Tennessee Attorney General Robert E. Cooper Jr. on Monday asked the Tennessee Court of Appeals to hear his arguments against two lower state courts’ decisions allowing Fisk University to sell part ownership in its treasured Stieglitz Collection of art and photographs for $30 million cash.
In this latest move to block the sale of the art work donated to Fisk in 1947 and 1948 by the late Georgia O’Keeffe, Cooper asserted in papers filed with the state’s highest court that approval of the sale would reflect a misinterpretation of existing gift law governing so-called “cy pres” relief from donor restrictions on gifts and would have a “chilling” effect on the public’s desire to make major charitable donations of any kind in the future.
Cy pres is a New York legal standard followed by most courts across the nation that says any relief from a donor’s restrictions must be “as near as possible to the donor’s original intent.”
“By granting cy pres relief that removes Ms. O’Keeffe’s no-sale restrictions on the Collection and allows the sale to the Crystal Bridges (a new Arkansas museum that has offered $30 million cash to Fisk for half ownership in the collection and exhibition rights) to proceed, the Court of Appeals has changed the fundamental nature of the Stieglitz Collection, converting it from a restricted charitable gift into an unrestricted asset for the benefit of Fisk University,” Cooper says in his court papers. In doing so, he says, the court also creates the very distinct and real likelihood that the entire collection will leave Nashville and Tennessee entirely.
Cooper’s legal appeal comes two months after the Tennessee Court of Appeals decided in a 2-1 decision to clear nearly all the legal hurdles Fisk has faced in its five-year effort to monetize the 101-piece collection in order to raise badly needed funds it says would be used to pay off outstanding debts, restore funds borrowed from its endowment and seed a major capital campaign.
The November appeals court decision approved a trial court’s ruling that the collection could be sold to the Alice Walton-backed Crystal Bridges and without a key covenant imposed by the trial judge. That covenant would have placed two-thirds—$20 million—of the sale proceeds into a trust fund whose earnings could only be used by the school to support care and promotion of the art collection in Nashville. Fisk protested the covenant and won on appeal in the November decision.
Cooper, who has opposed the sale for several years on various legal grounds, had been expected to oppose the appeals court decision and went to great lengths in his petition Monday to state why he felt the appeals and trial courts have erred along the way in trying to assist Fisk in its efforts.
“There can be no question that the Court of Appeal’s ruling will undermine the status of restricted charitable gifts made not just to colleges and universities but to all charitable tax-exempt organizations in Tennessee,” Cooper says, echoing arguments made by the larger museum community across the nation. “Avoidance of this chilling effect alone, with its resultant negative consequences to the public interest, merits … review by this court,” Cooper says.
Under the Fisk plan approved by the appeals court, the art collection would be housed and exhibited on a rotating basis: two years in Nashville, where it has been since the early 1950s, and two years in Arkansas at the Crystal Bridges Museum.
The museum would also have first rights to purchase the other 50-percent interest in the art collection in the event Fisk was unable for any reason to honor its part of the ownership agreement. Cooper and others who are opposed to the sale say that co-ownership provision alone sets the stage for the school to eventually lose the entire collection since Fisk has declared publicly it can no longer afford to pay for the care, upkeep and promotion of the collection and risks insolvency absent a major infusion of cash.
In court arguments in 2010, Fisk told trial court Judge Ellen Hobbs Lyle that the school was essentially broke. It said it had mortgaged all its buildings, cut salaries, and deferred maintenance and capital improvements. The school told the trial court it had zero dollars in unrestricted endowment funds, its endowment had shrank to $3.7 million, and the school was running an annual deficit of $2 million. The school’s financial situation has changed little since, as no major funders have since stepped forward, absent the Crystal Bridges Museum.
As this latest chapter in the courtroom battle over the art sale commenced, Fisk was in the throes of trying to raise some $8 million by the end of June, according to recent correspondence to Fisk alumni from university president Hazel E. O’Leary and development officials. The goal is part of a larger plan Fisk says it is pursuing as part of an effort to satisfy the Southern Association of Colleges and Schools (SACS), its accrediting body. No plan for raising the funds has been discussed publicly.
In a December letter to Fisk supporters, O’Leary did issue an urgent appeal to alumni and friends to help raise $835,500 immediately to ensure that 230 students “in good academic standing” could afford to return to the school for the spring semester. In the letter, O’Leary says the students “are in jeopardy of not returning … because of unpaid balances.” The school has pledged SACS that it will maintain and boost its enrollment as part of its demonstration of the school’s long-term viability.
When Fisk opened its doors last fall for the 2011-2012 school year, its enrollment was just over 500 from a high of more than 1,000.
