Valuing History Collections

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Treating collections as financial assets puts the objects at risk endangering their ability to continue to. be used for the public good 5 AASLH does not endorse the capitalization of collections that is. assigning a monetary value to a history organization s collections and declaring them as part of the. organization s financial assets AASLH also does not support using proceeds generated from the sale of. objects deaccessioned from its collections for operating expenses 6. The AASLH Statement of Standards and Ethics states. Historical resources should not be capitalized or treated as financial assets. History organizations should detail the process for deaccessioning objects from their collections. in their collections management policy Decisions to deaccession should be based on the. relationship of the object to the institution s mission the object s cultural value i e its ability. to interpret a larger story the physical condition of the object and or the ability of the. institution to continue to care for the object Under no circumstances should the decision to. deaccession an object be made on the basis of monetary value. Funds from the sale of collections may be used for the acquisition of collections or the direct. care7 or preservation of existing collections Funds should not be used to provide financial. support for institutional operations In the case of institutions that accession their contributing. buildings and landscapes cultural and historical assets that are accessible to and interpreted. for the public funds acquired through deaccessioning can be used for direct care and. preservation of objects archives buildings archeological sites and cultural landscapes that. provide public benefit as outlined defined in their collections policy Institutional policy should. distinguish between building maintenance and building preservation 8. Definitions, The following definitions are key to understanding a museum s obligations to its collections. Asset As understood by an accountant an asset may be any property owned by an organization and. can include objects held in a collection 9, Capitalization As an accounting practice capitalization occurs when an organization records the. monetary value of owned property which can include objects held in a collection as assets on the. assets schedule in its financial statements, Collection s The objects or groups of objects held by a collecting institution such as a museum. historical society archive library botanical garden zoo or university These objects are formally. accessioned into the collection wherein they are protected cared for and preserved They are. Marie C Malaro and Ildiko Pog ny DeAngelis A Legal Primer on Managing Museum Collections 3rd ed Washington D C. Smithsonian Books 2012 417, AASLH Statement of Standards and Ethics revised 2018. Direct care is an investment that enhances the life usefulness or quality of a museum s collection This definition was first. introduced in the American Alliance of Museums publication Direct Care of Collections Ethics Guidelines and. Recommendations April 2016 aam us org wp content uploads 2018 01 direct care of collections ethics guidelines. and recommendations pdf pdf, AASLH Statement of Standards and Ethics revised 2018.
For a comprehensive discussion of assets see chapter XII Part 2 Tax Considerations Relative to Audit Purposes in Malaro. and DeAngelis 2012, acquired recorded and managed solely to further the organization s nonprofit purpose in pursuit of. its mission and in accordance with its articles of incorporation bylaws and collection policies and. procedures These purposes include research education interpretation and or public exhibition. Collections management policy A collections management policy is an organization s document or. documents that outlines the internal policies and procedures used to govern the development and. care of the organization s collections and that is approved by the organization s governing authority. This policy is designed to ensure appropriate development care preservation and use of the. collections while minimizing potential risks, Deaccession To remove an object from an organization s collection. Direct care The AASLH Statement of Standards and Ethics 2018 directs that monies realized from the. disposal of deaccessioned collections may be used for the acquisition of collections or the direct care. or preservation of existing collections 10 Following the guidance of the American Alliance of Museums. AAM AASLH defines direct care as an investment that enhances the life usefulness or quality of a. museum s collection 11 This investment in the direct care of the collections is intended to ensure the. monetary proceeds from the disposal of the deaccessioned object are put towards a use that continues. to benefit the public and not the organization or any individuals. Disposal After an object is deaccessioned a history organization must determine if the object will be. retained in a collection other than the accessioned collection whether its title will be transferred to a. third party e g through sale at public auction transfer or exchange usually to another public. organization or if the object will be destroyed 12. Governing authority The executive body charged with legal responsibility for the historical. organization or its parent organization This body approves institutional policy Its title may be. among others a board of directors governors regents or trustees an advisory board council and or. commission, Title Title is understood as the legal ownership of property including museum objects Title to. property can vary in its 1 completeness and 2 quality For example 1 When a museum owns an. artwork but not the copyright s in that artwork the title is not considered complete because a third. party controls a portion of the object its copyrights 2 The quality of a title may not be good if an. object was previously stolen because under American law a thief cannot convey good title in stolen. property 13, AASLH Statement of Standards and Ethics revised 2018 emphasis added. American Alliance of Museums Direct Care of Collections Ethics Guidelines and Recommendations. For details about the disposition of objects from history organizations collections see John E Simmons and Toni Kiser. eds Museum Registration Methods 6th ed Lanham MD Rowman Littlefield 2020 and Hugh H Genoways Lynne. Ireland and Cinnamon Catlin Legutko Museum Administration 2 0 Lanham MD Rowman Littlefield 2016 301 302. For a more in depth discussion of title including issues related to completeness and quality of title see Malaro and. DeAngelis 2012 64 83 and Heather Hope Kuruvilla A Legal Dictionary for Museum Professionals Lanham MD Rowman. Littlefield 2016 150 151,1 What are a history organization s assets.
History practitioners view objects in a history organization s collections as cultural and historical. resources held in trust for the benefit of the public not as financial assets For accountants however. assets are anything of value owned by an individual or organization Assets typically include cash real. property land buildings etc and moveable property such as artifacts documents or vehicles 14. Applying generally accepted accounting principles GAAP an accountant may capitalize a history. organization s collections as financial assets However a history organization does not need to. recognize its collections as financial assets if all of the following criteria are met. A The collections are held solely for public exhibition education or research in furtherance of. public service rather than financial gain, B they are protected kept unencumbered cared for and preserved and. C they are subject to an organizational policy that requires proceeds realized from the sale of. collections items be used for the acquisition of additional items for the collection the direct. care of existing collections or both 15, 2 What does it mean for an organization to treat its collection as financial assets. If collections are considered financial assets they may be capitalized encumbered and or sold for. financial gain Treating collections as financial assets can endanger a history organization s ability to. freely manage its collections and use them for the public benefit. 3 What does it mean to capitalize a collection, Capitalization is an accounting practice that records the value of all of an individual s or organization s. possessions as part of its assets on financial statements 16 When a collections object is capitalized the. object s monetary value is added to the organization s total financial assets. Some argue that capitalizing collections gives a distorted picture of a nonprofit s financial position. Consider the following, Historic House Z HHZ has an operating budget of 2 000 and an annual income of 1 500. Were HHZ to capitalize its collections which are worth 3 000 HHZ s annual audit would show. that HHZ s assets are 4 500 its annual income of 1 500 plus the value of its collections well. above its annual operating budget, HHZ wishes to apply to Foundation Y for a grant of 500 making the argument that HHZ needs.
the support in order to produce its annual education programs. Foundation Y does not look closely at HHZ s annual audit and rejects the request because it. sees that the Historic House has sufficient assets to meet its budgetary need. These types of non real estate property are technically called personal property. Financial Accounting Standards Board FASB Accounting Standards Update 2019 03 Not For Profit Entities Topic 958. Updating the Definition of Collections, fasb org cs ContentServer c FASBContent C cid 1176172408217 d pagename FASB 2FFASBContent C 2FComplete. dProjectPage accessed March 22 2020, When an organization deaccessions objects and uses the proceeds for things other than acquisitions and the direct care. of collections it does not mean that they necessarily capitalize their collections. 4 What circumstances might lead to history collections being capitalized. When a history organization is part of a larger entity or parent organization e g university college. state or local government agency the parent rather than the history organization may hold legal title. to its collections In these cases the parent can determine whether the collections are capitalized as in. the following, Collections held by government agencies The legal title to city county and state government. museums and history organizations collections may be held by the governmental entity rather. than by the history organization itself That these collections are held for the public benefit may. be undeniable but that does not exclude the possibility of the collections being monetized. when the government seeks favorable bond ratings and interest rates or resolutions to urgent. financial difficulties Once collections are viewed as financial assets it becomes easier to argue. for their sale when cash is needed As a result significant collections from public institutions. risk being transferred to private hands in essence reversing the legacy of collecting that is the. foundation of our public museums and depriving local citizens access to a part of the world s. cultural heritage 17, Collections held by university systems The legal title to collections held by college and. university museums are often held by the parent organization that is the college or the. university These museums are especially susceptible to pressures to capitalize collections. because of their dependence on their parent organizations which may have institutional. priorities beyond the protection of their museums This situation is intensified by the. comparatively high operational costs of museums and perceptions of the significant market. value of their collections As a result academic administrators and trustees who often do not. have knowledge or experience in the field of museum management may be tempted to view. their campus museum collections as an asset to be used to bolster weak finances or address. other non museum related needs 18, For an eloquent statement on the value of art to a city see Steven W Rhodes Supplemental Opinion Regarding Plan.
Confirmation Approving Settlements and Approving Exit Financing In re City of Detroit 524 B R 147 Bankr E D Mich. In 2007 the board of Randolph College in Lynchburg Virginia approved plans to sell four paintings from the Maier. Museum of Art to shore up the college s operating budget The works were sold between 2008 and 2015 prompting strong. opposition from museum professional associations including the American Alliance of Museums and the Association of Art. Museum Directors which both issued sanctions against the Maier in 2014. American Alliance of Museums Statement on Deaccessioning of Men of the Docks by Maier Museum of Art at Randolph. College 2014 ww2 aam us org about us media room 2014 statement on deaccessioning of men of the docks. Association of Art Museum Directors Association of Art Museum Directors Statement on Randolph College and Maier. Museum of Art 2014 aamd org for the media press release association of art museum directors statement on. randolph college and, 5 What are some of the considerations for a history organization s governing. authority regarding capitalization, In some instances the governing authority of a history organization may ask whether the. organization s collections should be capitalized These entities are legally responsible for their. Valuing History Collections Assigning a monetary value to a history organizations collections makes the collections appear to be financial assets and is counter to ethical principles espoused by the American Association for State and Local History AASLH This paper addresses what it means for an organization to treat its collections as financial assets and provides guidance for implementing

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