I.  INTRODUCTION

The recent economic crisis that downed banks and other industry players did not leave the art world untouched.  Newspapers report that financially strained museums are resorting to the sale of artwork in order to remain viable.[1] One high-profile case centers on the Rose Museum at Brandeis University in Massachusetts.[2] Another case, although not initially due to the recession, focuses on the Stieglitz Collection at Fisk University in Tennessee.[3] These examples raise recurring questions about the extent of donor control over gifts and benefited institutions.  Given the restricted status of many donated works, is a museum’s decision to sell art barred by donor intent?  Would the recession count as an event “impracticable” or “impossible” enough to justify a departure from donor intent?

This Note explores these issues in the context of the Rose Museum and the Stieglitz Collection and suggests that courts should take the state of the economy into account when deciding whether to override donor intent to allow deaccession, or the sale of art.  Judicial recognition of the financial difficulty facing museums may in turn lessen the legislative desire to interfere, à la New York state bill A06959, in a field that is properly self-regulatory.

II.  THE IMPACT OF FINANCIAL DIFFICULTY ON UNIVERSITY ART MUSEUMS

1. THE SPECIAL PREDICAMENT OF UNIVERSITY ART MUSEUMS

University museums are beset with a host of pressures not felt by independent museums.  First, university museums are controlled by their universities.  Because the university museum has no legal identity beyond its affiliation with the university, it is no different from any other university department and no less vulnerable to budget cuts when the university as a whole is struggling.[4]

Second, the university museum must fulfill a challenging dual role by justifying its position within an academic institution and attracting a diverse and appreciative audience.  The university museum’s two hats mean that the museum’s role is often defined by the university and the administration’s particular budget needs.  At worst, the university museum might be considered “an ancillary service, a frill, or a dead weight” and might be especially vulnerable to budget cuts.[5]

Thus, in times of financial difficulty there may be a conflict of interest between the university and the university museum.  The university is all too ready to subvert its museum’s interests for its own benefit.  In order to honor the policy goal of keeping museums viable, courts in deaccession disputes should consider which institution, the university or the university museum, feels the strain of financial difficulty and the extent of financial stress.

1. THE ROSE MUSEUM AT BRANDEIS UNIVERSITY

In January 2009, Brandeis University announced that it would close its Rose Art Museum and sell art in order to plug budget gaps caused by the recession.[6] The Rose Collection is one of the finest postwar collections in New England and worth an estimated $300 million.[7] The president of Brandeis at the time, Jehuda Reinharz, defended the decision by referencing the university’s significantly reduced endowment and choice to prioritize its “core teaching and research mission.”[8]

Although initial reports that the university intended to sell all of the Rose’s holdings[9] were modified by statements that no art would be sold if the economy improved,[10] the university faced a lawsuit for violation of donor intent brought by the Rose’s board chairman and two prominent donors, one of whom was a member of the Rose family.[11] A Suffolk County Probate and Family Court judge issued a preliminary injunction preventing Brandeis from selling any art donated by the plaintiffs and ordered Brandeis to notify the Massachusetts Attorney General at least thirty days before selling any other art.[12] The judge set the trial date for June 2010.[13]

1. THE STIEGLITZ COLLECTION AT FISK UNIVERSITY

In 2006, Fisk University attempted to sell an O’Keefe and a Marsden Hartley painting from its Stieglitz Collection in order to raise funds.[14] This set off a legal tug-of-war.  After an initial settlement attempt, the Tennessee Attorney General withdrew his approval of the settlement and gestured towards “greater resolution of the legal issues from the Court.”[15] The chancery court then enjoined Fisk from selling either part or all of the Collection because of a lack of general donor intent[16] and because Fisk neglected to plead “specific facts of hardship . . . such as the University’s financial condition render[ing] it impracticable to continue to maintain the Collection at the University.”[17]

Indeed, when the case moved to appellate court, the court ruled that Fisk failed to prove a precondition that might have allowed it to apply the cy pres doctrine.18 Specifically, the court found that although O’Keefe had a general charitable intent to benefit the university,[18] Fisk failed to prove that compliance with donor-imposed restrictions had become impossible or impracticable due to the University’s financial troubles.[19] Thus, the court remanded on the question of whether Fisk had recourse to cy pres, “which must be held in abeyance unless and until the trial court . . . finds that literal compliance with the conditions imposed by Ms. O’Keeffe are impossible or impracticable.”[20] The case on remand was scheduled for 2010.[21]

III.  THE UNDESIRABILITY OF LEGISLATIVE INTERVENTION IN DEACCESSION

Although the force of financial pressure and the need for clearer standards are reasons to improve deaccession policy, supporters of New York Bill A06059 assume that the legislature is the proper vehicle for encouraging this change.  However, there are a number of arguments against legislative intervention in museum affairs.             First, American museums have a tradition of operating independently of the government.  The idea that cultural development is properly left to the people via independent museums encourages diversity and “the direct participation of many in shaping a cultural heritage.”[22] Second, American museums are traditionally self-regulatory and have formed regional and national organizations, such as the Association of Art Museum Directors (AAMD), that exert great pressure on museums to follow professional codes of conduct.[23] Because the museum community is a relatively small one and because museums run on social capital in order to work on joint projects, any violation of these codes can be highly visible and opprobrious.  With this highly respected and workable structure in place, legislative measures may prove more meddlesome than helpful.               Third, deaccession is a legitimate and accepted practice among museums.[24] Indeed, it is necessary for museums to remain true to their missions by pruning unnecessary or deteriorated pieces and acquiring relevant works.[25] Fourth, legislation limiting deaccession is undesirable because it fails to recognize a fiscal reality that museums face.[26] Ignoring this reality is not only intellectually dishonest but affirmatively harmful for attacking a professionally recognized source of revenue without suggesting any alternative.[27] Indeed, the bill was introduced only a few months after the State Board of Regents almost passed an emergency amendment permitting financially-troubled institutions to deaccession.[28] Finally, passing legislation like Bill A06959 would set a dangerous precedent for allowing the legislature to regulate museum affairs.  Museum professionals are entrusted with the public’s cultural development, not politicians.[29] The legislature fails to recognize that accession and deaccession are part and parcel of a holistic approach and that selective disregard for one over the other fundamentally misunderstands museum management.[30]

IV.  FINANCIAL HARDSHIP AS A FACTOR FOR DEACCESSION

A.  THE CY PRES DOCTRINE

Courts may allow departure from donor intent via the cy pres doctrine.  “Cy pres” is derived from old French for “aussi près que possible,” meaning “as close as possible.”  This doctrine allows for the alteration of specific donor intent in order to adhere to general donor intent.  Cy pres is available only if three criteria are met: the donor has created a charitable trust, the specific purpose of the trust is impossible or impracticable, and the donor expressed a general charitable intent.  In addition, cy pres allows deviations only to the extent necessary so that donor intent is upheld as much as possible.

B.  FINANCIAL HARDSHIP AND THE CY PRES DOCTRINE

Case law has referenced financial stress as a reason for employing the cy pres doctrine, suggesting that a similar rationale may be applied in the context of deaccession.  For example, in Knickerbocker Hospital v. Goldstein,[31] the court found that the donor had a general intent of benefiting the hospital and that war-related economic stress counted as an unforeseen “changed circumstance” that warranted application of cy pres.[32] Thus, the hospital was allowed to invest restricted funds in order to preserve the donor’s general intent of keeping the hospital open.[33] This case demonstrates that a court should take economic difficulty into account when deciding whether to apply cy pres, especially if the difficulty is widespread and threatening the very viability of the organization that the donor intended to benefit.[34]

Similarly, in Morristown School, Inc. v. Parsons, the court allowed the school to access funds reserved for scholarships in order to complete construction of a gymnasium, without which the school was losing enrollment and would be forced to close.[35] The court understood that the donor’s general intent of benefiting the school through its students could not be preserved if the school ceased to exist.[36] As in Knickerbocker, the court considered the degree and effect of economic stress on the school in allowing it to borrow from restricted funds.[37]

Therefore, if the Fisk and Brandeis cases reach litigation,[38] the courts should explicitly consider financial stress when deciding whether to permit departure from donor intent.  The courts should be particularly sensitive to the fact that the financial stress at hand is due to a widespread and unexpected recession.  This kind of stress should perhaps weigh more heavily in favor of cy pres than stress of a more regular occurrence.  Judicial consideration of this fact would acknowledge a very real pressure that museums face.

C.  HOW THE BRANDEIS COURT SHOULD RULE

If the dispute reaches court, the Brandeis court is likely to rule in favor of the donors and against Brandeis and its decision to deaccession.  Because it is Brandeis and not the Rose that is pushing for deaccession, the court should pay particular attention to whether general donor intent lies with the university or the museum.  The court may find that general intent is limited to benefiting the Rose, thereby barring the university’s use of the cy pres doctrine.

Even if the court were to find that the donors intended to benefit the university, it must still be wary of the inherent conflict of interest between universities and university museums.  Because the university decided to deaccession although the museum was not in financial trouble, and because closing the museum would mean that the collection would at least be initially lost to viewers, the court should rule against deaccession.  The court should remember that the financial difficulty card in a deaccession case is for the museum and not the university to play in order to ensure its viability.

D.  HOW THE FISK COURT SHOULD RULE

A court might decide that Fisk has a better argument for cy pres than Brandeis because the Stieglitz Collection was gifted directly to the university.  In fact, Fisk does not have a museum.  There would be no conflict of interest between the university and a university museum.

On remand, the trial court is likely to agree with the appellate court that there was general intent to benefit the university.  Although a lower court indicated that the donative instruments made no mention of intent to benefit the university,40 the appellate court looked to other indicia, such as the fact that O’Keefe made similar charitable donations to other charities, to find that there was general intent.41 Because the appellate court honed in on this missing factor as a bar to Fisk’s use of cy pres,42 Fisk is likely to amend its argument to address its deteriorated financial state.  Indeed, when the Tennessee Attorney General initially allowed Fisk to sell the O’Keefe and Marsden pieces, he wrote that his reason was to avoid “the risk of financially crippling one of the preeminent historically black colleges and universities in the nation.”43 Although the extent of Fisk’s financial troubles is unclear, given the language of the Attorney General it seems likely that its difficulties are proportionately much more severe than those experienced by Brandeis.  While Brandeis suffers a severe budget cut, Fisk’s very viability seems to be threatened, which works in favor of allowing deaccession in order to keep the university open44 and the rest of the Stieglitz Collection available.

Thus, when art is gifted directly to the university so that there is no university-university museum conflict of interest, the extent of the university’s economic hardship may be a determinative factor in evaluating the force of an argument for cy pres.

V.  CONCLUSION

Financial hardship, particularly if due to widespread economic problems, should be a factor for courts to consider when deciding whether to apply the cy pres doctrine to allow deaccession.  Such consideration would allow courts to recognize the reality that museums face, would grant museums the flexibility they need to remain viable, and would discourage legislative meddling.  Courts deciding whether to apply cy pres to allow deaccession must also be wary of the conflict of interest between universities and university museums.  The Brandeis and Fisk cases would provide the judiciary with prime opportunities to keep art accessible by recognizing economic reality and defending museum independence against legislative interference.