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"Donors And Dollars: Art Community Sees Victory In Summer Settlement At Brandeis" by Brian Farkas

Donors and dollars: Art community Sees Victory In Summer Settlement At Brandeis

by Brian Farkas

June 2011 saw the settlement of the bitter legal battle over the Rose Art Museum at Brandeis University. The outcome of Meryl Rose, et al, v. Brandeis University, et al, an action brought in July 2009 in Suffolk Probate and Family Court by museum supporters, will keep the Rose open for business. See Settlement Agreement, Suffolk Probate and Family Court, Civil Action No. 09-E-0152. Nonprofits and museums around the country should look at the Brandeis firestorm as cautionary tale against de-accessioning donated artwork to generate revenues -- even against the backdrop of a grim recession.

How did we get here?

Before looking at the lawsuit and settlement, the broader context of the underlying controversy is crucial. At the peak of the financial crisis in 2009, Brandeis' then-president Jehuda Reinharz announced that the school would close the Rose and sell off an estimated $350 million in artwork. In a plan supported by the University's Board of Trustees, the proceeds and savings was to support the University's other operations, namely its undergraduate and graduate programs.

Why did the administration pursue this triage strategy? The financial crisis was difficult for colleges in general, and particularly bad for Brandeis. Many elite private colleges and universities typically depend on endowment returns for around one-third of their annual operating budget. Consequently, sharp market declines had a tremendous impact on the finances of these institutions. Moreover, one of Brandeis' largest donors, the Carl and Ruth Shapiro Family Foundation, suffered some $545 million in losses because of investments in Bernard Madoff's Ponzi scheme. Many other top donors to the school were also directly affected by the crisis. Brandeis' situation thus seemed increasingly dire to Reinharz and other University leaders.

Meanwhile, the Rose was a valuable asset, both culturally and financially. The museum, located on Brandeis' campus in Waltham, Mass., houses some 8,000 works of art. The collection is considered one of the finest caches of contemporary art in New England, and includes works by modern luminaries like Willem de Kooning, Jasper Johns, Morris Louis and Andy Warhol. The Rose is certainly one of the country's most exquisite college museums -- a mandatory stop for contemporary art lovers, as well as for high school students and families shuffling through the circuit of college tours. See, e.g., Michael Rush, Brandeis does the right thing, THE ART NEWSPAPER, July 21, 2011, http://www.theartnewspaper.com/articles/Brandeis-does-the-right-thing/24367 (last visited August 5, 2011). All in all, the Rose was a popular place with a strong base of supporters.

The Cost of Doing Business: Public Opinion

Those supporters were outraged at Reinharz's announcement. The art community, never soft-spoken, swiftly lashed out against the University's decision to close the Rose and sell its contents. Famed artists like Chuck Close, Frank Stela and Claes Oldenberg publicly attacked Brandeis for breaching their curatorial and academic duties. Art magazines across the country published irate op-eds. Even The New York Times published a lengthy editorial scolding Reinharz. "Hard times force hard choices on everyone. But that does not require bad decisions too," the Times wrote. "Selling the university's art collection would help plug its financial gap, but it would create a gaping hole in Brandeis's mission and its reputation." See Art at Brandeis, N.Y. TIMES, Feb. 1, 2009, http://www.nytimes.com/2009/02/02/opinion/02mon4.html?adxnnl=1&adxnnlx=1312294654-F+5YImYygxV+28d11d/1Ig (last visited August 5, 2011). By this point, the University was forced to hire a prominent public relations consulting firm, Rasky-Baerlein Strategic Communications, to stem the rising tide of public outcry. But that made little difference. See Id.

Donors and alumni, angry and embarrassed, signed petitions and joined letter-writing campaigns. One group started a website with the motto "ATM: Art Trumps Money." Three prominent museum-world figures, all Brandeis graduates, spoke out vigorously. In an open letter, Adam D. Weinberg, director of the Whitney Museum of American Art; Gary Tinterow, chairman of the department of 19th-century, modern and contemporary art at the Metropolitan Museum of Art; and Kimerly Rorschach, director of Nasher Museum of Art at Duke University, wrote that Brandeis had "shaken confidence in its educational mission, threatened a covenant established with thousands of donors, and set a sad and troubling example to other institutions." In short, the decision instantly became a public relations nightmare for Brandeis.

The Cost of Doing Business: Legal Controversy

It didn't take long for it to become a legal nightmare as well. Soon after Brandeis' announcement, long-time Rose donors Meryl Rose (a family member of the original philanthropists who created the museum in 1961), Jonathan Lee, Lois Foster and Gerald Fineberg filed suit to enjoin the sale of any artwork. They also encouraged the Massachusetts Attorney General to review wills and agreements made between the museum and the estates of donors to determine if selling artworks violated the terms of donations.

De-accessioning -- the practice of a museum selling off art -- has long been controversial. The American Association of Museums prohibits the proceeds of such sales from being used for anything other than further acquisitions or direct care of collections. See Information Center, THE AMERICAN ASS'N OF MUSEUMS ONLINE, http://www.aam-us.org/museumresources/ic/index.cfm (last visited August 6, 2011). The Association of College and University Museums and Galleries and the International Council of Museums have similar standards. Most reputable American museums and college museums are members of these groups. Theoretically, this means that member museums have agreed not to sell off a Picasso or Bacon to cover the salary of the curator or to renovate a gallery.

The primary rationale is a classic slippery slope: Letting one museum sell off a couple paintings for profit paves the way for dozens of museums to sell off thousands of artworks, perhaps routinely. Suddenly, the argument goes, countless works of art would be in private hands and inaccessible to the public. It would be impossible to regulate all of these sales, to ensure that nonprofits are appropriately using the proceeds.

In practice, however, a museum or nonprofit may still have the legal right to sell a given piece of art. Ethical considerations aside, the legality depends on the terms of the specific instrument -- usually a will, trust or outright deed of gift -- through which the institution acquired artwork. Such terms will be interpreted in line with legal precedent that may favor donor intent over current institutional or financial interests. (Donors are thus wise to speak with an attorney before making such a gift. Oral representations by the museum at the time of the gift might be unenforceable if there is a controversy years or decades later. The terms of the written instrument would control).

Furthermore, state attorneys general are charged with oversight of nonprofits. The attorney general, usually after being tipped off, has a duty to investigate cases where institutions might be shirking promises to donors. Nonprofit trustees must be able to show that they are acting in good faith and exercising due care, and in the case of de-accessioning, that they considered alternatives to selling the art.

For example, in 1993, the New-York Historical Society, a major institution on Central Park West in Manhattan, was on the brink of insolvency and forced to close operations for two years. Administrators approached the attorney general about selling off selected items from its collection in order to bolster its endowment. The attorney general worked with the Historical Society, which was able to raise about $11.2 million through sales, and consequently was able to get back on its institutional feet. The attorney general even stipulated that certain museums could pre-empt private purchases, buying works the Society sold for a discount of between 3 and 10 percent. The Metropolitan Museum, for example, purchased a valuable Medici tray. Vassar bought several important Hudson River School paintings for its museum. See Kevin M. Guthrie, History Matters: Lessons From The New-York Historical Society's Board Room, BOARDSOURCE, 1997, e-book edition, www.boardsource.org, (last visited August 6, 2011).

Compare that situation, where the New-York Historical Society acted in conjunction with interested parties, to with the case of Fisk University. Famed artist Georgia O'Keeffe gave Fisk, a small historically black school in Nashville, over 100 works by her and her husband Alfred Stieglitz in 1949. The collection also included works by Picasso, Cezanne, Diego Rivera and others. O'Keeffe's donation required that the paintings not be sold and be kept on permanent display. When the school was on the brink of bankruptcy in 2005, it attempted to sell works from the collection, valued at over $100 million. This action has been the source of legal challenges and drama ever since. See, e.g., Deidre Woolard, Fisk University Gets Approval To Sell A Share Of Art Collection, LUXIST, http://www.luxist.com/tag/crystal+bridges/ (last visited August 5, 2011).

The Georgia O'Keeffe Museum in New Mexico, representing Ms. O'Keeffe's estate, sued in Tennessee to recover the paintings from Fisk, alleging a breach of the terms of the 1949 donation. The court ruled that Fisk could not sell the paintings. Moreover, the Tennessee attorney general petitioned that the art should remain in Nashville, even if it means its removal from Fisk and exhibition elsewhere. See Id.

Last fall, Fisk petitioned for release from the strict conditions of O'Keeffe's bequest and for permission to sell an interest in the collection to the Crystal Bridges Museum of American Art -- a museum being built by the Walton family heiress Alice Walton in Arkansas -- for $30 million. The agreement would rotate the collection between the campus and Arkansas. The court is still working out the arrangements, and the Tennessee attorney general is in vigorous opposition. See Id.

Like Fisk, Brandeis did not work with the state attorney general or interested parties in advance of the decision. And also like Fisk, it quickly faced legal hurdles. The 12-page complaint for declaratory judgment (and 140 pages of various exhibits, ranging from blog posts to scholarly articles to donor agreements) filed in Meryl Rose is interesting for its fascinating mix of arguments, which alternate between the University's alleged legal responsibilities and its alleged academic responsibilities. The legal arguments, of course, relate to the University's legal obligations to donors. The curatorial and academic arguments, less concretely, involve the self-imposed professional guidelines among museums that artwork not be "sold off" to support operations.

The legal arguments of the complaint rest mostly on the broken promises and dashed expectations to the donors. The clearest statement of their claims is that "Brandeis has reneged on its duty to keep the Rose open as a permanent, public museum." Moreover, "Brandeis's actions to close the Rose and prepare its collection for sale for cash for general university operations contradict the charitable intentions of... the plaintiff donors and other donors, [and] abrogates [its] promise that the Rose would be maintained in perpetuity as a [m]useum." See Susan N. Gary, The Problems With Donor Intent: Interpretation, Enforcement, and Doing The Right Thing, CLARK LAW REVIEW, Vol. 85, No. 3, pgs. 977-1043.

In short, the University was accused of breaking explicit promises to donors, who presumably would not have made such gifts without the assurance that the Rose would remain the Rose.

An Admission of Guilt

After two years of dispute, during which Reinharz resigned, the case was finally settled. The eight-page settlement agreement, released on June 30 of this year, represents on its face a full victory for the plaintiffs. It also ends the Massachusetts Attorney General's inquiry into whether the University's plan would violate contractual agreements with donors. "The Parties agree," the agreement begins, "that the Rose is -- and will remain -- a university art museum open to the public, professionally staffed, and dedicated to its primary mission of collecting, preserving, studying, and exhibiting fine art." Meryl Rose, et al, vs. Brandeis University, et al, Civil Action No. 09-E-0152, Settlement Agreement at 1-2. It continues, "Brandeis has no aim, plan, strategy or intention to sell any artwork donated to or purchased by the University on behalf of the museum." Id. at 2.

Note, however, that the agreement does not say that Brandeis will never sell its collections. It merely says that it has no "aim, plan, strategy or intention" to do so. Id. Those are very different statements. Moreover, committing to keep the museum "open to the public" is actually something to which Brandeis had already committed in April 2009. See Randy Kennedy, Rose Art Museum To Remain Open For Now, N.Y. TIMES, April 17, 2009, http://artsbeat.blogs.nytimes.com/2009/04/17/rose-art-museum-to-remain-open-for-now/ (last visited August 6, 2011). Still, the sentiments behind this settlement document would almost certainly make it extremely difficult for Brandeis to suddenly backtrack at this point.

The agreement then requires that that museum hire a new director, specifically one with a "specialty in contemporary art." Meryl Rose, Settlement Agreement at 2. (The former director, Michael Rush, lost his job once his contract expired after vocally condemning the school's plans). Brandeis also agreed to commit $1.5 million to renovate the Rose in time for its fiftieth anniversary in the fall. Id.

The settlement agreement also included some specific donor requests. For example, Gerald Fineberg required that the size of his acknowledgment plaque in the upper gallery be doubled. Id. at 3.

Not surprisingly, the named plaintiffs were thrilled with the overall result. "We did the art world a favor," beamed Meryl Rose in an interview with the Palm Beach Daily News. "Nobody will try to do this again." Jan Sjostrom, Rose Art Museum Case Settles, PALM BEACH DAILY NEWS, Artspeak Blog, July 1, 2011, http://www.palmbeachdailynews.com/blogs/content/shared-blogs/palmbeach/artspeak/entries/2011/07/index.html (last visited August 6, 2011).

Brandeis administrators, on the other hand, walked away with their collective tail between their legs. "The Rose is and will remain an active and valued part of Brandeis," said the University's new president Fred Lawrence in a statement. "We are thrilled that this is behind us." Brandeis, plaintiffs settle Rose Art Museum lawsuit, BRANDEISNOW, June 30, 2011, http://www.brandeis.edu/now/2011/june/rose.html (last visited August 6, 2011).

In short: Brandeis tried to close its museum and sell off its collection because of a dire financial situation. The plan caused such outrage that Brandeis not only needed to promise to retract the scheme, but ironically needed to pay lawyers and PR agents, agree to further integration of the museum into university life, hire a "world class" new director, and -- the most bitter pill of all -- perform a multi-million dollar renovation of the building. So much for shoring up the budget. As far as their artwork is concerned, Brandeis lost its bargaining mojo faster than Van Gogh lost his left ear.

Summing Up

This controversy has demonstrated the legal and public relations minefields that await museums and universities who hope to cash in their collections, even during the worst financial crisis since the Great Depression. By any measure, Brandeis suffered tremendously for its initial scheme. Beyond the hassle and expense of dealing with the legal action, Brandeis was attacked by academics, alumni and the popular press. Its reputation was irreparably damaged. The school was depicted as destitute, and its leadership depicted as visionless at best and unscrupulous at worst. The legal settlement reflects this beleaguered bargaining position. Unlike many settlements that split the difference between parties or aim to achieve a compromise, this settlement represents a wholehearted admission of guilt for Brandeis.

Of course, none of this firestorm response necessarily justifies the art community's strict anti-de-accessionism. Some curators, museum directors and policymakers do question the knee-jerk reaction. Everyone seems to agree that de-accessioning to acquire more art is perfectly acceptable. So if de-accessioning is not inherently "evil," why is it acceptable for one reason but not any other? Is the public interest (or even donor intent) only served by amassing more artwork? Is buying more art always more important than anything else a museum can do? For example, what if a museum with meager assets wanted to sell a few paintings in order to renovate its decrepit roof, or hire a director of public education? Surely one could make a case that either of those two expenditures would make more works of art more accessible to the general public.

Putting these philosophical questions aside, the art and philanthropic communities remain extremely skeptical of de-accessioning. In the art world, professional standards matter as much as legal standards. As the Brandeis case has shown, a nonprofit will have a very difficult time in today's climate making a case for selling off artwork. They can expect public scrutiny, professional scrutiny, and swift legal scrutiny.

Brian Farkas is a student at the Benjamin N. Cardozo School of Law in New York City focusing in intellectual property and art law.

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This page contains a single entry from the blog posted on August 15, 2011 7:42 PM.

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