Fall 2020 - AAMD Reverses Its Position: Museums Can Sell Art To Fund Their Operating Expenses - For Now
Matthew Erskine, Wealth Management , Contributor Forbes Magazine, https://www.forbes.com/sites/matthewerskine/?sh=7085bebf6ebd
When clients gift art to a museum there is always one issue which I raise - what should happen if the museum is, due to no fault of their own, in such financial straits that they must either sell the art and use the proceeds to meet their costs or close their doors. Some clients wish to have such restrictions on the museum that the art is never sold, and the terms of the gift are drafted accordingly. Some clients understand that it is better to sell some art and fix the roof rather than keep it all and have it rot away in storage.
The American Association of Museum Directors (AAMD) position has been that:
“Selling from the collection for purposes such as capital projects or operating funds not only diminishes the core of works available to the public, it erodes the future fundraising ability of museums nationwide. Such a sale sends a message to existing and prospective donors that museums can raise funds by selling parts of their collection, thereby discouraging not only financial supporters, who may feel that their support isn’t needed, but also donors of artworks and artifacts, who may fear that their cherished objects could be sold at any time to the highest bidder to make up for a museum’s budget shortfalls. That cuts to the heart not only of the Berkshire Museum, but every museum in the United States.”
Association of Art Museum DirectorsStatement on the Berkshire Museum Proposal to Deaccession Works of Art for its Endowment, Operations, and to Fund Capital Investments
On April 15, 2020 the AAMD Board announced that it passed two resolutions amending its ethical standards. These resolutions are a policy reversal on their prior position on meeting institutional operating costs both by accessing restricted endowments and by using the proceeds of selling items in the museum’s collection.
“The resolutions state that AAMD will refrain from censuring or sanctioning any museum—or censuring, suspending or expelling any museum director—that decides to use restricted endowment funds, trusts, or donations for general operating expenses. The resolution also addresses how a museum might use the proceeds from deaccessioned art to pay for expenses associated with the direct care of collections. The resolution does not change AAMD’s Professional Practices or any other rules currently in place, but instead effectively places a moratorium on punitive actions through April 10, 2022. AAMD also recognizes that it is not within the Association’s purview to approve the redirection of restricted funds. However, it hopes that these resolutions will serve as an endorsement to donors or the relevant legal authorities, encouraging them to permit the temporary use of these funds for unrestricted needs.”
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There is no legal grounds for the prior position by the AAMD. In the very thoughtful and comprehensive law review article “Art or Assets: University Museums and the Future of Deaccessioning” Christian Brill points this out that, absent some specific and explicit written prohibition on the sale of the artwork in the Deed of Gift from the Donor, there is no blanket prohibition on selling artwork to preserve the financial survival of the museum or its underlying institution.
The new position is a much more realistic position to take. Better yet, the AAMD should adopt the suggestion of Dr. Erica Coslor, in her article “Art Investment Collections: A New Model for Museum Finance?” – that museums create an investment collection that could be used to generate funds to meet operating and capital needs. There are issues, such as governance, accountability and conflicts of interests, but it is a realistic solution to the current financial crisis impacting museums across the country.
https://www.forbes.com/sites/matthewerskine/2020/08/19/aamd-reverses-it-positionmuseums-can-sell-art-to-fund-their-operating-expensesfor-now/?sh=8b2d851783ee
