Cleveland Museum of Art allowed to use 50% of income from trusts for expansion; 1st time in Ohio since 1955.

A follow up to my posts (here and here) regarding the power of museums to deviate from the terms of a donor’s limitations on the use of money donated:

Last week, the Cleveland Museum of Art won permission from a Cuyahoga County Probate Court judge to use 49.99% of the income (not the principal) from 4 trusts over a period of 10 years (up to an amount not to exceed $75 million) to finance the museum’s ongoing renovation and expansion. The 4 trusts were established in 1920, 1935, 1938, and 1952. It is the first time since 1955 that the museum has sought such relief from the terms of a donor’s trust, which is also the last time such relief has been sought by any museum in Ohio.

These facts plainly do not justify the fears the museum’s critics hold up as the consequence of such rulings.

ADDENDUM: The Art Law Blog was right on top of this, and also has written, commented upon, and linked to articles about the background.

Rules must allow for the inevitability of change: art museums and the doctrine of deviation

I’ve had my disagreements with Donn Zaretsky, the author of the Art Law Blog. But he’s dead on in his criticism last week of objections typified by Eric Gibson’s ”piece in the Wall Street Journal . . . about the Cleveland Museum of Art’s [CMA] request for court permission to use certain acquisition-restricted funds . . . to help complete its renovation/expansion. . . .”

As Zaretsky acknowledges, Gibson is sympathetic to CMA’s plight: “Clearly the museum has to do something. Nobody could have anticipated the events of a year ago, and [the museum's director] and his colleagues make a compelling case that the museum has to move forward with its expansion plan rather than mark time.” I would add that sympathy is worth the paper Gibson’s online piece is printed on. Yes, something has to be done. Maybe from New York an art museum, even a respected one, in Cleveland can be treated with condescension, but as a native Clevelander who happily moved back after 13 years of professional life in NYC, I can appreciate that the Cleveland Museum’s self-description accurately describes the importance of the institution:

The Cleveland Museum of Art means many things to many people. To the residents of Greater Cleveland, it is a beloved civic asset, a place where the community’s greatest aspirations find expression, and a backdrop for many a wedding photo. The museum is a major force in the regional cultural and intellectual community, helping to keep Northeast Ohio a vibrant center of learning and artistic endeavor. As one of the nation’s top museums, the CMA has long exhibited leadership in acquisitions, presentation, and education, and its curators have originated many groundbreaking exhibitions. The Cleveland Museum of Art is renowned the world over for the extraordinarily high quality of its holdings (which are in constant demand for loan exhibitions) and for both the intellectual rigor and the public spirit of its daily activity.

And CMA is no dusty holdover from the days when John D. Rockefeller and his contemporary Cleveland industrialists funded a cultural life of one of the richest and most dynamic cities in the country. Earlier this year, as Gibson also notes, it “completed Phase I of a $350 million, eight-year expansion and renovation plan that, when completed in 2012, will increase the museum’s size by nearly 50%, significantly expand exhibition space, and enhance the museum in other ways.” But, of course, “[l]ast fall, with the start of the second and last phase of the plan on the horizon, the museum found itself caught in what Michael J. Horvitz, the board’s chairman, calls “a perfect storm”: With $138 million remaining to be raised, philanthropy dried up, the credit markets froze, and the museum’s endowment plummeted—to $558.5 million as of June 30 this year from $736 million before the crash.”

Gibson, however, is paralyzed with fear that “the precedent this could set”if the court grant’s CMA’s request to use funds restricted for use to the acquisition of art. You have to to worry about what [art museums] might do if given an opening to finesse the rules governing restricted endowments.” As Zaretsky notes, “Lee Rosenbaum makes a similar point . . . . Cleveland’s actions,” she says, “unchecked, would set a dangerous precedent that could have a negative impact on future benefactions, just when museums need help the most.”

This is garbage. As Zaretsky points out: “The doctrine of deviation, upon which the museum relies, has been around forever. If the court grants the museum’s application, it won’t be creating an opening that other museums will then come rushing through, but allowing it to pass through an opening that was always there.” Moreover, the CMA’s has used the doctrine of deviation in the past in a responsible way, and there’s no reason to think, given the obvious need even its critics acknowledge, to think that if it convinces the court to allow it, that the decision would be a precedent for museums everywhere suddenly to act irresponsibly. Nor should we make rules that don’t permit courts to look at individual cases and grant relief from restrictions no longer serving any useful purpose just because we’re afraid someone may try to get away with fooling a court into letting them act irresponsibly. As Zaretsky points out, those who fear that allowing the CMA to be released from the restrictions imposed on its use of certain funds because circumstances demand it would create a bad precedent are blind to the fact that the rules that allow precisely that have been around and worked well for a long time:

The “opening to finesse the rules” has existed for this very museum with respect to these very funds for more than 50 years. It seems safe to say they haven’t exactly been abusing the privilege. Once again, the people who run our nation’s museums are not naughty schoolchildren who need to be penned in by simple, black-and-white rules.

And the rules set no strict standards. The legal doctrines that grant relief from restrictions on contributions made by donors require that “present circumstances have made it impossible, unlawful, or impracticable to adhere to the original terms of the donation . . . [or] the administrative terms of a gift . . . hamper the accomplishment of the gift’s purposes.” Emmeline Barton, Relief from Gift Restrictions: Cy Pres and Deviation, Harvard Law School Art Law Client Newsletter at 7 (Spring 2007).

I do wish people like Gibson and Rosenbaum would bother, before spouting off, realize that others long ago might not only have shared those opinions but also managed to work their way through to a reasonable way of accommodating the entire range of concerns raised in connection with those opinions. If the CMA can’t convince the court that circumstances merit relief from the restrictions on the funds they want to use, the court won’t let them. And we shouldn’t stop them because we’re afraid someone else might not deserve the same type of relief they’re seeking.