The Rose Art Museum at Brandeis University in Waltham, Mass., has built an impressive collection of contemporary artists since it opened in 1961. But now, on the floor-to-ceiling glass wall at its entry is tacked another sort of display: poster boards, some shaped like tombstones, with “R.I.P.” scrawled in magic marker.

These are physical manifestations of the outrage generated by a Jan. 26, 2009, announcement that Brandeis' trustees had voted unanimously to close the museum and sell holdings valued at $350 million.

“INTEGRITY FOR SALE. All MUST GO! Accepting all offers,” reads one of the student protests. The politics continue at the front desk, where the museum, locked in a battle with university trustees, has put a sign waiving the $3 admission fee, set out a donation box in which $20 dollar bills are stuffed, and offers visitors “SAVE THE ROSE” buttons.

Brandeis' move to close its museum sparked protests and headlines across the nation. It was condemned by museum associations and attacked in a New York Times editorial. Few seem softened by Brandeis' plight: The university's endowment has plummeted because of the national economic crisis and its fundraising has dropped dramatically because so many key donors were victims of the Bernard Madoff ponzi scheme. The university president said Brandeis was forced to sell the art to preserve its “educational mission.”

Stunned donors, some of whom made their gifts as recently as last May, also voiced objections to the sale — although none has threatened a lawsuit. Indeed, while a public relations war is in high gear, nothing has happened on the legal front — yet. The museum's brass are murmuring about the possibility. Jonathan Lee, chairman of the museum's board, an investment banker who also holds a law degree, announced that the board was looking into what donor restrictions there may be on the art that the Rose museum holds.

Whatever lawsuits are eventually filed, or not, the kerfuffle over the Rose Art Museum collection should remind practitioners everywhere that they might want to ask whether clients wish to include restrictions on any gifts of art to charities — so that the donors may have some say if their gifts are later offered for sale or exchange. But be advised, these restrictions may not be worth more than the paper they're printed on. And some prominent philanthropy experts believe that, in the long run, they are counterproductive.

Tradition vs. Law

Art patrons can no longer expect that museums and other not-for-profits will be restrained by the traditional assumptions of art philanthropy — or even museums' code of ethics. The Code of Ethics for the American Association of Museums provides that proceeds from the sale of art “in no event shall [they] be used for anything other than acquisition or direct care of collections.”1

“It is just not done,” says Paul N. Frimmer, a partner at Los Angeles' Irell & Manella who specializes in estate-planning aspects of art collections. “It sort of gives you a black eye in the industry if you do” sell off donated art, says Frimmer. “That is why this [proposed sale by Brandeis] is such a shock.”

Because the “no sale of donated art” has long been the art world's understanding, many gifts are silent on the subject, Frimmer says. That's why he suggests lawyers may want to rethink their contracts now, putting in clauses to make contractual the language of the ethics code: that the sale of art should only be to purchase more art. “There is nothing like being specific,” says Frimmer. “Lawyers have an obligation to start asking [for] that on behalf of their clients.”

Even with such a restriction in place, donors historically haven't had a right to challenge sales of their donated works. Most states still accept this traditional rule, that donors, despite whatever restrictions they may have grafted onto their gift, lack standing to sue charitable organizations. That right usually belongs solely to the state's attorney general.

A handful of decisions have nipped away at this rule, including one on an important 2001 case in New York stemming from a restricted gift to St. Luke's-Roosevelt Hospital Center.2 These cases suggest that a donor who puts detailed restrictions into his gift will be able, despite historical convention, to go into court to enforce that right, alongside the state's attorney general.

Meanwhile, the Uniform Trust Code (UTC) grants standing to donors of charitable trusts to enforce restrictions on their gifts of property, but UTC Section 405(c) has been adopted by only a minority of states.

Still, these legal innovations lead Winton Smith, a trusts and estates lawyer in Memphis, Tenn., to declare: “Donors who made restricted gifts of art to Brandeis may have legal recourse to enforce those gift restrictions.” Smith even believes such a restriction is inherent in the gift of a work of art. “I don't think anyone gives artwork contemplating that the donee is going to sell [it],” he says.

Harvey Dale, a noted professor at New York University School of Law and director of its National Center on Philanthropy and the Law, describes the recent cases allowing donors to sue as “not too brilliant.” He says it would be a “terrible shame” if the “object lesson” of the Brandeis art sale should “be that donors will be increasingly tight and inflexible.” Dale notes that donors suffer from a “frailty of prescience.” So, any gift predicting the future is bound for trouble, he says.

That may be. Certainly, Brandeis' trustees and donors could not have predicted the economic meltdown or the Madoff mess would pit one of the nation's most progressive universities against the art world.

Still, art lovers hold fast to the belief that integrity should prevail, no matter what the black letter of the law might allow. Explains one lawyer, the former general counsel to a major New York museum (who requested anonymity): Art “is not a financial asset, it is a cultural asset. You are the last bastion of the protection of cultural history, and you can't sell that cultural history.”

Endnotes

  1. “Code of Ethics for Museums,” American Association of Museums, www.aam-us.org/museumresources/ethics/coe.cfm.

  2. See Smithers v. St. Luke's-Roosevelt Hospital Center, 723 N.Y.S.2d 426 (App. Div. 1st Dept. 2001); see also Hertzog Foundation v. University of Bridgeport, 243 Conn. 1 (S. Ct. Conn. 1997).

Karen Donovan is a journalist based in Cape Cod, Mass.