Less Than Half of Fisk Windfall to Shore up Endowment

Fisk University’s $30 million cash windfall from the sale of half its ownership in the prestigious Alfred Stieglitz Collection of art and photographs has yielded the university far less discretionary income than might have been expected based on the institution’s insistence for several years that the controversial sale could set the stage for securing the university’s long-term future.

In a statement released last week, the university said it paid $2.4 million in legal fees for the seven years of litigation it waged to win court clearance to sell the interest in the art collection to the Arkansas-based Crystal Bridges Museum backed by Wal-Mart heiress Alice Walton.

The university also agreed, according to court records filed last week, to deposit $3.9 million of the $30 million into a restricted endowment to support for perpetuity the cost of care and exhibition of the collection by Fisk or “any future owner” of its 50-percent interest in the new entity that will own the collection in conjunction with Crystal Bridges. The court document made no such stipulation with respect to a future owner of the portion of the collection now owned by the Arkansas museum.

Fisk also said it was paying $3.483 million to settle outstanding bills to various vendors, settling local bank loans of $1.6 million (it had mortgaged nearly all of the university’s property) and repaying its depleted endowment some $7.4 million in loans with interest. In the early 1990s, before current president Hazel O’Leary took the helm of the institution, the university borrowed regularly and heavily from its endowment as enrollment and fundraising began to decline.

Fisk also said it was putting $5 million of the $30 million into a fund to support “initiatives” of the university’s new president. O’Leary is retiring in December, and the university is on the hunt for a new chief executive.

Creation of the $5 million fund was seen by observers as an additional lure for prospective candidates wiling to take on the job of helping the university stabilize and secure its future. Its fundraising has been weak over the past 20 years, and enrollment has dropped to nearly 600 students, half the student count the school claimed in its heydays a few decades ago.

The university said that, once outside obligations were settled, it would have $22.4 million to “strengthen” the Fisk endowment. Once all the bills are paid and special accounts established, however, an analysis of the information suggests that amount shrinks to about $12 million in restricted endowment money whose income could be used directly to support the historic school.

“We are, obviously, very pleased that this case was resolved in a manner that will ensure the financial security of Fisk with most of the funds being used to strengthen Fisk’s endowment,” Fisk President O’Leary said in a statement issued in conjunction with the filing in a Nashville state court of a brief document detailing the final points of the controversial sale.

Referring to the half ownership as a “sharing” agreement, O’Leary sought to pacify critics of the sale.

“The Stieglitz Collection is not lost to Nashville, but it is saved to be exhibited here two of every four years,” she said, referring to the terms of the sale agreement. “Fisk will probably for the first time have the financial ability and professional expertise available at Crystal Bridges to do everything necessary and appropriate to care for and exhibit this collection.”

The 101-piece collection, which includes photographs by Stieglitz and paintings by Renoir, Diego Rivera, Dove, Cezanne and other artists of their era, was donated to Fisk in the late 1940s by artist Georgia O’Keeffe, Stieglitz’s widow.

The gift has strict covenants to which Fisk agreed, including to never sell the collection (once valued at more than $70 million), loan it, or exhibit it in pieces. The idea at the time was to place important European art at a historically Black institution making it necessary for Whites to visit the Fisk campus and associate with Black people, if they wanted to see the highly touted works.

The collection was never fully utilized by the school however, as the good intentions of then President Charles S. Johnson were not widely embraced by his famous art department team. Also, Whites did not respond as hoped. The Fisk art department leaders at the time felt the European art did not complement the other forms of art they were embracing. In the ensuing years, after Johnson’s death in 1956, the collection spent years with little attention for the larger Fisk community and got little patronage from wealthy Whites in Nashville who were art enthusiasts. The collection eventually was spoken of less and less and spent much of its time out of public view.

In the late 1970s, as Fisk’s fortunes began to fade, then President Walter Leonard persuaded O’Keeffe to give the university $100,000 to pay for restoration of some of the works. The transactional work was done. Still, the relationship work never caught fire, and several efforts to stimulate interest in it failed.

By the time O’Leary came to the university in the early 2000s, the university was in such dire straights for money that its board decided to ask the state’s courts to declare the O’Keeffe restriction null and free it to handle the collection as it pleased.

The Fisk story in many respects mirrored that of Lincoln University in Pennsylvania, the historically Black college that in the 1990s eventually surrendered its prized Barnes Collection in exchange for several million dollars to enhance its campus. The Barnes is now a downtown Philadelphia centerpiece of the art community.

The legal skirmish over whether the O’Keeffe restrictions were still binding, despite her death, and under what conditions the university could escape the restrictions, pitted O’Leary and the university leadership against the state, a handful of legacy alumni and eventually the nation’s museum community.

 Opponents contended Fisk, which has gone through half a dozen fundraisers in the past decade, needed to fine tune and build its fundraising machine, not sell an asset. Others, including the Tennessee attorney general, said that allowing Fisk to deviate from the so-called “dead hand” rules governing giving would sour any future hopes that Fisk and other institutions might have of securing gifts from wealthy donors.

 This past winter, the Tennessee Supreme Court upheld a 2011 ruling by the state’s Appeals Court that Fisk had met the tests of the so-called cy pres standards used by courts across the nation in judging whether to grant waivers from donors’ intent. The university was free to monetize the collection by selling a half interest to the Arkansas museum.

Fisk, whose fragile financial situation was one of the reasons it was placed on probation by the Southern Association of Colleges and Schools (SACS), the major accrediting agency for institutions of higher learning in the South, is hoping the fresh flow of revenue will boost its chances of getting a clean bill of health from SACS in December when the agency meets to again ponder the university’s fate. Meanwhile, Fisk is reportedly planning to launch a new modest goal of a $25 million capital campaign this fall.