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IBA Annual Conference 2016

Washington DC

Art, cultural institutions and heritage session

Art is not enough: what else do donors want from

museums?

The Panel

David Sleeman, Winston Art Group

John Cahill, Cahill Partners LLP

Daniel Simon, Collyer Bristow LLP

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Today’s topics

1. Gifting Basics and Donor Concerns

• Tax Deductibility

• Exhibition Obligations

• Recognition (Naming Rights)

• Donor-Friendly Risk Allocation in Worst-Case Scenarios

− Claims against the Artwork

− Bankruptcy of Donor or Museum

2. Loan Basics and Donor Concerns

• Key Terms Donors Want

• Insurance

• Import/Export; Seizures

• Sale restrictions

• Tax basics

3. Private Operating Foundations

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Gifting Basics

Make sure the recipient will afford donor a deduction

− Not every "foundation" is 501(c)(3)

Make sure the gift will be a "related use"

Make sure that the gift will be accessioned

Make sure that the recipient will keep for at least three years

Get a qualified appraisal timed accurately

Get Form 8283 from Museum

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Gifts: plan ahead

Based on donor’s individual tax and personal issues/desires

Options include

− Lifetime direct gift

− Trust or other vehicle

− Gift on death

Avoid surprises: do pre-gift diligence and get advice

− Is it the right place for the gift?

− Check if Museum has accessioning policy

− Title

− Authenticity

− Other risks that most donors cannot even imagine

− Expert advice from experienced professionals is key

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Tax bonuses: sales tax break

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Francis Bacon, Three Studies of Lucian Freud

Purchased for $142 million

15 weeks at The Portland Art Museum vs. Private Residence in

Nevada $11 million saving in Nevada use taxes

Enhancing value and provenance

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SOLOMON R. GUGGENHEIM MUSEUM

OCTOBER 25, 2013–JANUARY 22, 2014

Christopher Wool

CHRISTOPHER WOOL

Christie's New York, Sold $14,165,000

M. Thomas, 'Christopher Wool', Pittsburgh Post

Gazette, 28 November 1998

Christopher Wool, exh. cat., Institut Valencià d'Art

Modern, 2006, p. 11

Christopher Wool, exh. cat., New York, Solomon R.

Guggenheim Museum, 2013, pp. 9293

Gift Risks

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• Canyon, by Robert Rauschenberg

• Liens (e.g., De Young)

• Title disputes

• Authenticity disputes

• Seizure

• Import/Export (gift to Getty)

• Can the donor get an indemnity

– Or insurance?

Naming rights

• Builds relationships with donors.

– Henry Luce Foundation and visible storage of American Art

• Museum Naming Policies

• "For museum executives, the dirty secret of expansions has been

that they are often motivated by the need to have some exciting

new thing to rally board members and interest potential patrons.

These institutions depend heavily on rich people to fund them.

Those rich people like to pay for flashy new buildings; no one wants

to donate to boring old museum upkeep."

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To Name or Not to Name?

• The Isabella Stewart Gardner

Museum

• The Broad

• The Whitney

• The Frick

• The Morgan Library & Museum

• Rubell Family Collection

• Etc.

• National Gallery of Art (Paul

Mellon)

• Metropolitan Museum (4,504

collection records for “Gift of J.

Pierpont Morgan,1917”)

• The Met Cloisters (John D.

Rockefeller)

• Neue Galerie (Ronald S.

Lauder and Serg Sabarsky)

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Bankruptcy?

(Donor and Museum Risk)

• DIA and Corcoran

• UCC?

• Rescission Right?

• Friede Collection at M.H. de

Young Museum• “. . . A Florida judge ruled that Mr. Friede’s

brothers, Robert Friede, 68, and Thomas Jaffe, 58, could take possession of the entire collection. The judge determined that John Friede had violated the terms of an October 2007 settlement in the estate dispute in which he put up his collection as collateral. Later the city attorney’s office in San Francisco, acting on the de Young Museum’s behalf, sued and obtained a temporary restraining order prohibiting the brothers and John and Marcia Friede from disturbing the collection until a judge could determine who legally had title to it.”

- Kate Taylor, THE NEW YORK TIMES12

Creative Gifting

(with strings)

• Doris and Donald Fisher Collection Galleries at SF MoMA

– Loan ends in May 2116

– About 60% of indoor galleries will have work from the collection

– Some works in the collection belong to Fisher Foundation while

others belong to Doris Fisher.

– Generosity, but with curatorial control.

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Loan agreements

• Why loan?

– Public spirited; increases art’s value

• Get the basics right:

– Term of loan

– Location of loan (more than one museum venue — more than

one loan agreement?

– Credit to lender?

• Get the physical care right:

– "Museum quality" craters, shippers, unpackers, climate, damage

notice etc.

• Get the insurance clear:

– Whose insurance? Museum liable regardless of insurance?

• Get the law right: copyrights, disputes, international etc.

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What Donors

Want (Sometimes)

• A commitment to display

– Sometimes, in a particular way (e.g. Barnes)

• Ongoing maintenance

– Endowment

• Educational and programming concerns

• No deaccession or other sale

• But consider the Museum’s concerns

– Curatorial integrity

– Can’t opine on value

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Jerome L. and Ellen Stern

Restrooms at the New Museum

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Insurance and

agreed value

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June 2006, Nick Flynn was caught on

camera as he fell down a staircase at the

Fitzwilliam Museum in Cambridge,

smashing three 17th-century vases worth

an estimated £500,000.

Cultural Heritage

and Export

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The Three Graces by Antonio Canova Rome, 1814-1817, carved marble. Museum no. A.4-1994, © Victoria and Albert Museum, London

After a five-year struggle, Britain prevented the Three Graces sculpture from being exported to USA, raising $11.75 million to match offer made by the Getty Museum in California

The Innocent Eye Test

– Mark Tansey

Millionaire Nurse

–Richard Prince

Wylde v. Gagosian Gallery

Interesting Disputes

and Practice Examples

• Weill Naming Dispute (Avery Fisher, etc.)

• Gifts of stolen artwork

• Gifts of fake artwork

• DIA, Corcoran and Other Disputes

• VARA (damage) disputes

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Father (not) Mark Landis

One might not think of light as a matter of fact, but I do. And it is, as I said, as plain and open and direct an art as you will ever find.—Dan Flavin, 1987

22© 2011 LYNN CAHILL LLP

Private art museums and

foundations

• 43 private art museums in the US (recently under scrutiny by Senate Finance

Committee)

• In the UK, no real distinction between private and public charities

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Glenstone, Potomac, MDThe Brant Foundation Art Study

Center

Greenwich, CT

Any Questions?

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Daniel Simon

Collyer Bristow LLP, 0044 (0)20 7242 7363, daniel.simon@collyerbristow.com

David Sleeman

Winston Art Group, 001 212 542 5755, sleeman@winstonartgroup.com

John Cahill

Cahill Partners LLP, 001 212 719 4400, jcahill@CahillLawFirm.com

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