More on antiquities leasing

Derek Fincham is a fan of the idea, mentioned last week here:

"It is a pragmatic solution, and one that has as good a chance as any at pleasing the disparate interest groups that shape cultural policy. A couple potential drawbacks are the risk of transportation, problems insuring against theft, and upsetting those who feel antiquities belong in their source nation. It's an exciting idea though, and one that merits further study."

Barnes News (UPDATED)

In her Friday "Inside Art" column, Carol Vogel reported that the Barnes Foundation has announced its short list of six architects being considered to design its new building in Philadelphia. The Philadelphia Inquirer's Inga Saffron has more, including the following on how the legal posture will affect the architecture:

"As a result of restrictions imposed by the court after a protracted legal battle, the foundation is obliged to replicate the exact arrangement of its existing galleries within the envelope of the new, larger museum. It also must hang the art collection assembled by founder Albert Barnes in the precise way he arranged it on the walls of his former Merion home. Some maintain the Barnes will even have to re-create its burlap wallpaper. Depending on how the court order is interpreted, the Barnes' new galleries could end up feeling a bit like frozen-in-time period rooms within the new museum shell."

UPDATE: Art historian Michael Lewis has some thoughts:

"According to the court decision, the new building must replicate exactly the layout, proportion, and materials of the original galleries, as well as Barnes’s famously eccentric hanging scheme. There is little scope for invention, other than in the way this simulacrum is to be enclosed. I spoke with Andrew Blanda, of the Philadelphia firm Sandvold/Blanda, who was interviewed for the Inquirer article. His prediction: 'I’m betting that the effect will be like a chunky jello salad: blocks of galleries encased in a glassy shell of nebulous public space.'"

Victory for Christie's

The Delaware Supreme Court has upheld the dismissal, on statute of limitations grounds, of a lawsuit brought by a couple who purchased a painting from Christie's in 1986 that they later learned was inauthentic. The AP story is here. The decision is here, though all it does is adopt the reasoning of the lower court decisions, here and here. That court had held that the cause of action accrued when they purchased the painting in 1986, and therefore Delaware's three-year statute of limitations expired in 1989 (though by contract Christie's extended the warranty period to six years). And it noted:

"A prudent purchaser of valuable art can readily safeguard his investment by verifying its authenticity with an independent third-party appraisal. Such prudence is especially advisable when art is purchased at auction. The sale price at auction inherently reflects a greater risk of authenticity than if the buyer purchased the work directly from the artist or from a gallery representing an artist. Truly, had they exercised reasonable due diligence, the [plaintiffs] could have discovered that the painting might not be a genuine work ... well within the limitations period and certainly within the six-year warranty period. They failed to do so and now ask Christie's to produce evidence and refresh its memory as to the sale of the painting that took place over 18 years ago. This is precisely the type of case which the statute of limitations ... seeks to prevent."

Fifth Time a Charm?

In The Art Newspaper, Jason Edward Kaufman reports:

"For the fifth consecutive session of the US Congress, a bill has been introduced that would allow artists to deduct the fair market value of works of their own creation from their taxes, if they donate them to museums and libraries. Existing provisions enable collectors to deduct the value of donated art, but artists can deduct only the cost of supplies such as canvas and paint."

As the article notes, artists used to be able to deduct from their taxable income the full fair market value of contributed works. Since 1969, however, the deduction has been limited to the artist's "basis" in the work -- essentially, the cost of her materials.

Kaufman adds:

"The Senate has approved the bill five times since it was first introduced in 1999, but the House of Representatives never sanctioned the measure. The art museum association hopes to attach the bill to tax legislation before this session of Congress closes at the end of 2008."

You can read, and track, the bill, the Artist-Museum Partnership Act, here. A statement from Senator Leahy, co-sponsor of the bill, is here.

Antiquities Leasing?

Tyler Cowen points to a paper by Harvard economics professor Michael Kremer that makes the following argument:

"Most countries prohibit the export of certain antiquities. This practice often leads to illegal excavation and looting for the black market, which damages the items and destroys important aspects of the archaeological record. We argue that long-term leases of antiquities would raise revenue for the country of origin while preserving its long-term ownership rights. By putting the object into the hands of the highest value consumer in each period, allowing leases would generate incentives for protection of objects."

Tyler thinks it's worth a shot, but doesn't think it would make much of a difference:

"Collectors, being irrational creatures and 'completists,' wish to own rather than lease, even if the lease extends past their expected lifetimes. Museum donors wish to fund museum acquisitions more than museum borrowings. Similarly, it is much easier for a non-profit to raise money for buying a building than leasing one long-term. So the demand for leased antiquities won't be all that huge."

Austin Theft

From the UPI:

"A Texas art museum executive and his wife face accusations that they attempted to snatch paintings from an art festival.

"Police in Austin, Texas, arrested Nathan Sheppard, 37, and his wife Alexandra, 33, Sunday. Nathan Sheppard, the Austin Museum of Art finance and operations director, was charged with burglary and evading arrest, while his wife was named in a burglary count, the Austin American-Statesman reported Wednesday.

"Alexandra Sheppard was allegedly spotted by police Cmdr. Michael Jung walking among the tents of the Austin Fine Arts Festival in Republic Square Park early Sunday. S he told the officer she was looking for her car and then allegedly said something in a foreign language that included the word 'policia,' the newspaper said.

"The officer then saw that a zipper to one of the tents had been opened and allegedly noticed Nathan Sheppard inside holding two paintings. Sheppard allegedly dropped the paintings and ran. He was arrested a short distance away."

Sheppard has since resigned from the museum. David Nishimura hopes "his misdeeds were limited to his off-work time."

"This is an art school. For them to censor art ... is unacceptable." (UPDATED)

So says Lori Marcus, the lawyer for Joshua Stulman, the former Penn State graduate student whose art exhibit "Portraits of Terror" was canceled last year by the university. He's now filed a lawsuit against the school (as well as Director of the School of Visual Arts Charles Garoian, art professor Robert Yarber, and President Graham Spanier). The Penn State Daily Collegian summarizes:

"In April 2006, Garoian canceled a scheduled showing of Stulman's 10-piece exhibit, which was sponsored by Penn State Hillel and featured images of conflict in Palestinian territories. According to the lawsuit, Garoian said the exhibit violated Penn State's Policy AD42: Statement on Nondiscrimination and Harassment, and did not promote 'cultural diversity' or 'opportunities for democratic dialogue.'"

According to the article, the suit seeks an order requiring that Penn State now host the canceled exhibit and pay all costs of shipping, and also seeks money damages against Garoian for defamation (he apparently said the exhibit was nothing more than a "billboard for Hillel's political agenda," and that Stulman himself was simply a "megaphone").

Lawprof David Bernstein was all over this when it was happening last year.

UPDATE: Via Eugene Volokh, here's the complaint in the lawsuit.

Scream Sentence

From this morning's New York Times:

"Sentences from five and a half to nine and a half years were imposed yesterday by an appeals court in Oslo on the gunman, the mastermind and the getaway driver in the theft of the Edvard Munch masterpieces 'The Scream' and 'Madonna,' The Associated Press reported. ... They were also ordered to pay a total of $263,000 in compensation to the city of Oslo, owner of the paintings, which were stolen in a daring daylight robbery at the Munch Museum in 2004. The paintings were recovered in August, but both were damaged."

Gonesky

The New York Times reports:

"Workers for Transport of London, the government body responsible for the city’s transport systems, have painted over a mural by Banksy, the celebrated graffiti artist, BBC News reported yesterday. The work, right, near the Old Street underground station, was taken from the film 'Pulp Fiction' but showed the actors Samuel L. Jackson and John Travolta clutching bananas rather than guns. It was one of Banksy’s best-known efforts, estimated by some to be worth [$600,000]. .... In March most of a Banksy mural in East London was stolen, and an early work was mistakenly painted over in the city of Bristol by graffiti-removal contractors. In February two smaller works in London were also painted over."

A spokesman for the agency says their "graffiti-removal teams are staffed by professional cleaners, not professional art critics." (Norm Geras wonders if that's a slur on the staff.)

You can see an image of the work with the BBC story here. Previous mentions of Banksy here and here.

Graffiti Charge

This morning's New York Times has a story on graffiti artist Alain Maridueña, who has been charged by city prosecutors with "14 criminal counts, including trespass, criminal mischief, and making graffiti. If convicted, he could potentially face decades in prison and huge financial penalties." The New York Press blog discussed this last month.

Chihulys Found

The Dale Chihuly sculptures stolen from an exhibit at the Fairchild Tropical Botanic Garden last week have been found in a vacant lot less than a mile away. Story here. The original report was that "seven to 12" works were stolen, but now they're saying it was (exactly) eight and all of them have been recovered -- though unfortunately not in great shape.

Intervention

In today's Nashville Tennessean, Jonathan Marx reports that the State Attorney General Bob Cooper has petitioned the Court for permission to intervene in the lawsuit between Fisk University and the O’Keeffe Museum. The motion argues that he has an interest in the case "because it involves the administration and/or disposition of a charitable trust, or in the alternative, a charitable gift." Elizabeth Ulrich has more at the Nashville Scene's blog:

"Now that Cooper's given the university another chance to get it right, he doesn't seem sure that Fisk will. ... According to the motion, Cooper wants to make sure that the university explores 'all possible strategies to preserve the collection in its entirety at Fisk.' If that's not possible, he's going to try to make sure that 'Radiator' never hits the auction block. He says the painting 'is clearly the signature piece and heart of the Stieglitz Collection.' He'd rather see Hartley's 'Painting No. 3' or another piece of the collection go."

Cohen Speaks

Also from the Apr. 17 ARTnewsletter, and also not online, an interesting quote from Saul Cohen, president of the O'Keeffe Museum, that I don't think I've seen anywhere else, in reaction to the Tennessee Attorney General's cancellation of the Fisk University settlement on the grounds that the $7 million price the university and the museum agreed to was too low:

"We knew that an auction house could do better, and we knew that Fisk had received offers for more. But, the fact is, if Fisk breached the condition of the bequest Georgia O'Keeffe made, it was obligated to just give the work to the museum, which would have been much worse for them than selling it for $7 million. The $7 million would help Fisk to carry on, and it would give the painting to a museum, where it likely belongs."

I made a similar point here.

$40 million elbow?

It's not online, so no link, but the Apr. 17 ARTnewsletter reports that, according to a "source familiar with the case," Steve Wynn's lawsuit against Lloyd's of London over his elbow-damaged Picasso "settled for approximately $40 million." He reportedly had been seeking $54 million, so not bad.

Fernwood Suit

In the Maine Antique Digest, Daniel Grant reports that "a group of investors in Fernwood Art Investments, a multimillion-dollar art hedge fund founded in 2004, [has] filed a lawsuit .... against the company’s founder, chairman, and CEO Bruce Taub. The suit claims embezzlement of $8 million."

Taub was also sued for $1 million last year by Roy Disney's Shamrock Holdings Inc.

Grant says that "[j]ust two years ago, art investment hedge funds seemed to be an idea whose time had come. ... Between a dozen and 20 art investment funds around the world have either come into existence within the past two years or were in the process of being launched." But "[o]nly the London-based Fine Art Fund remains as a working art investment program." NYU economist Michael Moses is quoted as saying, "I think what we may be seeing is not less interest in diversifying one’s portfolio to include art but, rather, that individuals who decide to invest in art want to do it on their own. They don’t need a manager for their art investments, and that causes an art fund to have a lot of headwinds to sail into." There is also this.

You Conduit Too

In a follow-up post on the issue of internationally-targeted charitable donations, Lee Rosenbaum writes:

"There's one thing, though, that puzzles me in Zaretsky's pro-'friends' group analysis. He advises us:

"U.S.-based nonprofits may (1) engage directly in charitable activities overseas and (2) re-donate funds they receive to foreign charities (in the latter case, as long as the intermediate U.S. charity is not deemed to be a 'mere conduit').

Isn't 'mere conduit' a perfect description of these 'friends' groups, whose raison d'être is to funnel tax deductible U.S. donations to foreign institutions?"

She has every right to be puzzled; on first glance (and maybe second) "friends of" organizations do seem to violate the "conduit" restrictions. Nevertheless, the IRS has for years relied on a "control and discretion" theory to allow donations to such groups to qualify for the charitable deduction. So long as the "friends of" organization maintains sufficient control and discretion over the use of funds donated to it, the deduction remains intact. But there's no denying that the "friends of" groups push the water's edge policy almost to the breaking point. The key IRS rulings are Revenue Rulings 63-252 and 66-79.

Against Original Location Fundamentalism

The Cranky Professor pushes back (crankily) against those making a fuss over Thomas Jefferson University's Eakins sales:

"Why shouldn't it be alright to say something like 'We're a medical school, not an art museum. If we can get $100 million dollars to plow into medical education that's more important than the pious preservation in one room of three portraits of mid-19th century professors.' ... I want doctors who were trained with all the latest toys. I want a cure for cancer. Keep the art in museums. . . .

"Should the collection or any individual painting stay in Philadelphia? Why on earth - unless they raise the money for them. They did raise enough between two institutions and a public outcry to keep one of the three. Should the Elgin Marbles go back to the Acropolis? What is the painting about? The history of art? The history of medicine? Philadelphia in the mid-19th Century? Unless you're going to be an Original Location fundamentalist there's really very little justification not to move art from place to place on the basis of price."

Back On

A lot of people were disappointed last month when the news broke that Stanford Professor Carol Shloss had settled her lawsuit against the Joyce Estate. This may make it up to them: "Having obtained what she sought in her complaint (the right to publish her Electronic Supplement on the internet) and more (the right to publish it in print, too), Professor Carol Shloss has asked the Court to order the Estate to pay her attorneys' fees based on the unsubstantiated positions the Estate took for years, only to back down once finally challenged." The motion for attorneys' fees is here.

At Ars Technica, Nate Anderson says: "Essentially, this boils down to 'bullies need to be taught a lesson.'"

Chihuly Theft

The Bradenton Herald reports that "seven to 12" Dale Chihuly sculptures were stolen from an exhibition at Fairchild Tropical Botanic Garden in Florida last week. (Not sure why the uncertainty about the number of works.) It apparently was a second try -- an earlier attempt in December ended with the works recovered "thanks to an anonymous tipster." The sculptures were supposedly protected by a ''sophisticated surveillance system that includes cameras and 24-hour guards." Fairchild's chief operating officer says the works are worth "tens of thousands of dollars each, at least."

According to the Herald, these were not the first reported thefts of Chihuly's work. In 2004 a work entitled ''Moccasin Brown Desert Basket Set with Turquoise Blue Lip Wrap'' was stolen from a gallery in Oregon, and in 2003 a man walked out of a Seattle hotel with a $40,000 glass bowl. And there are "at least 25" Chihuly works listed in the Art Loss Register's stolen art database.

Wading In (UPDATED)

Lee Rosenbaum invites me to join the conversation she's been having with Tyler Green about the tax treatment of charitable donations to foreign museums. Should international and domestic donations be treated the same for tax purposes? Lee says no; Tyler takes the universalist view and says yes. (Ed Winkleman sides with Tyler.)

I think it's a complicated question, and it depends on what you think the purpose of the charitable deduction is in the first place. First, the basic structure of the law. Our tax system does in fact privilege domestic over foreign giving, at least to some extent. Since the 1930's, we've had what some call a "water's edge policy": for a charitable contribution to be deductible under section 170 of the Internal Revenue Code, the donee must be "created or organized in the United States or in any possession thereof, or under the law of the United States, any State, the District of Columbia, or any possession of the United States." (That's for income tax purposes; gift and estate tax deductions are not subject to the same limitation.) On the other hand, as the discussion between Lee and Tyler suggests, there's plenty of international philanthropy taking place, and that's because U.S.-based nonprofits may (1) engage directly in charitable activities overseas and (2) re-donate funds they receive to foreign charities (in the latter case, as long as the intermediate U.S. charity is not deemed to be a "mere conduit"). So our current tax policy does not preclude deductibility for internationally-targeted donations, but does make them a little trickier (e.g., the foreign charity has to set up, and properly maintain, a "friends of" organization to receive the donations).

Is that the right policy? Should foreign and domestic charitable donations be treated the same? I guess, to the extent you see the deduction simply as a way of encouraging people to do good things, then, yeah, there doesn't seem to be any strong reason to distinguish between doing good things here and doing good things overseas. If we're going to encourage people to support art, what's the difference between supporting art in Philadelphia and supporting art at the Hermitage? As Tyler says, it's all part of our "common cultural history."

That's certainly one way to look at the question (and, as Lee concedes, probably how most people see it). An alternative approach would be to view the charitable deduction as a kind of "substitute" for direct expenditures the government would otherwise have to make. As the legislative history of the Revenue Act of 1938 (which enacted the "water's edge" policy) put it, "the [deduction] is based upon the theory that the Government is compensated for the loss of revenue by its relief from the financial burden which would otherwise have to be met by appropriations from public funds, and by the benefits resulting from the promotion of the general welfare." To the extent you buy this rationale for the deduction (and I'm not sure I do), distinguishing between domestic and foreign donations starts to look less strange: the less money the Philadelphia Museum receives through private donations, the more the government is going to have to give to it. But the same is not true of the Hermitage or the Mauritshuis. I don't think anyone would argue that private donations to those institutions are a substitute for funding the U.S. government would otherwise feel compelled to provide.

So if one wanted to construct a defense of Lee's position, I think that's generally what it would look like. As I say above, I'm not sure how convincing it is, though. Notwithstanding that legislative history, I don't think the best way to think about the deduction is as a substitute for spending the government would otherwise be making. (To take one example, how then to explain the deductibility of gifts to religious organizations, which clearly do not provide services the government would otherwise be providing?) I think that, over time, the deduction really has come to be seen as a way of encouraging people to "do good," and it's hard to see how helping victims of the 2004 tsunami, or helping preserve the Hermitage's Matisses, doesn't qualify as doing good.

UPDATE: JL at Modern Kicks weighs in here.