I read the Corcoran judicial ruling so you don’t have to

…unless you want to, or think I’m an unreliable source of information, which would not be unreasonable given my lack of law degree. I wrote this shit direct from the court documents (here) without googling anything. I am as stunned as you are.

Why am I doing this to myself?

This ruling made me rethink a lot of what I thought about the Corcoran proceedings (though I continue not to be super into the plan that will ensue) and I think they will become more relevant as a new generation of arts orgs with tenuous board structure come up through the ranks – this should be the root of some of you strategic planning for the next 5 and 10 years.

How am I doing this to myself?

All of my citations are from the ruling which includes both the original case and the subsequent petition for a Cy Pres ruling.

Here’s this: Sebastien Arbona, et al. v. The Trustees of the Corcoran Gallery of Art and The Trustees of the Corcoran Gallery of Art v. The District of Columbia, 2014 CA 003745 B (D.C. Super. Ct. August 18, 2014).

What exactly am I doing to myself?

This is a civil case, so the intervenor/petitioners (Sebastien Arbona, et al., who are the members of Save the Corcoran assigned this role – I’m just going to call them intervenors) brought a civil suit against the Trustees of the museum.

Subsequently, the Trustees petitioned DC for a Cy Pres ruling, which comes from a French term meaning ‘as close as possible,’ and in this instance indicates that it has become impossible for the Trustees to fulfill the literal terms that pertain to the Corcoran and that they have proposed, instead, to do what is closest to the original intention at founding.

Spoiler alert: The Trustees’ motion was granted, so they will move forward in their plans with the National Gallery of Art (NGA) and George Washington University (GW).

Be specific, Bridge.

I’m going to talk about why the UMD deal fell through, the faults in everyone’s plans, and my thoughts about the final ruling with a lot of quotes.

This is an extremely long blog post, even for me, but I felt compelled to discuss the full ruling, as written. For the extremely short version of events, click through below and scroll down to “This is the real summary of what happened here:”

Good luck.

The case is long, around 50 pages, so I’m going to try to be judicious (get it?!) about what I include, but some block quotes are unavoidable. Probably you can skip them until you get confused.

If you don’t know a ton about the Corcoran, you can check it out somewhere easy, like wikipedia, but here are the essential details: it is made up of the Corcoran Gallery of Art and the Corcoran College of Art + Design. The gallery is the oldest private art museum in DC and the Corcoran is the only college of art and design in the District.

The key part of the memorandum opinion is this idea:

The question before the Court is not which if these visions the Court prefers. Rather, the issues before the Court are narrower and can be summed up as follows: 1) have the Trustees of the Corcoran Gallery of Art (the “Trustees”) established that it is impracticable to carry out the Deed of Trust that created the Corcoran, given the Corcoran’s current financial condition; and 2) if so, is the plan proposed by the Trustees as near as possible to the intent of William Wilson Corcoran when he established the Trust.

So that sums up the Cy Pres idea. The court has no latitude to make alternate suggestions, though they will review this one and give it a yes or no stamp. If they grant the Trustees Cy Pres, the other half of this case will no longer have standing and will not be heard by the court. Which is what they did.

I’m going to skip the expository section because you can read about it on a newspaper website of some kind. The DCist link to the full text at the top of the post is a good one because they’ve been following this case incrementally.

will include some information about the formation of the trust because it’s important and I think it’s a great mission, so back off.

Mr. Corcoran created the Trust for the purposes of establishing “an institution in Washington City, to be ‘dedicated to art,’ and used solely for the purpose of encouraging American Genius, in the production and preservation of works pertaining to the ‘Fine Arts,’ and kindred objects.

This could be an entire blog post about how many of those phrases are so great, but it’s not. Mr. C also donated a building to the Trust and said they could only use it “for the perpetual establishment and maintenance of a Public Gallery and Museum for the promotion and encouragement of the arts of painting and sculpture, and the fine arts generally.”

The Board of Trustees gets to develop “appropriate measures for increasing the collection of painting, statues, and kindred works of art” at their discretion, says the Corcoran fellow. I think this is really important later.

So for 11 or 13 years, depending on who you ask, the Corcoran has done a bad job of having money to pay for things. Their accounts were frozen, they restructured payments, they barely paid their staff, and they put off renovations. They made a 15% cut across the board and increased tuition at the college.

The annual revenue structure that the Corcoran set up doesn’t actually add up to all the money they need, in part, because they don’t take into account how much financial aid they’re giving students. The Trustees have been filling holes with big, one-time fundraising moves, like selling stuff.

They also did this thing that I’m not very happy about: they used restricted  funds, specifically from an account for deaccessioning works, as advance funds when they could guarantee repayment. Not cool.

Then we get into some of the most interesting questions for me. There are several accreditations at play here:

  • Middles States Commission on Higher Education – academic accreditation for the college
  • American Alliance of Museums – relevant to the gallery
  • and Association of Art Museum Directors – who have a lot of power in terms of sanctions

MSCHE accreditation is in process with the general commentary that they are producing ‘unique contributions to arts education,’ but that their financial model is unsustainable. They recommend absorption or closure. These guys endorsed the GW/NGA plan. They’re really important largely because they control access to federal tuition assistance.

The AAM and the AAMD both have extremely strict guidelines about deaccessioning art – or distributing art that your organization no longer wants or needs. This is a really important concept that sometimes doesn’t make sense to those outside of the context of the art world – the goal of any accredited museum is, or should be, to display, restore, and protect the art under its care. Because of this, provisions exist to keep the money you spend on art as separate as possible from the money spent on the operation of facilities, administrative overhead, and salaries, among other things.

Money you make selling art is money you spend buying other art or, in extreme circumstances, preserving other art. You cannot sell a painting to pay the electric bill. Possible sanctions imposed as a result of doing so include a loss of accreditation, ineligibility for public and private grants, limitations regarding loans of art and hosting exhibits, and the inability to hire and retain qualified staff.

The AAM and AAMD also supported the NGA/GW plan.

In addition to the NGA/GW plan, three major options were discussed:

  • selling the Flagg Building – donated at the inception of the Trust
  • philanthropic partnerships
  • partnering with the University of Maryland

The Corcoran and UMD agreed to work exclusively towards a partnership in 2013. Full disclosure: I went to the University of Maryland, I worked for the University of Maryland, and I am a strong advocate for the artistic expansion of the University of Maryland.

UMD is considered an extremely strong STEM school and has amassed an impressive faculty of well-regarded researchers in the sciences. The art departments at the University are also extremely strong, but President Wallace Loh committed, at the time of his appointment, to expanding the arts at Maryland and making the transition to a STEAM program.

The Corcoran and the University processed a number of term sheets that outlined the level of responsibility that UMD would take in management and operations, selection of the members of Board of Trustees, and outright monetary grants. The University would also cover the renovation of the existing property over 10 years. They would have reciprocity in exhibition and in classroom space.

UMD presented the funds as a grant that would convert to a loan if the partnership was severed. The Trustees seem to have interpreted that clause as an indication that the money was only a loan.

Another key disconnect was ownership over the college, literal and figurative. The Trustees of the Corcoran wanted UMD to take full control of the College, however, they were not comfortable with UMD art faculty having a managing role with the Corcoran students, nor were they comfortable with UMD having any control over nominations.

The Trustees withdrew from the exclusivity clause before the end of the negotiation period and accepted the GW/NGA proposal.

The court states:

Although no evidence was presented as to the exact terms of the GW and NGA offers that were made in February of 2014, no party has asserted that the terms were any different than those memorialized in the final agreements

So while we have a clear set of terms from GW, there was little time for input from current students and faculty or donors before that offer was accepted.

The terms of the GW/NGA deal: GW acquires all real estate property and all of the funds allocated for the College. GW will manage a collection of works, to be selected and deemed Permanent Works, that will be on display at the Flagg Building. The Corcoran College dissolves and becomes  a department of the college, though it may maintain the Corcoran name.

“If the transaction between GW and NGA should terminate at any time, GW would continue to dedicate space within the Flagg Building to the exhibition of art to the public.”

As far as the NGA is concerned, they will take on the custody, care, and possession of the collection of 17,000-18,000 works, with the exception of those selected as ‘Permanent Works.’ The NGA plans to distribute works to other museums and institutions as they see fit. Preference will be given to museums within 50 miles of DC. The NGA will then create a department that also uses the Corcoran name, effectively dissolving the Gallery. The NGA will assist GW in maintaining a contemporary collection, but not the Permanent Works. GW is required to dedicate a certain amount of space to contemporary art regardless of the relationship between GW and the NGA.

The Intervenors provided some alternate plans.

One plan involved establishing an endowment with a seeing plan to eventually generate operating funds, with an emphasis on fundraising unrestricted gifts.

They also suggested that a man named Mr. Reynolds take on the Chairmanship of the Board of Trustees. He has previously accomplished a significant turnaround at the nearby Ford’s Theatre. He provided a list of 23 philanthropists interested in funding the Corcoran.

The Intervenors preferred the UMD option to the GW/NGA option because they felt it was more in line with Corcoran’s original intent. They felt it was important that the Corcoran remain one, united, separate institution with partners, rather than being absorbed. The UMD proposal had expired by the time of this testimony, however Loh testified that UMD would be prepared to make a new offer.

I find fault with much of what is proposed, but I think it’s more relevant to discuss what lessons this leaves us for institutions that may just be starting to have problems.

First and foremost, I find it shocking that an endowment was not pursued previously. Had they taken that action 10 years ago when financial trouble began to arise, they would likely have been able to maintain a standalone institution.

Secondly, I think that the need for legal intervention in order for the preferences of the current Corcoran stakeholders to be heard is inappropriate with regards to a mission that holds the students in such high regard.

The UMD deal was indecisive. The GW/NGA deal removed the option of maintaining an independent Corcoran from the table.

Mr. Reynolds, who I have written about previously on this blog, has had a number of questionable philanthropic dealings, as has his wife. An 18 month turnaround plan was not realistic. He also would have encouraged the Board to sell works in order to maintain an independent organization. While I feel independence is crucial to the Corcoran mission, I feel doubly sure that violation of deaccession principles is unacceptable.

But here’s the deal. No one gives a shit what I think and, actually, no one gives a shit what the judges think.

Remember when we talked about what this case was for? The courts decision is about whether or not the board has reached a point at which it has become impossible or impracticable to maintain the trust, as established. Something of note is this phrase that appears in much of the relevant precedent:

 the D.C. Circuit has noted that a party fails to establish impossibility or impracticability when it seeks to modify a charitable trust “merely because it suits its own convenience to do so.”

And:

the Court of Appeals has defined “impracticability” to mean that a party is excused from performing its obligations under a contract due to an unexpected contingency only if that contingency causes the party “extreme or unreasonable difficulty”.

There is very little arguing with the fact that the Corcoran has reached a position of extreme difficulty. The District of Columbia and the Corcoran Board of Trustees closed by arguing that the Trustees’ proposal was made in good faith and should be awarded an unspecified level of deference. The Court determined that the good faith argument was irrelevant and should not be used in developing a standard, however it remains true that a standard for a cy pres ruling does not formally exist.

[Previous Courts] do not answer the question of whether the Court owes any deference to the Trustees while exercising its own independent review.

Ultimately, the Court does not need to resolve this issue because the Court finds that the Trustees have satisfied the requirements for obtaining cy pres relief, even without deferring to the Trustrees’ assessment that it is impracticable to carry out the Deed of Trust and that the GW/NGA proposal is as close as possible to Mr. Corcorans’s intent in establishing the Trust.

The Intervenors made the argument that cy pres proceedings must adhere to the clear and convincing evidence standard while the Trustees argued that the “traditional preponderance of the evidence standard applies to these proceedings.” The Court sided with the Trustees on this matter, and correctly so, as the results of this decision are not likely to create a precedent where “the consequences of a court’s decision will be severe.”

This is the real summary of what happened here:

Although the court agrees with the Intervenors that the Trustees have not established that it would be impossible to continue under the existing Deed of Trust, it also finds that the Trustees have established that it would be impracticable to do so.

The argument that the Trustees make for this plan of succession is that:

it retains the Corcoran collection in the District of Columbia, maintains the College in the District of Columbia, and preserves the Flagg Building as the location that will house both the collection and the College in the District of Columbia.

I would argue that the wide-scale dissolution of the collection as well as the lack of agency of any collegiate study render that argument void. The Court was not necessarily responsible for selecting an option, though it did agree with the NGA/GW proposal.

This option prioritizes location over independence. I don’t agree with that decision, but given that the UMD offer is not currently on the table and cannot be presented before the end of the proceedings, it’s unrealistic for the Court to compel the Corcoran to consider it further.

I agree with their statement that Mr. Reynold’s proposal is inconsistent with Mr. Corcoran’s intent. His tempestuous withdrawals of support from other DC institutions does not make it appear likely that he would complete  tenuous negotiations with the Trustees as they stand. UMD stated categorically that they are “philosophically opposed to deaccessioning art to pay the bills.”

While the Court emphasized the concreteness of the plan and propel before then from GW and the NGA, they did concede that:

the GW/NGA proposal is inconsistent with Mr. Corcoran’s intent in one important respect… the GW/NGA proposal effectively eliminated the Corcoran as an independent institution, leaving behind only an untethered Board of Trustees to advise GW and NFA on future plans for the College and Gallery.

Essentially, the Court admits they are able to consider only the entire proposals in front of them, eliminating UMD’s potential future proposal and the amorphous call for an endowment. They continue:

Undoubtedly, Mr. Corcoran would not be pleased by this turn of events. It seems likely, however, that he would be pleased to see that the College will be preserved through partnership

In the ultimate conclusion of the case, the Court expresses clearly my opinion and what I expect is the opinion of many D.C. area residents:

The Court finds it painful to issue an Order that effectively dissolved the Corcoran as and independent entity. But this Court would find it even more painful to deny the relief requested and allow the Corcoran to face its likely demise – the likely dissolution of the College, the closing of the Gallery, and the dispersal of the Gallery’s entire collection.

While the Court did not reach a conclusion that I hoped it might reach, it did reach the conclusion mandated by law and, in addition, reached that conclusion in the spirit of my argument and in the spirit of the founding mission. 

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