This is the third installment in our report from the Ethics Smackdown at the Alliance annual meeting, debating whether museums should loosen the ethics restrictions governing the use of funds resulting from the sale of deaccessioned collections. In today’s post, John E. Simmons, principle of Museologica, Adjunct Curator of Collections, 
Earth and Mineral Science Museum & Art Gallery
Penn State University 
and
 Lecturer in Art
Juniata College
, Huntingdon, Pennsylvania, summarizes the arguments against the resolution.

Resolved: Whereas, cultural, financial, technological and political trends are changing the world in which museums operate, American museums should revisit the Code of Ethics for Museums and relax the restriction on the use of funds from the sale of deaccessioned collections.

Deaccessioning is necessary to maintain a healthy museum—the issue is how funds generated from the sale of deaccessioned objects should be used. Deaccessioning should be a tool to improve and refine collections, not a source of income.

Using deaccessioning proceeds for anything other than “acquisition or direct care of collections” violates the principle that collections are held in the public trust. Museums and businesses play by different rules, and for good reason. Most U.S. museums are nonprofit, tax-exempt organizations that carry out their missions for the benefit of the public. Because most museum property is held for charitable purposes, museums are legally treated as charitable trusts. This special status is strictly defined and tightly regulated by the Internal Revenue Code of the United States, and it means that museums have both legally mandated and implied responsibilities, including the duty to care for and manage their collections. Nonprofit, public trust status is not to be taken lightly—in 2011 the Internal Revenue Service revoked the tax exempt status of 275,000 organizations, including many museums, for failure to comply with legal requirements.

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Nonprofits are given their special legal status to allow them to take on tasks that are socially desirable, because they usually operate at the limit of their resources, and because they provide a benefit to the public. A Legal Primer on Managing Museum Collections puts it this way: “When a for-profit organization faces a financial crisis, the sale of part of its assets is essentially a matter of business judgment…  For a nonprofit, the sale of assets can mean (as in the case of a museum) the disposal of part of its very reason for being.” Holding collections in the public trust does not mean that a museum must keep every object in its collections; rather, it means that a museum must ensure that the objects help fulfill its mission, and that collection objects are not treated as a source of ready cash.

Allowing deaccession proceeds to be used for general purposes will turn collections into financial assets that have no greater worth than their market value, presenting an irresistible temptation to boards and administrators. Fair market value rarely reflects an object’s research or scholarly value (which is dependent on its documentation) or cultural value (which is dependent on its associations).  Calculating the monetary worth of a museum object is necessary for purposes of insurance, but it does not begin reflect how much objects are worth as part of a museum’s collection.  Collections are the heart of the museum—everything that a museum does, including exhibitions, pubic programs, research, and the acquisition of more objects—is based on the use of its collection. Liberalizing the ethical standard would have a negative effect on supporters and future donors, who would see that the museum valued their donations only for their cash value, not for their cultural or scholarly value.  Deaccessioning for cash is very a bad public relations move, and may force the museum into court.

If the ethical standard is revised, collection objects will be sold to pay for pet projects, building expansions, salaries and bonuses, to cover debts, and in other ways that offer an escape from fiduciary responsibility. It isn’t just museum professionals who make decisions to deaccession for cash—it is often the museum’s parent organization, which leaves university museum particularly vulnerable to the plundering and pillaging of their collections. We know that deaaccesioning for cash will take place on a large scale because there is a long history of it despite the ethical standard. For example, in 2007 Randolph College sold four paintings from the Maier Museum of Art to help balance the university’s general budget; the local paper called it a “targeted heist.” In 2008, the National Academy Museum sold two paintings for $13.5 million to shore up its troubled finances.  Following a devastating flood at the University of Iowa, the state legislature attempted to force the university to sell its Jackson Pollock mural to help pay for $743 million in flood damages. In 2009 Brandeis University announced plans to shut down the Rose Art Museum and “monetize” its collection to make up the university’s budget shortfall. The Western Reserve Historical Society sold $3.2 million of collection objects to help pay a debt of $5.3 million. In 2010, Fisk University sold a 50% share of its Georgia O’Keeffe paintings to the Crystal Bridges Museum for $30 million, of which the university was allowed to use 1/3 to pay its debts; the paintings are now shipped back and forth between Nashville, Tenn., and Bentonville, Ark., every two years. In 2011, the New Jersey Historical Society sold artifacts to pay off a $2.1 million debt; the local paper described the museum as cannibalizing itself to survive. In 2012, it was reported that the Field Museum, which had already sold more than $15 million worth of George Catlin paintings, might sell more collection objects to cover its debts—five years previously, the board had issued $90 million in bonds, doubling the museum’s debt; at the time, the Chicago Tribute described the board’s financial plan as “fraught with risk.” Although behind all of these examples we can find worthy goals and good intentions, we can also find financial recklessness and absurd predictions for future income.

The present ethical standard allows broad use of deaccessioning proceeds while keeping museums focused on their missions. As any ethical standard should be, this one has already been re-evaluated and revised. The 1991 edition of the code stated that the use of deaccessioning proceeds was “…restricted to the acquisition of collections;” this was revised in 1994 to “…acquisition or direct care of collections.” The meaning of “direct care” has been interpreted widely, both in museum practice and in the courts. When deaccessioning proceeds are used to care for the collection, it means other sources of income can be diverted to other museum needs.

Finally, if the museum is in dire financial straits, in most cases it is due to fiscal mismanagement, so selling off the collections won’t help, it will only cripple the museum in the future. An analogy can be made to a hiker who is lost in the woods at night and sets his map on fire to find the trail. That’s a really bad idea—the hiker should tough it out until daylight. It might be uncomfortable, but at least when the sun comes up he will still have a map to read.

In the next installment, James Bradburne of the Palazzo Strozzi in Firenze, Italy summarizes the arguments for the resolution.You can order a recording of the session here.