The Philanthropy Bubble
For all the bile-spewing and garment-rending over a possible new art market bubble, the froth may have a silver lining, even for the most committed art purists.
I say this because of some recent reviews of the state of philanthropy in the arts. The Art Newspaper reported last week that while overall nonprofit giving in the US was slightly down in 2014, the visual arts have been overachieving like that dork everyone hated in your fifth grade math class.
Practically every major American art institution seems to either be gearing up for its most ambitious fundraising effort ever, or is already in the thick of it. And in general, the returns thus far have been borderline unbelievable.
The Art Newspaper piece above mentions several success-stories-in-progress: The Museum of Fine Arts, Houston has already landed $330M of its planned $450M benchmark in less than two years; SFMoMA has secured $570M of its $610M goal in under five years; and The Smithsonian has raised a mind-detonating $1.1B in just over four years.
Individual mega-gifts are a major factor in this swell of cultural largesse. According to the Chronicle of Philanthropy, $5M individual donations have already been made this year to the Museum of Contemporary Art, Jacksonville, and the Norton Museum of Art, West Palm Beach. Just last week, Bloomberg reported that Citadel CEO Ken Griffin dropped a $10M check into the hands of the MCA Chicago.
And the Museum of Fine Arts, Houston has been straight beasting. Its 2015 haul to date includes a $10M gift from oil moguls Oscar and Lynn Wyatt, a $50M gift from energy royalty Richard and Nancy Kinder, and a $70M gift from Egyptian cotton heir and investor Fayez S. Sarofim. Cue Drake’s “10 Bands.”
What I’m wondering is whether this nonprofit giving jackpot is what economists would call a positive externality of the commercial art market. Everyone agrees that the bubblicious activity in galleries and auction houses is coming from the new money–the clientele that private London gallerist Pilar Ordovas recently shaded in a New York Times piece as “buyers” rather than “‘collectors’ in the old sense of the word,” with all the crassness that label implies.
My theory is that the newly unfavorable optics around acquiring art are spurring a capital flight to museums. Collecting art used to be the way that a certain subset of the wealthy signaled their cultural credentials. It was a differentiator–a way to prove that they were something more than Jordan Belfort blowing the roof off [NSFW].
They had depth. They had substance. They were enlightened.
That differentiator no longer exists today. To the old guard and the image-sensitive, the sacred practice of art collecting–which Sarah Thornton once wisely classified as “a secular religion”–has been dragged through the red light district. Galleries and auction houses are teeming with individuals who behave like characters in a Tom Wolfe satire, and collectors “in the old sense of the word” cringe at the thought of being associated with the frat boy antics around them–so much so that they may be desperately searching for other ways to heighten the contrast between themselves and the “buyers.”
Enter nonprofit giving. It has all the cultural attraction of private collecting, but with a shimmering halo above it. A “true” patron of the arts doesn’t just spend for personal gain. She spends for the greater good.
Even better, she still gets to advertise both her net worth and her cultural bona fides–in a form more lasting and more public than any fleeting auction record. As I’ve written before, there’s major personal branding value associated with arts philanthropy. Why set a temporary Gerhard Richter record at Sotheby’s when you can tattoo your name onto a museum expansion forever?
Sure, the tax incentives are still enormous, and philanthropy has always appealed to people who want their stacked millions to mean something. But in the market’s current context, the renewed fervor for institutional giving reads to me as at least partially a response to the tarnished aura of collecting.
Either that, or it’s just the next frontier in the new money arms race that visual art has become. No matter what the motivation, though, the undeniable outcome is that the public benefits. And that’s a rare win for everyone in this increasingly stratified era.