As art museum directors across the United States confront balance sheets devastated by the coronavirus pandemic, the field’s leading professional organization has adopted temporary measures aimed at giving them greater flexibility in how they manage their finances.
The Association of Art Museum Directors, which has about 240 members, said on Thursday that, for the next two years, it will not censure or sanction museums that engage in some activities typically prohibited by its policies, including using income from restricted funds for general operating expenses.
“Some of our member organizations are in very precarious positions,” said Brent Benjamin, the ADAA’s president, who is the director of the St. Louis Art Museum. “That is one of the reasons we took these actions—we wanted to make sure we could help in any way the association could.”
The move means that an art museum facing a cash crunch for, say, payroll could potentially use income from a fund earmarked for conservation or acquisition projects without facing repercussions. This new policy applies only to the income, or the standard draw rate, from such funds (around 5 percent, in many cases), not the principal of the endowment.
“This is very sensible,” museum consultant David Gordon said. “Faced with a collapse in the economy it is necessary to break all normal rules to ensure survival.”
The emergency policy also tweaks how a museum can use proceeds from art it deaccessions from its collection and sells, a process that has sparked controversy in the past. The temporary measures will permit directors, without fear of consequence, to use all such proceeds for the “direct care of collections,” as determined by the institution. Under standard AAMD guidelines, proceeds from an artwork’s sale are to go toward a fund for new acquisitions. The resolutions include language that allows income from such acquisitions funds to be used for operating expenses.
“This is a very substantial shift,” said Nicholas M. O’Donnell, a partner in the Boston office of Sullivan & Worcester who specializes in art law, of the relaxing of deaccessioning requirements. “It’s nice to see the AAMD be timely in response to the reality of what’s going on.”
Museums deciding to tap restricted funds or donations would likely consult with donors, their heirs, or state attorneys general, which oversee nonprofits in many jurisdictions, and make the case that the deviations from intent are necessary, O’Donnell said. “You would want to be on the phone with them, saying, We might go out of business if we don’t do this.”
Benjamin said that some AAMD members—whose institutions range widely in size and resources—had already contacted donors, and asked to redirect funding temporarily. “The response has been overwhelmingly positive,” he said.
The resolutions do not change AAMD’s actual governing standards. They merely lift the possibility of sanctions through April 10, 2022. Those punitive measures, which can include the ejection of museum directors from the organization, isolate museums them from their peers by preventing them from receiving art loans and taking part in other types of collaborations. (The Berkshire Museum, in Pittsfield, Massachusetts, was hit with such restrictions in 2018, when it began selling collection works to pay for a proposed renovation and other expenses.)
The AAMD measures come amid widespread uncertainty about the viability of many cultural institutions as they face a collapse in revenue from ticket sales, investment losses, and a possible downturn in donor giving. The American Alliance of Museums, a group that advocates for U.S. museums, has said that 30 percent of institutions may not be able to reopen without substantial government relief.
The recent federal CARES Act set aside $300 million for arts groups, a fraction of the $4 billion for which the sector had been lobbying, but also included a “Paycheck Protection Program” for which some institutions may be eligible. “Museums should take full advantage of all programs, federal, state, and city, that grant money to keep staff on payroll,” Gordon, a former director of the Milwaukee Art Museum, said. Over the past month, numerous institutions have laid off or furloughed sizable percentages of their employees.
Speaking of the AAMD resolutions, O’Donnell said that “what remains to be seen is how this affects big institutions as opposed to small institutions.” Larger organizations typically have far more substantial funds from which to draw. At a moment of potentially calamitous financial shocks, the emergency measure could also raise a debate about “What’s the point of an endowment?” he said. “That’s a healthy question to ask at an unhealthy time.”