Meeting the Challenges of Art Wealth
Leading edge private banks are recognising that today’s UHNWI’s require the same strategic planning for an art collection as other financial investments and with the help of skilled advice can leave a lasting legacy. The future looks bright for private collectors both interested in creating new museums and having their work exhibited in other institutions. Equally important, a new breed of art philanthropist is emerging whereby wealthy individuals are choosing to use their wealth to realise what they define as a richer life.
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Gifting a Collection to a Museum
The most important question a collector should consider before gifting to a museum revolves around whether the museum is ready for the gift. As a general rule, museums will accept donations only if the items offered will enhance an existing collection or can be integrated into a strategic plan to expand a collection in the future. In most cases, partnering with a museum early on is crucial. Ultimately, a collector must strike an agreement that spells out the terms by which it will offer, and a museum will accept a gift. Even though they may have similar goals, in the end donors and museums can have different means of achieving them.
Setting up a Private Art Foundation
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By GlobalDataIn recent years a growing number of wealthy collectors are choosing to build their own museums through a foundation rather than donate works directly to existing institutions. While there are a number of factors driving the growth of private museums globally, a lack of public exhibition space has played a major part. Apart from the psychological motivations, the decision to build a private museum is often prompted by the desire to keep artworks exposed and available to the public. Collectors must also consider the extent to which they can provide financially for the preservation of their collections. A private museum is not only expensive to build, but requires a large endowment to preserve it for the future.
Applying Venture Philanthropy Techniques
Shifts in the global economy have led many HNWI’s to view art philanthropy with renewed, more entrepreneurial focus. The term "venture philanthropy" has emerged with the increase in new entrepreneurs who apply business acumen and passion in the fulfilment of their philanthropic goals. Their generosity is stimulated by a passion for art and quite often these motivations are far stronger than any tax incentive they may receive. Sometimes referred to as "engaged grant-making", this new philanthropy requires investment of both financial and human capital to improve the effectiveness of wealth giving. Simply put, it is applying the venture capital model to grant making, thus assisting art institutions to better achieve their mission. Common philanthropic objectives for wealth giving to the arts often include one or more of the following strategies:
-Support established arts organisations
-Promote the creation of art and new methods of creative expression
– Foster active engagement from all socio-economic and ethnic backgrounds
Conclusion
With their private art collections as their core, and with their missions of civic responsibility and infusing the arts field with new ideas; a new generation of art philanthropist is emerging with the potential to create a real understanding of art and culture while applying business acumen, passion and technology in the fulfilment of their philanthropic goals. Engaging private clients through their passions can be of immediate and practical benefit to wealth managers by deepening client relationships and enhancing client retention.
Randall J. Willette is the founder and managing director of Fine Art Wealth Management
