1Setting the foundation
Self-glorification is a small price to pay for philanthropy
The use of the term âphilanthropistâ has become synonymous with many of todayâs wealthy and influential collectors. The word bestows status and prestige on the recipients and admiration from aspiring benefactors who might seek to enter this elite social sphere. Establishing notable cultural achievements, a growing art collection and even a private museum can help to improve a collectorâs esteem and public reputation in a way that their enterprising deeds cannot do. This is not a twenty-first-century phenomenon but one that dates back to the late nineteenth- and early-twentieth-century American industrialists, banking tycoons and railway magnates, who looked to improve their reputations and legacies through their cultural actions. Henry Clay Frick is one that readily comes to mind â we might consider Eli Broad to be his contemporary equivalent. By drawing similarities between todayâs collectors and their predecessors, we can observe that past collectors determined their philanthropic intentions towards the end of their life. Decisions about how their holdings would be dispersed upon their death were vital. Contemporary collectors however favour a more active approach to arts philanthropy. This is a significant development that has prompted a growing number of collectors to consider various formats of the private museum model above more traditional methods of benefaction. Opening up oneâs own museum to the public enables collectors to manage their public image. It also allows them to maintain authority over their holdings while securing generous tax benefits for themselves and their not-for-profit foundations and museums.
Traditionally, the options available to past collectors included: whether to sell their notable works of art at auction; bequeath them to their next of kin who inevitably sold them; give them away over time or gift them to a public museum; establish a private foundation and museum at considerable personal cost or allow their executors to determine the ultimate fate of the collection.1 Frank Hermann argues the latter inevitably resulted in âno philanthropy and certainly no self-glorificationâ.2 Moreover, Hermann states that todayâs wealthy and successful businessmen and benefactors have been associated with a âself-glorifying philanthropyâ in pursuit of tax breaks rather than genuine altruistic pursuits. It is for this reason, he says, that serious art collecting is often seen to be synonymous with self-glorification.3 There are other interesting aspects to Hermannâs argument: for example, collectors often see their expansive holdings as a work of art in its own right and do not wish to see it disbanded over time, nor do they want it hidden in a public museum basement. The issue of estate tax is an additional complication that needs to be addressed upon the death of the collector.
By constructing oneâs own art museum, wealthy collectors can actively manage their holdings and public personae within the public realm and in their own lifetime, albeit at a greater price than gifting works to public institutions. Private museums allow their founders to take charge and address the dilemma of the shortage of exhibition space available for private collections to be on permanent display within public institutions. It can also be argued that the existence of private museums can deny public institutions future access to significant holdings that were once seen to benefit the museum.
This chapter examines how arts philanthropy affords benefactors public recognition and financial incentives in return for their generosity. Philanthropy can directly address the ongoing dilemma of public funding; however, it also raises a number of other concerns. In accepting donations of money or works of art public museums are expected to balance individual benefactorsâ expectations alongside their public responsibilities. More often than not, private bequests are usually accompanied by strict terms and conditions that are set out by the donors. Furthermore, tax incentives are seldom an immediate call to action and do not always prompt ongoing philanthropic giving within society. Governments also need to promote a sense of goodwill as changes to cultural and taxation policy alone might not bring about the paradigm shift required by governments.
It is generally accepted that most public museums throughout England, Europe and Australia have traditionally operated under the auspices of national, state or local government, irrespective of their private or public origins. Over time governments have assumed responsibility for basic funding, the appointment of boards of trustees and a degree of stewardship over the collections and exhibition programmes â the US is the exception to this rule.4 In light of ongoing budgetary restraints throughout Europe, England and Australia, governments have, and continue to introduce taxation reforms to prompt wealthy individuals to increase their philanthropic contributions. There is a direct link between increased tax-paying and an increased desire for wealthy individuals to offset their earnings with tax benefits and philanthropic donations. Philanthropy is seen to reduce wealthy individualsâ tax burden considerably.5
The âAmerican modelâ of philanthropy is seen to promote private philanthropic giving through generous tax inducements. Owing to the long-standing tradition of private philanthropy in the US and the complex relationship between private and public support, it is difficult to accurately distinguish between the two as they are often alike. The terms private and public when used in relation to American museums can often be complex and confusing. Private individuals and donors have and continue to play a significant role in the formation of the private and public art museum in the US. It is, therefore, important to understand how philanthropy fits into the overall structure of American museums. This will be discussed in more detail shortly.
Fostering a culture of âgivingâ â then and now
To better understand the complexity of the âAmerican modelâ of philanthropy, and its implications for collecting and museum building, we need to consider historical decisions, tax laws and different cultural traditions that have promoted private benefaction and established a culture of âgivingâ in the US. During the late nineteenth century, American governments sought to incentivise wealthy industrialist collectors to transfer their holdings to the US, from Europe â especially England. The accumulation of expensive European art collections at the turn of the twentieth century was aided by the reduction, and eventual abolition, of import tariffs in the US. The PayneâAldrich Tariff Act in 1909 saw import duties that were implemented in 1897 lowered by 20 per cent. What was even more significant was the abolition of import duties on European artworks that were more than 20 years old.6 This not only encouraged wealthy American collectors to acquire important works of art but prompted those who kept them in storage abroad or in their European or English private properties, to bring them to America. Before 1909, American financier and banker, J. Pierpont Morgan (1837â1913) maintained works of art valued at $30,000,000 (approximately $719,000,000 in todayâs value) in London to avoid paying import taxes.
This positive tariff situation was confirmed in an interview conducted by the San Francisco Examiner on 27 March 1909, with renowned British art dealer Sir Joseph Duveen (1869â1939),7 from the Duveen Brothers: âAt present, I have stored here [in London] millions of dollarsâ worth of art objects which Americans have purchased, but which they would not import owing to the tariff dutiesâ.8 By 3 October 1913, the import tariff rate would be further reduced to ten per cent under the implementation of the Underwood Tariff Act. Thus, it was not long before significant sums of money would be paid abroad to acquire notable paintings, sculptures, rare book collections and decorative objects that were ultimately destined for the American public. In this evolving cultural context, private collections soon provided the backbone of major public institutions that began to mushroom across the nation before and after the turn of the twentieth century.
The introduction of the Federal tax law in 1913 prompted the private sector to assist governments with the funding of social and cultural programmes. In return, charitable contributions were deducted to offset individual tax burdens. This continues to date as private foundations are established as tax-exempt entities. Unlike their European and British counterparts, American museums were not founded on elitist or enlightenment principles, instead they stemmed from a desire to make art available to all citizens â to make it accessible to every member of society, irrespective of their social standing. It was the initiatives and funding of civic-minded individuals, or groups of entrepreneurs, artists, collectors and philanthropists, that saw the formation of American public museums: amongst them, the Smithsonian Institution, Washington, DC (1846); the Metropolitan Museum of Art, New York (1870); the Museum of Fine Arts, Boston (1870); the Philadelphia Museum (1876); the Art Institute of Chicag...