An art endowment can be a number of things in the realm of nonprofit fund raising. In some contexts, an art endowment is a gift of art that has certain donor-specified restrictions placed on it. These restrictions can include a prohibition against selling the art or a requirement that proceeds from any art sold be used to purchase additional artwork. In other contexts, an art endowment can be a gift of money that has a restriction placed on it by the donor that requires the money to be invested and the interest used to purchase artwork. Sometimes, a cultural endowment is mislabeled as an art endowment simply because a donor's gift promotes exposure, education and training involving the arts.
Endowments are the lifeblood of institutional nonprofits, such as museums and universities. This type of donation is made to sustain a critical part of the institution. It is typically a substantial gift and is designed to prevent changes in the institution's administration from affecting the intent of the gift to remain as a legacy of the donor. Most endowment gifts come with a written contractual agreement that specifies how the endowment can be used. Once an institution accepts a gift and signs the agreement, it is legally obligated to comply with the gift terms forever, or else risk having the gift rescinded.
Cultural institutions, such as museums and galleries, are often gifted with a certain type of endowment. Ordinarily, an art endowment is a gift of artwork to a museum, made under donor-specified conditions. For example, some wealthy individuals collect artwork. Upon death or simply to allow the public to appreciate the collection, the individual can donate the art to a museum. Instead of simply relinquishing the artwork with the hope that it will be used as the donor intends, the individual can establish an art endowment.
The restrictions placed on the use of the artwork can ensure that the museum never does anything to circumvent the original intention of the donation, such as selling the works to another private investor to raise operating money. Many museums have art endowments that form the basis of their major collections. Donor restrictions that can be placed on actual gifts of artwork can be anything that the donor envisions, including restrictions against sale, against using the proceeds from any sale for anything other than to purchase more artwork or against leaving the artwork on display more than a handful of months a year.
In some instances, an art endowment can take the form of a monetary gift. This gift is given to a museum or other art institution to provide a stream of income that can support the institution's operations. Ordinarily, the principal of the gift is invested, and the institution uses the interest to support operations. Museums sometimes receive this type of cash art endowment to be used to make art purchases.
