Watching the Deaccessioning Police

One of the biggest stories in the art world this week is the Berkshire Museum's plan to "deaccession" (read "sell") 40 artworks from its "permanent collection" worth about $50 million, in order to pay for renovations and shore up its endowment. The museum plans to auction at Sotheby's works by Norman Rockwell, Frederic Church, Albert Bierstadt, Alexander Calder, and Charles Wilson Peale, among other artists.

The Berkshire Museum is located in Pittsfield, Massachusetts. It was founded in 1903, and dedicated to science, history, and art. While the museum is an important cultural institution in western Massachusetts, its attendance and donors have gradually declined. For the last 20 years, it has operated at a deficit, which has been over $1 million per year for about a decade, and its endowment has gradually declined to about $4 million.

After a two-year study, the museum's board of directors decided to refocus its mission on science and natural history. As part of that shift, they decided to sell the artworks, as part of a projected $60 million fundraising campaign, which it will use to bolster its endowment by $40 million and pay for a $20 million renovation. The renovated museum will feature interactive exhibits intended to promote education and community engagement.

Predictably, the deaccessioning police went ballistic. The American Alliance of Museums (AAM) and the Association of Art Museum Directors (AAMD) issued a joint statement saying they are “deeply opposed to the Berkshire Museum’s plans to sell works from its collection to provide funds for its endowment, to make capital investments, and to pay for daily operations.” The AAM and AAMD also noted that their "ethical" codes prohibit museums from selling artworks in order to cover operating costs. And their art world allies piled on, with perennial deaccessioning critics like Lee Rosenbaum lamenting the museum's decision.

I disagree. I was quoted in an Artsy.net editorial on the museum's deaccessioning plan: "The argument that 'art is special, and you shouldn’t sell it for these crass commercial reasons, that’s not really an argument,' Frye said, adding that he would like to see an engaged debate around the pros and cons of when and whether to sell works, rather than a flat prohibition." But I added a lot more, which wasn't included in the editorial. I think the AAM and AAMD codes are incoherent and ridiculous, and arguments that rely on them are little more than question-begging.

The premise of the AAM and AAMD prohibition on deaccessioning artworks for the purpose of covering operating costs is based on the premise that museums hold artworks in the "public trust," which somehow prevents them from selling those works and using the proceeds to support themselves. This argument is a nonstarter. For one thing, while there is a "public trust" doctrine, it has only ever applied to governmental entities and public property. In other words, the "public trust" doctrine provides that cities can't sell things like waterways and beaches, which are (theoretically) best held as collective property for the use of all. It has never applied to private parties or personal property. And it specifically has never applied to artwork.

For another, the AAM and AAMD do not even present a coherent argument that artwork is or could be held in the "public trust." Their own codes provide that museums can sell artwork, but only to buy more artwork, and not for any other purpose. As Donn Zaretsky has observed over and over again at The Art Law Blog, this just doesn't make any sense. If artworks are held in the "public trust," then museums can't sell them for any reason, just like the "public trust" doctrine prohibits cities from selling waterways. And if museums can sell artwork for any reason - including buying more artwork - then it isn't held in the "public trust" at all.

Indeed, the AAM and AAMD tacitly admit that there is no legal prohibition on museums selling artworks and using the proceeds for anything they like. But they argue that selling artwork for any purpose other than buying more artwork is "unethical." Why? It is unclear and unstated. Apparently, the AAM and AAMD think it would be "unethical" for a museum to sell an artwork in order to, say, fund free admission or sponsor community arts activities. Or, as in the case of the Berkshire Museum, to prevent bankruptcy and chart a new institutional direction.

They can't be serious. Indeed, merely stating their argument exposes its absurdity. As the museum and its supporters have argued, the museum's decision is not only "ethical," but also probably required by the board's fiduciary duty to the organization.

More sophisticated deaccessioning opponents argue that donors won't give artworks to museums if they know the works can be sold. But of course, existing deaccessioning norms already say it is fine for museums to sell works, so long as they use the proceeds to pay for new ones. The only thing they prohibit is selling works to pay for anything else? If hypothetical donors don't want museums to sell the works they donate, why would they care about the purpose of the sale? Moreover, as Tim Schneider pointed out over at The Gray Market, "there are also many collectors who gift works to museums in large part TO TRANSFORM THEM INTO disposable financial assets" by taking a charitable contribution deduction for the value of the work. Indeed, as ArtRank founder Carlos Rivera explained in an illuminating interview, it's effectively a risk-management tool. If the expected sale price of an artwork declines by half or more of its purchase price, a collector can simply donate the work to a museum and take a deduction.

Of course, as scholars like Michael Rushton have observed, it is possible to view deaccessioning norms as a "disciplinary device" intended to prevent boards from relying on deaccessioning as a crutch to escape the consequences of mismanagement. He is absolutely right that museums seem to resort to deaccessioning only when they have no other choice. But one reason is the hailstorm of criticism they know they will encounter if they deaccession. Perhaps institutions would make better and more efficient deaccessioning choices if they could safely exercise good judgment in flush times, rather than acting out of desperation in lean ones? After all, many museums hold massive collections of artwork that will never see the light of day. Wouldn't it preferable for those works to be sold and seen by someone? Especially when many, if not most, will be purchased by other museums or end up in one eventually?

The real, if unspoken and unacknowledged, purpose of deaccessioning norms is to maintain scarcity on the secondary art market and prevent museums from claiming capital gains in artwork. When a collector donates a work to a museum, that work is effectively removed from the market. If a museum sells it in order to buy another work, relative scarcity remains the same. As a consequence, only private collectors can internalize capital gains. In other words, deaccessioning norms are effectively a way of enabling the private art world to steal from the charitable sector. Private collectors want to have their cake (charitable contribution deductions) and eat it too (capital gains). Understandable, but indefensible. And hardly "ethical."

I am reminded of an old adage: “When the facts are on your side, pound the facts. When the law is on your side, pound the law. When neither is on you side, pound the table.” The deaccessioning police have been pounding the table for awhile now. Why? Surely, not because they cynically want to help private art collectors with their rent-seeking. I have no reason to believe they are anything but sincere.

Indeed, I see where they are coming from. The artworks the Berkshire Museum plans to sell are beautiful and important. And I find their proposed new plans appallingly insipid. My aesthetic preferences are deeply offended. But so what? It isn't my decision to make, it's the decision of the museum's board. Presumably, they know better than I what the community wants and the museum needs. After all, while I've visited the neighboring Mass MoCA several times, I've never visited the Berkshire Museum. Why should my aesthetic preferences matter?

Comments

[RQA]

You recognize that at least the ostensible purpose of deaccessioning norms is to prevent lazy boards from too quickly turning to sales to meet expenses rather doing the hard work of fund-raising. But then you argue that we ought to defer to the judgment of the Berkshire board because they know better than we do what their community wants. That seems like a pretty elastic restraint. So far, this board has run a museum that's at the point of distress: prima facie, that's not evidence the board knows what it's doing. Of course, it's possible the board is making the best of a bad situation, but nothing cited in this post establishes that. You also suggest that if deaccessioning norms were relaxed, museums could sell art they can't exhibit without having to act in desperation and under pressure. Maybe so. But what about the risk that deaccessioning would become routinized, to some extent replacing fund-raising in museum budgets? All in all, despite acknowledging the concern, you've apparently concluded that we don't need to worry much that poorly-run boards will undermine the museums they oversee; it's not clear to me why you've reached that conclusion.

[Brian Frye]

RQA,

Thanks for your comment. You're absolutely right, I should say more about Rushton's theory of deaccessioning norms as a "disciplinary device." While I think it is the only coherent theory anyone has offered, I still don't find it convincing on the merits. True, deaccessioning norms prevent unwise sales of artwork, but they also prevent wise and appropriate sales of artwork. I don't take a position on whether the Berkshire Museum's board was wise or unwise, well-run or poorly-run, frankly because I don't know & I don't think it matters at this point. The institution is where it is & it is the board's responsibility to make the best decision it can under the current circumstance. I don't see how punishing the institution by forcing it into bankruptcy at this point will do anything to discipline the Berkshire board or any other. Indeed, enforcing deaccessioning norms arguably would allow the board to put on a show of high-minded "ethics" and let the museum slide into bankruptcy, rather than making the hard and unpopular decision to sell these artworks for the sake for the institution.

Don't get me wrong, I absolutely think we need to worry about nonprofit mismanagement and incompetent boards. But I am not at all convinced that deaccessioning norms are an appropriate or even effective way to accomplish that goal. While you are right that there is a theoretical risk that museum boards would deaccession willy-nilly to cover operating expenses, rather than engage in fundraising, I don't think that's a real risk in practice. There doesn't have to be an absolute prohibition on the sale of artworks in order to properly and convincingly criticize particular sales. After all, deaccessioning norms permit museums to sell artworks in order to buy other artworks, but people still can and do criticize particular decisions on that front.

On the whole, I think nonprofit board management (maybe any board management) typically can't rely on rigid rules and prohibitions (with some exceptions, of course!), because it requires self-reflection and a dynamic conception of board's duty to the organization. As Eric Chaffee (https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2694366) and others have observed, charitable boards have a special public duty expressed in the somewhat inchoate but nevertheless essential "duty of obedience." I think nonprofit board governance needs to look more that duty and how to create a culture of compliance with it among board members, rather than rigid rules.

Also, I would note that Rushton's theory is only one of the ostensible purposes of deaccessioning norms, and not necessarily the most widely invoked. Indeed, I think the consequentialism implicit in the theory makes it uncomfortable for many supporters of deaccessioning norms, who want an absolute prohibition, whether or not it actually works to discipline board members.

BLF