To: Foundation Board of Directors
From: Vice President for Advancement Janet Cash
Subject: Art Collection and Scholarship Fund
At the last board meeting, VP Enrollment Michael Rank made a compelling case for additional scholarship funding of at least $15 million. Everyone agrees that fostering student success is the primary objective of the Foundation’s work. A lively discussion resulted in various ideas for raising funds, such as social media fundraisers, raffles, contacting Oprah Winfrey and hosting a black tie event.
Board member John Stocks pointed out that the art collection is valued at $15 million, according to the audit. Several members advocated the sale of the collection to support scholarships. I explained that this was not a recommended or feasible course of action. As a result, the Chairman of the Board, Joseph Bonds, requested a memo explaining my rationale. The following represents the procedural and legal hurdles, as well as the costs and risks associated with selling the collection.
The art collection supports teaching and learning, as do the books in the library. It is central to the work of the university museum, which is a university department. Many academic disciplines, including but not limited to museum studies, art history, studio art, history, and communication studies, use the collection in their courses. To sell the art collection, the Faculty Senate, Provost and President would have to recommend the museum’s closure to the Board of Trustees, who would make the final decision. It is not up to the foundation board to make decisions about the programmes.
The art collection is a limited asset; meaning that the foundation and the university are legally bound by contractual obligations with the donors to use the asset for this purpose. Even if the foundation sold the art, the funds would still be limited to support the museum or similar use if the agreement permitted. The use of funds for scholarships would probably not be permitted.
Museum accreditors dictate the management and use of art collections. There are museum policies and procedures in place for removing a work from the collection (a process known as disposition). It’s a long process with significant hurdles to clear for every piece to sell. Sale of the collection or even part of it with the intention of using the funds for purposes other than the collection is not permitted by the policy.
To auction the art collection, research to determine provenance (origin and successive line of ownership), donor agreements, and appraisal of each work should be conducted by a professional. The labor cost and time required will be high and could take years. Also note that auction houses take a percentage of sales. While the reported value of the collection may be $15 million, the net of such a sale would likely be less than half and possibly even less.
Reputational and financial risk
Universities and colleges that have attempted to sell art collections, in whole or in part, have faced public scrutiny, outrage from alumni, negative press, and lawsuits. Some notable examples include Randolph College, La Salle University, and Brandeis University. These institutions were sued by donors, heirs and alumni who wanted to prevent the sale. The process took years to settle in court.
Treating the art collection simply as an asset to be bought and sold goes against the values of the university. Constituents, including prospective students and parents, alumni, donors, and the campus community, believe in the intrinsic value of art to convey information about humanity, history, and the power of human imagination. Treating art collecting as something of only extrinsic value will set off a firestorm and derail registration and fundraising efforts overall. The action goes against the mission of the institution, which the foundation is required to respect by its charter.
Selling the art collection is not a way to get scholarships for the institution. A scholarship fundraising campaign is a much more cost-effective and efficient way to obtain the additional assets needed to support enrollment and retention.