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"Fiduciary duties carried the day. At the end of the day, the directors have a legal duty to the Academy, not the AAMD"

By Intellectual Property Law, Esq.

Like Berkeley's Michael O'Hare, Jack Siegel (author of the Desktop Guide for Nonprofit Directors, Officers, and Advisors) thinks the AAMD's apoplexy about the recent sales by the National Academy Museum is unwarranted:

"Normally, we agree with AAMD?s tough stand on deaccessioning, particularly if the sales proceeds are used to pay current operating expenses. But there needs to be flexibility in any rule. This decision and the resulting sales strike us as well considered and reasonable. First, the sale was made after an extensive consideration by the board of directors. .... Second, the sale apparently was necessary for the Academy to survive. ... The Academy?s interim director, Carmine Branagan, told Kennedy that the Academy would have been forced to close without the sale. It has unpaid vendors. ... The AAMD can stand on principle, but the fact remains that the Academy holds over 7,000 paintings, most of which have never been publicly displayed .... Some of the sales proceeds will be used to mount exhibitions that will be open to the public. If the status quo continues, future generations will be deprived of seeing works by Chuck Close, Japser Johns, Franky Gehry, and Wayne Thiebaud."

He also does what many reflexive opponents of deaccessioning often fail to do, namely consider the alternatives:

"What happens if an organization like the Academy files for bankruptcy? Maybe the state attorney general will intervene to protect the charitable assets, but bankruptcy can be a messy process. Unless the assets are specifically restricted by the donor, a case can be made that they can be used to satisfy creditors. See In re Boston Regional Medical Center, 2004 U.S. Dist. LEXIS 15398; and In re Winsted Memorial Hospital, 280 B.R. 588 (Bankr. D. Conn 2000) for two cases holding that assets without express donor restrictions could be used to satisfy creditors in a bankruptcy proceeding. If those cases are followed, unrestricted artwork will be sold (and not necessarily to other museums) and the museum will go out of existence. Wouldn't it have been prudent in terms of AAMD's concerns to sell a couple of paintings and keep the museum (generically--we aren't referring to the National Academy) running [rather than] risk being forced to sell all the paintings in a bankruptcy proceeding? In short, we don't think the AAMD has followed the logic of its strict policy to its logical conclusion. The logical conclusion: By being inflexible, the AAMD may end up forcing more artwork out of the charitable sector than if it were more flexible."

Full post as published by The Art Law Blog on December 07, 2008 (boomark / email).