Judith H. Dobrzynski's New York Times op-ed and Arts Journal blog post on arbitrated deaccessions generated a very interesting discussion in the comments. The most interesting post by far for me was James Maroney's because he writes about a plan using tenancy in common to let a museum have its Monet and money, too. That's the first completely independent stab I've seen at any kind of alternative to achieving Coaccession's capacity. The discussion prompted me to submit my own comment:
Museums certainly shouldn't deaccession for financial reasons now that Coaccession(tm) offers them an alternative that raises funds while retaining all cultural rights in perpetuity.
This novel, useful, subtle variation on equitable servitudes -- patent-pending, of course -- divides the fee simple title into a Cultural Title(tm) that the museum retains and a Collector Title(tm) that the museum sells. Divided interests, James Maroney -- are you listening?
If the museum is not currently exercising its Cultural Title rights over the object for display, research, conservation or other purpose, the collector can exercise his or her Collector Title right of possession. The museum can retake possession any time it needs its object -- in effect taking the object out of external storage for as long as active use continues. When the museum no longer actively uses the object, it goes back to the collector's possession -- a right the collector can hold in perpetuity, or resell at any time for what the market will bear.
With Coaccession, museums really would look for investors, rather than just calling donors investors because it sounds nicer to ask for an "investment" than a gift. All those objects in the collection could underpin in part people's savings for college and retirement and major purchases (like artworks!) -- offering a socially-responsible route to greater diversification.
Since a community can afford to invest much more than it can afford to donate, museums would have much larger resource bases to work with in preserving and presenting the objects in permanent collections (not to mention access to the whole community's homes, offices, schools, churches, etc., for storing objects not in use).
Existing museums could begin to care for and display their permanent collections like the wealthy institutions that they are in many cases, and new museums could start up much more easily when the need arises to accumulate and preserve a new collection to present some important part of the community's culture.
Great benefits will come from rejecting the existing "mortmain model" handed down from feudal times (as we might call it with a nod to Lee Salomon) and letting modern ideas and modern methods mobilize finance to elevate culture.
Like Mr. Maroney, I'm very happy, even eager, to describe my Coaccession method in detail, comparing and contrasting it with other proposals like arbitrated deaccessions, collection-based loans, collection rentals, and tenancy-in-common. You can write me at coaccession-at-gmail.com.
The comment didn't post -- Judy Dobrzcynski moderates -- but it did prompt an email from JDH to me:
Dear Mark White:
Thank you for your comment. I have not published it because it reads like an advertisement, and because ArtsJournal sells advertisements on my blog, it would be a conflict to publish.
I do plan to post again about deaccessioning, and I'll read your comment again at that time with an eye toward mentioning the concept (attributed to you, of course).
Thanks again, and regards,
JHD @ RCA
My reply:
Dear Judith Dobrzynski,
You're absolutely right about how my comment reads -- although I think of it more as an incitement than an advertisement. When Charles Desmarais writes "Indeed, if the restrictions on deaccession proceeds were not in place, [trustees] might justifiably make the ethical argument that a museum has no right to ask for money it "does not need" (now that there is another source), when there are so many unfulfilled social needs elsewhere," I think he cuts right to the heart of the "mortmain model's" problem. It takes valuable assets out of circulation so they don't provide full societal benefits. Coaccession keeps cultural rights and access in the public domain while fully mobilizing financial values to support cultural activities. America's wealthiest art museums are wonderfully positioned to underwrite a cultural renaissance in their cities, given the trillions in assets they hold. All they have to do is let households, mutual funds, pension funds and insurance companies trade their stocks and bonds for Investor Titles(tm) to iconic works on permanent display and Collector Titles to selected works in storage and they will have billions in annual income to support the arts, humanities and sciences.
Your op-ed and post about your arbitrated deaccessions proposal really help advance the conversation on financial deaccessions. I hope Coaccession will take financial deaccessions completely off the table, though, by showing museums how they can have their Monet and money, too. It's awfully hard, though, to get museum people to consider a different approach towards capitalizing collections, which is quite ironic considering what Mark Gold writes about the museum world's victory on FASB Standard No. 116. I do hope you'll mention Coaccession as an alternative when you next post on deaccession, and in the meantime let me post a toned-down comment.
All the best,
Mark White
PS If you're interested, here are some additional perspectives on Coaccession:
http://news.medill.northwestern.edu/chicago/news.aspx?id=113597
http://www.youtube.com/user/coaccessionnetwork
http://www.charitygovernance.com/charity_governance/2009/05/talking-past-those-who-were-absent-a-panel-discussion-about-brandeiss-rose-museum.html
(see especially the three paragraphs discussing audience reaction to Mark White's idea)
http://www.chicagonow.com/blogs/art-talk-chicago/2009/07/in-hard-times-should-museums-be-allowed-to-sell-their-art-works.html
(especially the comments starting with Paul Klein's first, and most especially my two comments)
http://www.chicagonow.com/blogs/art-talk-chicago/2009/06/joyce-owens-do-collectors-owe-artists-profits.html
(especially my comment)
... and my comment:
JHD, your op-ed and post stimulated some great discussion on deaccession, but for me the most important comment was James Maroney's. Given all the cash-strapped institutions cutting cultural programs today, finding workable alternatives to financially-driven deaccessions (as opposed to culturally-driven deaccessions) should be the museum profession's highest priority. Workable is the key word here. Wishful thinking will not preserve all our cultural institutions and their permanent collections intact when private and public donors face their own tight constraints on giving.
Like Maroney, I have a plan that does not sell art, which once sold is gone forever. Rather than selling partial, undivided interests in the titles to selected artworks to join museums with private collectors in a Tenancy in Common, my plan sells one part of a divided title to collectors who have right of possession when museums would otherwise store the selected artworks, and retains the divided title's other part so museums have right of possession when they need the piece for display, research, conservation or other cultural purposes. With this Equitable Servitude on their artworks, museums have the cultural rights they need for their cultural mission, as well as added funding for that mission -- in essence, this plan lets you have your Monet and money, too. Rather than temporary emergency financing, my plan lets museums permanently turn most of the financial value of their permanent collections into stocks and bonds paying dividends and interest to support their cultural mission, and lets households, mutual funds, pension funds and insurance companies hold divided titles to museum artworks as the most socially-responsible part of their financial portfolios.
Here's hoping that the silver lining to the current hard times includes stimulating more alternatives to the existing "mortmain model" for cultural institutions (hat tip to Lee Salomon for the moniker). By immobilizing the financial value of their permanent collections, museums paid a very high price to win the "victory" on FASB 116 that Mark Gold describes. If the right alternatives emerge, it might be time to begin climbing down from that position. Like Maroney, I would be pleased to describe my plan in greater detail to folks interested in developing and using workable alternatives to deaccession.
Dr. Mark White -- Coaccession-at-gmail.com
... prompted this response from Judy:
much better, and published.
This sounds like kind of a partial gift in reverse...is there a time-frame for the agreement, or till the death, or...
Also, are there tax benefits for the collector-investor? Why would a collector do this?
thanks,
JHD
My answer to her questions:
JHD,
Responding to fair criticism tends to make texts much better, even publishable. I'm happier with the second version, which appeals more to thoughtful readers thanks to you.
Some Coaccession applications (there are many) can indeed sound like kind of a partial gift in reverse, and others like kind of a partial gift, and yet others like some sort of securitization. When this idea of structuring shared ownership on divided rights rather than percentages of the full rights bundle first came to me (to encourage archaeologists and collectors to work together rather than fight each other) I had no idea that its ramifications would make it so similar to so many existing ownership and leasing structures, yet so distinct in crucial particulars and implications. Of course, I also had no idea it was a novel and subtle application of the law -- my doctorate is in finance, not law -- and that my associates and I would be working though these ramifications de novo. Feel free to ask for comparisons, and I will do my best to point out the similarities and distinctions.
Partial gift in reverse? When a collector with full title divides it and donates the Cultural Title to a museum, the museum immediately has in perpetuity all rights except possession, plus the ability to take possession as needed to exercise its rights. The collector retains the Collector Title with the right of possession in perpetuity and takes actual possession any time the museum does not actively use the artwork for its cultural mission (storage doesn't count as active use -- that's when the collector enjoys possession). That collector's donation is in fact a partial gift (albeit not the standard partial gift of fractional ownership of a full undivided title), and the collector can take a tax deduction for the Cultural Title's value (which I maintain is one-tenth the value of the sum of the divided titles, which sum is in turn slightly more than the value of a full undivided title thanks to the divided titles' flexible applications). So, when a museum with full title divides it and sells the Collector Title to a collector, retaining the Cultural Title, it's fair to say in that sense and that application that Coaccession sounds like kind of a partial gift in reverse. The time-frame for the transactions is perpetuity, since titles and consideration change hands, and the obligations to the museum run with the Collector Title to the artwork. This is quite distinct from James Maroney's tenancy in common till the death agreement, which is more an innovation in application than an innovation in common law (which Coaccession is, in the history of equitable servitudes).
Tax benefits? Coaccession can open up art investing to a much larger cross-section of the public, including a vast middle class that tends to be much more interested in holding a diversified portfolio of appreciating assets than in finding write-offs to lower taxable income. A major museum with an iconic work on permanent display could sell an Investor Title instead of a Collector Title, offering millions of "shares" to small investors though an lPO on a Chicago Board of Art. An Investor Title obliges the museum to forever use the artwork actively for its cultural mission -- it can only come off display for research or conservation or restoration. Museums then must be very sure of an artwork's iconic status before they issue an Investor Title. Once they do, though, the IPO proceeds will let them be very sure they have the financial resources to properly care for their icon, which will be all the more in the public's awareness thanks to daily reports on its share trading in the CBOA. (How did your Starry Night do today? Would you like to get into some Nighthawks or American Gothic, or do you want to pull in your horns and just hold some Fidelity Diversified Art Fund for now?) Museums can serve the broader community seeking better investments by offering a socially-responsible, historically-strong, better-diversified, bankruptcy-proof asset class, rather than serving just that narrower slice that asks if there are tax benefits for the collector-investor. The new collector class would do this for all the benefits listed above. The existing collectors? Tax advisors assure me that Coaccession can offer new angles for the wealthy, even if that's not the main thrust of its. And the museums? The investing public and its intermediaries in mutual funds, pension funds and insurance companies can offer undreamed-of resources to support the cultural missions of these cultural property repositories. The museums just have to learn to share ownership rather than hoarding it under the "mortmain model."
I expect existing museums will shrink from Coaccession absent extreme duress, because the development model with Coaccession is so dramatically different than those they're used to. Extreme duress stalks the cultural landscape these days, though, so perhaps Coaccession's initial market will consist of more than just start-up institutions, and some of those IPOs will be available relatively soon. I believe Coaccession ought to have a broader market soon, since it mobilizes finance to elevate culture like no other proposal I've seen. When museums facing milder cutbacks see how Coaccession can generate resources without compromising cultural access, they should start to follow suit.
Is this how the inventor of perspective felt? It feels like a new way of seeing things. Sorry, though, that my answers to your questions go so long. Thanks for bearing with me.
Best,
Mark
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