Steve and Katie discuss two recent art world controversies involving small, local nonprofits seeking to raise money through asset divestment. The di Rosa Center for Contemporary Art in Napa Valley is attempting to deaccession most of its permanent collection of Bay Area art works in the face of vocal art world opposition. In Philadelphia, the proposed sale of the Painted Bride Art Center building by the organization’s board, including its one of a kind mosaic mural façade, has raised public protest and legal challenge. Both entities claim they need funds to continue their mission, while critics say the act of selling off the assets at issue in each case directly undercuts such mission.
Resources
di Rosa Center for Contemporary Art:
http://www.dirosaart.org/history/
https://nonprofitquarterly.org/napa-museum-plan-to-deaccession-art-works-raises-art-communitys-ire/
http://www.artnews.com/2019/08/20/dirosa-foundation-open-letter/
http://www.artnews.com/2019/08/28/di-rosa-foundation-deaccessioning-support/
Painted Bride Litigation:
https://paintedbride.org/about-us/
https://philly.curbed.com/2017/11/28/16709332/painted-bride-building-theater-for-sale
https://observer.com/2019/09/philadelphia-painted-bride-art-center-condos/
https://philly.curbed.com/2018/9/14/17861972/painted-bride-building-art-center-old-city-philadelphia
https://whyy.org/articles/judge-old-citys-painted-bride-cant-be-sold-for-condos/
Episode Transcription
Steve Schindler: Hi, I’m Steve Schindler.
Katie Wilson-Milne: I’m Katie Wilson-Milne.
Steve Schindler: Welcome to The Art Law Podcast, a monthly podcast exploring the places where art intersects with and interferes with the law.
Katie Wilson-Milne: The Art Law Podcast is sponsored by the law firm of Schindler Cohen & Hochman LLP, a premiere litigation and art law boutique in New York City.
Steve Schindler: Hi, Katie.
Katie Wilson-Milne: Hi, Steve. So, today we’re going to talk about two at least what we think are very interesting controversies/developments in the arts community involving two small arts nonprofits, one in California and one in Philadelphia, Pennsylvania. And they will touch on some of the issues we’ve discussed before in the podcast around deaccessioning and fundraising struggles and you know, the tension between people who say arts organizations need to preserve their artistic assets in perpetuity for the public and more, you know, practical logistics-based arguments about needing to stay open and needing the money such assets can bring.
Steve Schindler: So, the first of the two that we’re going to talk about is the di Rosa Center for Contemporary Art, which is a wonderful refuge in the Napa Valley. The di Rosa Center for Contemporary Art was really the vision of two patrons of the arts, Rene and Veronica di Rosa. Veronica di Rosa was an artist who married Rene di Rosa in the mid 70s. Rene was a journalist working in San Francisco who started collecting art in the early 60s by emerging Bay artists. At the same time, he purchased land in the Carneros region of southern Napa and started planting vineyards, which sounds lovely.
Katie Wilson-Milne: Yeah, it sounds delightful.
Steve Schindler: So he was — he was collecting art and thinking about how to make wine, and he was successful in both of these endeavors, because for one thing he developed life-long friendships with a number of artists from the San Francisco Bay area. They included Robert Arneson, Roy De Forest, and Manuel Neri to name a few. Over time his collection grew and included works of the artists Mark di Suvero, Viola Frey, Paul Kos and many others.
Rene ultimately served on a number of boards of museums including the San Francisco MOMA and between the early 1960s and the 80s. He was very successful in developing his vineyard so much so that in 1986 he was able to sell his vineyards to Seagram for a lot of money and used the profits on that to establish the Rene and Veronica di Rosa Foundation, with a vision to build what he called an “art park” for the public on his land in the Napa Valley. And in 1997, the center opened, became a separate 501(c)3 charitable organization, and began to offer the public access to this magnificent collection of art in the outdoors.
The property itself encompasses multiple galleries and a sculpture meadow, and the land is protected in perpetuity. So Rene died in 2010, and he left his entire collection to the foundation, but this past July, the foundation publicly announced its plans to sell off most of its 1600 works of art to re-focus its mission on exhibitions and on education. So, in making this announcement, Brenda Mixson, the president of the foundation’s Board of Directors, said that the center and the foundation would emphasize what she called “commissioning and supporting working artists and expanding the artistic experiences available for visitors.”
It’s important to just stop and note here that we’re really talking about two separate legal entities with the di Rosa’s, one is the foundation and that’s the parent organization that owns all of the art and also has a portfolio of stock that generates a large amount of income. And the foundation is the principal funder of the 501(c)3 center. The center has it’s own Board of Directors, and it has an executive director who it hired in 2016 whose name is Robert Sain, who has a long and storied career in the arts with an emphasis on promoting experimentation in the arts, promoting exhibitions involving commissioning new works by living artists, and generally a mission including strong outreach to the public.
In announcing its plans to sell, most of the foundation’s collection, Mr. Sain had indicated publicly that the annual budget for the center was just insufficient to maintain the collection and that the center had been running at a deficit for the past several years. We can come back to that and talk about that a little bit, because there is some information that’s publicly available on that.
He has also hired Graham Beal who is interestingly the former director of the Detroit Institute of Art, who is advising Sain and the Board on the deaccessioning plan, because they will be selling approximately 1600 works of art, keeping a core collection of a few hundred pieces.
Katie Wilson-Milne: So that seems key, they’re not selling all the art, Steve. They’re keeping some sort of iconic smaller collection of a few hundred pieces, and that will still be at the center?
Steve Schindler: That’s right, and I don’t think that they have identified publicly what they’re keeping and what they’re selling, but I think the idea is to sell a lot of the works, but to keep the core collection. It’s also interesting to note that a lot of these works that are being sold have been maintained in storage for a number of years at a substantial cost to the center and that are not really available to be seen in the public.
Katie Wilson-Milne: So if we were to fly there today, which we should start taking some Art Law Podcast field trips —
Steve Schindler: Absolutely.
Katie Wilson-Milne: We would not actually see the works that are being deaccessed for the most part?
Steve Schindler: That’s right. I think that’s true. And according to Sain, based on the financials, the sale of the 1600 works is the only alternative approach to closing the center’s doors. Now, as we’ve seen in other instances, this decision has been met with some controversy by some members of the arts community.
Katie Wilson-Milne: Not surprising.
Steve Schindler: Of course. And in August nearly a 150 artists, galleries, and other art world stakeholders signed a letter communicating their opposition to the sale of the art works. And the letter said that the di Rosa collection was the “only collection in the world dedicated exclusively to the history of post-World War II art in Northern California in all of its diversity of media, gender, race and philosophy. The letter also maintain that Rene di Rosa wanted the collection to be preserved as a whole above all institutional concerns. Now, I don’t know whether that’s true or not. There is no source cited for this, and in fact there seems some inconsistent evidence about what it is that Rene di Rosa really wanted.
Katie Wilson-Milne: That’s a pretty bold statement and I guess what are institutional concerns. Are institutional concerns staying open?
Steve Schindler: Yeah. No, of course. And I think you know, again this sort of highlights this tension between particularly small nonprofits whose resources are limited between the sort of stuff that they have and here it happens to be a collection of art and the mission that they are trying to maintain which is programmatic which is education which is funding works by living artists, and all of these things seem to be as much a part of the institutional concern as maintaining the integrity of a collection.
Now, of course as we saw with Berkshire, this community of objectors has made a number of demands including that the current board make an effort to find a home for the collection so that it can be maintained intact as best as possible.
Katie Wilson-Milne: Rather than selling off each piece one at a time —
Steve Schindler: Right.
Katie Wilson-Milne: Or something like that.
Steve Schindler: Now, interestingly Art News reported this past summer that at least two stakeholders here supported the sale. Interestingly, one was a woman by the name Gloria Merchant who is the widow of Roy De Forest, one of the principle artists in the collection, and Tim Kelly, himself an artist who had also served on the foundation’s Board. Both of these individuals argue that deaccessioning and focusing on supporting living artists is entirely consistent with the museum’s legacy and with di Rosa’s vision.
And that was an interesting counter point and of course as we’ve seen in other places, Mr. Sain in responding to the objectors noted that Rene di Rosa had repeatedly said that the collection needed to be pruned, that it was too big. He also welcomed the financial support from all of the critics and I thought that was kind of a nice response to a number of critics who seemed to be unwilling to at least recognize the possibility that this small nonprofit notwithstanding all of its efforts to raise money simply could not raise enough money to continue its mission and particularly you know, with its location right in the middle of the Napa Valley and not too far away from San Francisco. There are certainly communities of people who support the arts who could easily have made some funding available, but you know, apparently have chosen not to do so.
Katie Wilson-Milne: Yeah, I — I thought that was a very subtle the powerful part of the museum — or the center’s response to the critics, was to you know, sweetly invite them to donate as much money as possible.
Steve Schindler: Right. Which — which seems not to have been forthcoming, and unlike I think the case that you’re about to talk about, as of this moment there hasn’t been any court activity. As far as we know, the AAMD has not taken the position on this deaccessioning proposal. They certainly did, as we saw in the Berkshire Museum, where they sanctioned the museum.
Katie Wilson-Milne: Right. And with other museums like Delaware and over time, right?
Steve Schindler: That’s right, that’s right. So, so they may view this has a slightly different type of situation, but it may also just be, you know, a matter of it’s still early.
Katie Wilson-Milne: Yeah. I think another you know, interesting detail, perhaps unique to the di Rosa situation or at least it was pointed out clearly, is that giving away your art is just an invitation for someone to have to spend a lot of money. So di Rosa built this incredible collection, put it in a foundation you know, so the public could view it, but he didn’t properly endow you know, the ongoing mission of the foundation or the center. And that’s something the center and the foundation tried to explain in dialoguing with the critics was that they very much wished that di Rosa had left enough cash to support and take care of this art, but taking care of 2000 pieces of art is an unbelievably expensive long-term project not to mention — maintaining a beautiful museum building and paying for staff and programming and all that other stuff, that just the art itself needed cash —
Steve Schindler: Right.
Katie Wilson-Milne: And it was never properly endowed.
Steve Schindler: Right. I will say you know, it’s interesting I took a look at the Form 990s, the tax returns that nonprofits file and the most recent returns that are available are for the year 2017, and it does shed a little bit of light on the finances of both of these organizations. Now, for one thing, the foundation itself does have a substantial endowment which consist really of the cash that di Rosa received from the sale of his vineyards the Seagram in 1986 —
Katie Wilson-Milne: I see.
Steve Schindler: And that is invested and that is throwing off substantial income, all of which —
Katie Wilson-Milne: Is paying for the —
Steve Schindler: Or substantially all of which goes to pay the expenses of the center, the center, which is technically a public charity and can raise tax deductible funds from the public, does so, but at least in 2017 of it’s approximately 1.9 million dollar budget ,1.3 or so came directly as a grant from the foundation and that was really all of the income of the foundation for that year, substantially all of it so —
Katie Wilson-Milne: Yeah.
Steve Schindler: It looks like right now the foundation is providing as much money as it cane on an annual basis. Now, the biggest expense of course for the center are salaries and it does have you know, quite a number of people working for it, but it’s clearly not enough —
Katie Wilson-Milne: Forever, yeah.
Steve Schindler: For everything and forever and so one can argue that a prudent thing to do for a nonprofit at this point and its history is to try to figure out its sustainable strategy going forward.
Katie Wilson-Milne: Yeah, I think a lot of entities that are named after their founders face this problem —
Steve Schindler: Yes.
Katie Wilson-Milne: Because there’s a perception issue right, Steve —
Steve Schindler: Yes.
Katie Wilson-Milne: Like you go to a museum named after a rich family, your feeling isn’t immediately I have to pull out my you know, check book and contribute, because you just feel like it’s well endowed, you feel like it’s already been taken care of and so that’s certainly something to think about for our listeners who are thinking —
Steve Schindler: Yes.
Katie Wilson-Milne: Of starting nonprofits —
Steve Schindler: I think it’s —
Katie Wilson-Milne: Don’t name it after yourself.
Steve Schindler: It’s entirely true. I think when you see the name of a wealthy patron you just assume, you know, why do I need to give money as well?
Katie Wilson-Milne: Right. It feels like a private foundation —
Steve Schindler: Yeah, yeah.
Katie Wilson-Milne: Even if it’s not.
Steve Schindler: And really even if it’s not, it sort of, in some ways it’s sort of is, because it’s very much a captive entity that derives most of its income from the foundation.
Katie Wilson-Milne: Yeah in this case, for sure. All right. So, we’re going to talk about a nonprofit entity in Philadelphia that’s encountering some of the same issues in terms of the dialogue with public critics in the arts community, but it’s in a slightly different situation in terms of how it was founded and its funding. So, I want to thank one of our biggest fans, Gregory Alexander, who’s a trust and estates lawyer in Philadelphia for finding us the documents from the Orphans’ Court so we could talk about this case, which we would not have otherwise been able to find, so thank you, Greg.
So we’re going to talk about the Painted Bride Art Center, and this is a center in Philadelphia that was founded by a group of artist in 1969 as part of what was known as the “alternative space movement.” And basically, this was a devotion to cultural diversity and raising visibility of non traditional or non traditionally recognized artists in that community. The organization generally has a collaborative approach with artists to present multi-disciplinary works, does some community outreach, and does engage with social issues, so it sees itself as a very much involved with the community and with local artists.
So the organization is around since the late 60s, but in the early 80s the Painted Bride purchased a building in the old city historic district in Philadelphia, which became its main performing space. It had art galleries, it had offices, and it presented music, dance, and theatre and other kinds of exhibitions.
Steve Schindler: What’s the origin of the name?
Katie Wilson-Milne: We think the Pained Bride name comes from the fact that the building that the organization purchased was some kind of bridal shop, which is charming. So then in the early 90s between 91 and 2000, the organization worked with mosaic mural artist whose name was Isaiah Zagar and he created an incredible wrap-around mosaic mural on the entire façade of this building, and it — like I said it took him nine years. This work, the mosaic work on the façade is known as the Skin of the Bride and he did this work by fixing as you do with mosaic works, small tiles directly to the exterior walls of the building.
So the Painted Bride, like you might expect is a nonprofit corporation in Pennsylvania, and it is tax exempt, it finances itself through grants and contributions, memberships, ticket costs and space rental. It’s always been a public charity. It has no endowment or investment fund. It does have a small endowment that’s restricted to jazz programming, but that’s not relevant for the purposes of the story or for its overall future, so put that aside.
Now, since the 1980s when the Bride moved into this part of Philadelphia, a lot of things have changed. The neighborhood around it has changed, it’s become much more gentrified, much more desirable, the property values have gone way up, but perhaps more importantly, the arts landscape in the United States and in Philadelphia as changed. Funder’s priorities have changed. There are bigger, more high profile institutions that are fighting for every charitable dollar, and as with many small nonprofits, funding is a challenge. So that has made it difficult to maintain the Painted Bride’s mission and also keep up the aging building, which they have to pay to repair in addition to this intricate tiled work on its exterior.
So for those reasons, the assets have been decreasing for many years. The 2017 990, which is the Federal Tax Return nonprofits file, shows net assets of between 500 and 600 thousand dollars, not counting the property and a 12% decline in assets from the prior years. So it’s sort of we’re seeing a downwards trend in terms of the financial health of the organization, including negative cash flows.
Steve Schindler: What’s the annual revenue or budget for the year if you know?
Katie Wilson-Milne: So it looks like in 2017 the contribution in grants, which is how much the organization is getting from the public from contributions was 467,000 and a little bit in the prior year it had been almost 517,000. So, we’re seeing a decrease in contributions. At least in this year I believe it was true in prior years as well, and a decrease in total revenue from you know, almost 740,000 down to 670,000 and that reflects also running a deficit meaning that the expenses, the budget of the organization, is more than what they’re taking in of over $100,000.
Steve Schindler: Right. And presumably a part of the expenses are the maintenance of this building and the maintenance of the art.
Katie Wilson-Milne: Of the art. You hear a mosaic façade it should sound expensive because —
Steve Schindler: Right.
Katie Wilson-Milne: It is expensive and these little tiles obviously can have detachment issues. So that’s exactly one of the big issues. Their property itself requires significant renovations, and the Painted Bride itself estimates that at about four and a half million dollars which includes restoring the art work. As I just explained you know, there’s no endowment, they have negative income basically every year, so they don’t have that money.
An engineering firm that the Painted Bride hired also found that about 50% of the Skin of the Bride, the mosaic façade, is detaching from the property. So it’s some pretty serious problems with the art work on the façade as well that you know, are dangerous potentially to the public, but also to the integrity of the work.
Now, there is substantial disagreement about whether there is any long-term way to preserve the mosaic properly given how it was constructed. One consulted suggested it would need to be kept inside because of serious safely concerns, but there is disagreement about how well it can be preserved in its current state outside.
Steve Schindler: Right.
Katie Wilson-Milne: So the Painted Bride works with you know, a number of financial advisors and engineering consultants to evaluate this less-than-optimal situation, and the Board of Directors decides to sell the building, which includes this art work on the façade. And it markets the sale widely, including to nonprofits. It gets one offer from a nonprofit that is a theatre company, a local theatre company, that would maintain the building basically in its current condition —
Steve Schindler: Right.
Katie Wilson-Milne: And therefore the façade for about 2.6 million dollars. A private developer named Groom Investments offered the much higher sum of 4.85 million dollars, and that was the highest offer that the Bride received at all. But Groom’s plan was to tear down the building and build a condominium basically in the place that the Painted Bride now sits, so that would destroy the Skin of the Bride. Now the Painted Bride board accepts this offer thinking that the building is merely the form for the artistic mission it is not the artistic mission —
Steve Schindler: Right.
Katie Wilson-Milne: In and of itself, so the sale of building will enable an endowment and funds to keep the programming going and not rely so much on earned income, which it really wasn’t receiving.
Steve Schindler: Right. And I think you can also argue or understand that their position as fiduciaries of a nonprofit that faced with two competing offers for the building, one of the which is almost twice the other, it’s hard to see a path toward taking the lower number if you’re exercising your fiduciary responsibilities to this organization.
Katie Wilson-Milne: Right. So the board you know, accepts the offer moves ahead with the sale, they had arranged to partner with existing Philadelphia organizations including The Barnes, The Kimmel Center, the Pennsylvania Academy of Fine Arts to continue its programming in different locations around the city —
Steve Schindler: Right.
Katie Wilson-Milne: Once this location was destroyed, but during the same time, another arts organization which is called Magic Gardens, which incidentally was started by Isaiah Zagar the artist who did the mosaic to kind of promote and preserve mosaic art. They tried to get the property historically landmarked with what I think is clearly the mission of preventing any kind of destruction —
Steve Schindler: Right.
Katie Wilson-Milne: And the Philadelphia Historical Commission declined to do that, so it’s not landmarked although it is in a historic area with a lot of other important historical sites.
Steve Schindler: Right because that’s a legitimate thing to do and to consider —
Katie Wilson-Milne: Yeah.
Steve Schindler: And — and you know, that was a topic of conversation even with 5Pointz —
Katie Wilson-Milne: Right.
Steve Schindler: You know, whether or not it was appropriate to landmark that building and that just takes into account a whole other sort of series of questions that it’s really up to the city to —
Katie Wilson-Milne: Right.
Steve Schindler: Answer and clearly they answered then the negative.
Katie Wilson-Milne: Right. This group Magic Gardens also offered to assist in fixing and preserving the Skin of the Bride in perpetuity, like they would help maintain the art work, but I don’t know how concrete that plan ever got. Now there were significant opposition to the Groom sale, unsurprisingly, from the arts community and from the artist Zagar based on the significance of the building and Skin of the Bride art work in terms of its visual impact on Philadelphia and the historical role of the Painted Bride.
Now, in the phase of opposition — public opposition, the Painted Bride and Groom Investments the buyer decide themselves —
Steve Schindler: I love the fact, by the way, that it’s Groom Investments so it’s the Painted Bride and Groom.
Katie Wilson-Milne: It’s true! That it’s great.
Steve Schindler: It’s quite lovely.
Katie Wilson-Milne: Maybe that’s why they took the offer, so they decide that even though they don’t legally have to do this, they’re going to go to the Philadelphia Orphans’ Court and ask for approval to make the sale. Now, the Orphans’ Court which is just the best name and if people are familiar with The Barnes Foundation Saga, which perhaps some day we’ll do an episode about, the Orphans’ Court features prominently in that debacle as well, but it’s basically like New York’s Probate Court. It’s the court in Pennsylvania that administers trusts and estates and nonprofit entities. It’s a you know, a court of equity that’s now been merged into the regular legal system, but it along with the Pennsylvania attorney general, regulates and monitors nonprofit activity within the state.
So legally this doesn’t seem to have been required, at least that’s the Painted Bride’s position, but they do this voluntarily. They go to the AG, they go to the court for PR reasons, and as I am going to explain, this may have been a mistake. The AG didn’t have any objection to the sale, but the court ultimately does weigh in. So the petition is filed by the Painted Bride and then the artist of the mosaic work, Zagar, files his own petition opposing the sale.
And then another group called the “proposed alternative directors” of the Painted Bride, which is you know, a group of individuals who have no current affiliations, some of them have a prior affiliation with the Painted Bride —
Steve Schindler: Right.
Katie Wilson-Milne: File a petition opposing the sale and asking the court to replace the current Board of Directors with them, so that they can run the organization better and basically not make the sale.
Steve Schindler: What’s the basis of that? That seems crazy.
Katie Wilson-Milne: So that’s a good question for both — both of these opposition —
Steve Schindler: Right.
Katie Wilson-Milne: Petitions, right? Why does Zagar have any standing to get involved?
Steve Schindler: Right and he also has some vested interest as well, right? I mean wasn’t he — I mean I guess that’s one of the reasons why he can file a petition, but — wasn’t he also the head of the organization that was —
Katie Wilson-Milne: Offering to help?
Steve Schindler: Offering to help?
Katie Wilson-Milne: Yeah, he is. I don’t think he has any legal vested interest. I mean if you mean he’s an emotional interest then —
Steve Schindler: Right.
Katie Wilson-Milne: He is the artist that created this work, but presumably the Painted Bride purchased that from him you know, when it was done in the year 2000 and — you know, he should have no ongoing legal property claim at least in this work, but he files this petition. Now, that’s the same question you know, for the alternative board of directors, who are they to this organization that they have any say? And they are nobody, they just want to be the board.
Now, this is all made possible by the type of court this is being heard before. Now the Orphan’s Court is a court of equity. It can act outside the bounds of the law, make its own assessments about fairness and equity in these kinds of petitions and so that’s why you can kind of have anyone weigh in here and have the court pay attention to those requests and arguments because the court can really do whatever it feels like in terms of fairness. That doesn’t mean these things can’t be appealed or there is no kind of review, but it does mean we’re not operating in the strict world of legal rules and property rights.
So take that as you will. So Zagar’s argument is that his mural is of such great artistic significance to Philadelphia that its loss would be you know, a catastrophic harm to the general public and that a sale can’t be sanctioned because of that, because you know, basically no matter how high the Groom Investment’s offer is it would never be high enough to make for the loss of this art work.
He also has some significant disagreements about the Painted Bride’s estimates for its own needs for restoration. He says actually this is going to cost way less money, in fact I’ve arranged to repair all this for free, you should not be complaining.
Steve Schindler: Huh, okay.
Katie Wilson-Milne: Now, one of the issues is we don’t know anything really about this Magic Garden nonprofit and how do we know that it’s going to have enough funds and be open forever and ever and ever —
Steve Schindler: Right.
Katie Wilson-Milne: To be able to repair this mosaic, but they did offer. He also makes this point which is an equitable point that of course the Groom Investment’s offer was much higher than the nonprofit offer, but when you look at the value of the building and all the other externalities around the sale, the nonprofit’s offer is actually much more competitive.
Steve Schindler: How is that?
Katie Wilson-Milne: So the building stays in place, the mosaic gets to stay there and the mosaic is so valuable that the fact of its existence makes the offer more competitive.
Steve Schindler: But the value, that’s a value to the community isn’t it? How does that get translated into a question of —
Katie Wilson-Milne: Right.
Steve Schindler: Private ownership?
Katie Wilson-Milne: He’s making a — a public good argument.
Steve Schindler: Okay.
Katie Wilson-Milne: And he is saying that the fiduciary obligations of the Painted Brides’ board should have taken that into account.
Steve Schindler: I see.
Katie Wilson-Milne: It’s, yes so —
Steve Schindler: And how much this — this is something —
Katie Wilson-Milne: Yeah.
Steve Schindler: That struck me how much of what’s going on in this legal proceeding touches on the question of gentrification?
Katie Wilson-Milne: Oh, I think a lot of it.
Steve Schindler: Because this is an area I think you mentioned at the outset that at the time it was created was in a part of Philadelphia that was —
Katie Wilson-Milne: Not as wealthy.
Steve Schindler: Right and — and —
Katie Wilson-Milne: Or desirable.
Steve Schindler: And now — now it is and in fact the development is a development of condos right?
Katie Wilson-Milne: Yeah.
Steve Schindler: And that is I think just has a sort of ring to it of this is just a gentrifying investment and —
Katie Wilson-Milne: I think that’s totally right I mean, we see that in a lot of coastal cities now that — but of course you can’t bring a petition saying you can’t make the sale, because I don’t believe in gentrification, right? First of all that word doesn’t mean anything specific, but I do think that’s what’s underlying in the community of opposition, which I am not going to say is large, it’s certainly vocal. There is fear about gentrification that it’s underlying and motivating opposition.
Steve Schindler: But it does seem like the arguments being made in this court of equity are not strictly speaking legal in any way that —
Katie Wilson-Milne: They are not legal, no.
Steve Schindler: They are really recognizing.
Katie Wilson-Milne: They are not legal, but they do realize that they have to be focused on the entity itself, right. So they’re not going to the court and saying we don’t want this neighborhood to change, because we’re —
Steve Schindler: Right.
Katie Wilson-Milne: We’re afraid of change or you know, there’s all these other externalities they are focused on —
Steve Schindler: Right.
Katie Wilson-Milne: The situation of the Painted Bride itself.
Steve Schindler: But they are saying that the mosaic needs to be preserved in a large sense?
Katie Wilson-Milne: Right.
Steve Schindler: Okay.
Katie Wilson-Milne: So both of the opposition petitions from the artist and from this alternative board basically blame the Painted Bride’s current Board for all of its problems. It says you know, you fail to fundraise appropriately, you didn’t keep up the art work appropriately, you are in this position because you didn’t do your job correctly. And that’s the basis for the request for the Board removal that you know, if you had run things properly from the start you would never have been in this position.
And that if you know, if a new Board is put in place, they will be able to fundraise credibly in a way that the current board, now having shown the public that it wants to just sell off its assets, will never be able to do.
Steve Schindler: Right.
Katie Wilson-Milne: So the court hears all these arguments and in an extremely brief, largely unexplained decision, it decides to block the sale, which I think is surprising —
Steve Schindler: Wow.
Katie Wilson-Milne: Given the fact that the AG didn’t object, and the AG is really the main regulator. And that you know, this is a private charitable entity. This obviously, you know, it has to have a public purpose to get a federal tax benefit that these nonprofits get, but this is not a government entity, it’s not state-funded, this is you know, a private charitable organization that wants to sell one of it’s assets to keep up with its stated mission, but the court says you know, you didn’t show that this sale was in the best interest of the entity or of the public, and you know you came to me, and because you petitioned me, you have the burden of proving that the sale is in the best interest of the entity and of the public and you failed to do that. Now the irony of this of course is that they didn’t even have to go to the court in which case —
Steve Schindler: Right.
Katie Wilson-Milne: They would’ve had no burden at all.
Steve Schindler: Right.
Katie Wilson-Milne: But they chose to do this, and apparently they did not show to the court’s satisfaction that this sale was a good idea. And part of the reason this seems extraordinary is, because again, there is no real question about the technical legal rights of this nonprofit to sell its own assets right. No one is saying there is a lean, the artist retained a property interest in the work, no one’s arguing that, and the court admits from the very beginning that if the façade of the building was not a work of art that he deemed important, this would be a no brainer. He would have allowed the sale.
Steve Schindler: Right.
Katie Wilson-Milne: So —
Steve Schindler: And so in a sense he was importing what we would have talked about elsewhere as sort of the moral rights of an artist to some extent into the decision, because that’s actually one avenue that I suppose the artist could take.
Katie Wilson-Milne: Yeah, I mean he doesn’t decide this like Zagar wins he’s –- it’s not because of the artist that the finds this, but you know, it’s much more that the court is looking at this as a question of what’s best for the general public and he finds that this work is so significant that it’s not that the artist retains any right —
Steve Schindler: Right.
Katie Wilson-Milne: But that the public somehow acquired a right.
Steve Schindler: Right. So, it sounds like he is in some senses inserting his own equitable judgment into a process that really should have been one that the city was entertaining you know, for landmarking the building, that’s exactly why you landmark a building. One of the reasons would be that there is a work of art on it that’s of exceptional value and that the public should have the right to see it.
Katie Wilson-Milne: Right, right. There are many different legal ways you could talk about public interest and this decision you know, is somewhat typical of what the Orphans’ Court can do, but I think it did certainly surprise the Painted Bride, because now what are they supposed to do? I mean they have the sale agreement that they have to pull out of. They have no financial plan now —
Steve Schindler: Right.
Katie Wilson-Milne: For the future, and they got to figure this out. And you know, what’s underlying this tension is the Bride says you know, our mission is to keep alternative arts programming alive and local artists working in Philadelphia. The court, Zagar, the alternative directors they say no. The façade is actually what’s core to your mission, this object is core to your mission and by putting this object at risk you are abandoning your mission and so we cannot allow that because that means that the Board of Directors here is breaching their fiduciary obligations, and that’s where we can intervene.
Steve Schindler: Wow. So the end result of that could very well be that the organization goes out of, business because it has no sources of funding and the building remains.
Katie Wilson-Milne: Yeah. I mean I think what the alternative directors say is you know, put us in power, and we’ll fix all these problems.
Steve Schindler: Right.
Katie Wilson-Milne: Like you know, they do go through a detailed argument saying the current board basically stopped doing any interesting programming, they kind of abandoned the mission a long time ago, and if they were still a vibrant programming entity people would be giving more money and going more. So there’s been sort of this fall off an enthusiasm that is largely blame and you know, look we have this other entity promising to repair the façade for free, so what are we worried about.
So that’s all factual. We don’t know if any of that would really work out or be true, but we do know that the court you know, decided that there were strong arguments that the façade was an artistic treasure and of immeasurable value and so the Painted Bride no matter what could not have possibly shown, or it just did not show because they could not robot that it was of immeasurable value, they could not show that the sale price was worth it.
The Painted Bride is left in this difficult position. The decision on the petition to replace the Board of Directors has not been decided as far as I know. So, I guess that’s still hanging out there —
Steve Schindler: Right.
Katie Wilson-Milne: I don’t know when the court will decide that or if you know, it’s sort of moot now, but this fight and so many others really comes down to what is core to the mission of an organization? Is it the objects it holds or is it what those objects allow the public to experience? And if it’s what the public is experiencing, that may at some point in a long history of an organization when funding priorities change and environments change, those objects may become more or less necessary or important you know, to that original mission.
Steve Schindler: Right. And I think it’s a little different, though, when we’re talking about a major collecting museum versus the Painted Bride which is obviously not a museum and even the di Rosa Center, which is really the fruit of one person’s collection and I think you know, when you have a museum that is the recipient of many people’s gifts there is baked into the whole process including the tension you just outlined a responsibility of stewardship and of taking care of you know, very valuable objects that people have entrusted to you to take care of, and I think that’s an overlay that we don’t — certainly don’t see in the Pained Bride and I think it’s less evident in the di Rosa situation.
Katie Wilson-Milne: Yeah and even in these cases perhaps you can make an argument that people would never have given money if they knew that you were going to be doing this, right? If you were going to be changing the mission in this way, but they are no agreeing – you know, when you give money to a nonprofit you don’t get to decide unless you have a you know, a gift agreement how that money is going to be ultimately —
Steve Schindler: Right.
Katie Wilson-Milne: Used in the future and you don’t get to control the mission, so I think that is a sentiment and that’s one it’s raised a lot. But obviously it’s a little — it’s unworkable if you tie every donation to nothing changing.
Steve Schindler: Right. And in fact that is an argument that had been made by the opponents to the deaccessioning and di Rosa. They said that some of these artists basically —
Katie Wilson-Milne: Right.
Steve Schindler: Donated the works either for free or at a deep discount to their value, because they believed in di Rosa and they wanted this collection to reflect something about the times and that it then somehow wasn’t up to the successors to di Rosa, the foundation to go ahead and sell these works.
Katie Wilson-Milne: Yeah. And to be fair, I mean, at least the opponents in the Painted Bride case you know, they raise some procedural arguments that there was a real lack of transparency in the Painted Bride’s process for sale, that they didn’t meaningfully consult the public. We see this a lot we saw this in the —
Steve Schindler: Right. Well that was Berkshire you know, —
Katie Wilson-Milne: Berkshire Museum controversy, so our listeners should go back and listen to that episode, where we talk about these issues in more detail. And that may be true and that maybe a very fair point of criticism. I don’t know that you know, nonprofits are — there is no standard of transparency you know, and that they have to follow —
Steve Schindler: Right.
Katie Wilson-Milne: In terms of how they make the board makes decisions and when public comment is appropriate so that can always be a source of disagreement. But it was a point that was raised, and it raises one of the bigger themes you know, in and all of these controversies which is what is an obligation of a private charitable organization to consider what’s in the broadest public interest. That’s always a fight you know, who a private charitable entity should be looking out for, and there will always be people who say that they should be looking out for a wider group. You know, the critics in all these cases, Berkshire and in the ones we talked about today and others on the podcast you know, tend to argue that if an organization just tries harder and is more creative about fundraising, they’ll figure it out, right. And you know, typically the opponents are not producing a 20 point plan for how that works, but there is this sense that you could have just tried harder and you would have found the money, but the idea that these tiny arts nonprofits can always figure out how to fundraise successfully does seem to ignore some of the real challenges facing these organizations. I mean, the competition for charitable dollars it’s real, it’s you know, high profile and extremely attractive to give it to the Met and to MOMA, but it’s not that high profile to give money to —
Steve Schindler: Right.
Katie Wilson-Milne: Organizations on the small and the bottom end of the spectrum and —
Steve Schindler: Right. It definitely doesn’t come with the same level of sort of prestige or whatever, but —
Katie Wilson-Milne: Right. And it — it may be that there are too many small arts organizations to be sustained given the funding landscape, right. This may not be a problem that just goes away —
Steve Schindler: Right.
Katie Wilson-Milne: It maybe it may continue to metastasize.
Steve Schindler: Right. And I think one of the ironies about the Painted Bride situation is that this was an organization that was founded in 1969 it’s part of the Alternative Space Movement.
Katie Wilson-Milne: Right.
Steve Schindler: And so it was really supposed to be liberated from —
Katie Wilson-Milne: It didn’t have space then, yeah.
Steve Schindler: From space and — and so the fact that it’s now being held hostage to this space that they can no longer afford just seems deeply ironic to me.
Katie Wilson-Milne: Yeah. And not to say like I hope to get to Philadelphia to see this façade again before anything happens to it, and maybe nothing will now, but I mean this is a treasure. It’s an incredible work of art —
Steve Schindler: Yeah, for sure.
Katie Wilson-Milne: So I don’t want to under sell that, it’s just a question of you know, how is that controlled and who gets to control it?
Steve Schindler: And that’s it for today’s podcast. Please subscribe to us wherever you get your podcasts and send us feedback at podcast@schlaw.com and if you like what you hear, give us a five star rating. We are also featuring the original music of Chris Thompson and finally we want to thank our fabulous producer Jackie Santos for making us sound so good.
Katie Wilson-Milne: Until next time, I’m Katie Wilson-Milne.
Steve Schindler: And I’m Steve Schindler, bringing you the Art Law Podcast, a podcast exploring the places where art intersects with and interferes with the law.
Katie Wilson-Milne: The information provided in this podcast is not intended to be a source of legal advice. You should not consider the information provided to be an invitation for an attorney-client relationship, should not rely on the information as legal advice for any purpose and should always seek the legal advice of competent counsel in the relevant jurisdiction.
Music by Chris Thompson. Produced by Jackie Santos.