Katie and Steve discuss some recent art museum-related legal(ish) developments, including New York’s new legislation requiring labeling of Nazi-looted art, the AAMD’s long-awaited changes to its deaccessioning policy, and an unusual gift/sale of part of MoMA’s collection.
Resources
https://www.nysenate.gov/legislation/bills/2021/S117
https://www.nytimes.com/2022/09/30/arts/design/museum-leaders-vote-deaccessioning.html
https://news.artnet.com/art-world/aamd-museum-deaccession-rules-2185274
https://www.artnews.com/art-news/news/aamd-amends-deaccessioning-policy-1234641312/
https://www.theartnewspaper.com/2022/09/14/sothebys-70m-william-paley-collection-museum-modern-art
https://www.artforum.com/news/moma-to-auction-70m-in-art-to-expand-museum-s-digital-footprint-89249
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 and Hochman LLP, a premier litigation and art law boutique in New York City. Hello, Steve.
Steve Schindler: Hello, Katie. How are you?
Katie Wilson-Milne: I’m pretty good, but I hear you’ve been up to some exciting art law adventures. Maybe you can tell our listeners.
Steve Schindler: Well, I have. Actually last week, I was asked to go to Madrid by an organization called the ADA, which is a Spanish organization located in Madrid consisting of participants in the art world, mostly in Spain. I addressed them along with my co-presenter, Antonia Bartoli from the Yale University Art Gallery, on the history of Nazi looting and Nazi restitution, particularly here in the United States. And I spoke particularly about the various restitution cases that have been making their way through the US courts since the late 1990s, including a couple that are still pending today. What’s interesting about it was one of the main cases that is pending today, which you know about, is called Cassirer v. Thyssen-Bornemisza [Collection] Foundation and—
Katie Wilson-Milne: Very impressive pronunciation.
Steve Schindler: I bungled it at the presentation. I tried really hard, but I confess that I kind of stumble a little bit. But anyway, more importantly, that’s the case that is now—went up to the Supreme Court and is back in the Ninth Circuit, and it involves a claim by the heirs of Lily Cassirer involving a work by Camille Pissarro that was certainly without question looted during the Nazi regime, appropriate for what we’re going to be talking about partly today. And that work now sits about a kilometer away from where I was giving the address. So of course it had a lot of relevance to the people that I was talking to, but I think it went really well. My co-panelist, Antonia from Yale also did a marvelous job, and I understand from talking to people in the audience that there are a number of listeners of this podcast, and so I both want to thank the ADA for having me and to thank all of those listeners for continuing to listen to the podcast.
Katie Wilson-Milne: That’s amazing. Yes, thank you Spanish listeners. We are grateful for every one of you. So today, Steve, we’re going to be giving our listeners three museum-related updates. So Steve, give us your update first.
Steve Schindler: Sure. Well, two months ago on August 10th, New York Governor Kathy Hochul signed into law an act to amend the New York education law to require museums to post notices regarding displayed art stolen during the Nazi era in Europe. It’s a very short law and it says— I’m going to quote it because it’s very short— it says, “every museum which has on display any identifiable works of art known to have been created before 1945, and which changed hands due to theft, seizure, confiscation, for sale, or other involuntary means in Europe during the Nazi era (defined as 1933 through 1945) shall, to the extent practicable, prominently place a placard or other signage acknowledging such information along with such display.” And that’s the statute.
Katie Wilson-Milne: And this applies to every New York Museum?
Steve Schindler: Every New York museum. Now, this law was part of a larger package of amendments to the education law relating to the Holocaust. It includes enhanced classroom education involving the Holocaust. It also includes directive to banks to offer favorable rates to Holocaust victims. And of course, the guidelines enacted in the late 1990s by the Association of Art Museum Directors, called the AAMD, and the American Alliance of Museums, AAM, have called on member directors and museums to identify Nazi-confiscated art and make their archives open and accessible. This is consistent with the 1998 Washington Principles on Nazi-Confiscated Art adopted by 44 countries who attended the Washington Conference on Holocaust era assets. Now, of course, those existing guidelines are all voluntary, and now we have a law compelling museums to act. And while this law is well-intentioned, there are still a lot of questions about how it would be complied with and how non-compliance will be enforced. So one positive aspect of this law is the very broad definition of the art involved. And while the Washington Principles and the museum guidelines speak only of “confiscated art,” this statute is considerably broader and applies to art, which “changed hands due to theft, seizure, confiscation, forced sale, or other involuntary means.” And we know that the Nazis employed a wide range of techniques to force Jews to sell their art, often as a way just to leave the country. A great deal of art was taken under forced sales and other means that were designed to look like voluntary transactions, which they were not. So the statute broadens the definition of confiscated art which existed in the Washington Principles and the museum guidelines to a more realistic notion of how art changed hands between 1933 to 1945 in Nazi-occupied Europe. But the statute is silent as to who at the museum makes the decision that a work changed hands due to one of these articulated reasons. Is it a curator? Is it a director? A board committee? And by what process is that determination going to be made? Keeping in mind that a number of museums, including both the Met and MoMA, have litigated the question of whether a work was sold under duress, with the Met recently winning a case against the Leffmann heirs in Zuckerman v. Metropolitan Museum of Art.
Katie Wilson-Milne: Which we talked about on this podcast. Yeah.
Steve Schindler: We did. And so museums have been at times aggressive about contesting even the question of whether or not there was a seizure. In the Zuckerman case that I just referenced, one of the questions was, was the sale made under duress? And the court concluded in part that it was not. Also, the other question that it raises is, who’s going to enforce a museums non-compliance with this law? Right?
Katie Wilson-Milne: Great question.
Steve Schindler: So, a couple of possibilities. Presumably, the New York Attorney General’s office, which is responsible for supervising nonprofit organizations, could be charged with enforcing the law. It’s not specific in the statute. And most New York museums are also subject to regulation by the New York Board of Regents. Could be them, too, I suppose. The law doesn’t indicate who will enforce it and what process will be put in place to identify non-compliance and then to adjudicate any disagreement over whether a work falls into one of the defined categories. Now, it’s also worth noting that this statute applies only to works that are “on display” and does not extend to all works in a museum’s collection. So to that extent, it’s narrower than the existing museum guidelines, which ask museums to publicly— to make available provenance information about works in its entire collection.
Katie Wilson-Milne: The voluntary guidelines, yeah.
Steve Schindler: Correct. And so that’s kind of an interesting point, because of course one way around this is just to not put something on display, and museums have a lot of objects and paintings that are—
Katie Wilson-Milne: Most probably.
Steve Schindler: —not on display. So that’s one perhaps loophole in this. And finally, some commentators have raised the possibility that this will create a disincentive for museums to research a questionable work, because the law applies to works known to have changed hands, et cetera. And of course, if a museum doesn’t know a work was taken by the Nazis, then it’s not obligated to label it. I mean, it’s a pretty cynical view and I’m not sure it’s a correct view, but it’s, again, a kind of oversight, perhaps, in the law. And as of this date, none of the major museums in New York, as far as I’m aware, have released any guidance on how they intend to comply with the law.
Katie Wilson-Milne: No. They’re probably not sure.
Steve Schindler: Right.
Katie Wilson-Milne: I have a lot of questions on this, Steve—
Steve Schindler: I’m sure you do.
Katie Wilson-Milne: —which may not surprise our listeners. First being, why now? I mean, what is happening right now that a law like this comes into effect?
Steve Schindler: That’s a good question.
Katie Wilson-Milne: I just wonder, you know?
Steve Schindler: Yeah. I mean, as I said, this was part of a kind of larger effort to address a variety of educational issues—
Katie Wilson-Milne: Yeah, around the Holocaust.
Steve Schindler: —pertaining to the Holocaust. And you know, I’m sure some of it’s political. There were a number of sponsors, or at least co-sponsors. Anna Kaplan was the sponsor of the bill, but a range of co-sponsors. So, you know, this is certainly the kind of thing that— I don’t want to be too cynical about it— but it doesn’t hurt politicians to sort of be behind something like this. And also, again, because there’s no— it’s such a vague statute. It doesn’t cry out how much it’s going to cost and again, how it’s going to be enforced, so it’s almost just like a proclamation.
Katie Wilson-Milne: Symbolic, yeah.
Steve Schindler: And in fact, there’s a little justification in the bill, and it goes through the history of Nazi looting and how it was designed to enrich the Third Reich and integral to the Holocaust goal of eliminating all vestiges of Jewish identity and culture. And so I think it highlights, of course, what many people already understand about the Nazi regime’s very extensive efforts to strip Jews of all of their assets, including their art. But of course, this has been talked about for many years.
Katie Wilson-Milne: Right.
Steve Schindler: You know, starting in 1991 with Lynn Nicholas’s book, The Rape of Europa, and since—
Katie Wilson-Milne: And we talked about it in our podcast with Nick O’Donnell, which our listeners can go back and listen to.
Steve Schindler: And Nick, who wrote a really authoritative book on the subject. So I can’t answer the question as to why now exactly, except that it was part of a number of statutes to have our education law focus on this issue.
Katie Wilson-Milne: My take listening to you explain this is that its power is really in its symbolism, but that its legal effect may be extremely limited. For one, the statute relies on terms like “forced sale” and “coercion” that have been litigated in New York for many decades, right? These are hotly contested ideas that even the brightest jurists and lawyers differ on and can’t agree on. And the idea that some museum curator is going to be able to determine if a sale qualifies as a voluntary sale or not, and is even going to have access to the information they need to make that determination just seems very unlikely to me.
Steve Schindler: I think it’s entirely unlikely. And also we’ve seen cases where, as I said, museums have hotly disputed whether a work is—
Katie Wilson-Milne: Yeah. There’s regularly litigation about it.
Steve Schindler: —looted. And in some ways when you think about it, we talked about the case of the Norton Simon Museum and the litigation over the pair of the Adam and Eve—
Katie Wilson-Milne: That’s right.
Steve Schindler: —panels by Lucas Cranach the Elder. This was a case brought by Marei von Saher who’s an heir of Jacques and Desi Goudstikker. We talked about this case, I think, when Nick was on the podcast. Clear that this work was looted. There’s no doubt that the work was looted. And the Norton Simon litigated this case very vigorously on the theory that the actions of the Netherlands Restitution Committee at the end of the war were somehow definitive and required to be followed by—
Katie Wilson-Milne: Basically the heirs couldn’t have a second bite at the apple.
Steve Schindler: Yeah. And there’s a lot of disagreement over whether they correctly applied the doctrine. But I think in my head for a moment, oh, what if California had this law and you had to put under the Cranach Adam and Eve panels, “this work was looted” or words to that effect? It would be a very powerful thing. Of course, the Norton Simon would undoubtedly not do that, because of the position that they’ve taken, that the work in effect was not looted for technical reasons.
Katie Wilson-Milne: Or was looted, but that the heirs have no recourse.
Steve Schindler: Correct. So I think this raises more questions, in many ways, than it answers. I think you’re right, it’s a symbolic act, a good symbolic act, I suppose. But how it ends up changing museums behavior, at least museums that already have signed on for a number of years now to a voluntary obligation to do what this statute compels them to do.
Katie Wilson-Milne: Or more actually, to research and to restitute.
Steve Schindler: And to do more. That’s right. That’s right.
Katie Wilson-Milne: And I just point out too, that those AAMD and AAM guidelines, museums sign onto them but—and I’m somewhat sympathetic to the resource constraints of these institutions— but they’re not followed. I mean, every museum that’s a member of AAM and AAMD is not doing exhaustive World War II-era provenances research on every piece that might have changed hands the end of the 1930s and the 1940s. It’s just not happening. And one reason it’s not happening is that they don’t have the staff for that. They don’t have professional researchers, and it’s not part of their budget to hire outside people to look at every work. Now, I think they do that as problems come up. We have seen that, because this is revealed in many lawsuits where research is done, but there aren’t people doing this at every museum. So they’re not even following these voluntary guidelines to the letter.
Steve Schindler: Right.
Katie Wilson-Milne: Yeah.
Steve Schindler: Alright, Katie.
Katie Wilson-Milne: Alright.
Steve Schindler: Tell us what’s going on.
Katie Wilson-Milne: So we’re going to move away from the Holocaust, but we’re going to stay with museums, as I said, and the AAMD. So we’ve talked a lot on this podcast and I’ve talked in other places a lot about the deaccessioning rules, norms, and in New York, laws about deaccessioning in the art museum context, which just means, again, the disposal of works of art from a collection and when and how that is allowed to happen and also how the proceeds of that disposition can be used, which is hotly contested. So the Association of Art Museum Directors, AAMD we’ll call them— which is a membership organization made up of art museum directors that sets industry norms and standards, just like the Holocaust research-related ones we were just talking about— has long had a policy on deaccessioning in art museums, as have other ethical membership organizations like AAM as well. And AAMD’s policy on deaccessioning had particular teeth, and it’s been very controversial, because it’s been very strict. So the guidelines for deaccessioning that AAMD has laid out for all its members, which are basically all the important art museums in the country and some in Canada, have been the same since 1981. And they state that you can deaccession for certain limited reasons that support the integrity of the collection, like there’s duplication in the collection, or work is damaged, or not representative. But the funds from deaccessioning could only be used to purchase new artwork. That’s it. Not operations, not capital expenses, no other purpose, just buying new work. So when certain member museums like the Delaware Museum or the Berkshire Museum— which I’ll also reference to prior podcasts, if our listeners want to learn more about those examples— when those museums deaccessioned art to pay for other things, like operational or capital expenses, they were sanctioned or expelled from AAMD. Which on the one hand— is not a legal organization, what’s the big deal?— but on the other hand meant that those museums no longer could interact in important ways with their peers. They couldn’t get loans, there was no cooperation among museums. So it actually is quite harmful.
Now during COVID, which of course we’re still in, but during the early days of the pandemic AAMD decided that it was going to change its approach to deaccessioning as part of an emergency measure to support its members during what many of them said was a real financial crisis. So in April of 2020, AAMD issued a moratorium that for two years, until April, 2022, it would not sanction member museums for two things: using restricted funds for operating expenses, and for this discussion, that it would not sanction member museums for using funds from deaccessioning for a broader set of purposes than buying new art. And they said you could also use funds from deaccessioning for what they call direct care of the collection. Now, I just want to note that the press has covered this extensively, and I just want to correct again that this was not a rule change per se. It was just saying we will not punish you if you do this, which—
Steve Schindler: Very lawyerly, I think.
Katie Wilson-Milne: Yeah, which of course fairly is maybe a rule change, but that they technically did not change the rules. And this term, this idea of direct care, remained undefined in this moratorium by the AAMD, and it opened up a lot of flexibility of interpretation. So museums themselves were technically supposed to enact a board-approved policy that outlined what they meant by direct care and that should have been publicly available. Not all museums did that. But the point being that museums could define that for themselves. And many museums said, well, everything we do at the museum is direct care of the collection, right? The janitor and the elevator repairmen are like— of course they’re here to protect the collection. That’s how the art moves. We don’t want it to get dirty. So things like salaries, some of the core things that we think of as operational expenses were justified as direct care during this period, and museums were allowed to kind of define that for themselves. But the AAMD when it nervously enacted this moratorium, gave a pretty strict warning. It said, and I quote, “this temporary approach is not intended to incentivize deaccessioning or the sale of art. Only to provide additional flexibility on the use of proceeds from art that may be sold. AAMD’s longstanding principle that the proceeds from deaccessioned art may not be used for general operating expenses remains in place.” So many museums, I think somewhere around eight museums sold blue chip art during this period, taking advantage of this moratorium, including the Met and the Brooklyn Museum.
And they did substantial deaccessioning, the proceeds of which were used in a pretty broad range of so-called direct care expenses, including salaries, at both of those museums and in other cases, public programming and other activities in the museum. Now, this change or acknowledgment by the AAMD that its traditional deaccessioning rules weren’t going to fit the present moment opened up a big debate in the art museum world about whether those strict prohibitions on how cash-strapped museums could use funds from deaccessioning made any sense at all. And amid calls to review the rules permanently, AAMD did appoint a task force to look into this and examine and evaluate whether there should be permanent changes or alterations to its rules. And indeed there were. So this—
Steve Schindler: Tell us about them.
Katie Wilson-Milne: In September, a couple of weeks ago, AAMD announced new guidelines on deaccessioning, which is, as I said, the first substantial update since 1981, and these new permanent rules allow proceeds from deaccessioning to be used for the direct care of artworks in the collection as well as acquiring new arts. So that sounds like a pretty big change, and for the AAMD, which is a very conservative organization in this sense, it is. But this time, unlike with the moratorium, AAMD took care to define and place guardrails around what direct care means. So it is not leaving this up to its members to define for themselves. And the rules say, “direct care for purposes of this section means the direct costs associated with the storage or preservation of works of art. Such direct costs include, for example, those for conservation and restoration treatments, including packing and transportation for such conservation or restoration, and two, materials required for storage of all classifications of artwork such as acid-free paper, folders, mat boards, frames, mounts, digital media migration.”
So it’s pretty specific. But the most interesting thing about these new guidelines is what it says that these funds cannot be used for. Because AAMD knew— because it had watched what had happened in this two year moratorium period, how broadly museums would seek to define direct care— so the new guidelines also state that funds from works that are sold may not be used for capital expenses or operating costs, including explicitly the salaries of staff or the cost to mount temporary exhibitions. So this is unlike the more permissive pandemic era rules that let museums flexibly define what direct care would be, and this is a big limitation to the way many museums defined those rules. So 109 of 199 voting members approved this policy, 21 voted against it, and it does look like many directors who had been very much against the pandemic-era loosening rules did support this because of the strict guardrails that were put around it.
Steve Schindler: I see.
Katie Wilson-Milne: The limitations, I agree, I think will make the slippery slope argument less worrisome, because it explicitly says you can’t pay salaries with this money.
Steve Schindler: Right. And do we know who voted against these regulations or guidelines?
Katie Wilson-Milne: I don’t know off the top of my head, but some directors have made statements that they did not support it. But some directors who have been very against loosening the rules did support it and said that they did so because of the guardrails that were put in place, that it was really a compromise measure.
Steve Schindler: Right. It’s interesting that this is sort of coming to the surface at the same time that some of the wage issues we see in some of the museums, particularly MoMA right now, are also coming to the surface. And it always just strikes me as one of these tensions here that somehow you can sell works of art to do certainly narrowly-defined things, but if it comes to paying people, for cash-strapped institutions that’s just a non-starter.
Katie Wilson-Milne: Well, I think the people who are wary of loosening the rules around deaccessioning would say like, you’re an art museum, your goal is— your purpose is to preserve the art. That’s what you do. And once you start using your collection as an asset that can be monetized, that goes on your balance sheet, it’s like there’s no real end to that. So I think it’s wrapped up in how we define what an art museum is and what it means to have a collection. But I agree with you, it’s a hard argument for not the big museums in New York, but for smaller regional art museums who, as we’ve said many times on this podcast, were gifted incredible art that is now worth many millions of dollars in a time when there were wealthy donors in those regions and there are not anymore. And they have very limited fundraising avenues and serve a less-advantaged population than the big museums in New York. To tell them that they can’t sell a work of art that’s been sitting in the basement for 25 years to serve their community— it’s a tough argument, and that’s what we saw coming out of the Berkshire Museum controversy, which we will not relive right now, but we’ve certainly talked about a lot.
Steve Schindler: Is the AAM or the Alliance of American Museums, are they going to follow suit in any way?
Katie Wilson-Milne: They’ve always had that rule. So AAMD has always been much stricter. They’ve been the strictest organization. AAM, FASB, and the Regents rules in New York have been relatively aligned in that you’re allowed to use proceeds from deaccessioning for direct care. And AAMD is still stricter than those organizations. We’ll just say AAMD is the only one of those organizations that applies only to art museums. And I think it’s fair to note that, that there’s something about an art collection that may be different from different types of collections with objects that may be more transient or not as integral to the mission of the museum.
Steve Schindler: Right.
Katie Wilson-Milne: So we’ll see kind of what museums do with this new rule and if anything changes.
Steve Schindler: I think we’ll see also as the economy shifts and who knows whether we’re going into a recession or not going into a recession, but if things start to go sort of down again economically for some of these museums, they’re going to be faced with similar types of scenarios that they faced during the pandemic, maybe not quite as acutely, but—
Katie Wilson-Milne: Yeah. And I think we also— it wasn’t just the pandemic. I think we had the pandemic and a marriage of a huge social justice push after George Floyd’s murder in which members, not members of AAMD, but employees and participants and patrons of these museums wanted the museums to be much more than art museums. And I think there’s a fair debate about whether they’re the appropriate venue to do much more, but they really were asked to engage with their communities in a different way and they needed funding for that and they had a lot of expensive art. And I think that is not going away. We’re also seeing big unionization pushes at museums. So there’s— the expectations that employees have, that artists have, that visitors have for these museums is changing too, and that’s, I think, creating some pressure.
Steve Schindler: Right, and I think that leads us into your next topic.
Katie Wilson-Milne: Yes. Okay, so the next and last update is about the William Paley sale that MoMA is doing through Sotheby’s this fall. So, a foundation created by the CBS founder, William Paley, decided to auction off 29 of 81 masterpieces long on loan to the Museum of Modern Art in New York. This is the first time, I should note, that any works in this collection have been sold. So Paley, just a little background on Paley, he was a significant MoMA supporter from its very early days and a modern art collector at a time when modern art was absolutely not in vogue and was not something that a lot of wealthy patrons were interested in. He joined the MoMA board eight years after MoMA was founded in the ‘30s. He served as its chairman and president. And when he died in 1990, his extensive and quite impressive private collection full of paintings and sculptures by artists like Picasso, Renoir, Rodin, went into MoMA’s care via a unique arrangement. Now, I’ll just say on the sale, none of the works that are being sold are currently on view. So to our point about works being in storage, all have been in storage. And Glen Lowry, MoMA’s current director, has said that Paley’s most famous piece at MoMA, which is Picasso’s Boy Leading a Horse, which is on display and a beautiful work is still on display, it’s staying put, absolutely not being sold. And the same with an iconic Matisse called Woman with a Veil. So not all of the works are being sold just certain of them are—.
Steve Schindler: So breathing a sigh of relief.
Katie Wilson-Milne: Yes, well the Picasso one I even remember seeing every time I go. But some of the works being sold are quite significant. So there’s a Picasso Cubist work that will be offered for at least $20 million in November in New York and a Francis Bacon triptych will be offered for $35 million in October in London. And there works by Renoir, Moreau, Bonnard also being sold during these evening sales in the fall.
Steve Schindler: Those are the estimates, right, that you’re referring to?
Katie Wilson-Milne: Yeah, those are the estimates. So they’re going to be offered for at least that amount. The expected income from all the sales at Sotheby’s is $70 to 100 million. So it’s a pretty significant amount. A very small portion of this is going to go to Paley’s Foundation to support its own causes, but the vast majority of the funds are going directly to MoMA, and MoMA is integral and orchestrating the sale. Now, what MoMA wants from these proceeds, and the reason this sale is happening is to create an endowment earmarked to support digital media technology and related acquisitions. So the funds are going to expand the museum’s digital presence in many possible formats, which we’re not sure of yet, but could be its own streaming channels, digital art or NFTs. Kind of jumping into that world in a way that MoMA has not been able to. So why is this interesting? I think this is interesting because the relationship that Paley’s Foundation had with MoMA is quite clever. So Paley’s Foundation placed his collection with MoMA on a very long-term loan, the terms of which gave MoMA significant control over how the works would be used or disposed of. So not a gift, but feels gifty.
Steve Schindler: Right. When you say dispose of that means sold, right?
Katie Wilson-Milne: I would assume. Now, I unfortunately have not seen the gift agreement, and if any of our listeners have access to it, please send it to me, because I would love to. But what’s been reported is that there’s a significant control over the whole lifespan of the works in MoMA’s collection, as they sit in MoMA’s collection.
Steve Schindler: So this is not deaccessioning in the way that you were just discussing before, because the museum never owned the works.
Katie Wilson-Milne: Right?
Steve Schindler: They weren’t in the museum’s collection.
Katie Wilson-Milne: One might forget that MoMA doesn’t own the works, but it does not. So Paley’s arrangement with MoMA where MoMA has possession and significant control looks a lot like deaccessioning, right? Which we just talked about. Here, MoMA directly benefits from the sales with substantial and relatively unrestricted income, and it parts with art that’s been a functional part of its collection for decades. So sounds like deaccessioning.
Steve Schindler: It sure does.
Katie Wilson-Milne: But it’s not, because MoMA’s not the owner, the foundation is. I feel like you could call this backdoor deaccessioning. And I do think, as I said, that it’s quite clever because it gives MoMA a lot of flexibility. Clearly here the foundation and MoMA are entirely aligned, so there’s no dispute about whether this sale can occur. They’re doing it together. So the only issue is really public perception and as we just said, typically there are variety of legal and ethical rules with respect to actual deaccessioning, which restrict when you can deaccession something. You have to have a justification that’s collection promoting, and it restricts the use of proceeds to the acquisition of new works or care of the collection, right? I don’t think anyone even in the most flexible interpretation would say that creating a huge digital media presence would be either of those things.
Steve Schindler: No, I don’t think so.
Katie Wilson-Milne: So here MoMA doesn’t have to deal with any of those limitations. And the foundation, which Paley’s son is still involved with, has confirmed that MoMA has pretty much free reign to do whatever it wants with the funds in the digital space.
Steve Schindler: Right.
Katie Wilson-Milne: So the foundation’s not managing it. It’s really just kind of alongside for the ride.
Steve Schindler: So it’s interesting. I mean putting aside this particular transaction, for people who are sort of planning ahead and planning their estates with large collections, that does open up an interesting door to loan your works to a museum, probably again through a foundation, because it’ll probably have to be set up that way. And then it gives the museum ultimate flexibility down the road whether and when to sell the works and what to do with the proceeds and all you have to do is, instead of donating the works give them a long-term loan.
Katie Wilson-Milne: Yeah, I mean I think what’s interesting is that most donors would never want to do that, right? Museums would always want this and I’m sure they ask for it, but donors don’t want that because they want to give their art to a museum and know that it’s going to stay there and be displayed. They don’t want to make donations the museum’s just going to sell and pay for salaries, right? That’s what donors want to avoid. So what’s so interesting about this arrangement is the astounding flexibility in the original gift that we rarely see, and perhaps a real awareness and generosity by Paley that understanding how times change and that he really trusted MoMA with this pseudo-gift in a way that most donors will not. In fact, one of the major concerns with deaccessioning, which I think is real, is that it discourages donors, because they want their artworks going into a public trust essentially, right? And they want to know that the museum’s going to care for it, that it’s going to be in a scholarly institution and available to the public and not being sold off into private hands. And it’s not deaccessioning, of course, but the concerns and the worries underpinning the rules applicable to deaccessioning certainly apply here. We have these modern masterpieces leaving the collection of a major museum where now scholars can go research them, they could be on display, they’re theoretically available to the public, and they’ll probably go into private hands.
Steve Schindler: Right, so you trade a Bacon triptych for an NFT.
Katie Wilson-Milne: That makes me less sympathetic. But it is a pretty interesting posture and I think it certainly was a terrific arrangement for MoMA.
Steve Schindler: So Katie, why would MoMA want to sell these works, some of which are obviously masterpieces to get into the digital space?
Katie Wilson-Milne: That is a great question. To me this seems like a response to great pressure that museums are under to gain traction with younger audiences and new audiences and to stay relevant. And as much as I love an art museum, especially a modern art museum, I think there’s a fear that these are somewhat archaic institutions in terms of how they approach audiences and are run and are organized. And that in the pandemic there was this big push and response to digital presence in a way that museums really hadn’t explored before. And I think MoMA feels like they really have to get on this train, or they’re going to miss it. So I think there’s a real effort to stay relevant. And also just the reality, the pandemic presented, which is that online traffic is up, foot traffic is down. I think my skepticism, I think this could be very interesting, but if I’m going to be skeptical, which I’m sometimes prone to be, my skepticism would be around whether there’s some mission creep here, which is that—
Steve Schindler: Right.
Katie Wilson-Milne: —it’s not that digital access or digital art or perhaps even NFTs maybe aren’t interesting or important, but I don’t know that MoMA or museums like that need to be the places to offer that type of art or experience. They may be best served and their visitors may be best served by being modern art museums where you can go see physical objects.
Steve Schindler: Right.
Katie Wilson-Milne: So MoMA may be great at this but they may not be, and maybe they’re getting into something that isn’t their specialty.
Steve Schindler: Right, and we see this also with a whole range of non-profits that feel the need to move into different areas, and sometimes it ends up diluting their original mission, which is what they’re good at.
Katie Wilson-Milne: Right.
Steve Schindler: So I guess we’ll see.
Katie Wilson-Milne: Yeah, we will see.
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.