APAA In Conversation: Museum Exchange + TPC Art Finance
Chaz Guest, The Tenth, 2019, Oil and ink on linen, 84 x 192 inches, Gift of Ms. Feng Jianhua, Ulrich Museum of Art, 2022.2a-b.
What happens when you take the fashion, fame and frenzy out of any given art event? We sat with Naomi Baigell, Managing Director, TPC Art Finance, and Joanne Cohen, Director Healthcare & Education, Museum Exchange, to understand how their organizations support the growth and curation of collections in ways that are quite different from art advisors, gallerists or auction houses.
Naomi Baigell (NB): TPC Art Finance (TPCAF) and Museum Exchange are alternatives to selling. We both look at collecting from a curatorial perspective, albeit not in the customary definition of curation. We both seek to support clients wanting to reshape their collections through donation or by leveraging works of art to add to an existing collection. Both of these approaches are alternatives to selling if you are interested in adding to or finding a new home for your collection.
Joanne, can you walk me through your process? Does Museum Exchange have a threshold in terms of value and artist recognition?
Joanne Cohen (JC): Great questions, Naomi. Museum Exchange is the first digital platform designed for donations of art to museums throughout North America. Our end-to-end service connects donors with museums, as well as hospitals, universities, and other non-profit organizations.
Currently, we review works of art ranging in value from $2,500 to $1 million. Artist recognition is not necessarily an integral part of the equation. We often provide under-recognized artists more exposure and attention. We are also helping to redistribute cultural assets to institutions and communities that may have historically been underserved. We love discovering under-recognized artists and introducing them to new audiences.
Our process is simple:
We currently offer four catalogs annually with available works.
Donors may list one work or an entire collection of art on the Museum Exchange platform.
Our recipient network includes more than 130 art museums.
Museums can access the site at will until they are ready to make a case for a possible donation.
The donor, or person listing the work, then selects the institution that makes the most compelling request.
Museum Exchange manages the process from shipping to appraisals to tax paperwork through our streamlined digital interface. Our hope is to help expand and diversify collections and donor bases at institutions of all sizes, while simplifying the donation process for all.
NB: I can see that while our programs are different, there are some common threads. TPCAF typically looks at works of art valued at $100,000 and above, and collections valued at $1-$30 million. We felt that there was a lot of time and energy focused on the upper tiers of the primary and secondary markets, while important primary market artists and loans starting at $500,000 were overlooked. There is a demographic, regardless of income, that collects and transacts at the $100,000 to $1 million level. They have not had a financial resource to support their collecting habits and other investment opportunities.
TPCAF was set up to look at value, name recognition and depth of market -- transactional histories -- and to bridge the gap between $100,000 works and the highest levels of the market. Both TPCAF and Museum Exchange are great resources in this previously underserved segment of the art market.
JC: Interests and tastes evolve over time as one engages with art. The ability to expand a collection, pare it down, or curate it through a different lens has become easier through the tools offered by TPCAF and Museum Exchange.
I’ve shared two examples below of successful placements from the past year, with interesting stories of why the museums vied for this work and why the donors selected the respective institutions. We also have an accelerated placement option that allows us to offer artworks directly to select institutions for expedited donation. This has been particularly advantageous for collectors and galleries when the acquisition of a work is contingent on the successful placement of an additional work in an institution’s collection.
Donation: Ursula Von Rydingsvard, Three Boxes, 1985, Sheldon Museum of Art, Sheldon Art Association, Gift of Norma and Sheldon Minkowitz, S-1185.A-C.2021
The Sheldon Museum has an impressive collection of modern sculpture, primarily by male artists, but peppered with great examples by artists including Louise Bourgeois, Barbara Hepworth and Louise Nevelson. Adding a significant work by Von Rydingsvard helped balance gender representation in their collection and bring a different narrative the Sheldon shared about minimalism. The work is on view through July 2, 2022 in the Sheldon’s current exhibit, The Scene Changes: Sculpture from the Collection
Donation: Chaz Guest, The Tenth, 2019, Oil and ink on linen, 84 x 192 inches, Gift of Ms. Feng Jianhua, Ulrich Museum of Art, 2022.2a-b.
The Ulrich Museum had planned a major exhibition for Fall 2022, Myths of the West. When the Chaz Guest depicting Black Buffalo Soldiers from the Civil War became available, the Ulrich felt it would be a crucial work for their show. They even proposed to the donor that it should be the banner work greeting visitors entering the exhibition. Even more relevant, the regiment of Black soldiers later named “Buffalo Soldiers” were based in Kansas where the Ulrich is located.
NB: We also consider mediums including prints and photography that other specialty lenders might not; including artists transacting on the primary market. Like Museum Exchange, our team has more than 50 years of art market experience. We have greater transparency, and therefore comfort, in our ability to support different areas of collecting, as well as artists who have either been less recognized or are about to take off. Lean more in The Canvas + TPC Art Finance Auction Spotlight.
JC: Of all the work on our platform, photo-based work has been the most successfully gifted and placed-- a photograph actually received the greatest number of museum proposals last year. It’s not something we at Museum Exchange would have predicted.
Donation: Zhang Huan, Foam, 1998, C-print on archival Fiji paper, edition 6 of 15, 40 x 27 inches, Gift of Sue Stoffel, 2022, ACQ1206. Albright-Knox Art Gallery.
NB: That is the kind of ah-ha moment that we can offer to clients in terms of solutions that may not have been on their radar, providing something they may not have realized they needed.
Here are some other examples where a loan may be helpful, geared towards our readers.
Acquisition Finance provides quick capital to be able to jump on a new art acquisition. We help pay the gallery in a timely manner so collectors can get continued and early access. We work closely with advisors and can give a pre-qualified loan amount.
Pre-Auction sale income, providing capital in advance of a sale - be it a gallery or auction consignment. A work of art is typically consigned months before a sale. We provide capital against these works so that the seller has capital when they need it. Once sold, the seller pays down the value of the loan and keeps the rest of their proceeds less any agreed upon commissions. We do not take a share in the sale or any upside should the work sell above our loan amount.
I’m happy to share a case study, below:
The Challenge:
A collector was referred to TPCAF by their wealth manager. There were 10 artworks, by major contemporary artists, with a fair market value of $9,000,000, that the collector planned to sell at auction to earn capital for an investment opportunity. However, the auctions were not timed to meet their capital needs.
The Solution:
The collector decided that an art-secured term loan would be the best option to bridge the gap. TPCAF was able to process the loan within 3 weeks after reviewing all the necessary documents.
We are happy to send out a series of case studies with more of these opportunities.
JC: There are definitely synergies between our organizations, especially from a logistics perspective, and our processes are designed to remove barriers to entry. Having said that, we are very different businesses. I am curious why a potential donor would borrow against, rather than gift, works of art?
NB: I think that clients could, potentially, work with both of us at the same time. A client could borrow against works of art that they are not quite ready to sell or donate, then donate works that do not fit into their collection. This could potentially benefit an institution’s needs, but also make works that might not realize enough to be preferred by an auction house, other sales venues or even a loan a useful resource.
And, in response to your question, Joanne, our process is quite straightforward. Like Museum Exchange, we have streamlined procedures and logistics to make it user- friendly and headache-free.
Our primary focus is on the art.
We do not require the borrower’s financials, which eliminates a lot of paperwork and time for both parties.
We are not transactional nor do we play an advisory role.
We are a complement to, not competitors with, art advisors, auction houses, wealth managers, trust and estate lawyers among others.
As a first step:
We ask for images and typical inventory information on the works of art so that we can do an internal valuation of the collection and determine if we can meet the client’s financial needs.
Once this is identified, we present the client with an indicative term sheet that outlines the value and terms of the loan, and have a conversation to finalize the deal.
Like Museum Exchange, we ask for outside expert advice to corroborate our valuation and condition assumptions, but this does not happen until we are all in agreement and have signed off on documents. And, as with any loan, be it a mortgage or line of credit, we ask for certain information such as receipt of sale to ensure the borrower has title. Once we receive the information required from the borrower, we can often fund within a few weeks or less.
JC: I also want to note that we have eliminated the need for storage on our business end. A client maintains their work until it is selected by an institution. It is then shipped directly, meeting our goal to help clients reduce their storage footprint. Ultimately, we aspire to help clients be the best stewards of their art. Like TPCAF, the appraisal component is a key feature in our process. We have relationships with appraisers who provide timely services. We also offer a handy pre-appraisal feature if a client wants a preliminary assessment on the value of their work. To your point, a client may not want to sell a work now to fund another work if they believe there is more value in holding on to the asset. At the same time, they may want to sell other works and offset gains in a given year by gifting works to an institution. Ultimately, they may determine that a work is better suited for an institution. It is wonderful to connect institutions with donors they might not otherwise have had an opportunity to cultivate.
Alleviating obstacles from an often-challenging process and finding the right institution or organization for a particular work of art is very gratifying. It allows works that might languish in storage to be on view and enrich more viewers’ experiences. Both Museum Exchange and TPCAF aim to simplify a cumbersome process.
APAA: Companies like TPCAF and Museum Exchange are leading an exciting dynamic in the current art market landscape. Many more tools are being ushered into the market to complement, or support alternatives to, selling.
Look to TPCAF and Museum Exchange for strategies that support artists, artists’ estates – both living and deceased – as well as those who have yet to understand the power of these tools for their future projects, collection growth, or desire to share their collections with smaller institutions in meaningful ways. TPCAF and Museum Exchange are at the forefront of their prospective areas of practice and look forward to continued developments and conversations with their partners. Please reach out to Naomi or Joanne, listed below, should you have further thoughts or questions.
Naomi Baigell, Managing DirectorTPC Art Finance
Naomi@TPCAF.US
https://tpcaf.us/
Joanne Cohen, Director, Healthcare & Education
Museum Exchange
Joanne@museumexchange.com
www.museumexchange.com
Recent news
