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Deaccession Concession: AAMD Bends Its “Fundamental Principle” on Art-Sale Proceeds

Desperate times call for desperate measures?

At a time when “cutbacks,” “furloughs,” “layoffs” & “cancellation” have become the baneful bywords of museum management, the Association of Art Museum Directors has capitulated to the exigencies of the moment by loosening its tight strictures against the use of proceeds from art sales for anything other than acquisitions. It has also weakened its guidelines for preserving endowment principal.

According to Wednesday’s AAMD announcement:

The resolutions state that AAMD will refrain from censuring or sanctioning any museum—or censuring, suspending or expelling any museum director—that decides to use restricted endowment funds, trusts, or donations for general operating expenses. The resolution also addresses how a museum might use the proceeds from deaccessioned art to pay for expenses associated with the direct care of collections.

The resolution does not change AAMD’s Professional Practices or any other rules currently in place, but instead effectively places a moratorium on punitive actions through April 10, 2022 [emphasis added]. AAMD also recognizes that it is not within the Association’s purview to approve the redirection of restricted funds. However, it hopes that these resolutions will serve as an endorsement to donors or the relevant legal authorities, encouraging them to permit the temporary use of these funds for unrestricted needs.

In response to my queries, an AAMD spokesperson emphasized that “AAMD has not changed its standards and best practices. It has only said that it will not take punitive action against an institution or director for taking certain steps within the next 24 months, ending April 10, 2022.”

The spokesperson would not say whether the board’s vote to allow these deviations was unanimous, but did note that “there was robust discussion among the group, in order to ensure that everyone understood the terms of the resolution, the potential impact on the range of museums that comprise AAMD’s membership, and the importance of putting a clear time limit in place as part of the process.”

Daily reports of museums in dire straits point to the undeniable necessity of these regrettable measures. That said, the danger of the “slippery slope” cannot be overstated: How will AAMD’s watchdogs ever again be able to censure or sanction individual museums (as happened with the National Academy in New York and the Berkshire Museum in Pittsfield, MA) if they resort to monetizing their art in an attempt to secure their economic futures in future years, after the national emergency has passed?

Norman Rockwell, “Shuffleton’s Barbershop,” 1950
Sold in 2018 by the Berkshire Museum to the Lucas Museum of Narrative Art
Photo by Lee Rosenbaum

In its 2008 statement deploring the National Academy’s desperation deaccessions, AAMD had declared:

It is…a fundamental professional principle that works can only be deaccessioned to provide funds to acquire works of art and enhance a museum’s collection….The National Academy is now breaching one of the most basic and important of AAMD’s principles by treating its collection as a financial asset, rather than the cornerstone of research, exhibition, and public programming, a record of human creativity held in trust for people now and in the future [emphases added].

Under AAMD’s new (temporary) guidelines, art museums will be able to apply the full amount of deaccession proceeds to help pay for “direct care of collections,” without incurring the wrath of their peers. And AAMD is passing the buck to the individual institutions when it comes to defining what “direct care” actually means:

Each museum must determine its own definition of “direct care,” develop and adopt a policy that articulates that definition clearly, and share it publicly. We recommend that institutions draw on a position paper developed by the American Alliance of Museums (AAM) as a starting point.

In the above-linked 2019 position paper, AAM defines the use of sale proceeds for collections’ “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”—a very broad definition that could encompass functions as diverse as conservation or climate-control upgrades. (Could the Metropolitan Museum’s current $150-million skylight-replacement project theoretically be classified as “direct care of the collections,” under the terms of AAMD’s relaxed guidelines?)

The AAMD spokesperson stated to me that “while we would consider something like conservation to be part of the direct care of collections, general operating expenses, such as utilities or capital improvements, do not fall under AAM’s definition of “direct care.”

According to AAMD’s temporarily relaxed guidelines, income (but not principal) of endowment funds, trusts, or donations that benefactors have explicitly restricted for purposes other than general operations (i.e., to help bankroll art acquisitions, conservation or research) can be applied towards “general operations, including necessary expenses such as staff compensation and benefits.”

“Income” refers to the rate designated by the board as a prudent amount to spend per year (i.e., usually around 4-6% of the endowment’s value annually), which may be less than actual income in good years and may exceed actual income (perhaps even resulting in an “underwater endowment”—lower in value than the original gift) in bad years. This year, the actual income from endowment funds will undoubtedly plummet, due to the pandemic-related decline in the values of investments.

I asked AAMD’s spokesperson whether there is a danger that association’s resolution could trigger a rash of art sales that might not otherwise have taken place. Here’s his reply (with my own bracketed commentary in italics):

We do not think this is likely. First and foremost, AAMD has communicated to the membership, both orally and in writing, that the expectation is that museum leadership will act in good faith. [“Good faith,” to me, is a nebulous “standard.” It only means that in the individual director’s (possibly flawed) judgment, art disposals are in the institution’s best interest.]

It has likewise been communicated to the membership that the near-term flexibility that AAMD’s resolutions provide is not intended to incentivize art sales. [But that may be the practical effect of a one-shot opportunity to monetize art without incurring formal censure.] The best practices addressing deaccessioning, as articulated in AAMD’s Professional Practices in Art Museums, has not changed. 

Those “best practices” include the following, as delineated on p. 21 of Professional Practices in Art Museums (AAMD’s 35-page compendium of governance standards):

Funds received from the disposal of a deaccessioned work shall not be used for operations or capital expenses. Such funds, including any earnings and appreciation thereon, may be used only for the acquisition of works in a manner consistent with the museum’s policy on the use of restricted acquisition funds. In order to account properly for their use, the AAMD recommends that such funds, including any earnings and appreciation, be tracked separately from other acquisition funds [emphases added].

“Professional Practices” is due for its once-a-decade update next year. How the rest of this year plays out may be a deciding factor in whether any of the current emergency-driven deviations regarding what practices are feasible and permissible will find their way into the new edition.

For now, I’ll grudgingly concede that AAMD’s current action is a justifiable emergency rescue operation for the entire field, not merely an easy fix for a few poorly managed institutions.

The association’s spokesperson put it this way:

The pandemic is having a broad range of effects on our society and our economy, with long-term consequences that are difficult to predict. But the near-term impact on art museums is clear, affecting everything from admissions revenue and other earned income to charitable contributions and endowments.

That is the context for AAMD’s actions, recognizing that providing museums with greater financial flexibility now will help ensure their long-term stability and their opportunities to serve their communities down the line.

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