To: Foundation Board of Directors
From: Vice President for Institutional Advancement Janet Cash
Re: Art Collection and Scholarship Funds
At the last board meeting, Vice President for Enrollment Michael Rank provided a compelling case for additional scholarship funding of at least $15 million. Everyone agreed that enabling student success is the primary goal of the foundation’s work. A spirited discussion resulted in various ideas to securing funds such as social media fundraisers, raffles, contacting Oprah Winfrey, and having 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 it is not an advisable nor feasible course of action. As a result, the Board Chair Joseph Bonds requested a memo explaining my rationale. The following represents the procedural and legal obstacles, and the cost and risks associated with selling the collection.
Procedural: The art collection supports teaching and learning, much like books in the library. It is core to the work of the university’s museum, which is an academic department. Numerous academic disciplines, including but not limited to museum studies, art history, studio art, history, and communication studies, utilize the collection in their courses. To sell the art collection, the faculty senate, the provost, the president would have to recommend the museum’s closing to the board of trustees, who would make the final decision. It is not in the foundation board’s purview to make curricular decisions.
Legal: The art collection is a restricted asset; meaning, the foundation, and the university are legally bound by contractual obligations with donors to use the asset for said intent. Even if the foundation sold the art, the funds would still be restricted to support the museum or a similar use if the agreement allowed. Using funds for scholarships would not likely be permitted.
Accreditors of the museum 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 deaccessioning). It is a lengthy process with significant hurdles to jump for every piece to be sold. Selling the collection or even a portion with the intent using funds for a purpose other than the collection is not permitted by policy.
Cost: To auction off the art collection, research to determine provenance (origin and successive line of ownership), donor agreements, and valuation for each work would have to be conducted by a professional. The cost of labor and the amount of time required will be high and may take years. Also note, auction houses take a percentage of sales. While the stated value of the collection may be $15 million, the net from such a sale would be likely less than half and possibly less.
Reputational and Financial Risk: Universities and colleges who have tried to sell art collections, in part or whole, have faced severe public scrutiny, alumni outrage, negative press, and legal action. A few noteworthy examples include Randolph College, La Salle University, and Brandeis University. These institutions faced legal action by donors, heirs, and alumni who wished 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 runs contrary to the university’s values. 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 the human imagination. Treating the art collection as something with only extrinsic value will ignite a firestorm and derail efforts in enrollment and fundraising overall. The action runs contrary to the institution’s mission, which the foundation is required by its charter to uphold.
Conclusion: Selling the art collection is not a path forward to secure scholarships for the institution. A scholarship fundraising campaign is a far more cost-effective and efficient means of securing the additional assets necessary to support enrollment and retention.