The Met Opera’s recent admission that their famed Chagall murals are now providing collateral against existing debt raises anew a fundamental business question: is art an asset for a cultural institution? An asset, as you likely know, is any item of economic value owned by an individual or corporation, especially one that could be converted to cash. Assets come in all flavors — from liquid (very close to cash) to capital (harder to convert to cash). And any thoughtful enterprise will understand all the assets under its control, and when those assets should be strategically converted from one form to another.
Museums are constrained to a particular answer to this question by their certification process and their standards of practice (that answer is “yes its an asset…but tightly wrapped in a promise of stewardship”). Cultural institutions outside the museum world have a more difficult calculus, as they are constrained only by public opinion and bank officials (and sometimes the demands of the artwork’s donor).
There were all kinds of controversies surrounding Brandeis University, of course, when it seemed to be claiming the art collection of the Rose Museum as a convertible asset. And there are likely to be more such struggles as arts organizations seek to restructure debt and access credit in a world of shrinking cash flow. When the money gets tight, and the banks come calling, many such groups are left with one significant asset in their arsenal — their cultural artifacts. Very tempting.
This is a tricky question – where to draw the line — and the definition of cultural assets can go beyond works of art — to archives, historical objects, or even notable buildings.
It would be hard to argue that the Chagall murals are at the heart of the Met’s mission.
But we know what happens so often when public art treasures fall into private hands — this Philadelphia Inquirer story on the disappearance and recent rediscovery of banners by Alexander Calder kind of says it all:
http://www.philly.com/philly/news/homepage/37429639.html
I’m not sure what the difficulty is – as you say in the article there are some assets that are more liquid than others. Art (at a museum) is simply a less liquid asset. If the organization was in dire straits, those assets (like an endowment) could be turned into cash. As much as I’d like all art to be always accessible to the public, unless we put it all into a government trust (that’s then loaned to museums, galleries, opera house lobbies etc) then art will always move among public, not-for-profit and private hands.
Yes, a permanent work of art (for example, a painting but not a live performance) is an asset. An organization may not WANT to sell its art, but technically it is possible for that to be done.
Everyone may encounter a situation like this at some point. In desperate economic times a person may not WANT to sell his or her house, but he or she may HAVE to. Just because the person didn’t want to sell the house doesn’t mean it wasn’t an asset. It can be sold, and that is the bottom line.
If it can be sold it is an asset. The idea of an asset is completely independent of what you would PREFER to do with your belongings.
Thanks for the comment, Teryn,
Of course, it’s a bit more complex than that. If an individual or a for-profit corporation holds an asset, then they can sell it. But a nonprofit organization does not own its assets, it holds them in the public trust. They are given fiscal privilege and access to contributed income and other tax exemptions because they are intended to serve that public trust. They have a governing board to ensure the public is being served.
So, preference is not the only issue. Rather, when they sell or convert an asset, they have to consider whether that sale is in ultimate service to the public trust. If a work of art moves from public access to a private collection as a result of the sale, even if the holding organization isn’t a museum, that could be a violation…even if they need the cash.
Nonprofits aren’t owned by anyone, they are owned by everyone. Hence the slippery slope.
I definitely agree that a board’s job is to ensure that the organization is serving its mission. And I appreciate the further clarification on the more specific inner workings of a non-profit. I had obviously over looked the fact that non-profits are owned by everyone.
However, if a board is in charge of determining what is best for the organization then I don’t understand why it would matter how “asset” is defined in the general sense. It would only matter on a situational basis. An organization’s board would be responsible for determining, on a case by case basis, whether a piece of art could be used as an asset.
So I suppose my main point is that art, although it is not always an asset, can be used as an asset in some situations. And unfortunately, given the current economic downturn, we may see these instances appear more often than they have been occurring recently.
But in my opinion, whether art counts as an asset would not matter until it may be needed as an asset.
In addition, I realize this may be a stretch to say, but having read Mr. Taylor’s comments about the restrictions that a non-profit deals with in order to use a piece of its art as an asset, I feel even more confident that art would only be use as an asset when absolutely necessary.
I had not yet before thought about how many safeguards there would be within an organization to keep a piece of art from being sold or used as an asset without reason. And although I am sure there are some exceptions, because there always are, it seems that the government rules, the organization’s by-laws, and the board of directors are good safeguards against those who might want to use art as assets when it is not appropriate.
In my mind, I prefer to regard art as a conbination of assets and invaluable culture.
Under the business society, earn profits paly an important part in every companies and institutes. Although non-profit institutes do not aim to earn profits, they also need to care the cost. Art works can transfer into money, it is the capital that convert invisible value to accessible assets. These institutes operates on the art, spread art,at the same time they convert art to asset, to money and live on the profits brought from art.
It is the same to artists. To a certain degree, these visible prices of art stand for the status of the artists. And those who do not learn well of art will judge of the artists on the prices of the artists’ works. Unknowingly, the values of art equal to the price of the art works.
Art is no longer just a art, it gradually become an asset. However, not all the arts are changing to asset, like museum, national antiquities. They are culture forever. Money could never buy them, they are trace of human beings development, invaluable treasure.
Using the murals as collateral makes one forget about the intrinsic value of the art. This makes art in general fall under the category of being a commodity which is acceptable but we do not want to overlook the original purpose for creating the art. Was is solely made for the money?
I agree that art should not be used as collateral-if the art has not been purchased with the organization’ funds (ie has been donated by a private donor, private organization, etc.) Given this situation, the art would have almost certainly been intended to be shown in that particular setting for the pubic, and the organization does not reserve the rights to use it as collateral or sell it.
One of the main differences between for profits and non-profits is that non-profits have the right to ask for and collect donations from individuals, corporations and even the government. This could be seen as a “trade off” of sorts as not being able to use their possessions as collateral.
How can they put the murals up for collateral when they don’t really even own them? They were granted to the Met’s Opera house to be used in a certain way. I don’t think that arts organizations can use these kind of assets in this way. If an asset is donated to an organization it shouldn’t be able to put them up for collateral unless it is for the greater good of the organization.