest of the public. In fact, this protection was likely the driving force behind San Francisco’s decision to codify guidelines for deaccessioning by the city-run museums. Footnote 212 As the three case studies detailed earlier in this article show, museum collections are facing an unprecedented level of risk. Because of both the continued state of the museum economy and the fact that museums are deviating from their own self-enforced standards, legislation offers a compelling option to provide structure, protect the masterpieces housed in museums, and prevent the next “Corcoran” from following a dramatically different path.
Existing Models of Legislation
Legally binding governing rules are not foreign to this arena of museum art sales. Certain aspects of such sales and collection management practices are currently regulated by legislation or government oversight. These regulations include: (1) “found in collections” laws; (2) New York’s Board of Regents’ Rules; (3) other laws relating generally to the field of art; and (4) San Francisco’s rules for its city-run museums.
“Found in Collections” Laws
More than 30 states have “museum-specific laws to assist in the acquisition and disposition of old loans and undocumented objects.” Footnote 213 New York law, for example, provides clear rules for state museums to declare ownership of pieces in their collection that are either unclaimed property (“property held with a loan agreement which has either expired or was loaned for an indefinite term (often called ‘permanent loans’)”) or undocumented property (“property for which the museum cannot determine the lender, donor or owner after making a good faith search to find the owner (this property is often deemed ‘found in collections’)”). Footnote 214 This law alludes to the ability of New York museums to then sell the work since “[a]ny person who purchases or otherwise acquires property from the museum acquires good title to such property if the museum has acquired title in accordance with this [legislation].” Footnote 215 The rules are clear and provide specific procedures the museums must follow in order to acquire ownership, such as repeated attempts to notify the lender and specific time periods that must be observed. Footnote 216
New York law also provides similar provisions for other (non-state) museums to acquire ownership of property. Footnote 217 In addition, these provisions specify that “[p]roceeds derived from the sale of any property title to which was acquired by a museum pursuant to this section shall be used only for the acquisition of property” for the collection “or for the preservation, protection, and care of the collection and shall not be used to defray ongoing expenses of the museum.” Footnote 218 New York has thus already codified the ethical principles advanced by the AAM in terms of collection practices and the use of proceeds from this narrow section of sales.
California enacted a similar law to allow museums to address works left in their possession. Footnote 219 This law was adopted noting that “the public’s interest in the intangible values of unclaimed property loaned to museums can best be realized if title is transferred to the museums holding the property” and that “[t]he public interest is served by ... vesting title to unclaimed property on loan to museums in the museums which have custody of the property.” Footnote 220 Similar to New York law, “[a] lender shall be deemed to have donated loaned property to a museum if the lender fails to file an action to recover the property on loan to the museum within the periods specified.” Footnote 221 Thus, the museum acquires ownership of the property. Further, the museum may sell the piece and the purchaser will acquire good title to the property if the rules set forth in this legislation are followed. Footnote 222 The California statutes, however, did not codify ethical principles addressing the acceptable use of proceeds from such sales.
New York Board of Regents Rules
The New York Board of Regents amended its rules designed to govern the deaccession practices of all of the museums and historical societies chartered by the New York State Board of Regents, effective as of 8 June 2011. Footnote 223 These rules codified existing ethical policies, going further than the professional ethical standards of the AAMD and the AAM because they are, by their very nature, legally binding. Footnote 224 These rules “[e]numerate ten specific criteria under which an institution may deaccession an item or material in its collection” and “[r]equire that all museums report annually a list of all deaccessions.” Footnote 225 The rules mandate that proceeds from deaccession practices may only be used for “the acquisition of collections, or the preservation, conservation or direct care of collections. In no event shall proceeds derived from the deaccessioning of any property from the collection be used for operating expenses or for any [other] purposes.” Footnote 226 This mirrors the policies of the AAM, which are less stringent than those of the AAMD.
As of 2014, New York was the only state with a statewide deaccessioning policy, as set by the Board of Regents. Footnote 227 If a museum violates these rules, it risks losing its charter. Footnote 228 The rules explain that “[i]n the current financial downturn, museums face deficits that threaten the ownership or integrity of their collections” and specify that “[e]ven if a museum fails, [the Regents] want to keep collections in the public trust and not lose them to debt or insolvency.” Footnote 229 These rules are “meant to provide museums with the discretion to refine their collections over time, while at the same time ensuring that museums’ collections are preserved for the public.” Footnote 230
Other Laws Relating to the Field of Art
A variety of other legislation also affects museum practices. There is US legislation on the importation of certain objects. Footnote 231 The Visual Artists Rights Act of 1990, the first federal copyright legislation granting protection of an author’s moral rights, provides additional rights to artists whose works meet certain requirements. Footnote 232 These rights include the right to attribution and the right to disclaim works that have been modified or disfigured, regardless of who owns the physical work or copyright in the work. Footnote 233 Several states, beginning with California and, as of 2007, including Connecticut, Illinois, Louisiana, Maine, Massachusetts, New Jersey, New Mexico, New York, Pennsylvania, and Rhode Island, had enacted moral rights legislation. Footnote 234 California had also enacted a resale proceeds right law. Footnote 235
San Francisco Municipal Code: Arts and Culture
Article 5 of the San Francisco Charter establishes the Fine Arts Museums of San Francisco and the Asian Art Museum of San Francisco as “charitable trust departments” with “exclusive charge of the trusts and all other assets under their jurisdiction,” however acquired. Footnote 236 The San Francisco Administrative Code, in turn, outlines the process by which these municipal museums may sell, exchange, or transfer works of art from the museums’ collections. Footnote 237 Authorized sales methods include public auction and private sale, subject to certain conditions. Footnote 238 All funds received from the sale of any work of art belonging to the museums will be used for the purchase of other works of art, Footnote 239 a policy that tracks that of the AAMD and is more stringent than that of the AAM.
With respect to objects that are of “scientific, social, cultural or historic value, but of little monetary value and therefore not appropriate for sale or exchange,” the San Francisco Administrative Code encourages transfer to “other public and nonprofit institutions for preservation, study and display.” Footnote 240 The Code also stipulates that the Board of Trustees may transfer title of a work in the collection “to another public or nonprofit institution when the transfer is in the public interest.” Footnote 241 A transfer is in the public interest when the board finds that “[t]he object is no longer appropriate to the [museums’] collections,” that “[t]he scientific, social, cultural and/or historical value of the object outweighs its monetary value,” and that “[t]he object is more likely to be preserved, studied and available to the public if it is transferred to the recipient institution than if it remains with the [museum] or is sold.” Footnote 242
Response to Legislation Attempts
Generally speaking, museums prefer “self-policing to government intervention” Footnote 243 or “the force of law.” Footnote 244 Renowned museums responded unfavorably to the New York State Assembly’s consideration of the Brodsky Bill, designed to codify, regulate, and govern deaccession practices for the museums chartered by the state legislature and thus not already subject to the rules on deaccessioning promulgated by the New York Board of Regents. Footnote 245 This Bill failed “in the face of opposition from major cultural institutions like the Metropolitan Museum of Art” (Met), which termed the legislation “impractical, unworkable and unneeded.” Footnote 246 Further, the Whitney Museum of American Art (Whitney) opposed temporary regulations from the New York State Board of Regents that imposed stricter guidelines in 2008 governing deaccessioning, arguing that these regulations impeded their freedom to refine their collection and to improve its quality. Footnote 247 Interestingly, major museums including the Met and the Whitney also opposed the passage of moral rights legislation in New York. Footnote 248 Their distaste for state intervention is thus not purely relegated to oversight governing deaccessioning principles. Following the New York Board of Regents’ acceptance of its new rules, “[b]oth the AAM and the AAMD issued tepid statements stating that they would prefer that deaccessioning standards be left to museum professionals rather than government regulators, but endorsing the principles behind the new rules.” Footnote 249
MOVING FORWARD: THE NEED FOR LEGISLATION
Despite the fact that US museums and their governing organizations generally prefer self-governance, difficult decisions and moral conflicts created and driven by difficult financial times are not likely to disappear any time soon. Relying on ethical standards advanced by governing institutions, voluntary in nature and unsupported by any legal means, does not appear to enable the art world to control deaccessioning practices as well as the overarching community of professionals would like. Footnote 250 It is unrealistic to believe that all museums will conform to deaccessioning principles without further enforcement mechanisms.
Legal action also falls short of an effective protection mechanism. Court involvement does guarantee individualized review of the specific instance of deaccessioning, which allows for consideration of the museum, its purpose, and the situation. Footnote 251 However, judicial review usually requires considerable time, effort, and monetary investment, which may not always be feasible. Footnote 252 Further, the current legal “standards are unclear, the evaluation is after the fact, and few parties have standing or means to sue.” Footnote 253 Judicial review is thus rendered an impractical solution.
Given the recent events in the museum world, it is time to embrace legislation as a means of providing legally binding structure to the practice of deaccessioning, both to protect the process as a tool used to carefully cultivate and shape a collection and to guard against the risk of the decimation of an institution’s collection, which is held in trust for the public. Legislation can provide clarity to those making decisions, Footnote 254 a characteristic lacking in the current deaccessioning equation with the dichotomy between legal restrictions, strict ethical restrictions, Footnote 255 and more lax ethical restrictions. Footnote 256 It can shield nonprofit organizations from the glaring light of ethical scrutiny that consumers are shining on all organizations. Footnote 257 And at a time when news travels at lightening speed through society, and it takes only the blink of an eye for a museum to commit an ethical faux pas, museums and museum professionals would benefit from codified protection surrounding deaccessioning. Legislation would provide guidance to museums seeking to deaccession works and to museum professionals responsible for deaccession decisions. In fact, when considering the proposed amendment of § 3.27 of the Rules of the Board of Regents, the New York Board of Regents noted that their “[m]useum constituents ha[d] asked for specific criteria and guidance” on deaccessioning. Footnote 258 Legislation would also allow for an impartial check on the deaccession process to diminish “the wave of harmful criticism which greets any museum contemplating a deaccession,” thereby protecting the reputation of the museum. Footnote 259
Legislation is daunting, given that “one size doesn’t fit all” in the museum world. Footnote 260 Each museum is a separate and distinct organism comprised of visitors, supporters, donors, artists, scholars, trustees, staff, and federal, state, and local government, all serving distinct communities and following different missions, and each possessing a distinct identity. Footnote 261 Subject to such a delicate balance, museums argue that they are best suited for self-regulation. Footnote 262 Effectively drafting legislation would be a complex undertaking. Further, legal obligations present the minimum standards that must be met, while professional ethical standards prescribe the highest standards toward which one should strive, Footnote 263 thus enabling the standard to be set higher.
However, if deaccessioning remains ungoverned by legislation or an effective enforcement mechanism, museums may soon experience either a decrease in donations Footnote 264 or an increase in donor demand for restrictions allowing donor heirs to reclaim donations. Footnote 265 Donors to the Museum of Contemporary Art in Miami, for example, began to make their opinions regarding the art they had donated known in 2014 (after the situation in Detroit began to unfold), emphasizing that they had given to the museum and not to the city. Footnote 266 Laws regulating deaccession procedures would reassure donors and provide them with a renewed sense of security that accompanies a regulated process. Such legislation would help to prevent the public’s confidence in, and trust of, museums being undermined. Footnote 267 It would also help to guard against the stain of misunderstanding and suspicion that often surrounds the practice of deaccessioning, a regrettable result of the general public’s first experience with the practice under this terminology. Footnote 268
Further, some concern around legislating deaccessioning could be combated through careful consideration of what policies to legislate. The subject of deaccessioning is emotionally charged and varied: some believe in selling for any purpose, Footnote 269 some believe in selling a piece that will otherwise remain in storage indefinitely, Footnote 270 some believe in selling when there is an emergency, Footnote 271 some believe in selling and using funds according to the AAM’s standards, some believe in following the AAMD’s standards, and some believe in further restricting proceeds so that they are only used to purchase a piece of art that is the same type as the piece sold. Footnote 272
Rather than striving to reconcile these conflicting opinions on the use of proceeds, which is an ethical question to be governed by voluntary commitment to community standards, it is imperative to consider the location in which the deaccessioned piece will ultimately reside after sale, assuming it remains of museum quality or otherwise suitable for public display. The purchaser or purchasing institution is fundamentally important; while the privatization of works in order to achieve maximum profits for museums may enable museums to purchase new works, the withdrawal of museum-quality works from the public sphere seems counterintuitive to the notion of the public trust and does not represent the optimal result for the public. A solution should ultimately be codified into law in order to increase the likelihood of maintaining the works of US museums within the public sphere.
A NEW INTERPRETATION OF AN OLD GUIDING PRINCIPLE: THE PUBLIC TRUST AND THE PURCHASER
The trumpet sounded over and over by those who argue against deaccessioning to fund operating costs (and argue in favor of using sale proceeds to purchase new pieces or to care for the existing collection) is that such unrestricted use violates the public trust. Footnote 273 Although technically legal title to a museum’s collection and the works housed in the museum usually resides with the museum’s trustees, there is a “general overriding condition to their ownership. The condition is to the effect that every act of ... disposition of works in the collection must be in the public interest.” Footnote 274 This is based on a founding tenet of US museums—that the protection of an invaluable cultural resource has been entrusted to the museum’s care for the benefit of the public. Museums serve as stewards of these cultural resources and make them accessible to the public. Footnote 275
The public trust doctrine was initially a tool in property and environmental law, used to avoid the exploitation and privatization of natural resources such as waterways. Footnote 276 However, scholars believe “it is not limited to navigation or commerce” but, rather, “applies broadly to the public’s use of resources.” Footnote 277 It is widely believed in the museum arena that “once a work of art enters a museum collection, that museum holds those works in the public trust for future generations in much the same way that the public may enjoy navigation on public waterways.” Footnote 278 The New York State Board of Regents codified the definition of the public trust as the “responsibility of institutions to carry out activities and hold their assets in trust for the public benefit.” Footnote 279 In broad strokes, the public trust concept refers to the duty museums owe to the public with respect to their methods of operation and the care they exert over their collections. Footnote 280 Proponents of deaccessioning principles in line with those of the AAMD and the AAM argue that unrestricted use of the proceeds from deaccessioning violates the public trust. Footnote 281 Much of the controversy surrounding deaccessioning by museums “arise[s] from the perception that [museums] are public institutions impressed with the role of protecting and preserving their collections intact for future generations.” Footnote 282
But current guidelines may not fully protect or advance the public interest, Footnote 283 as they are primarily concerned with the use of proceeds generated from a sale and do not take into account the other side of the equation when a piece of art is sold: the purchaser. Footnote 284 In one sense, arguments made about maintaining a certain piece in the public trust disappear when the museum wishes to sell that piece and use the proceeds to purchase a new piece. Footnote 285 The public would benefit from that sale in that the museum would provide access to the newly purchased piece. Still, however, the purchasing institution remains an important component of the selling process and public trust as well. When a piece is deaccessioned (even in accordance with the principles accepted and promulgated by the AAMD and the AAM) and sold outside of the public sphere to a private collector, it is potentially permanently removed from the public sphere. Works of art sold to the highest bidder can be lost to the public forever. Footnote 286
Museums should still retain the discretion to determine which pieces to keep and which to deaccession, and they should receive the proceeds from any sale. But it is also possible to simultaneously consider the purchaser in a deaccession. If the idea of serving the public trust is to be considered paramount, it seems reasonable to ensure that a museum’s deaccessioned work (suitable for exhibition) first have the opportunity to move to another museum or public arts institution or even to a private institution if it were accessible to the public (collectively referred to as a “public institution”). This would enable the piece to remain in the public realm in keeping with the public trust concept. Such a policy is favored by other types of museums, with history museums being more concerned with finding “an appropriate new home for a piece” and placing little emphasis on the use of proceeds, and anthropology museums and natural science museums typically allowing only exchanges with other collecting organizations. Footnote 287
New York’s Brodsky Bill originally required museums to “make a good faith effort to sell or transfer such [deaccessioned] item to another museum in New York State. If such sale or transfer cannot be accomplished, a museum must make a good faith effort to sell or transfer such item to another public museum.” Footnote 288 Existing San Francisco law provides for a transfer of works to another public or nonprofit institution when the transfer is in the public interest. Footnote 289 The AAMD’s Policy on Deaccessioning (amended in October 2015) also addresses the recipient of a deaccessioned work, noting in Part IV.C that “museums may give consideration to keeping a deaccessioned work in the public domain.” Footnote 290 Further, the International Council of Museums notes that there will be a “strong presumption that a deaccessioned item should first be offered to another museum.” Footnote 291
The desire to keep deaccessioned works in the public domain, however, may conflict with the concept of fiduciary duty. Museums and museum trustees have a fiduciary obligation to act in the museum’s best interest. Footnote 292 As Stephen Clark of the Getty notes, these fiduciary obligations include a responsibility to maximize the value the museum earns and to obtain the highest price for a work. Footnote 293 Tensions thus develop between this idea of maximizing earnings and ensuring the public’s continued access to works. Footnote 294
The possibility of restricting the sale of an American museum’s deaccessioned works of art to other museums is appealing in terms of keeping the works within the public sphere. Under this approach, the concept of fiduciary duty would be subjugated to, and interpreted in terms of, the principle of the public trust. This means that a piece should go to the public institution willing to pay the most for it—therefore, the trustees would still fulfill their (modified) fiduciary duty but with new requirements in place regarding the purchaser. This approach is in line with the concept of museums as institutions designed to serve the public, not as money-making machines. As noted by David Julyan, one of the most important considerations is making the works available to the public. Footnote 295 The fiduciary duty of the selling institution (and the accompanying drive to receive the highest price for the piece) would be of secondary importance; primary importance would be placed on the piece going to another public institution, Footnote 296 albeit the one willing to pay the most for it.
The problem with this approach, however, is the degree to which it could dampen, Footnote 297 or limit, the market for these pieces and also fail the museum trustee’s traditional fiduciary duty. With the current state of the economy, practically giving away pieces to other museums for low prices is not feasible for most institutions; if there were no way for an institution to maximize its profits or at least earn substantial revenue from its sales, it is likely that museums would simply stop selling pieces. Footnote 298 And that would be a tragedy for the museum community, which uses deaccessioning to shape its collections with purpose. Footnote 299 Thus, restricting sales to other museums, while beneficial in terms of public access to works, is unfeasible when examined from an economic and fiduciary duty perspective.
The rules of the New York Board of Regents indicate a preference that a museum close rather than sell its pieces and allow these works to leave the public sphere. The Corcoran resolution seems to offer a better solution—and perhaps marks the start of a trend of museums choosing a merger option in order to distribute their works to other arts institutions, creating a reign of “super museums.” Or perhaps there is another way to allow the selling institution to earn money but still preserve the art in the public sphere after the sale.
The simplest fix, in theory, would be a law stating that selling institutions must first offer their deaccessioned pieces to other arts institutions for fair market value before selling to a private purchaser; thus, museums would have a first right of refusal, an option to keep the piece in the public sphere. This is, however, idealistic at best if the overall goal is to maintain these pieces in the public sphere. Museums inherently possess limited funds; they simply cannot afford to pay fair market value for every piece of museum art that comes on the market. They also likely would not have the funds available for immediate use. Further, determining fair market value would be a difficult, if not impossible, endeavor.
A more plausible option is one of pre-emption, under which public institutions would be given an opportunity to match an existing private offer within a specified period of time. If such an institution could match the private offer, that institution (and therefore the public) would receive the piece. Footnote 300 If not, the piece would go to the private purchaser. This system emphasizes a fair balance between income to the selling museum and the public’s continued access to the work. Such a pre-emption policy, though temporary in nature, operated successfully following the 2006 announcement that Thomas Jefferson University in Philadelphia would sell Thomas Eakins’s The Gross Clinic (1875) to Alice Walton (for Crystal Bridges) for $68 million. Footnote 301 The Philadelphia Museum of Art and the Pennsylvania Academy of Fine Arts were given 45 days to match this price—and they succeeded! Footnote 302 These two Pennsylvania institutions refused to let such an iconic piece of Philadelphia history leave their state. Similarly, when the New York Historical Society sold 183 Old Master paintings in order to try to maintain its operations, the New York Attorney General allowed qualified institutions to pre-empt a sale. Footnote 303 Such institutions were even able to purchase works below hammer price. Footnote 304 The Met purchased Triumph of Fame (1449) by Lo Scheggia in 1995 through this pre-emption process. Footnote 305
The United Kingdom also has a similar system, effectuated through its export restrictions. Essentially, a review committee examines if a work proposed for export satisfies any of the Waverley criteria. Footnote 306 If it does, the committee recommends that the secretary of state institute a deferral period “to allow time for an offer to purchase to be made at [or above] the fair market price to keep an object in the UK. In most cases, such offers are likely to come from public sources (museums, galleries or other heritage bodies such as the National Trust).” Footnote 307 The committee recommends the fair market price as well as the length of the deferral period (which is normally between two and six months). Footnote 308 These restrictions give British museums and cultural institutions the opportunity to keep iconic works in the country. Footnote 309
A benefit of a system of pre-emption over one of first opportunity to buy is that it provides an opportunity to determine the highest price the piece could fetch, instead of asking a museum to make an offer without seeing what the market would support. Once the market determines the price, institutions would be given a reasonable time period to evaluate the situation. Private buyers are much more “nimble than their institutional counterparts,” as they do not have to navigate boards and ethical duties Footnote 310 and thus could make their offers much more quickly. A system of pre-emption would ensure that public institutions are given both a definitive price and the time to try to raise funds and work within their governing structures, while ensuring that the selling institution would still receive a price that satisfies its fiduciary duty.
However, a system of pre-emption is not without its challenges. The requirement to offer public institutions time to raise the funds would translate into a longer period the selling institution would have to wait in order to receive the proceeds, regardless of whether the private purchaser or a public purchaser ultimately bought the piece. This system would require more administration and oversight than a regular sale, as public institutions would have to be notified and time would have to be monitored. This system could result in fewer private offers, if private purchasers became disenchanted with a system under which they could lose a piece they thought they had purchased to a public institution. And, ultimately, the piece might still be removed from public view, if no public institution was interested in purchasing the work or was able to raise the funds!
Despite these challenges, a system of pre-emption strikes the best balance between the fiduciary duty of the selling institution’s trustees and the public’s interest in the work remaining accessible to them. The delay in time before the selling institution would receive the purchase price would be combated shortly, as museums could make deaccession decisions further in advance due to this prescribed delay. It is unlikely that private purchasers would become so disenchanted that they would stop engaging in the purchasing process, as shown in the above examples. Public institutions would receive a fair chance to maintain a work in public view, while the selling institution would still receive fair market value for the piece.
Even with more time for hopeful purchasing institutions to raise funds, however, limited funds remain available to most public institutions. Footnote 311 If a museum desperately wanted a piece, there is no guarantee they could raise the funds to match the highest private offer. The question thus becomes under what circumstances should museums be willing to forgo a higher sale price so that the piece can be pre-empted and remain in the public sphere?
The most conservative option from a fiduciary duty perspective is that the selling institution should never discount its works for purchase by another public institution; the purchasing public institution would either match the private offer or the piece would go to the private purchaser. This methodology reflects the difficult financial situations facing museums today and takes into account that the selling museum would benefit from obtaining the highest price possible. However, this methodology is driven purely by fiduciary duty and allows no financial offset for the benefit inured to the public by keeping the work accessible to the public.
Another option is that the selling institution would offer a discount to other public institutions for certain pieces. This would enable the most iconic and important pieces to have a higher likelihood of going to public institutions and thus remaining accessible to the public. The benefits of this option, however, are vastly outweighed by the administrative and oversight issues it presents: who would determine which pieces would be discounted due to their importance? Would there be different discounts based on relative levels of importance? These questions make such a variable discount system impractical.
A more feasible solution involves a standard discount for public institutions, thus interpreting the concepts of fiduciary duty and the public trust in relation to one another. A trustee’s fiduciary duty could serve as a policing or regulating mechanism, in that the piece would be sold to a public institution only if the public institution were able to pay the selling institution a certain high percentage of the piece’s private sale price, perhaps along the lines of 95 percent. Alternatively, a graduated discount could be applied. For example, if the private sale price is $25,000 or less, the purchasing public institution would receive a 10 percent discount; if the price is more than $25,000 but less than or equal to $100,000, the discount would be 5 percent; and if the price is over $100,000, the discount would be 3 percent. This exact graduated discount system was previously utilized in 1995 by the New York Historical Society, Sotheby’s, and the New York State Attorney General and allowed institutions including the Met, Vassar College, and the Corning Museum of Glass to purchase works that otherwise would have gone to private purchasers. Footnote 312 Either system would increase the likelihood that museums would be able to purchase iconic and legendary pieces that should remain in the public sphere. Such a system would also prevent institutions from scooping up another museum’s treasures for mere pennies, which might occur if sales were limited to other museums. While both the amount saved by paying only a certain percentage and the amount of the graduated discount might appear minimal, such savings could be just enough to help a purchasing public institution afford the piece in question. This methodology would slightly reduce the amount received by the selling institution, but the discount is worth the benefit to the public of retaining access to these pieces. It re-emphasizes the priority and central museum tenet of making works accessible to the public.
A pre-emption provision, incorporating either a certain percentage or graduated discount model, should be enacted into legislation in order to both ensure that the trustees of the selling institution fulfill their fiduciary duties and guarantee that there is a fair opportunity for deaccessioned works of museum quality or that are otherwise suitable for public display to remain in the public sphere.
CONCLUSION
Considering the risks to individual works and museum collections illustrated by the recent events involving the DIA, the DeAM, and the Corcoran, it is clear that US museums in the twenty-first century need to consider how they will cope with serious financial challenges. As these case studies demonstrate, internal museum policies and ethical standards on deaccessioning may not provide sufficient safeguards moving forward. Legislation is needed to protect the principles that museums hold art in the public trust and that maintaining art in the public sphere, wherever possible, is of the utmost importance. In the absence of a binding framework, collections may remain one financial disaster away from being “cannibalized,” sold to the highest bidder, and removed from the public sphere.
Regardless of the perspective one takes on the use of proceeds from deaccessioning, museums’ inherent responsibility to the public interest is best served by presenting a fair chance to keep the art accessible to the public and within the public sphere. Legislation can be crafted to provide an opportunity for deaccessioned works of museum quality or that are otherwise suitable for public display to be offered to other museums, while remaining respectful of the rights of museums to carefully shape their collections as they see fit and to receive optimal proceeds from the sale of works. This will produce a net gain for the public, in that the selling institution will receive a price the market supports, or perhaps a slightly discounted price, for the deaccessioned work, and other publicly accessible institutions will have an opportunity to purchase the work and continue to provide the public with access to it. With such a carefully crafted and nuanced legislative policy in place, we can increase the likelihood that museums will be able to retain the art that is currently displayed in collections, and even held in archives, in the public sphere and thus satisfy the fundamental premise of American museums—they exist to benefit the public.
ACKNOWLEDGMENTS:
This article was written in conjunction with the author’s studies at Stanford Law School. The author would like to thank her parents, family, and friends for their love and tremendous support. Special thanks to Adine Varah and Stacey Jessiman de Nanteuil for their guidance, advice, and tireless encouragement during the writing of this article and to the museum professionals who participated in interviews on this topic. The author is eternally grateful to the late Professor John Henry Merryman for sharing the world of art and cultural property law through his mentorship and his Stolen Art course and for encouraging her to explore the topic of deaccessioning.
