Coaccession

Serve the stuff or the people?

2011-12-04T20:37:00.004-06:00

In response to Rainey Tisdale's question, Do History Museums Still Need Objects?, David Crosson asks “Are we here to serve the stuff or the people?”

My comment was this:

The City of Detroit owns the Detroit Institute of Arts. The DIA collection has many, many billions of dollars of financial value as well as priceless cultural value. Given Detroit's fiscal crisis, would the people choose to keep the DIA collection intact and give up essential municipal services, or would they cut the DIA collection (10%? 20%? 80%? 90%?) and use the funds to maintain services and jumpstart a recovery? That would be a very stark choice if those were indeed the only options. Fortunately, Detroit can have its Monet and money, too, with Coaccession:

http://www.indiegogo.com/Artworks-supporting-the-arts

With the capital income that financial value could produce in an endowment, Detroit could fully fund the arts that created the value as well as the essential services that let Detroit residents stay near it.

“Being Part of the Solution in Detroit – Read All About It”

2011-11-17T16:46:00.003-06:00

A. Alfred Taubman is a retailing genius. He's also the president of Detroit's Arts Commission. Here's hoping he'll recognize a spark of genius in Coaccession, because if he and Detroit Mayor Dave Bing lead a movement to mobilize the financial value of Detroit's most valuable asset, they can generate the funding to capitalize on Detroit's opportunity for an arts-led renaissance.

If he reviews the comments submitted to his blog, and decides to learn more about this one:

The City of Detroit faces a fiscal emergency now. The Detroit Institute of Art’s collection has enough financial value to resolve the City’s current financial problems and still establish a very substantial endowment to support the arts and humanities. Detroit should mobilize that financial value as long as it can do so without compromising the collection’s cultural value. Coaccession offers Detroit the best tool for accomplishing that goal and funding programs to raise its people’s literacy, numeracy and artistry.

... perhaps you'll see Detroit's assets funding Detroit's renewal.

More than appreciation

2011-10-12T11:45:00.002-05:00

Critics at Flickr prompted me to offer a hypothetical example of Coaccession at work:

At the German Gymnasium at Kings Cross in London during the London Street Photography Festival, the Vivian Maier Museum shows up with negatives that are usually in storage. A couple shows up with a baby in a pram. The VMM would like to run more programs, but all it has are negatives, and all they generate is capital appreciation. The couple would like to send the baby to a street photography course in 16 years, and while they have investments that will finance the course, each year they have to pay taxes on their investments' dividends and interest income before they reinvest it to keep saving for the course. So, the VMM Coaccessions℠ a negative to the couple. They cash out the investments and buy possession of the negative, subject to VMM's cultural rights. VMM invests the cash and uses the dividends and interest to finance programs. In five years, the winner of the VMM outsider curator contest wants the negative to make a print -- financed by dividends and interest the negative's financial value produced -- for a show. The couple happily send in the negative, knowing the show will enhance its provenance, letting their first-grader attend a better course in eleven years. The print made, VMM returns the negative to the couple. The time arrives for the baby's course, the couple sell their conditional possession to a fellow saving for retirement, and baby, thanks to all the capital appreciation, learns street photography at VMM. And it all started at the German Gymnasium at Kings Cross in London during the London Street Photography Festival.

As I asked the critics then, would that be so bad?

The Authenticity Business

2011-09-04T13:02:00.003-05:00

At the American Association of Museums LinkedIn group, a question, "What is the 'business' of museums," prompted me to answer "authenticity" in my usual roundabout way, which managed to discuss how authenticity creates the value to fund authenticity. As usual, I pointed out how museums capture little of the financial value that their authenticity creates, and thus lack the funding to fully develop the culture value in their authentic collections.

Given how some folks in the museum community may view Coaccession, I adopted a "Sympathy for the Devil" theme:

Please allow me to introduce myself, I'm a man who studies wealth and taste…

Learning that archaeologists wanted to ban private antiquities collections, it occurred to me that archaeologists could protect antiquities better by collaborating with collectors than by fighting with them. After all, many museums where many archaeologists ply their trade were started by or inspired by or added to by private collectors, so there had to be some cooperative potential there. The natural division of labor is archaeologists studying antiquities and collectors possessing them. If archaeologists simply let collectors store antiquities when archaeologists weren't using them, then both sides could be happy. But wait, there's more.

As well as their cultural value, antiquities have financial value. Museums earn tremendous capital appreciation on that financial value year in and year out. The way museums manage collections today, though, that financial appreciation is completely idle -- huge sums that can't employ a curator, pay a bill or earn a penny in interest or dividends. But if museums shared ownership with collectors, the money collectors paid to own storage rights to collection objects could hire curators, pay bills and earn interest and dividends. With museum endowments incorporating the financial value of collections, collectors would earn the capital appreciation instead of museums, but since museums don't use capital appreciation anyway, they're not out any cash. Financially, it's a perfect win-win. Museums get capital income they need, collectors get capital appreciation they can use.

Where does all this value come from? Well, you know the entertainment business loves authenticity. They may love a great story even more -- fiction sells great stories that lack the extra added advantage of being true -- but nonfiction can sell even so-so stories thanks to that frisson of authenticity. When Hollywood finds true stories that are great stories, bidding wars result and values go through the roof. Museums own authenticity. It's a great cultural advantage, and enough of a financial advantage to keep many of them going, despite policies that leave that financial advantage mostly idle.

Curators can and do find great stories amidst the collection's authenticity. Look at the history of forgeries. Some forgers have attracted so much attention for their colorful histories that private collectors and museums are assembling collections of their work -- authentic fakes that are much more valuable, culturally and financially, than forgeries by colorless characters. Curators research and validate cultural value, and it's cultural value that gives objects financial value. Two identical pens from the same manufacturer have completely different values, cultural and financial, if one belonged to a beloved author or politician and the other has an undistinguished provenance. Museums are not only cultural value storehouses, they are cultural value factories where curators mine authentic collections, assembling connections that inform and delight. Add funding for curators with flair and you get added value, cultural and financial.

When museums start mobilizing their capital appreciation by channeling it into their communities, the capital income that their communities return can help employ the curators that run the factories that mine added cultural value from authentic stored objects. As long as that capital appreciation remains idle, though, museums will underperform their potential. Realizing that, I fine-tuned my archaeological thoughts into a patent-pending business method -- Coaccession -- that divides ownership's bundle of rights so that museums can own the cultural rights they need for exhibition, research, conservation and so forth, while collectors own possession of the shared object only when the museum would otherwise store it.

In essence, Coaccession's Cultural Titles let museums own exhibition while its Collector Titles let collectors own storage. Storage gives the collector capital appreciation the museum can't use while the museum retains cultural appreciation that it can use.

Now, some curators will say I'm asking sympathy for the devil here -- letting collectors store objects??? EEK!!! Before letting anyone demonize Coaccession, though, I would ask for a quick reality check. In principle museums do indeed provide the best storage possible for culturally-authentic objects. Lacking principal in their endowments, though, they find they can't employ enough conservators to keep ahead of time's ravages in those compromised storage conditions that they can afford. Coaccession opens a path to a better, I believe, compromise than the existing one. In the new compromise, collectors care for the robust objects in storage while the capital income they add to endowment funding lets museums care better for the fragile objects in storage.

Mark Wahlhimer did start a really great thread here. Erika Keissner's comment has already hit authenticity squarely on the head when she writes that "The public trusts and relies on museums in a way that they do not rely on hotels and amusement parks," and Tim Walker's right about adding value when he writes about museums with "the ability to actively connect things together, to act as an intelligent fulcrum, hub, centre of consciousness or community energy…" I think Herman Mays misses the mark, though, when he says market forces won't support scholarship. Museums haven't even begun to plumb how to fully capture the financial value that scholarship adds to authenticity, so it's way too early to deny museums access to the enormously powerful forces of the market. Supporting the cultural ideals that Herman and Douglas Worts and so many others rightly espouse while securing the collections as Michelle Moon and others rightly emphasize in the difficult and rapidly changing economic context that Daniel Spock and others properly highlight requires new thinking. I see needed financial resources already existing in the unheralded and unrealized capital appreciation that museum collections produce year after year. I offer a method to tap them while keeping collections together and hope the museum community can find the will to mobilize those resources to support its many, varied and vital missions.

In sum, as a finance PhD looking at museums from the outside, I'd say museums' business is authenticity, not hospitality. Museums can't tell just any story like the entertainment business can, but they can tell authentic stories and the public values authenticity. If your story's authentic, the public will cut you quite a bit of slack about its greatness. If you can offer the public a great, authentic story, you'll have tremendous demand not only for your exhibitions, but for rights to store your collection, too. Just imagine… people paying you for the right to store your collection for you! If there's anything like folks paying Tom Sawyer to whitewash his fence, I'd say that's it, yet I'd also say it's a great opportunity museums can offer that folks will value both culturally and financially. And hey, Mark Wahlhimer, offering great opportunities is not exactly inhospitable!

There are those who will worry, of course, that mobilizing the enormous wealth in museum collections will tend to corrupt curators' taste, shifting their focus from cultural value to financial value. I think, rather, that curators will realize that they best serve the financial value that ultimately supports the museum by focusing on the cultural value that underpins its authenticity, but I suspect that won't keep those worriers from reminding the museum community that the greatest trick the Devil ever pulled was convincing the world he didn't exist.

Pleased to meet you, hope you bless my name…

Artworks supporting the arts

2011-01-05T23:12:00.008-06:00

Jack Reznicki, reflecting on Vivian Maier's life and passing, wrote "The compelling issue for me with all this is why some truly talented photographers can’t make a living with their photography and are respected and revered after their passing. Why is there not a support system and economy for such work? This case of Vivian Maier is very reminiscent of Eugene Atget and how photographer Berenice Abbott made the world aware of his wondrous and marvelous images of Paris, after he was gone. John Maloof is playing Berenice Abbott to Vivian Maier’s Eugene Atget." The support system for artists, such as it is, consists of artists, schools, dealers, auctions, collectors and museums. Everyone at every level tries to identify and support talent, but they all face strong limitations as to what they can offer. The reason those limits are so strong is the gross financial mismanagement at art museums. They idly hoard tens of trillions of dollars worth of financial value that could produce hundreds of billions of dollars a year in endowment income that could pay for far more curators, exhibits, teachers, studios and additions to their collections. With that funding, the arts economy could far more comprehensively identify and support talent, enriching artists' lives financially and the public culturally.

It's hard to blame museums, though. It's more the fault of finance and legal experts who've never given museums managements tools that can mobilize that financial value without diminishing the public domain. But then, it's even hard to blame them. I'm aware of two methods that have emerged to mobilize the vast idle endowments at museums: James Maroney's tenancy-in-common plan and my own Coaccession℠. I stumbled across Coaccession trying to find a way to keep archaeologists from picking fights with collectors, and only later figured it was a financial management tool too (and I'm a finance PhD!). So, James Maroney is the only person I know of who consciously looked for a way that a museum (the Barnes Foundation) could use the financial value of its artworks to enlarge its cash endowment, and his method still involves the incentive incompatibility of putting the artwork in a private investor's hands for only the life of the investor. It took sheer good luck to come up with my incentive compatible method, just as it took good luck for John Maloof to find Vivian Maier. But then, life is often that way... progressing in fits and starts from random connections. Here's hoping at least that discoveries lead to progress, onward and upward, rather than one step forward and another step back. With the financial value of artworks supporting the cultural value of the arts, the arts economy's aesthetic explorations can be both broader and deeper. That would be better for humanity than investing much of our money to dig gold up out of the ground only to bury it again in vaults and caches.

Have your Stills and ... ... sour-mash(???) too

2010-12-14T00:51:00.006-06:00

Dean Sobel, director of Denver's Clyfford Still Museum, says there can't be a deaccession if there's no accession first. As Kyle MacMillan reports, Still's widow Patricia had previously sold a handful of the 400 works Still had left to her personally (separate from 2,000 other works he had left to create a museum of his ouvre), and since those works she owned personally and also left to Denver haven't been formally accessioned into the nascent museum's collection, Denver figures it has an ethical opportunity to sell another handful to create an endowment... or at least a not unethical opportunity. Kyle calls its ethicality a technicality on AAM/AAMD strictures, and reports that Janet Marstine agrees it's a loophole that nonetheless passes muster, both for the transparency of the sale and the intention to keep the works together in the public domain by selling them as a group to a museum. Judith Dobrzynski is for the sale, and Sergio Munoz Sarmiento isn't against it, and Donn Zaretsky wouldn't be either, if he got around to commenting on it.

That leaves me as odd man out, or perhaps James Maroney and me as odd men out. As I commented at JD's blog:

As long as Denver has decided to sell, it makes far more sense for them to sell partial titles than full titles. James Maroney's tenancy-in-common plan would get the four works back at the demise of their life estate purchasers (this would be problematic if corporations or other perpetual institutions bought them, of course), while my own equitable servitude Coaccession℠ method would let Denver get them back whenever the Still Museum had an exhibition, a research or conservation project, or some other active cultural use. In the meantime, the partial title buyers could enjoy the paintings whenever they would otherwise be in storage at the Still. If other museums bought them, instead of private parties, the paintings might always be on display or in active cultural use, either at the Still or at the other museum. Actually, artists like Clyfford Still who want to keep their ouvre together could do that culturally with Coaccession, rather than having to keep full title to every painting. His widow might have felt much better about her actions if she'd kept the ouvre intact by retaining Cultural Titles℠ to those works, selling off only the conditional possession of Collector Titles℠.

Coaccession makes far more sense than deaccession, and that's true even when the artwork in question hasn't technically been accessioned. Museums that need current income can let collectors have future capital gains on Collector Titles while still maintaining cultural control with Cultural Titles. They don't need to give up all rights to the artwork.

Have your Picasso and peonies, too...

2010-12-12T01:13:00.010-06:00

The Huntington Library, Art Collection and Botanical Gardens surely* wanted to bring Frances Brody's Picasso, “Nude, Green Leaves and Bust,” into the public domain at their own institution. Francie, a board member, had other ideas. Her greatest love at the Huntington was for the gardens, and she wanted especially to endow their care. Gifting the Picasso to the Huntington would leave the painting's $106.5 million dollar value stranded, contributing art appreciation and capital appreciation to that institution's art collection, but not a penny of income to support its gardens. To cultivate income, her estate sold the Picasso to an anonymous buyer on the open market and gifted the cash to the Huntington. So no Picasso for the public to ponder, but plenty of pesetas for peonies, posies, pansies and petunias.

Poor Frances apparently knew nothing about Coaccession℠, which would have let the Picasso join the Huntington's art collection while also providing cash income dedicated (ostensibly, at least**) to the gardens. Sharing wisely allows many mutual benefits, while an institution's solipsistic greed can isolate and diminish it. Here's hoping the Huntington and other institutions ready better plans for expanding the public domain when similar opportunities arise again.

*Marion Maneker does question: "So which would the Huntington rather have had: the art or the money?"

** Jori Finkel does report Huntington president Steven Koblick saying that "using the Brody money for botanical purposes frees up existing funds to address other needs..." Diligent donors don't forget fungibility!

How to get art out of the basement...

2010-08-19T16:23:00.003-05:00

Paul Klein was good enough to point me to Maria Mazria Katz's Art Newspaper coverage of Eli Broad's talk at the annual meeting of the American Association of Museums. Broad's call to get art out of the basement prompted me to comment there:

Broad's right, of course, that museums should exhibit more. The problem is money. Tight public budgets can't get art out of basements -- they already threaten art in education. To reverse the trend toward layoffs downsizing exhibitions and outreach, artworks will have to support the arts. Their financial value in museums is the one realistically available fortune big enough to get art out of basements. Avoiding cultural depletion from deaccession requires new thinking, though. Coaccession™ preserves museums' cultural endowments while creating financial ones. Museums keep the property rights with an artwork's cultural value while selling the right with most of its financial value. This turns capital gains that can't pay for exhibits into stock and bond income that can, so a museum can have its Monet and money, too. Coaccession can start getting art out of the basement now while expanding art in the public domain rather than shrinking it.

Cameron Henderson was perceptive enough to call that a great post. We're both hoping Eli Broad will lead the way toward artworks supporting the arts by Coaccessioning his art collection so its own financial value provides a financial endowment to help maximize its cultural value through expanded exhibitions and outreach.

Needless Pressure on Arts Funding

2010-05-04T12:44:00.005-05:00

The Kennedy Center's Michael Kaiser responded early to the Great Recession, organizing a website and team that puts desperate arts organizations together with better-positioned mentors in a noble effort to keep more arts organizations alive through this very rough patch. His recent Huffington Post note tells how that's been going. Basically, funders have been quite exigent, demanding impeccable arts management performance that at-risk arts companies simply can't provide, even with mentoring. Arts organizations have been going down, and will keep going down unless something fundamental changes.

Kaiser points to arts management skills. This makes sense if you take funders at their word that impeccable arts management would get them to open their wallets. If that's just a pretext to deflect attention from the economic pressures funders face, though, all the arts management training in the world won't save a lot of these performing companies. What would save them is a substantial increase in available funds, and as my comment to Kaiser's note points out, art museums have the financial wherewithal to generously fund the arts embedded in their permanent collections. Deaccessioning or leasing from those collections to generate liquidity would be a mistake, though, now that Coaccession offers a better alternative that lets a museum have its Monet and money, too.

It's time for artworks to support the arts!

Don't deaccession, Coaccession(tm)!

2010-04-09T09:30:00.004-05:00

Northwestern Art Review publisher Cam Henderson shows through his writings his interest in, among other things, art markets and artists rights, so I reached out to him about Coaccession's role in those areas. That led to an interview over coffee, which led to his NAR post:

Don’t Deaccession, Coaccession™: The Need for a Radical Transformation of the Economic Management of America’s Fine Arts Institutions

Cam's youthful enthusiasm shows through quite clearly. I hope it will prove infectious so that artworks can finally start supporting the arts with all the munificence that their vast financial value can provide. Cam certainly seems committed to spreading the meme, and his efforts could be key to converting the views of some powers that be.

Tightening the bonds?

2010-04-02T21:57:00.003-05:00

Art 21 Blog published my comments on Maxwell Anderson's deaccession principles:

Whether today’s curators should be bound by past curators' decisions is debatable (legislators aren’t), but it seems beyond debate that today’s curators should use Coaccession(tm) to care better for an expanded collection.

Coaccession can let museums reduce deaccessions by reducing financial reasons to have "Items for which the Museum is not able to provide proper storage or care." Cultural Titles(tm) can be forever practically, even if circumstances make undivided titles impractical.

Mobilizing Coaccession

2010-02-23T11:31:00.004-06:00

Chicago Art Magazine just published my note on Coaccession applications:

http://chicagoartmagazine.com/2010/02/mobilizing-coaccessiontm/

My thanks to publisher Kathryn Born and editor Sara Burrows for their interest, encouragement and support. The exercise of preparing the note was quite useful, and I hope for feedback that fine tunes the applications.

Which Moral Hazard?

2010-02-15T22:39:00.004-06:00

Donn Zaretsky and Michael Rushton went around the block on moral hazards in museum management. Rushton concluded: "In the end ... I appreciate DZ's point that we just are not yet in a position to say with accuracy whether the costs of the moral hazard I worry about [of a safety net promoting lax management] exceed the benefits from flexible access to funds through deaccessioning in times of crisis. But I will maintain the cost is there, even if, under new, relaxed norms governing deaccessions, the costs would not immediately be apparent. Should we change those norms because of a one-time shock to endowments as a result of the financial crisis?"

As my comment there notes (in my characteristically-orthogonal way), "Zaretsky's position [about benefits of flexible access] brings up a more basic question that the moral hazard discussion tends to obscure: shouldn't museums use all their assets to best fulfill their mission? By mobilizing the financial value in their collections, museums can implement programs that increase the cultural value of those same collections -- more exhibitions, research, conservation and engagement.

"This mobilization seems all the more compelling if it doesn't require deaccessions. Partial title sales approaches, like James Maroney's tenancy in common method or my own Coaccession(tm) equitable servitudes system, let museums have their Monet and money, too, so artworks can support the arts without leaving the public domain.

"If museums can let their communities hold their collections' financial value while retaining control over those collections' cultural rights, then maximizing the collections' cultural value in the community seems like the right thing to do. In fact, doesn't fiduciary responsibility obligate the trustees and directors to do so? On what basis do they hold excess financial reserves in a passive form?

"This comment isn't meant to be absolutist about mobilizing finance to elevate culture. I just hope to show that there are other points of view and concerns beyond the moral hazard of deaccession. Museums don't have to deaccession if they use partial title sales. So, once we get past deaccession as a method, why not have your Monet and money, too?"

Briann Greenfield was great in responding to a comment not even on her own blog, willing to expand her range. I'd love to see Michael Rushton's response to my point, but now that nearly a month has passed, I fear it may be a long while, if ever. I still think it's a good point, which is why I share it here as well as there.

Keeping collections together in bankruptcy

2010-02-13T00:11:00.003-06:00

The New York Times and Bloomberg recently reported on a forthcoming Sotheby's auction offering the cream of Polaroid's photography collection. John R. Stoebner, court-appointed trustee for Polaroid, offered the complete collection to several museums, but none was able to purchase it. Well, it's a lot harder to buy the cultural rights along with possession than it is to buy the cultural rights alone.

The trustee should Coaccession the collection, not deaccession it. Museums could bid for the set of Cultural Titles to the entire collection, keeping the cultural rights together under a single owner, while individual collectors could bid for Collector Titles to individual photos.

Perhaps AD Coleman can persuade the interested parties to propose this to the trustee and Sotheby's. He seems better positioned to get their attention than anyone around here that I know.

UPDATE: The hat tip here goes to Donn Zaretsky, but kud0s go to Marion Maneker, who publishes comments about his posts. I'm glad they finally started catching me up on this.

DePaul tackles deaccession

2010-02-05T01:47:00.002-06:00

Time Out Chicago writes about deaccessioning controversies in the context of DePaul Art Museum's exhibit of artworks destined for collection-culling deaccession (hat tip to Donn Zaretsky).

My comment:

Museums should only deaccession to shape collections. Funding to avoid layoffs and program cuts -- or expand staff and programs -- can come from partial title sales with the Maroney Plan or my own Coaccession(tm) method. These let a museum have its Monet and money, too, so artworks can support the arts. Donors in fact finance care and exhibition via the financial value of donated artworks. Museums must mobilize that to maximize the cultural value of their artworks to their public supporters.

Thanks to Time Out Chicago for the 500 character limit. In the middle of the night, external discipline is useful, so the comment is better than it might have been.

What's More Ethical? II

2010-02-03T00:01:00.006-06:00

Over at the Connecticut Humanities Council, Briann Greenfield graciously responded to my comment on her review of Mark S. Gold's discussion of deaccession ethics. Briann said:

Mark: Thanks for your comments and for introducing me to "Coaccession." I have to admit that I don't understand the system you propose enough to fully evaluate it. But the idea raises fundamental concerns for me.

In a society in which individual ownership and private wealth is the rule, museums are important precisely because they stand in opposition to the private market place. Museums represent shared culture and a shared public trust. To function at their best, they need to be seen as community resources. Coaccession undermines museums' community role and transforms them into places where wealthy individuals have special rights and privileges over the collection. Museums have fought for decades to shed their image as temples for the elite and to become more inclusive. Isn’t this a step backward?

In addition, I'm concerned that selling "equitable servitudes" will affect the meaning of the objects in our collections. We want our visitors to value the art and objects in our care for what they can teach us about our culture and our history -- not for how much money they are worth. How will selling possession shares affect museum's collecting practices? Won't curators be influenced to acquire pieces for their profit potential rather than their educational potential?

I understand and appreciate Coaccession as an attempt to support the financial health of museums. We need to pay the bills and keep the doors open -- but we need to do so in a way that doesn't undermine our core values. (Posted on January 22, 2010 11:18 PM)

My reply follows:

Briann, your engagement on Coaccession is most welcome. This isn't the place for a tutorial on the system, but your fundamental concerns do deserve a response.

First, the private market place produces the wealth that let museums represent a shared culture and public trust. Coaccession would let museums thrive, putting on many more programs funded by their new endowments. Wealthy individuals would store the most valuable objects, but they're best able to secure and preserve them between exhibitions, research access, and conservation projects. Ordinary individuals could still store culturally-important objects, if not the most financially-valuable of them. This community storage is more inclusive, and a step in the right direction, especially with increased exhibitions and programs letting people see and appreciate the most valuable objects more frequently than when they're just sitting in the museum basement for lack of funds.

Second, cultural value determines financial value, not vice versa. Our visitors care most for the objects that teach most about our culture and history, and that desire raises their financial value. Selling possession via Collector Titles will let museums acquire cultural rights to far more of the art and objects that ought to be in the public domain, and will keep those objects in the community where people can appreciate them between those times when scholars and conservators need access and those other times when they're on display for the entire community to appreciate.

The financial health of museums lets them celebrate our core values more effectively. Genteel poverty or death with dignity should not be the fate of museums when the substantial financial resources in their collections can let them elevate culture more effectively. (Submitted, awaiting posting there. UPDATE: Posted)

Here's hoping Briann stays engaged in discussion.

The lllinois Arts Endowment

2010-01-28T13:34:00.005-06:00

Illinois State Representative Harry Osterman assembled and moderated an excellent panel for his State of the Arts Symposium yesterday at the Swedish American Museum Center in Chicago. The speakers joining Osterman were Ra Joy of Arts Alliance Illinois, Terry Scrogum of the Illinois Arts Council, and Michelle Bibbs and Eva Silverman of the Chicago Department of Cultural Affairs. The audience contributed to a lively questions and discussions session, which I led off by discussing Coaccession's potential to contribute a ray of sunshine amidst the dark clouds -- I hope I didn't sound as nervous* as I felt! The speakers ably illustrated the very challenging environment facing arts organizations, and had a number of useful responses, including more advocacy, networking, audience engagement and event promotion. The overall experience was quite valuable.

Particularly heartening for me were reactions to my discussion of Coaccession's potential to contribute to the cultural sector's response to its challenges. Osterman noted the cultural endowment at his son's school, while Joy said he'd like to discuss the endowment concept further. No one had a negative word to say. One of the participants even requested that I send along a couple of paragraphs giving the gist of my proposed Illinois Arts Endowment.

Here's hoping that Coaccession can indeed contribute substantially to the cultural sector's comprehensive response to the challenges in its changing circumstances. Fortunately, the cultural sector has historically created so much financial value to complement its cultural value that a successful adaptation should be a forgone conclusion. Crafting a creative response is within our abilities with leadership like that shown by Osterman, the panelists and the audience.

The lllinois Arts Endowment

The State of Illinois has invested in artworks for its buildings and landscapes through much of its history, establishing over the years a public art collection with tremendous cultural and financial value. Extending that history of wise arts investments is essential in these challenging fiscal times, as that strategy will continue to offer the great cultural and financial returns that it has in the past. Fortunately, Coaccession(tm) offers Illinois a way to mobilize its existing investment in artworks to support continuing arts investments.

By creating investment opportunities in the Illinois public art collection, Coaccession can let Illinois offer the public the same stable store of financial value that has benefited the State through its history, generating proceeds to establish a new pool of income-generating assets that can support continuing investments in artworks and in the cultural sector that enhances their cultural and financial value. Tapping the financial reserves embodied in artworks now can help Illinois extend its history of wise investments.

Coaccession: Artworks supporting the arts.

* when CAN-TV plays the tape, you can judge how nervous I sounded -- of course, only I know how nervous I was.

UPDATE 2/23/10: A good friend saw my discussion point on CAN-TV and thought I sounded fine.

Funding the arts and sciences

2010-01-25T10:00:00.002-06:00

Judith Dobrzynski reports on a Cincinnatti Fine Arts Fund study finding that people expect the arts to "succeed or fail in the marketplace, without the need for support." This and other findings explain why "people take little responsibility for financing them with public money." The Fine Arts Fund thinks that a better message can change public opinion and generate added money for the arts. But what if the public asks what the arts sector is doing to finance itself?

When even museum trustees tend to ask museum directors to sell artworks to support supposedly-vital museum programs, you can just imagine politicians' skepticism toward arts directors requesting more government funding in the face of the current public attitudes ably documented by the Fine Arts Fund. Perhaps a new message will indeed change those attitudes, but that bet's both risky and remote for arts and museum boards across America that now face nearly universal cutbacks and the prospect of rapidly rising closures.

In fact those programs truly are vital, but you can't blame the trustees and politicians for wondering a bit when the museums' professional associations insist that death with dignity is far preferable to deaccession and dishonor -- a point the need for Dobrzynski's arbitrated deaccessions plan illustrates.

So far FASB 116 and uncapitalized collections have mostly kept a lid on debates over existing government support for the arts, but if politicians and the public widely knew what trustees already know about all the money that's sat in basements for years without seeing the light of day, much less the enormous fortunes hanging on the walls, you might see some pretty strong sentiment for cutbacks. These days those appropriations might better head off hunger and disease than ennui and alienation.

Rather than hoping the right spin will increase the arts' share of declining public and private discretionary budgets, museum trustees and directors need to decide whether their programs and arts programs generally are worth saving right now with financial value held idle in their mortmain model. If a few deaccessions can make the difference between survival and death for a museum, mobilizing the collection's financial value more fully could fund a substantial increase in programs -- spending that could help the arts sector and the national economy.

If growing museum and arts programs now meant a lot of deaccessions, a survival diet would make more sense. But these days partial title systems like the Maroney plan and my own Coaccession method can let a museum have its Monet and money, too. Generations of philanthropists have endowed major art museums with some of the best financial investments of the past century, turning them into repositories of a significant share of the national wealth as well as its culture. Mobilizing that financial value in this cultural crisis doesn't risk our cultural heritage nearly as much as does leaving it idle while hoping, perhaps vainly, for better attitudes and better days.

Museum directors like the fundraising argument that exposure to the arts and sciences stimulates the innovation that enhances the nation's wealth and wellbeing. Why, then, doesn't the impetus for financial innovations that can strengthen our cultural legacy come from inside our museums? Artworks can support the arts, so why do the arts lack support? Those allocating public moneys may ask.

Ye Olde Coaccession(tm) Shoppe

2010-01-24T23:10:00.002-06:00

If you think two titles are better than one, you can gear up at the Coaccession Shop -- open today at Cafe Press! Show the world you're pro-innovation.

New Models

2010-01-22T21:12:00.002-06:00

Marion Maneker points to an NPR story linking a couple of modern-day Barneses -- collectors who'd rather keep their collection together than gift it to a museum. Don Fisher and Eli Broad have both the money and the collections to endow new museums (or art schools, or whatever form they choose) , but they're departing from Barnes's approach by making long-term loans to existing museums rather than keeping their collections together at their own personally -- perhaps even idiosyncratically -- chosen venue.

How many masterpieces are major universal museums missing because their mortmain model doesn't let them mobilize the overwhelming strength of their collections' financial value to acquire these artworks when they're available? Partial title sales -- the Maroney Plan and Coaccession are the methods I know -- let a museum have its Monet and money, too. Once that financial strength ensure the existing collection's cultural value is maximized by museum operations -- exhibitions, research, conservation, administration, complemented by music, dance, theater and other arts in the venue -- there's nothing to stop museums from investing in more Monets at auction and turning around to raise more money with partial title sales. In fact, they could go to auction first and tend to operations later, if they're willing to let down public expectations of the kind of comprehensive experience a museum could and should offer.

Maybe existing museums will just let the new collectors' models supersede them. Coaccession is available to any incorporated collecting institution that's open to the public. With it, the financial value of the artworks (or antiquities or specimens or ...) creates the operating endowment to maximize their cultural value. Artworks can support the arts. It's a shame the arts are suffering now in the midst of the great plenty vouchsafed by prior generations of donors -- and held by current generations of prospective donors.

Insidious - Updated

2010-01-20T16:30:00.004-06:00

Michael O'Hare [has] noted FASB 116's ongoing advantages for large museums and disadvantages for small museums. [He's] also noted that it was the large museums that lobbied to institutionalize their own ongoing advantages. What [he hasn't] noted, as far as I've seen, is the special advantage large museums have when accumulated disadvantages finally take down small museums.

Existing "ethical" guidelines expect a failing museum to gift its permanent collection to a successful museum (aka "merge") so the successful museum can assure continued care for that permanent collection. The rich get richer, and the poor fall by the wayside, and it's all facilitated by the existing mortmain model with its uncapitalized collections and stranded values. Insidious indeed.

[Mark Gold, considering deaccession rules,] writes: "At the end of the day, the survival of the museum is really the best way to protect collections for the benefit of the public." True enough, but the unspoken corollary is that the death of the museum is the best way to aggregate collections for the benefit of insiders. And what do the profession's rules promote? Small dead museums!

There's no suggestion here that the AAMD grandees actually got together and said "Let's think up some rules that ensure we end up with all the art!" The rules arose more insidiously than that. On the other hand, though, the fact that the deaccession rules promote this outcome is unlikely to make big rich museums any less zealous in enforcing them. With this pressure, poor little museums will need to a strong constitution to stand up for their own best interests.

That's where Coaccession can help. When museum trustees take the entire institution into account, rather than just the permanent collection, they'll use the full value of the collection -- financial as well as cultural -- to create a thriving community of experts, investors, and visitors around the collection. Fully funded by investors, the experts perform the research, acquire the objects and mount the exhibitions that celebrate the permanent collection with visitors, increasing both its cultural and financial value, which rise together. With Coaccession, they can keep the entire collection together, even expand it, while mobilizing its financial value to strengthen the programs that celebrate it in a virtuous circle.

Poor little museums, resist the urge to merge. And don't deaccession, Coaccession. Strengthen your museum by using your collection's value fully, not partially, so you can thrive rather than just survive.

UPDATE: Mark Gold writes: I think that FASB 116 advantages ALL museums – both large and small, by not having to disclose the value of collections. I think it was a bigger issue for the larger museums, and that the ethical rule limiting the use of proceeds was, at least in part, a response to the FASB pressure and driven by the larger museums. I think the ethical rule disadvantages smaller museums over larger. But I don’t think FASB 116 does.

I had originally written "Mark Gold and Michael O'Hare have noted FASB 116's ongoing advantages for large museums and disadvantages for small museums." That projected Michael O'Hare's take, I believe, and my own on Mark Gold, making an unfair characterization of his position. Still, in our defense, to the extent that small museums don't capitalize their collections, they look weaker financially than they would if they did (and they are weaker financially to the extent they don't mobilize their collections' financial value). But in Mark's defense, FASB 116 doesn't prohibit capitalizing collections, it just lets museums choose not to. Almost all museums, large and small, now take that option explicitly, or implicitly by publishing a capitalization with no connection to current market values.

What's More Ethical?

2010-01-18T22:11:00.003-06:00

Mark Gold and Michael O'Hare seem to be on to something with FASB 116.

Apparently independently, they note that wealthy museums don't want the public to know just how much wealth they're holding -- or mindlessly hoarding, as O'Hare calls it. Mark Gold ties the "ethics" rules on deaccession to the efforts of large museums to avoid having their accountants capitalize their collections. O'Hare says the real ethical problem is letting museum managements get such minimal returns from the huge assets they're entrusted with. If accounting statements reflected the market values of collections, we'd expect more.

Responding to attorney Mark Gold's September 2009 AAM piece about the deaccession rule's history, "Nothing Ethical About It," history professor at Central Connecticut State University Briann Greenfield writes that "While museum professionals know that deaccessioning can play an important role in collection management, the public see museums as perpetual caregivers. If mismanaged, high profile sales can wreak havoc with the public trust and alienate donors, both past and future."

The public sees museums as places to visit and learn. It's the museum profession and museum donors that see them as perpetual caregivers. If you really want to wreak havoc with public trust, let museums start closing their doors. As far as donors go, they'll likely be happier if museums Coaccession rather than hoard or deaccession. Once they see their donation not only add to the museum culturally but financially too, they'll be that much more satisfied.

Here's my comment on Greenfield's post at the Connecticut Humanities Council's website:

Gold's point about extremely wealthy institutions hiding their assets so they can keep asking donors for more resources rather than face calls to share their existing vast fortunes with their communities is overdrawn, but the grain of truth in it suggests these institutions should consider alternative ways to mobilize those resources.

Financially-driven deaccessions make a museum choose between having its Monet or having money. Modern alternatives let a museum have its Money and money, too. James Maroney's plan uses tenancy in common, while my own uses equitable servitudes. Both let museums share their collections with collectors and investors in ways that ensure the museum always has ultimate control over the objects used to raise money.

Even with arts communities of all kinds suffering, our wealthiest institutions shouldn't just liquidate their collections to help avoid layoffs and shutdowns. But if these art museums can mobilize their collections' financial value without jeopardizing their cultural value, then it makes sense for artworks to support the arts.

Coaccession lets museums expand the public domain by increasing their financial ability to control cultural rights to objects, letting them hold vastly more objects in their collections while improving care for those objects, and exhibiting and researching them more. Because it lets objects leave the public domain, deaccession is a worse alternative. But the worst alternative of all is letting the museum shut down and scatter its collection to the four winds in a sale designed to satisfy creditors, which is just what is happening at the Fresno Metropolitan Museum of Art and Science, and what is likely to happen repeatedly across America unless museums modernize past the mortmain management model for collections.

A little sunlight on Coaccession

2010-01-15T16:26:00.004-06:00

Jack Siegel, Charity Governance Consultant extraordinaire, had some thoughts on Coaccession:

Mark White, who was in the lively [Artropolis] audience, proposed that museums think of creative ways to monetize the value of their collections. He is working on an idea rooted in the property-law notion that a piece of property is a bundle of sticks, with each stick representing a different right or attribute. Under one of his proposals, a museum would retain all but one of the rights associated with a work in its collection. It would sell the right to others to display the work in their homes when the museum is not displaying it or conserving it or a scholar/historian is not studying it.

[An eminently fair description of Cultural Titles and Collector Titles.]

As various panelists and audience members pointed out, there are some problems with this idea.

[Perhaps at first glance, but not after due reflection.]

For example, how does the museum assure that the buyer will care for the art and not display it in direct sunlight?

[The buyer owns the artwork too, and is no more likely to ruin it if the museum retains rights to it than if he owns it outright. Museums, of course, have to use Coaccession wisely, keeping very delicate works under their own direct care, and maintaining open communications with co-owners and insurers of their more robust works. And while the open communications might be a financial burden under the old mortmain model of collections management, under the Coaccession model, the artworks provide their own endowment for care and outreach, among other things.]

Equally important, there is more to a museum’s mission than just displaying work. The art must be available to scholars who want to study it.

[The museum has the right to access the artwork to exercise its retained rights, and those include scholarly research. The artworks will be available to scholars the museum approves, and of course co-owners should be eager to cooperate since publication adds to the artwork's provenance and hence its financial value. Even if a highly eccentric co-owner proves uncooperative, though, the museum has the legal tools to enforce its access.

This does bring up an important point, though. The existing mortmain model severely limits museums' financial capacity to fulfill their missions. In many cases they cannot even provide proper conservation, much less proper research and exhibitions, and public outreach. By using at least part of the financial endowment inherent in the artworks that they own, museums will have the capacity to fulfill much more of their mission much more adequately. ]

But there was a disturbing undercurrent in these specific concerns. The notion that a work of art could be divided into fractional interests was characterized as too dangerous, a slippery slope, and troubling. We understand the specific concerns, but museums have had not been troubled by the notion of fractional interests in works of art when it comes to devising tax schemes that entice donations of fractional interests in works to museums. The fractional interest structure has permitted museums to lockup donor commitments before minds can change. As the legislative history to the Pension Protection Act of 2006 points out, there were abuses of fractional gifts, abuses that involved collusion between donors and museums. Under the practices that evolved, donors retained possession of the art. The museums didn’t seem all that concerned about sunlight or broken water pipes in those instances.

[Absolutely, Jack!]

One audience member came to White’s defense, arguing that museums need to pursue creative solutions to their financial problems. Although White’s idea may need some tweaking,

[I'm eager for suggestions!!]

and may not even be viable,

[Precedents have indeed gone both ways for equitable servitudes on chattel, but Coaccession is definitely on the side of the favorable precedents.]

he is at least thinking creatively about how to finance aesthetic sensibilities.

[Like Jack Maroney, who also has a plan that lets museums have their Monet and money, too, so artworks support the arts.]

In essence, the audience member argued that the curators should show the same open-mindedness to finance that they demand of the public when it comes to art.

[Here, here. It's high time to start moving past the mortmain model of collections management!]

Jack's Coaccession comments are part of a great post on the 2009 Artropolis panel session, Museums on the Line: Cutbacks, Closures and Opportunities, which touched on many topics illustrated by the closure of the Rose Art Museum at Brandeis University. Read it all!

Comment on Andras Szanto RE Monetizing Core Assets

2010-01-13T13:16:00.004-06:00

Andras Szanto protests perhaps too much in the Art Newspaper when he contends that museums have "no latitude to monetise their core assets" in making ends meet. Museums must make ends meet, and Coaccession gives them the latitude to partner with investors and collectors in their core assets to do so. To wit:

Museums have more latitude to monetise their core assets than they may think. James Maroney has his tenancy in common plan and I have my equitable servitudes plan, both designed to let a museum have its Monet and money, too. By selling partial titles rather than full titles, museums keep full cultural control over their entire permanent collection, yet raise substantial funds from collectors and investors.

Since museums should only care about their permanent collection's cultural values, letting their communities hold the collections' financial values costs museums virtually nothing in mission terms. Yet operating and programming benefits of changing those financial values into stocks and bonds paying dividends and interest greatly elevates the cultural mission and insulates museums from financial worries.

Partial title sales should be one of the surprisingly reassuring responses prompted by this moment's circumstances.

Dr. Mark White

Coaccession - at - gmail.com

The Art Newspaper kindly gives commenters 1000 characters to make their point -- if they gave 1500, I would have done worse!

Coming out more

2010-01-11T17:17:00.003-06:00

Judith Dobrzynski's NYT op-ed prompted letters to the editor, which prompted continued discussion in the comments at RealClearArts, first at her original post and then in her response to the letters:

Here's my response to the letters at her original post:

Regarding James N. Woods's January 8, 2010 Letter to the NYT Editor on your Jan. 2 Op-Ed, he and I agree that you deserve thanks from all who care about art museums, and especially public access and the public domain, for raising the deaccession issue that few speak of. But unlike Mr. Woods, I also agree with your conclusion — that a museum's financial crisis can justify selling artworks — and do so based on the issues he cites as his two reasons to disagree. First, I believe your plan and others aimed at capitalizing collections could indeed alleviate many financial crises and put museums on sound financial footings, and second, I think the "unintended" consequences from other capitalization plans could greatly increase public access and the public domain.

Artwork prices have risen so much in recent decades that selling one or two major or a few relatively minor artworks outside of a museum's core strengths can still raise very substantial sums relative to the small sizes of most existing cash endowments. Such sales let museums continue to conserve all their relevant, good, and thereby potentially important, artworks, and fund additional public access. The substantial sums available from artworks sales can make this a solution permanent, not a stopgap. Indeed, deaccessions can be a long-term solution raising substantial amounts that lets museums prosper mightily even with only just the endowment spending that preserves principal, and other approaches can even let museums preserve or expand the public domain at the same time.

An unintended consequence of capitalizing collections could indeed change a board's fiduciary perception more toward asset management than philanthropy, but that's not necessarily bad. Human nature shows us that most of us would prefer to invest our money than give it away, so a board that finds and embraces workable alternatives that fund museums more with investments than gifts may expand public access and the public domain far more than those that simply expect all supporters to give away their money. Boards should seize such alternatives as long as they give potential and past artwork investors and donors comfort as to the future use of their assets and gifts.

Deaccession alternatives that sell partial titles rather than full titles -- the James Maroney plan and my own are the ones I know -- offer ways a museum can have its Monet and money, too. These approaches let museums tap some of the huge hidden capital gains embedded in their uncapitalized collections to improve public access and expand the public domain. The existing "mortmain model" completely ignores these possibilities, going beyond conservative to monastic. If boards and executives are to contribute to the maximum of their capacity, they must contribute thinking as well as cash, and not just continue to do things the way museums have always done them. Financial resources are too central to the integrity of museums to be ignored, even if some insiders insist on trying to hide them under "ethical" covers. There's noting ethical about maintaining a pure posture until bankruptcy scatters a collection to the four winds.

Dr. Mark White -- Coaccession - at -gmail.com

This was before Judith posted her response to the letters. When she did, she addressed all their major points. My comment focused on her response to Jeffrey Abt's plan to require cash operating endowment donations accompany art gifts and operating endowment investments accompany art purchases. This makes theoretical sense from a "mortmain model" point of view, but, as Judith notes, it would "truly discourage donations of art."

To preface my comment submission, I wrote Judith: "Appreciate the pub of my response to letters, and liked yours, particularly for the food for thought on Abt. Hope you like my comment -- as I say, Coaccession makes me feel like I can draw plans in perspective while mortmain forces most others to just stack everything up in the plane. Here's hoping the museum profession bears with creative breakthroughs in real time as well as they would like to think they would."

Only Judith knows if my preface made a difference, but she did publish my comment:

You make a very good case, JHD, for arbitrated deaccessions as a last resort to avoid bankruptcy. Of course, since we all want to avoid financially-driven deaccessions, we should look for earlier resorts to enhance museums' financial stability before they need arbitrated deaccessions.

Jeffrey Abt's proposal to tie art gifts to cash operating endowment donations tries to do that, but you're right that insisting a donor pony up cash to accompany their artwork could be a bridge too far. What the "mortmain model" overlooks, though, is the fact that the operating endowment donation comes bundled right along with the art gift.

The partial title sales of the Maroney Plan and the Coaccession method let museums raise funds for the operating endowment -- and for future artwork purchases to boot -- without the art gift leaving the permanent collection. That's having your Monet and money, too! The museum need not ask the donor for cash when socially-responsible museum investors can supply it based on the gift's financial value.

Museums are only interested in their collections' cultural value. There's no cultural cost to letting communities invest in their collections' financial value and a great deal of cultural benefit from the enlarged operating endowments. Financial problems would be far less likely when partial title sales let communities literally invest in their museums' collections. Let's use the full cultural and financial value in permanent collections to avoid financial deaccessions -- arbitrated or otherwise.

Mark White -- Coaccession - at - gmail.com

Here's hoping museums will apply some financial creativity to fulfilling their cultural missions.

I just can't help myself... it's got to come out!

2010-01-07T10:50:00.003-06:00

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

Completeness

2007-08-09T14:14:00.000-05:00

The May Report mentioned Coaccession three times. The first was referenced in my first post here. The last was referenced when I thanked Ron May, The May Report's publisher/editor, for his praise and the experiences his interest occasioned. For completeness, this post references the middle mention: the Fast Pitch description Ron published April 5.

Thanks, Ron

2007-08-09T14:04:00.000-05:00

In April, The May Report's Ron May wrote "...I do think Coaccession may have been one of the hidden jewels in the crown at the Fast Pitch competition. Mark, you may be like the woman who did not win American Idol, but did win an Oscar."

Ron's interest in Coaccession afforded me a couple of rare treats. A financial historian contacted me about my invention after learning about it through The May Report, and when we were discussing it further, this fine fellow told me he thinks my invention could qualify as one of Chicago's many important financial firsts. And then a fellow attendee at a DePaul workshop on nonprofit startups listened to my description of The Open Museum and asked, "It that Coaccession?" You could have knocked me over with a feather!

Doing something

2007-03-27T20:25:00.000-05:00

Starting a blog, thankfully, differs from beginning some fish-hooks and then switching to making a hat with some leaves from a tree and stopping to look for a spring and then a chicken, but no, better a goat. Each post means progress on the blog. People can learn about Coaccession here, post by post. Still, when you start a blog, you usually have no idea how far you'll go before you wrap it up. So, like the Old Sailor, I'm starting something that I'm not going to finish before rescue arrives.

Nonetheless, I trust the blog will shield me from the charge of doing nothing but bask on a shingle wrapped in a shawl until I'm saved. Perhaps it will even help me organize the system in spite of my inclinations.

We shall see. Here.

Now, with most profound apologies to A.A. Milne... and the reader:

The Old Inventor

There was an old inventor my patent lawyer knew
Who had so many things which he wanted to do
That, whenever he thought it was time to begin,
He couldn't because of the state he was in.

Inspired, he developed his method for weeks,
And he wanted a patent, and he wanted no leaks;
And he wanted some lawyers, without any hooks,
to counsel pro bono like you read of in books.

And, thinking of this, he remembered a thing
Which he wanted (for money) which is licensing;
And he thought that to talk to he'd look for, and keep
(If he found one) an employee whose thinking was deep.

Then, because of the looting, he wanted to start
A non-profit agency that would do its part
To help museums fund scientific expeditions,
Rescuing much knowledge from risky conditions.

He began on the patent, and when he'd begun
He quickly switched gears because he must run
A retail store raising funds from fossils and art,
With catalogs, photos -- one-click shopping carts.

He was making the cart with some software that's free,
When he thought, "I'm as scared as a body can be,
And I've nothing to cover my terrible risk;
So I'll look for insurance that won't stretch my fisc."

Then he thought as he started, "Oh, dear and oh, dear!
I'll be lonely tomorrow with nobody here!"
So he made in his note-book a couple of notes:
"I must first find some clerks" -- "Who aren't total dolts."

He had just found a lawyer (through Lawyers for Arts)
When he thought, "But I must have domains for the carts.
But websites need hosts, and developers too;
So I'd best sit right down and figure out who."

He began on a website, but thought as he worked,
That, without supervision his workers could shirk,
With experienced managers he'd have nothing to fear,
Whereas now clerks might spend all day drinking beer!

So he thought of his agency ... and he thought of his clerks,
And his website and cart... Oh, might managers shirk?
And the license (for his money) and the coverage (for his risk) ...
But he never could think which would most help his fisc.

And so in the end he did nothing at all,
But research the issues that might cause a fall.
And I think it was dreadful the way he did dither -
Paralyzed, he let opportunity wither!

Insight

2007-03-27T20:18:00.000-05:00

Since this blog will capture my progress in real time as I develop the Coaccession system to implement the Coaccession method, it seems worthwhile to repeat here A.A. Milne's wonderful take on my personality type:

The Old Sailor

There was once an old sailor my grandfather knew
Who had so many things which he wanted to do
That, whenever he thought it was time to begin,
He couldn't because of the state he was in.

He was shipwrecked, and lived on a island for weeks,
And he wanted a hat, and he wanted some breeks;
And he wanted some nets, or a line and some hooks
For the turtles and things which you read of in books.

And, thinking of this, he remembered a thing
Which he wanted (for water) and that was a spring;
And he thought that to talk to he'd look for, and keep
(If he found it) a goat, or some chickens and sheep.

Then, because of the weather, he wanted a hut
With a door (to come in by) which opened and shut
(With a jerk, which was useful if snakes were about),
And a very strong lock to keep savages out.

He began on the fish-hooks, and when he'd begun
He decided he couldn't because of the sun.
So he knew what he ought to begin with, and that
Was to find, or to make, a large sun-stopping hat.

He was making the hat with some leaves from a tree,
When he thought, "I'm as hot as a body can be,
And I've nothing to take for my terrible thirst;
So I'll look for a spring, and I'll look for it first."

Then he thought as he started, "Oh, dear and oh, dear!
I'll be lonely tomorrow with nobody here!"
So he made in his note-book a couple of notes:
"I must first find some chickens" and "No, I mean goats."

He had just seen a goat (which he knew by the shape)
When he thought, "But I must have boat for escape.
But a boat means a sail, which means needles and thread;
So I'd better sit down and make needles instead."

He began on a needle, but thought as he worked,
That, if this was an island where savages lurked,
Sitting safe in his hut he'd have nothing to fear,
Whereas now they might suddenly breathe in his ear!

So he thought of his hut ... and he thought of his boat,
And his hat and his breeks, and his chickens and goat,
And the hooks (for his food) and the spring (for his thirst) ...
But he never could think which he ought to do first.

And so in the end he did nothing at all,
But basked on the shingle wrapped up in a shawl.
And I think it was dreadful the way he behaved -
He did nothing but bask until he was saved!

On the Web

2007-03-27T19:31:00.000-05:00

The May Report's Ron May posted the Web's first substantive reference to Coaccession on February 27, 2007. He mentioned Coaccession as an instance of Fast Pitch firms flying under the radar:

Some presenters appear to be flying well under the radar. For instance, I can't find a reference to Mark White's firm on the internet, Coaccession. Maybe you will have better luck than I did googling it.

Guilty as charged. Coaccession is too valuable to compromise by divulging publicly before the patent is pending. DLA Piper patents partner Blake Johnston said a pitch describing what Coaccession does could jeopardize European and Japanese patent rights. Not how Coaccession does what it does. What it does. Original thinking, apparently.

That was then, though. Thanks to Blake, I filed a solid provisional application on March 22, 2007. Method and system for implementing same. Figures. As much scope as the likely applications justify. Now I can appear on the radar! :-)

A note saying the same went out today to Ron, offering a scoop if he asks for it. We'll see. Even though Chicago's famous for its derivative contracts, Coaccession is probably not up Ron's alley.

Ron's reference turned up today as the first result in the latest of my occasional searches for words I've coined, such as Coaccession and Projuvenation. With a bit of activity on this blog, it should soon be the first result for Coaccession, just as the Projuvenation blog is now for that word. Time to get in gear. I can worry about coaccession.com later, just as I've put off using projuvenation.com. In the meantime, this blog can keep me as Google's top-ranked Coaccession page.