Foundation sells art collection at auction to increase endowment
Client profile
A foundation became familiar with Bank of America Private Bank through its multiyear sponsorship of the Artist-Endowed Foundations Initiative (AEFI), affiliated with the Aspen Institute. Impressed with the Private Bank’s breadth of services focusing on artist-endowed foundations, the foundation moved its endowment over to the Private Bank and immediately began a strategic planning consulting engagement with a Bank of America Private Bank Philanthropic practice expert. Through this exercise, the foundation determined that increasing its endowment was critical to furthering its strategic objectives and mission, and that its art collection could provide the necessary cash infusion to bolster the endowment.
Approach
The private client advisor introduced the foundation to the Art Services group to advise them on the sale of the collection and represent them to top auction houses.
- The team’s knowledge of the art market, combined with consignment agreements with several auction houses, allowed our client to access preferred pricing and other services to significantly enhance their net profit from the sale.
- The team orchestrated conversations with top auction houses to lay out the objectives of the sale and gauge interest in the consignment.
- The team arranged site visits for three different auction houses to view the collection in person.
- They then gathered competitive proposals from the houses and led negotiations to structure the most advantageous consignment deal for the client.
Solutions
After reviewing the offers from the three auction houses with the advisor, the foundation chose the one providing the most advantageous package.
- The Art Services group obtained a multimillion-dollar guarantee with a favorable upside split on the top lot.
- The auction house provided a robust enhanced hammer deal on the rest of the property.
- The auction house also agreed to a comprehensive marketing package to promote the sale.
- To meet the approaching deadline for the New York auctions, the Art Services group:
- Worked closely with the auction house to manage the logistics of the consignment (contracting, shipping, insurance)
- Oversaw the execution of the marketing plan (including a sponsored event by the auction house and a full-page ad in a national publication)
- Advised the client on setting auction reserves leading up to the sale
Results
By working with the Private Bank advisor and a team of art specialists, our client:
- Took advantage of the Bank’s relationships with auction houses to secure favorable terms from an auction leader, resulting in over $5 million in proceeds from the sale for the foundation’s endowment
- Saved significantly on fees compared with going directly to an auction house
- Tapped in to a global audience of interested buyers, which may have led to higher bidding and net sale proceeds
Art Services
Consignment services are part of a broader suite of art services offered by the Private Bank.
| Art lending | Art planning | Consignment services | Nonprofit services | |||
| Leverage your collection to generate capital |
Incorporate art and collectibles into your overall estate and financial plan according to your unique needs |
Arrange for the sale of art and collectibles through our partnerships with auction houses |
Utilize our bespoke consulting and investment management services for museums, foundations and institutions |
THE POWER TO
imagine, illuminate and inspire
At Bank of America, we believe in the power of the arts to help economies thrive, educate and enrich societies, and create greater cultural understanding. That’s why we are a leader in helping the arts flourish across the globe, supporting more than 2,000 nonprofit cultural institutions each year.
Our arts support is wide ranging. We believe the neighborhood playhouse can be as important as the world-class museum or orchestra in its value to the community, in the lives of its citizens and in the education of its young people. A key component of our arts program is to help nonprofit institutions illuminate varied cultural traditions and to help the arts sector create pathways for more diverse employment and engagement.
The Bank of America Art Program is part of the company’s commitment to grow responsibly while bringing value to economies, society and the communities we serve.
For more information, contact your Bank of America Private Bank advisor or the Art Services group at 646.855.1107 or visit privatebank.bankofamerica.com/art.
This publication is designed to provide general information about ideas and strategies. It is for discussion purposes only, since the availability and effectiveness of any strategy are dependent upon your client’s individual facts and circumstances. All asset allocation recommendations must be considered in the context of an individual investor’s goals, time horizon, liquidity needs and risk tolerance. Not all recommendations will be suitable for all investors. Please remind your clients to always consult with their independent attorney, tax advisor, investment manager and insurance agent for final recommendations, and before changing or implementing any financial, tax or estate planning strategy.
The case studies presented are hypothetical and do not reflect specific strategies we may have developed for actual clients. They are for illustrative purposes only and intended to demonstrate the capabilities of Bank of America Private Bank and/or Bank of America. They are not intended to serve as investment advice since the availability and effectiveness of any strategy are dependent upon your individual facts and circumstances. Results will vary, and no suggestion is made about how any specific solution or strategy performed in reality.
Always consult with your independent attorney, tax advisor, investment manager and insurance agent for final recommendations and before changing or implementing any financial, tax, or estate planning strategy.
Keep in mind this asset class may not be appropriate for all investors and can be a component of an overall investment strategy. Leveraging art involves risks including lack of liquidity and yield production and may restrict some movement and lending of the artwork. If case of default, sale of the collateral could result in distressed circumstances.
Credit facilities are provided by Bank of America, N.A., Member FDIC, its subsidiaries or other bank subsidiaries of Bank of America Corporation, each an Equal Opportunity Lender. All loans and collateral are subject to credit approval and may require the filing of financing statements or other lien notices in public records. Asset-based financing involves special risks and is not for everyone. When considering an asset-based loan, consideration should be given to individual requirements, asset portfolio composition and risk tolerance, as well as capital gains, portfolio performance expectations and investment time horizon. A complete description of the loan terms will be found in the individual credit facility documentation and agreements. Clients should consult with their own independent tax and legal advisors.
Diversification does not ensure a profit or protect against loss in declining markets.
