At Meural, we're driven by art democratization and transparency—and so we've developed a series at the intersection of art and commerce. Each installment provides an objective, accessible debriefing of a financial aspect of the art industry.
90% of the work in public collections like The Met come from donations by private individuals
by Elinor Case-Pethica
The past 15 years have seen a rapid increase in the number of private museums and art foundations—a fact often referenced in conjunction with rising auction hammer prices and declining market transparency. But what are these institutions and how do they differ from more familiar public museums and personal collections?
Art foundations are far from being new constructions—they began to appear as early as the end of the 18th century as an outlet for wealthy collectors to show off their purchases to the interested upper echelons.
Private museums and art foundations are legally defined as being founded and initiated by a private entity, such as an individual, family, or private company. The collection must exist in a publicly accessible physical exhibition space, although there is heated debate over what the exact meaning of public accessibility is; some interpret it as requiring regular opening hours, whereas others operate on an appointment-only basis. The exhibition space must be distinct and separate from the owner’s home, and must have an educational component to their program.
The Brant Foundation Art Study Center in Greenwich, Connecticut is one of America’s top private contemporary art museums
The reason for so many stipulations and rules regarding private museums and foundations is that they present a massive potential money-saving strategy for collectors. Charitable donations of artwork are tax deductible—a rule intended to incentivize wealthy collectors to share their art with the public rather than keep it locked out of view. The law has certainly been effective, and a major reason behind the fact that 90% of the work in public collections like The Met come from donations by private individuals.
Starting a private museum or foundation may be a more appealing option to major collectors than donating to an existing institution. One significant factor was a change of tax code; in 2006 there was a new law preventing collectors from taking tax deductions for pledging to donate an artwork after the event of their death. This had been a popular practice because the collector was able to remain until then as “owner.” The rise in popularity in private museums and foundations can be explained in part by the desire for ownership and authority. From an aesthetic standpoint, the collector maintains much more control. In 77% of private museums and foundations, the collector acts as head curator. This means that their pieces will be exhibited in the exact manner that they wish, solely accompanied by works that they felt equally worthy of buying. The collection of a single buyer tends to be much more cohesive than that of a public institution, and has more curatorial flexibility to focus on a specific artistic period or group of artists. There are also several financial advantages: in a number of scenarios, the collector can write the value of the works on display off their taxes, while still feeling a sense of ownership and having control over the fate of the pieces. Although the museum or foundation cannot be in their home, 59% of private museums are in close proximity to the collector’s place of residence—and in some instances even built on the same property.
The de la Cruz Foundation, in Miami, was founded in 2009
The argument is frequently made that the increase in the number of private institutions has contributed to the skyrocketing auction prices of recent years. One point worth making, however, is that these institutions are essentially stand-ins for pre-existing buyers. The major difference is not number of bidders, it is that the works purchased remain, or become, accessible to the public.
It is likely we will see a continuing rise of these private institutions; 70% of those already existing were founded after the year 2000 and announcements of new ones are ever more frequent. It is undeniable that the influx of private institutions is profoundly reshaping the climate of the art market; how this will play out in the long term is anyone’s conjecture.
The Goss-Michael Foundation in Dallas, was founded in 2007
All statistics are sourced from AMMA (Art Market Monitor of Artron)'s latest Private Art Museum Report, done in conjunction with Larry's List.