- Patty Gerstenblith
Process by which a museum removes an object from its collection. Many of the major European museums such as those in the UK and France are prohibited by national legislation from removing works of art from their collections. However, in rare circumstances, specific statutes permit such removal, for example in the UK with respect to art works stolen during the Holocaust. In contrast to their European counterparts, museums in the United States are legally free to remove works of art from their collections for purposes of sale or other reasons. While state statutes may in rare circumstances restrict alienability, the only general exception is if a donor has imposed a legally enforceable restraint on alienation—that is, the transfer of ownership. However, the codes of ethics and voluntary guidelines of the two major museum associations, the American Alliance of Museums (AAM) and the Association of Art Museum Directors (AAMD), restrict what a museum can do with the proceeds from the sale of a deaccessioned artwork. The AAMD restricts the use of proceeds to the acquisition of substitute works of art, while the AAM policy allows proceeds to be used for acquisitions and direct care of collections. The penalties for violating these guidelines range from censure to loss of accreditation. Yet, in light of the coronavirus epidemic, these associations have changed their guidelines, thereby casting doubt on the policy basis for these restrictions.
1. Legal restraints on deaccessioning.
Accessioning is the process by which an object is formally brought into a museum collection. Deaccessioning is “the process by which a work of art or other object … is permanently removed from a museum’s collection” (AAMD Professional Practices in Art Museums Appendix B, 19, 2011). Disposal is “the transfer of ownership by the museum after a work has been deaccessioned” (AAMD 2011). As the court stated in Rockwell v. Trustees of the Berkshire Museum, 2017 Mass. Super. LEXIS 208, *10 (Sup. Ct. Mass. 2017), “[d]eaccession is not a pejorative term; it is an integral part of collection management in museums. The failure to periodically both pare down and complement a collection may render the art collection obsolete. Consequently, deaccession involves both artistic and financial decisions that go to the core of its mission.”
A museum may be legally required to deaccession and return a work that has been determined to be illegally acquired, such as those stolen during the Holocaust, looted, stolen, or illegally imported archaeological artifacts, and indigenous human remains, sacred and other cultural items. Museums may also choose to return such works when their acquisition violated an acquisition policy, even if the return may not be strictly legally required. Objects may also be removed from a museum’s collection for other reasons including the poor quality of the work, the museum’s desire to refocus its collection, the failure of a work to fit within the mission of the institution, and the desire to raise funds for a different acquisition or to cover operating expenses and improvements.
The presumption in the United States is that museums, unlike their European counterparts, are free to deaccession works from their collections. It is recognized that museums have an obligation to maintain their collections and it may be desirable to improve and refine their collections through the sale or exchange of works. As the court stated in Wiltach Estate, 1 Pa. D. & C.2d 197, 207 (1954), “[a]n art museum, if it is to serve the cultural and educational needs of the community, cannot remain static. It must keep abreast of the advances of the times, like every other institution whose purpose is to educate and enlighten the community.” Members of the community where a museum is located have occasionally attempted to prevent deaccessioning, but these attempts have not been successful.
In disposing of an object from its collection, the museum must be careful not to violate any donor-imposed restriction on alienation unless the museum first obtains a court order permitting cy-près, or deviation from the donor’s terms. A donor may at times express a wish that a work not be alienated, but a museum is not bound by such a wish, if the wish is not expressed in a legally enforceable manner. New York State has enacted some specific restraints on alienation of works in museum collections. As a consequence of the sale by the Metropolitan Museum of Art in the 1970s of the Adelaide de Groot art collection in violation of the donor’s wishes, the Metropolitan Museum is subject to a voluntary agreement that requires it to consult with the state attorney general and the donor’s heirs before works are deaccessioned; if sold, such works must be sold at public auction. New York also has enacted statutory provisions with more specific rules for deaccessioning. N.Y. Educ. Law sec. 233-aa sec. 5 (Consol. 2021); N.Y. State Board of Regents, Rule sec. 3.27 Relating to Museum Collections Management Policies.
2. Voluntary restraints on use of proceeds from sale of deaccessioned works of art.
It is necessary to distinguish analytically between the process of deaccessioning and the use of the proceeds from the sale of a deaccessioned work. As the court stated in Rockwell v. Berkshire Museum, 2017 Mass. Super. at *11, “[a] conflagration occurs, not with deaccession, but the purpose or reason for the deaccession.” The AAM and AAMD, as well as the International Council of Museums (ICOM), limit what a museum can do with the proceeds from a sale. The AAMD policy allows proceeds from the sale of deaccessioned works and any income from or appreciation of such funds to be used only for acquisition of substitute works; it specifically prohibits the use of such proceeds for operational or capital expenses. The AAM policy is somewhat less restrictive in that it allows such funds to be used for the direct care of collections, in addition to the purchase of substitute works. However, the AAM guidelines do not clearly define direct care of collections. In 2016 the AAM released a white paper to clarify the concept. This study defines “direct care” as “invest[ing] in the existing collections by enhancing their life, usefulness or quality and thereby ensuring they will continue to benefit the public.” The ICOM Code states that proceeds from disposal of collections “should be used solely for the benefit of the collection and usually for acquisitions to the same collection” (Para. 2.16).
In evaluating these restrictions, one must bear in mind the incentives of the tax system in the USA, which grants a more generous tax benefit to a private collector who donates to a museum a work of art whose market value has appreciated rather than donating cash. As a result, museums may find themselves in the position of being art-rich but cash-poor. This means that museums are vulnerable to either internally generated financial difficulties or externally generated ones, such as in the case of the general economic downturn in 2008, which spawned many of the controversies in museum deaccessioning.
When members of the museum community are questioned as to the justification or basis for limits on the use of proceeds, the reply is usually that the works are held in the “public trust.” The public trust doctrine typically applies only to land and usually only to land abutting the edge of a lake or the coast, assuring public access to the body of water. Aside from the difficulty of defining what is meant by the public trust in the context of works of art, which are movable property, it is clear that the works themselves are not subject to the public trust. If they were, then they could not be sold at all and certainly not to a private collector, as this would take the work out of the public domain. The non-legal restraints developed by the museum community apply to the use of the proceeds from the sale and not to the legitimacy of the sale itself.
The question of permissible use of proceeds from the sale of artworks is interrelated with the Financial Accounting Standards Board (FASB) Standards No. 116, which defines a “collection” to include works that are “held for public exhibition, education, or research in furtherance of public service rather than financial gain” and that are “protected, unencumbered, cared for, and preserved.” In addition, proceeds from the sale of a collection must be used to acquire new items for the collection. Donations of artworks that meet the FASB standard do not need to be recognized as revenue to the institution, and the works in the collection do not need to be capitalized for accounting purposes. External auditors may question the method of accounting of collections that do not meet the FASB guidance, and this is something that museums attempt to avoid. The FASB standard played a role in encouraging the AAMD’s restrictive approach. In 2019 the FASB modified its definition of “collection” to reflect the broader approach of the AAM rather than the narrower approach of the AAMD, but this does not seem to have fostered a change in the AAMD’s approach.
In an alternative attempt to explicate the AAMD’s restrictive policy, Brian Frye suggested that the policy is intended to create an artificial scarcity in the market for art works by removing many from the market or ensuring that others will be removed from the market if works are sold. This benefits those who currently own works of art—that is, major private collectors, many of whom sit on the boards of museums. This artificial scarcity drives up the value of the private collection and enhances the price of works if sold on the market.
3. Controversies concerning deaccessioning and use of sale proceeds.
Museum donors or those living in the vicinity of a museum have occasionally attempted to prevent sales through litigation. However, courts have consistently held that museum members and other individuals typically do not have standing to challenge a decision of a museum’s board. Only the state attorney general, acting on behalf of the people of the state, has standing to do so.
Despite the AAM and AAMD policies, several museums have deaccessioned works of art and used the proceeds for capital or general operating expenses. A museum usually takes these steps when it is facing financial hardship or sometimes when it decides to reorient its mission. The restriction on the use of funds is enforced through sanctions that the AAMD imposes on members, including censure, suspension, and/or expulsion of the museum director (who is the member). The museum may be subject to censure, sanctions, or the loss of accreditation by the AAM as well. These sanctions extend to museums that are embedded within a larger institution, such as a university or college, even though decisions concerning deaccessioning and use of proceeds are controlled by the board of the larger institution. The professional associations may also prohibit their members to lend works of art to or cooperate in any way with museums that violate these policies, even though these museums are not members of these associations.
In two examples, the AAMD sanctioned the Delaware Art Museum, Wilmington, DE, and the Berkshire Museum, Pittsfield, MA. In 2014 the Delaware Art Museum sold several works to repay a debt incurred in order to expand and renovate its facilities. In 2017 the Berkshire Museum sold forty works of art, including two Norman Rockwell paintings, to fund its endowment and to reorient the museum toward a science museum. As a result, no AAMD member museum was able to lend or borrow works of art or collaborate in any way with these institutions.
4. Effects of the coronavirus pandemic.
In 2020 the coronavirus pandemic forced the temporary closure of many museums, causing significant loss of revenue and extreme financial hardship to these institutions. As a result, the AAMD decided not to sanction or punish museums and museum directors that violated the AAMD policies for two years. More specifically, this modification allows museums to use for general operating expenses, including staff compensation and benefits, the income from restricted endowment funds, trusts or donations, and the income from the proceeds from the sale of deaccessioned art, regardless of when the works were deaccessioned. The change in AAMD policy also allows the proceeds from the sale of deaccessioned works of art to be used for direct care of collections, subject to a board-approved policy indicating what constitutes direct care of collections. A museum’s use of income from restricted funds and sales of works of art remained subject to donor restriction and other legal requirements. While this added flexibility is very much needed in this time of financial stress, the fact that these rules can be changed casts doubt on the legitimacy of the rigidity of these rules and argues that flexibility should be accorded in other situations of financial or other hardship for the museum. In March 2021, AAMD members narrowly voted 91–88 in an informal poll against a proposal to make these policy changes permanent (Kenney).
- Conforti, Michael. “Deaccessioning in American Museums: II Some Thoughts for England.” In A Deaccessioning Reader, edited by Stephen E. Weil, 73–86. Washington, DC: American Association of Museums, 2002.
- Gerstenblith, Patty. “Acquisition and Deacquisition of Museum Collections and the Fiduciary Obligations of Museums to the Public.” Cardozo Journal of International & Comparative Law 11 (2003): 409–465.
- Association of Art Museum Directors Professional Practices in Art Museums Appendix B, 19 (2011).
- Frye, Brian L. “Deaccessioning & ‘Private Choice’?” Nonprofit Law Prof Blog (Sept 29, 2015): <https://lawprofessors.typepad.com/nonprofit/2015/09/deaccessioning-private-choice.html> (accessed Mar 19, 2021).
- Collins, Maureen B. “Pensions or Paintings? The Detroit Institute of Arts from Bankruptcy to Grand Bargain.” University of Miami Business Law Review 24, no. 1 (2016).
- Frye, Brian L. “Art & the ‘Public Trust’ in Municipal Bankruptcy.” University of Detroit Mercy Law Review 93, no. 629 (2016).
- Kuruvilla, Heather Hope. A Legal Dictionary for Museum Professionals. Lanham, MD: Rowman & Littflefield Publishers, 2016.
- Kenney, Nancy. “Members of US Museums Association Narrowly Reject Proposal to Contemplate a Change in Guidelines on Art Sales.” The Art Newspaper March 16, 2021 <https://www.theartnewspaper.com/news/members-of-us-museums-association-narrowly-reject-proposal-to-contemplate-a-change-in-rules-on-art-sales> accessed March 29, 2021.
- International Council of Museums (ICOM) Code of Ethics for Museums (2017): <https://icom.museum/wp-content/uploads/2018/07/ICOM-code-En-web.pdf> (accessed Mar 19, 2021).
- American Alliance of Museums, Code of Ethics, Collections: https://www.aam-us.org/programs/ethics-standards-and-professional-practices/code-of-ethics-for-museums/ (accessed Mar 19, 2021).
- American Alliance of Museums, Direct Care of Collections: <https://www.aam-us.org/programs/ethics-standards-and-professional-practices/direct-care-of-collections/> (accessed Mar 19, 2021).