Because They Can: On the Rise of Single-Donor Private Museums and Shifts in Art Giving

Scan Inside Philanthropy's Visual Arts vertical and you'll come across multiple pieces looking at the rise of the single-donor private museum. I'm talking here about places like The Broad, which opened not long ago in downtown Los Angeles to display the art collection of Eli and Edythe Broad, the sole funders of the museum. While such museums aren't new, research tells us that 80 percent of all single-family museums were created in the 21st century.

This development represents a major shift in the centuries-old partnership between donors, private collectors, and public museums. It's game-changing stuff, and points to a simple yet powerful question: How will the next generation of museums be funded?

To answer this question—to the extent that it can be answered—some additional context is in order. As a result, I'd like to first ask two additional questions before gazing into the philanthropic crystal ball. First, what factors explain the startling rise of the privately funded museum? And second, what are the effects, good and bad, of this development, both in terms of private museums' mission and fundraising model and the overall public interest?

Let's start with the first question.

A New Gilded Age

A perfect storm of trends has propelled the rise of the single-donor museum. A big underlying driver, most obviously, is the vast new wealth that's been created in recent decades. There are more billionaires in the United States today than can fit on the Forbes 400 list‚ which had just 13 billionaires when it debuted in 1982. And while more of these fortunes are being harnessed to philanthropy, with large gifts flowing to established institutions like the MoMA and LACMA, many billionaire collectors also realize that nothing is stopping them from simply starting their own museums.

The "Cezanne in Storage" Effect

With top art museums now holding more pieces than they can possibly display, collectors may wonder: what's the point of donating a trove of art without assurances that the public will actually view it? The LACMA has 150,000 pieces of art; MoMA has 200,000 pieces. Who wants their precious collection sitting in storage with tens of thousands of other pieces?

The issue of capacity was central to billionaire J. Tomilson Hill's decision to start his own private museum last year. "We've got so much art in storage," he said, referring to established art institutions.

Two other notable factors behind Hill's decision were his disdain for large capital projects—"I’m not into wings, I'm into art"—and tax implications. "I can shelter capital gains," he said. (If you care to take a deeper dive into the tax implications at play here—in short, some private museums have been criticized as tax-exempt exhibition spaces that allow collectors to deduct the full market value of the art, cash and stocks they donate—click here for similar grumblings surrounding Peter Brant and the Brant Foundation.)

Hill wasn't alone in his concerns about the public's ability to see his collection. The Rubin Museum of Art, also located in Chelsea, originated in much the same fashion given the couple's trove of Tibetan and Himalayan art. This calculus also played a role in the Broads' decision to create a new museum.

This issue of capacity—or lack thereof—is having a ripple effect across other corners of the arts philanthropy sector as well.

Collectors Giving "Outside the Box"

First, given the lack of space at large institutions, many collectors are increasingly donating work to regional museums and off-the-radar spots like libraries, retirement centers and hospitals. An institution might make a collector an offer they can't refuse. "Your art will not only be seen," they are told, but "it will help take our institution—and city—to a whole level." As a previously noted example, the Worcester Art Museum carved out a successful role as a "small town" institution without the "big city" trappings of a high-risk capital project. This approach appeals to collectors.

Collectors Giving—With Strings Attached

We're also seeing examples of a kind of collector's middle ground. Rather than start their own museum or give their collections to smaller museums, collectors are giving to large institutions, but with important caveats.

Exhibit A comes from Patricia Phelps de Cisneros and her husband, Gustavo A. Cisneros. Last November, the couple announced they would give 102 pieces of Latin American Art and establish a research institute for related studies at the Museum of Modern Art (MoMA). Ms. Cisneros's gift came with an important caveat. She allowed the MoMA to pick from her home collection as long as the museum, in addition to displaying the pieces, would regularly loan the works to other institutions.

Exhibit B comes from the other side of the continent, where the San Francisco Museum of Modern Art forged a partnership with the Fisher Art Foundation, which ensured a long-term loan of 1100+ works from the collection of Donald Fisher, the billionaire retailer and philanthropist who passed away in 2009.

Conditions of the loan raised eyebrows across the city's arts community. For example, the agreement stipulates that a minimum percentage of Fisher pieces are to be displayed in the wing at all times. The takeaway here is obvious. It's a seller's market. Contemporary art is in high demand, and conditions or no conditions, many other directors might happily sign on to the Fisher deal.

Funders Keen on Capacity Challenges

Institutional funders also understand that there's too much contemporary art and not enough room. Many museums can't afford or are unwilling to embark on multi-million-dollar capital expenses. And yet, with the contemporary art boom showing no signs of abating, many institutional acquisition departments are faced with the dilemma of too much work and too little space.

This is why I found the Henry Luce Foundation's American Art program so interesting. By providing grants earmarked for "reinstallations, or the act of either renovating a space or physically relocating an existing collection," the foundation helps bursting-at-the-seams museums maximize existing space.

This brief detour examining the behavior of collectors and funders many seem tangential, but it speaks to the larger narrative. The perfect storm of factors driving the private museum boom has affected all segments of art philanthropy, from collectors who bypass the usual suspects to foundations' grantmaking priorities.

These ripple effects are neither inherently good or bad on the surface. But the rise of private museums has clearly impacted the larger arts philanthropy space—and with it, museums' fundraising strategies—for the better and the worse.

More Art: What's Not to Love?

Everyone can agree that the public is better off when a collector's work sees the light of day rather than gathering dust in a basement somewhere. But it also underscores the looming threat of market oversaturation.

It's a topic I discussed last December with the news that Guess co-founder Maurice Marciano would open a new museum in the arts mecca that is modern Los Angeles in the Spring of 2017. Not surprisingly, the brothers created the Marciano Art Foundation and the museum to offer the public access to their collection of 1,500 contemporary works.

As co-chairman of the Museum of Contemporary Art Los Angeles' board, Marciano is aware of the risk of over-saturation, and with it, the need for his museum to differentiate itself from its peers. "We don’t need another MOCA or Broad or Hammer Museum,” he told a reporter. “It has to be different, or why do it?”

At this point, fears around market saturation, at least in Los Angeles, may be premature. it's worth noting that visitors to The Broad during its first year were three times higher than what it had projected.

Inflating the Contemporary Art Bubble

When collectors like Marciano open a private museum, acquisition directors sigh in resigned dejection. The law of supply and demand, after all, is a fickle mistress. A new private museum means that another trove of contemporary art is taken off the market forever. When collectors start their own museums rather than donate the work, or eventually sell it, the scarcity only worsens.

Widening the Inequality Gap

By placing such work out of reach for large and small institutions, private collectors turned museum founders unwittingly propagate inequality across the visual arts world. As previously noted, collectors' propensity for new museums and mega-donors' mega-gifts for glitzy capital projects come at a time when the most important financial lifeline for smaller museums—public grant dollars—is being cut. Adjusted for inflation, public arts funding is 15 percent lower today than it was 20 years ago.

"When grant funding is slashed, the organizations that suffer most are the smaller groups, which have lower levels of visibility among other donors," notes a recently analyzed report, "Diversity in the Arts," by the DeVos Institute of Arts Management. "This means that arts organizations of color—along with rural, avant-garde and service organizations—suffer disproportionately."

The Next-Generation Museum Funding Model

This widening gulf underscores a larger trend across the entire philanthropy spectrum. A recent post, "Hollowed Out: Big Donors, Inequality, and the Threat to Civil Society," illustrates this phenomenon, which has played out across most segments of philanthropy since the Great Recession:

The super-rich are giving more and middle class and lower income Americans are giving less. This reflects broader trends in household income. Nearly all of the economic gains in the past decade have gone to the top 1 percent, while most Americans have been treading water and, as a result, have less spare income to devote to philanthropy.

Will this development inform the next-generation museum funding model, particularly as government funding continues to shrink? Of course it will.

Back in January, the San Francisco Museum of Modern Art convened panels of major museum leaders, curators and collectors to discuss the all-day symposium “Yours, Mine, and Ours: Museum Models of Public-Private Partnerships," where imminent spending cuts loomed large over the proceedings.

Panelists agreed that the private donors will play a greater role as government funders step back, a theme that David Callahan elaborates in his new book, The Givers. But such a broad—and obvious—statement obscures the inherent complexity of this development.

Say Goodbye to "Old World" Giving

As this post illustrates, it's unwise to put donors in a box. Indeed, the unpredictability of modern donors is one of the driving forces behind the demise of "Old World" giving, the centuries-old paradigm whereby collectors happily gave their work to a trusted institution and essentially washed their hands of the whole process.

We've seen a significant change in the donor psychographic profile. Now museums are facing a new era of detail-oriented bankers, hedge fund chieftains and high-tech moguls. These aren't your grandfather's collectors.

And at the end of the day, the reason why we're seeing a rise in single donor museums adheres to the tenets of Occam's Razor, which stipulates that the simplest explanation is the best one for a given occurrence. Donors are starting their own museums because they can.

Will The Inequality Gap Continue to Grow? Probably.

As we've seen, the implications of Hill and his ilk starting their own museums run the gamut. On the bright side, valuable collections see the light of day and the public benefits. On the other hand, more museums mean more art on display in more places, which carries a risk of over-saturation, and with it, possibly fewer visitors to public institutions. It also means contemporary art will become more expensive, placing it increasingly out of reach for smaller acquisition departments.

In short, it means a widening of the acute gap between the "haves" and the "have-nots."

The immediate future represents more of the same. As public funding dries up and billionaire mega-donors' portfolios continue to grow, the patrons will command even greater influence—some of it good, some of it bad—across the visual arts world.