Government Policy in the Art Market
The first quarter of 2021 brought shock-waves to the art market, as NFT’s and the potential of the digital art medium captivated investor intrigue. But while attention was focused on the crypto-verse and rising fintech opportunities, significant strides were made by art institutions throughout the period as well, sparked by rising visitor count and active governmental policy bolstering the arts and culture landscape.
It comes as no surprise that art museums, galleries and programs were hard hit by the emergence of the pandemic in 2020, and into 2021. Visitorship at the top 100 art museums worldwide dropped by 77% compared to prior year — from 230 million in 2019 to 54 million visitors in 2020 — according to The Art Newspaper. This stark decline had far reaching implications that were far from unique to the art market alone. However, as institutions reliant on long standing patron contributions and government support, art museums were forced to explore the options available to offset operational costs no longer balanced by tickets and increased donations.
In the United States the result was the loosening of an Association of Art Museum Directors’ policy which prohibited institutions from selling art within their collections to cover overhead expenses. The response was overwhelmingly contentious — former Met Director, Thomas P. Campbell, likened the suspension of the decades-long position to “crack cocaine to the addict — a rapid hit, that becomes a dependency,” while others claimed that it offered newfound means for museums to grow and sustain unprecedented lags. Arguably, the ability of a museum to sell work in it’s collection could de-incentivize donors from sharing their artwork. Donor trust would be only one pillar at stake — board and civic responsibility, public benefit, and tax exempt status of collections deemed re-classed assets would also be called to question.
After the Met announced its decision to deaccession select works in the face of a $150 million deficit and layoffs of twenty percent of museum staff, other institutions followed suit, regardless of the potential petitions and backlash that might have ensued. The Brooklyn Museum gained $20 million at a Christie’s auction which included works by Matisse, Miro and Monet, covering costs to care for its expansive collection in October, 2020.
Yet, deaccessioning work wasn’t and isn’t a sustainable option for struggling museums to stay afloat, and financially stable museums to grow, domestically or internationally. According to a UNESCO report, forty-three percent of museums worldwide faced closures in the first quarter of 2021. Of the member states assessed, public subsidies remained stable in a quarter of countries, including Brazil, China and Saudi Arabia, rose in a quarter of countries, including Belgium and Canada, and decreased in half of the countries surveyed. The absence of government subsidies poses serious threats to museums with slashed budgets (by an estimated 40–60%) that the above mentioned descensioning of works sought to correct. While UNESCO proposed that public authorities act to financially support museums and prioritize the digital development and societal impacts of them, governments have had varied approaches to restoring the arts.
Germany developed the most proactive federal aid package for the arts in April of last year — nearly €50 billion was promised to be distributed to freelancers and small businesses, with additional assistance in the form of €5,000 checks to individual freelancers. These funds provided a safeguard of institutions and independent artists alike. In the first rescue package from the U.S., $300 million of the $2.2 trillion approved was earmarked for arts and media causes, though this figure was considered wasteful by conservative opponents.
In recent months, the art market in the U.S. is being revitalized by additional government subsidies — newfound funding for the National Endowment for Arts and for the Humanities at $135 and $175 million respectively, shows increased attention on the importance of the historical institutions that have undergone massive transformations over the last year. The possibility of an Arts Adviser under the Biden administration is also in conversation. At the state level, promising programs are likewise being rolled out. In Chicago a $60 million arts recovery is currently underway which includes projected job creation, creative and community project grants, public art projects, and support for local artists. In New York, mayoral candidates are each taking distinctive approaches to how they plan to support arts and culture. Ray McGuire has promised to protect and strengthen arts education, Maya Wiley plans to design a $1 billion “Recovery for Artists and Culture Workers” initiative, and Andrew Yang is pushing for subsidized rent for resident artists and legislation for an Open Culture program.
Art institutions are beacons of culture and history within the communities in which they exist. A visitor’s journey through vast halls and collections enriches their understanding of the world. For this reason, instituting effective policy reform and protections for the arts is critical, and certain policies rise above the rest. The success of art institutions and their operations is also indicative of the general health of the art market, as artworks are donated, purchased, descensioned and more with other players in the space.
