Allocating that complex asset, the museum collection

The decision by billionaire philanthropist Eli Broad not to donate his vast art collection to the new Los Angeles County Museum of Art is causing quite a ripple in the museum world (CultureGrrl explored the topic last month, as did Tyler Green, following the New York Times January article on the decision). Rather than donate the collection, Broad decided to hold it within an independent foundation that would loan the works to LACMA and other institutions.

Broad’s decision is a response to the invariable challenge of collecting museums, where the vast majority of the art is warehoused and rarely seen. Since collections can be huge, and gallery space is limited, some works may never be seen by the public again. So, Broad wondered, how does that serve the public trust? And more specifically, how does it serve his collection?

Back in 2005, I blogged about conversations in the United Kingdom on this very question — how is the public served by large individual warehouses of artifacts allowing only limited flow from one museum to another? There, the recommendation was to change our mental metaphor for the UK’s public museums — shifting focus from the institutions to the aggregated collections those museums held in trust.

If I were a cold and heartless MBA program director — oh wait, I am — I’d call this a classic asset allocation problem. How do you maximize asset value (connecting artifacts with people, both now and for generations to come) and minimize asset cost (in part, how and where do you maintain the asset)? And finally, is the traditional asset-allocation model of the collecting museum really the best structure for the job?