Sunday, December 9, 2012

A Coaccession Enthusiast's View

Mark White reconceives  Laura Berman's column
"Theorist suggests DIA riches will fix city"
original posted at Detroit News, DECEMBER 4, 2012 AT 10:10 AM
reconception posted blogspot.com, DECEMBER 9, 2012 AT 11:59 PM

Do the riches of the Detroit Institute of Arts make the city solvent?  Would putting them to work save them from risk?

These crucial questions — which defy conventional rules of museum practice and ethics, but might nonetheless help Detroit's renewal — animate many of Mark White's waking moments.

White, a finance Ph.D., thinks originally and profoundly about  museum finance.  A theorist and inventor, he recognizes that starting up his novel methods will take iconic artworks at a willing major art museum.

For the last year, he has been a fixture on blogs and discussion boards here as he tries to raise awareness around how to solve Detroit's fiscal crisis and protect DIA artworks with his masterpiece idea:  Put the capital riches locked in iconic works of art to work by selling shares in the artwork's appreciation to individual investors, while the major museum keeps rights to the display and physical custody of the works.

He calls this Coaccession, and he's devoted so much effort to Detroit because the many, many billions of dollars in its DIA can fix the City's finances, and by doing so save its DIA collection from default and dispersal. "The DIA is the only museum with the complete package," he told me.

He lives in Evanston, Ill., and has schooled himself remotely on the institute and its relationship to Detroit's misfortune. He's contacted Detroit officials, drawn up documents, consulted lawyers and answered objections.  What he hasn't done is sell his concept to Detroit yet.

White gained museum experience as a board member of the Evanston History Center, but it's far too small to bring Coaccession to fruition, and he can't afford the bigger boards around Chicago.  Eden Pearlman, the museum's executive director, says the EHC has no iconic artworks to make all the lawyers, accountants, appraisers, curators, etc., affordable as they work to start Coaccession with White's guidance.

Still, she recognizes a certain visionary gleam. "I do think there's something there," she says. "This may be one of those ideas where later we all wonder why we were so set against it."

She's talking about the opposition to even to talking about this idea, which runs deep among museum people because museums want to be like churches: Aspiring to higher values than material ones. Unfortunately, this leaves many churches and museums sitting atop vast idle wealth while they're surrounded by unmet needs.  White is the skunk at the garden party when he points this out.

White thinks a city with this kind of wealth will have to put it to work, unlike a church or a museum.  A city's first obligation is to its residents, not its art collections and gold fixtures.  Thus, his interest in the city of Detroit and the DIA.

And as Detroit lurches toward bankruptcy, his questions, which once seemed wildly inappropriate, are merely provocative. Can the city declare itself insolvent if it owns billions of dollars of art? The vast majority of the DIA's collection is city property, much of it purchased with city funds in the 1920s.

Imagine city residents faced with eliminating police service and firehouses, while city leaders insist on protecting Detroit's museum collection instead of its residents, acting as if an unbreachable wall seals residents off from using the many, many billions of dollars the city keeps invested in its DIA Van Goghs, Renoirs and Rembrandts.

No such wall exists, so White expects city leaders will eventually use those Detroit financial resources invested in artworks -- Bing's Billions, he's called them -- to pay for priority services.  But rather than selling Detroit's artworks to collectors and museums around the world, White wants Detroit to sell investments in DIA artworks hanging on DIA walls.  He says Detroit should have its Monet and money too.

Bankruptcy lawyers and museum officials will tell you nobody knows what might happen, or what might be possible, if the City of Detroit defaults on debt obligations. DIA spokeswoman Pam Marcil says, "Those are uncharted waters. It's all speculative." The museum's code of ethics, absolutely prohibiting it from selling art to raise funds, has no force of law. Its 20-year-contract with the city expires in 2018, letting Detroit sell art for cash now with delivery then, or Coaccession art for cash now and keep it on DIA walls.

White wants to move Detroit's discussion beyond museum morality and emotion to municipal morality and emotion.  There, lives have to come before art, so Detroit must put its financial resources to work.  Fortunately, White knows that saving Detroit lives doesn't mean losing Detroit art.

He notes that Detroit takes a chance either way.  Innovators, he points out, are frequently wrong  After years of working with experts, seeing others developing innovations with similar goals, and then seeing artwork shares actually start trading, he said in a telephone call, "I could be a crackpot, but I think I'm a genius."  Detroit should hope he's right.

Coaccession@gmail.com

Saturday, December 8, 2012

A Municipal Ethicist's Point of View

Mark White's rewrite of Laura Berman's 
"Theorist suggests DIA riches will fix city" 
original from Detroit News, DECEMBER 4, 2012 AT 10:10 AM
rewrite on blogspot.com, DECEMBER 8, 2012 AT 10:15 PM


If the city defaults, could the riches at the Detroit Institute of Arts be at risk?

Bankruptcy lawyers and DIA officials will tell you nobody knows what might happen, or what might be possible, if the City of Detroit defaults on debt obligations. DIA spokeswoman Pam Marcil says, "Those are uncharted waters. It's all speculative." The museum's code of ethics absolutely prohibits the DIA itself from selling art to raise funds, but it's the city's art, not the DIA's art.  The museum interprets its 20-year-contract with the city to preclude city sales of art or alternative agreements or arrangements, but a municipal default hasn't tested this contract, which expires in 2018.

This question — could the riches at the Detroit Institute of Arts indeed be at risk? — animates many of Mark White's waking moments.

White, who has a Ph.D. in finance, is an iconoclast of museum finance: a theorist who wants to overturn traditions, innovating with a willing arts institution.

For the last year, he has been a fixture on blogs and discussion boards here as he tries to create awareness around the risks to Detroit's DIA art collection.  His alternative to save the art?  Put the capital riches created by iconic works of art to work for Detroit, raising billions of dollars by selling shares in DIA artworks to individual investors, while letting the city keep rights to the display and physical custody of the works.

He calls this Coaccession, and he's gotten hard pushback on it. "What I haven't found is a museum executive director willing to sign on," he told me.  "They recognize it transforms their finances, but they can't get past museum 'ethics.'"

White, who lives in Evanston, Ill., focuses on the DIA's relationship to Detroit's misfortune because he thinks municipal ethics should guide Detroit arts policy.  To put Detroit's artworks to work, he's researched various alternatives and drawn up documents, consulted lawyers and other experts, and answered objections to his own Coaccession method.

White is a board member of the Evanston History Center, where he's been learning more about museum collections and policies.  Coaccession is on hold there.  Eden Pearlman, the museum's executive director, says she worries about a potential conflict of interest and the museum isn't in dire financial straits.

But she recognizes a certain visionary gleam. "I do think there's something there," she says. "This may be one of those ideas where later we all wonder why we were so set against it."

Museum opposition even to talking about this idea runs deep, because museums claim to be like churches: They aspire to higher values than material ones. In an age when everything from warehouse receipts to orange juice has become a commodity, art museums claim to offer a sense of refuge.  Like so many churches in Detroit, though, museums may have to innovate to keep everything together.  Many have failed.

What White needs to prove his concept is a museum that faces higher risks from standing pat with its traditions than from developing the art finance innovation that White's research has designed. Thus, his interest in the city of Detroit and the DIA.

And as Detroit lurches toward bankruptcy, his question, which once seemed wildly inappropriate, is merely provocative. Can the city declare itself insolvent if it owns billions of dollars of art? The vast majority of the DIA's collection is city property, much of it purchased with city funds in the 1920s, and vastly appreciated since.

Imagine city residents faced with eliminated pensions and slashed police service, while city leaders and DIA officials act as if an unbreachable wall seals those residents off from the vast city resources -- billions and billions of dollars -- invested in the Van Goghs, Renoirs and Rembrandts that hang on DIA walls .

No such wall exists.  Municipal codes of ethics absolutely let cities sell art to raise funds.  The DIA's 20-year-contract with the city can be interpreted to let the city sell art today for delivery in 2018, or to use Coaccession -- which wasn't even a gleam in anyone's eye in 1998 -- to put Detroit's artworks to work now.

White wants to move the discussion beyond just the morality and emotion of museum ethics, and start talking about the morality and emotion of raising funds for municipal priorities like avoiding default and funding public safety.

White admits that Detroit takes a chance if it innovates.  Innovators, he points out, are frequently wrong. "I could be a crackpot," he said.  Musing on the telephone about all the experts he's consulted, the markets he's studied and the many risks Detroit faces from just standing pat, he continues: "But I think I'm a genius."

Coaccession@gmail.com

Thursday, December 6, 2012

An extended response to Laura Berman

Laura Berman took a certain tone and posture in her column. Here's my extended dissection:

Detroit News
December 4, 2012 at 10:10 am
Laura Berman  
Theorist suggests DIA riches will fix city  

Indeed!

If the city becomes insolvent, could the riches of the Detroit Institute of Arts be at risk?

The riches of the Detroit Institute of Arts make the city solvent, but a solvent debtor's default poses its own risks. Those same riches, though, can fix the City's finances.

This taboo question — which defies all conventional rules of museum practice and ethics — animates many of Mark White's waking moments.  

Primarily because this not-taboo question — which defies no conventional rules of municipal practice and ethics — drives Detroit's finances, and I'm convinced my research can turn Detroit finances in a better direction.

White, who has a Ph.D. in economics, is the Dr. Frankenstein of museum finance: a theorist who wants to perform his first experiment on a willing arts institution.  

"... Dr. Frankenstein of museum finance?" Nice touch, that. "A theorist who wants to perform his first experiment on a willing arts institution?" A bit more neutral. But what about a Detroit default experiment? Have we lost sight of other experiments so quickly? How about context?

For the last three years, he has been a fixture on blogs and discussion boards as he tries to create enthusiasm around his mad scientist idea: Free the capital riches locked in iconic works of art by selling shares in artworks to individual investors, while allowing the museum to keep rights to the display and physical custody of the works.  

"Create enthusiasm?" How about inform an unknowing public? "Mad scientist idea?" Another nice touch! "Free the capital riches locked in iconic works of art?" Well, I say put artworks to work for the public, so bad, but not too bad.  "Selling shares in artworks to individual investors, while allowing the museum to keep rights to the display and physical custody of the works." Finally, something we agree on!

He calls this "coaccession," and he's gotten little respect for it. "What I haven't found is a museum executive director willing to sign on," he told me.  

"He's gotten little respect for it?" From museum executive directors, no, but then, the museum crowd has some strange ethics -- for them, growing their collection's financial value trumps everything, including, in Detroit, public safety funding.  It's that trump that make them generally unwilling to sign on. I explained that context, but context didn't make it into this atypically-short column. Space problems?

Although he lives in Evanston, Ill., and has never been inside the DIA, White has schooled himself on the institute and its relationship to Detroit's misfortune. He's drawn up documents, consulted lawyers and answered objections.  

"Has never been inside the DIA?" So? Should I then not school myself on the institute and its relationship to Detroit's misfortune?

White is a board member of the Evanston History Center, where "coaccession" has been rejected. Eden Pearlman, the museum's executive director, says the museum would have a conflict of interest and isn't in dire financial straits.  

"Coaccession has been rejected?" News to me. I thought Eden Pearlman had it on hold until the right moment.

But she recognizes a certain visionary gleam. "I do think there's something there," she says. "This may be one of those ideas where later we all wonder why we were so set against it."

 If "later we all wonder why we were so set against it," it might be because language like "Dr. Frankenstein" and "mad scientist" introduced it to us...

Opposition even to talking about this idea runs deep, because museums are like churches: They aspire to higher values than material ones. In an age when everything from warehouse receipts to orange juice has become a commodity, art museums offer a sense of refuge.

"Opposition even to talking about this idea runs deep." There we can agree!! "Museums are like churches: They aspire to higher values than material ones." Yes, but it's Detroit's art, not the DIA Founders Society's art. Detroit aspires to help its people stay safe and healthy... or is supposed to. "In an age when everything from warehouse receipts to orange juice has become a commodity, art museums offer a sense of refuge." In an age when every Detroiter runs a risk of mugging and murder, growing the investment in an art museum's collection as fast as possible -- which has absolutely nothing to do with it offering a sense of refuge to the public -- shouldn't necessarily be an overriding priority.

What White needs to prove his point is a truly desperate or unusually risk-friendly patient for this first highly experimental operation. Thus, his interest in the city of Detroit and the DIA.  

Well, yes. Stumbling toward financial meltdown, Detroit can run my experiment, or it can keep running the DIA Founders' experiment. So far, the DIA Founders haven't even tried justifying their "ethical" policy preference of keeping many, many billions of Detroit dollars invested in assets that generate no cash. Capital appreciation may be fine for museum ethics, but Detroit has bills to pay... or else! 

And as Detroit lurches toward bankruptcy, his questions, which once seemed wildly inappropriate, are merely provocative. Can the city declare itself insolvent if it owns billions of dollars of art? The vast majority of the DIA's collection is city property, much of it purchased with city funds in the 1920s.  

"His questions, which once seemed wildly inappropriate?" For a museum, sure, but not for a City that owns a museum!  Detroit should have always thought practically about both the market value and cultural value of its artworks.

Imagine if city residents are faced with eliminating pensions or police service, while acting as if an unbreachable wall safely seals off the DIA's Van Goghs, Renoirs and Rembrandts.  

Who's acting? City residents? No, they'd rather keep pensions and police service, especially if funding those innovatively can also keep DIA artworks safer. It's City leaders and DIA Founders who act like there's no connection between artworks and City finances!

Alas, no such wall exists.

"Alas?" For whom? City residents want police service and artworks on DIA walls. City leaders and DIA Founders want to endlessly grow the capital Detroit invests in its museum collection. Coaccession lets DIA artworks hanging on DIA walls earn funding for police service. True, the financial value invested the collection would grow more slowly then, or perhaps not at all, but residents would have city services plus access to artworks, so they would certainly be better off.

Bankruptcy lawyers and museum officials will tell you nobody knows what might happen, or what might be possible, if the City of Detroit defaults on debt obligations. DIA spokeswoman Pam Marcil says, "Those are uncharted waters. It's all speculative." But the museum's code of ethics absolutely prohibits it from selling art to raise funds. Its 30-year-contract with the city has also been interpreted to preclude selling art or entering into a "coaccession" agreement.  

"Those are uncharted waters. It's all speculative." That comes from a group with fiduciary duties to avoid uncharted waters and speculation. Given this uncertainty, maybe making the museum's code of ethics yield to the municipal code of ethics is a better course. The City's 20-year-contract (not 30) with the DIA Founders need not preclude Coaccession agreements if both sides agree to amend it for the good of Detroit's residents... and its art collection too!

White wants to move the discussion beyond morality and emotion.  

I want the discussion to contrast the morality and emotion of growing the City's artworks investment as fast as possible with the morality and emotion of helping fund public safety. 

Innovators, he points out, are frequently wrong. "I could be a crackpot," he said, in a telephone call. "But I think I'm a genius."

Innovators are indeed frequently wrong, and I could indeed be a crackpot, but years of vetting my method with experts in many different fields -- precisely to find out if I'm a crackpot -- have led me to think I'm a genius... or at least to think I had an ingenious inspiration. I guess there just wasn't space for that context.
 

Wednesday, December 5, 2012

Pixels in Detroit!

Laura Berman's Coaccession column beautifully captures the museum crowd's reaction to art finance innovation, but then, to the museum crowd, growing an art collection's financial value trumps public safety. The column's important point was the Pam Marcil quote. The DIA Founders Society board has a fiduciary duty to fulfill, and where's their plan for a Detroit default going? "Those are uncharted waters. It's all speculative." Well, that's a great plan. Who's got the more dangerous experiment, Coaccession or plain accession?