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Capitalizing Art Museum Collections: Awkward for Museums But Good for Art and for Society

Goldman School of Public Policy Working Paper No. GSPP08-005

18 Pages Posted: 3 Sep 2008  

Michael O'Hare

University of California, Berkeley - The Richard & Rhoda Goldman School of Public Policy

Date Written: November 2005

Abstract

Though standard accounting practice requires that all assets of a firm be manifest in accounts, an exception to this principle allows museums to omit their entire collections from their balance sheets. As the collection of any top-rank museum has more value than the rest of a typical museum's assets put together, this practice greatly obstructs good institutional decisionmaking. The practice is justified by an assertion common in the museum community that the collection is not a financial asset, neither available for sale nor obligation as a loan security, and by a variety of other assertions regarding the cost of assessing it. These assertions are shown to be choices with no fundamental support beyond museum management comfort, or to be erroneous.

The allocation of artistic patrimony across museums generates a return on investment below 1%, indicating that these assets are not being used efficiently to create the benefits museums (whether non-profit or public) are supposed to provide: no other organization would be allowed to control assets with such a low rate of return. Capitalizing collections is practical and would lead to a variety of beneficial changes in museum practice, on the criterion of inducing "more, better, engagement with more art by more people."

Suggested Citation

O'Hare, Michael, Capitalizing Art Museum Collections: Awkward for Museums But Good for Art and for Society (November 2005). Goldman School of Public Policy Working Paper No. GSPP08-005. Available at SSRN: https://ssrn.com/abstract=1262403 or http://dx.doi.org/10.2139/ssrn.1262403

Michael O'Hare (Contact Author)

University of California, Berkeley - The Richard & Rhoda Goldman School of Public Policy ( email )

2607 Hearst Avenue
Berkeley, CA 94720-7320
United States

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