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‘I’ll take 100 shares of American Gothic, please’

by Victoria Fine
Jan 29, 2009

Two Chicago art lovers say they have a potential solution to the financial squeeze being felt by art museums and institutions: Share the wealth locked up in those collections.

Their proposed funding mechanism would change the way art is bought and sold in the U.S.

The idea, called Coaccession, occurred to finance researcher Mark White in 2006 when he heard several archaeologists had proposed a ban on private collections to prevent dig sites from being looted.

“Because both parties [museums and collectors] are interested in antiquities, they should be able to work together. It occurred to me that they could split up the rights to display it and possess it.”

White began to take the idea more seriously three years ago when he realized it had never been done in the art world. He created a name for the rights-sharing system based on the museum term for buying and selling art, accession.

Art as a public trust

Traditionally, buying and selling art to generate money is frowned upon among art institutions.
The art they own is considered part of the public trust. Selling a piece of artwork is frowned upon unless profits go toward a new piece of art that will enhance the entire collection of an institution.

This means that museums across the country have plenty of art sitting in storage because there is no space to display it. They may also have famous works that increase in value each year, but will never sell them because thousands of people come to visit them each year.

White’s plan is to change the way art can be owned so that museums and investors can get the most out of its overall value.

Ownership rights to a piece would be divided into possession and cultural rights, such as the rights to display and research the piece.

For example, the Art Institute, which generates a large income each year from people visiting Sunday in the Park, could sell the possession rights for the painting to investors. The painting would never leave the safe confines of the museum, but investors would benefit as the value of the piece increases year after year. They could sell their share of ownership in 15 to 20 years for a profit.
“This is a way for an Art Institute to tap into the value of a piece to acquire more art, possibly create a new exhibition space, or pay for conservation or restoration,” White said.

Conversely, a museum may have a piece in its basement that is never displayed. A private collector could buy the rights to display the piece in his home, while the museum retains the rights to research or restore the piece.

This is different from a loan, White says, because “the collector would have the impetus to take care of it because they own it. They could own it forever, subject to the agreement with the museum.” Under certain circumstances, such as if a collector could no longer afford to care for the painting, the contract could be reverted, he said.

In theory, everyone wins

If the plan works as imagined, museums get significant extra income and keep pieces of art in the public domain, collectors have access to pieces of art they love, and investors have a new way of diversifying their portfolios in a socially responsible way.

In its full incarnation, rights to artwork could be sold on the open market, similar to shares of gold. “I expect there to be public trading,” White said. “You could put your 401k in a portfolio of investor titles on these artworks. It would be a diversified portfolio for socially responsible investment because your money will essentially underwrite the mission of the museum.”

Similar funding mechanisms are accepted practices in other industries, such as for intellectual property or in the agricultural futures market.
But the legality and intricacies of how the scheme would work have left many perplexed as to how such an approach could affect public institutions and artistic development in the future.

“I think that Coaccession is difficult for almost everybody to understand,” Chicago art advocate Paul Klein said.
For instance, details such as who would set the value of a share of an artwork and how the market would be monitored have not been determined.
But the details aren’t the point at this stage, Klein said.

“I’m looking at this as a potential opportunity to create liquid wealth for an awful lot of museums having significant problems keeping their doors open,” he said. He and White have teamed up to find partners in a pilot version of Coaccession. They hope that in this first try, they can establish the legality of such deals, then open up the financial scheme on a large public scale, such as at the Chicago Board of Trade.

“You could call your broker and say, ‘I want 100 units of American Gothic,’ and he says, ‘Done, I’m going debit your cash account and credit your American Gothic account,’” White said.

“Then there are art advisers, art mutual funds, the whole complex you see in stocks, acting to advise people to invest in art,” he said.

But there are downsides

Representatives at the Chicago Board of Trade declined to comment on the issue, as did the art investment division of Citigroup’s Smith Barney.
They, along with several gallery owners across the city, said they could not grasp the concept well enough at this point to make a decision as to its financial viability or potential public interest.

“It’s hard to see the fundamental value of it in the long run,” said David Robertson, director of the Mary and Leigh Block Museum at Northwestern University in Evanston. “It could affect what we collect, undermine normal physical security within the collection, and it’s going to skew us from our mission to protect the cultural patrimony.”

Dominic Malone, curator at the Museum of Contemporary Art Chicago, expressed concern on another front.

“[The idea] doesn’t necessarily devalue art, but from a reverse perspective, some artists’ careers are certainly buoyed by the market. This tends to really muddy the waters in terms of being able to assess the work’s other qualities. When you only access work in terms of its market value, this becomes complicated and dangerous.”

He worried that artists with little talent could potentially manipulate the market to bolster their careers, or that they would amend their styles to follow popular art share trends.

Mark Huddle, a painter from Chicago, was ambivalent about this potential to affect artists.
“Some artists make art because they’re compelled to. Others are frank that they are going to make money. In a new market, you’d still have all those personalities there,” he said.

“I see that this initiative would somehow accelerate the proliferation of these pseudo-artists. If that would happen, I would be dead set against it. But if it were set up in a way to allow galleries and not-for-profits to keep and acquire art, then it’s a good idea,” Huddle said.

White believes that if the idea takes off, it could also be used in other areas that have the mission to record humanity.

“Hopefully it will stimulate these institutions when funding is hard to come by,” he said. “I want to see more archeologists, paleontologists and artists working and this helps that to happen.”