Why Do Corporations Buy Art?

Summary

The script delves into the motivations behind corporate art collections, highlighting their role in enhancing employee well-being and shaping corporate identity. It explores how art serves as a communication tool, attracting talent and projecting a company's desired image. The script also addresses the strategic use of art for tax benefits and as an investment, questioning the implications of corporate art ownership on public access and the art market. It concludes by pondering the influence of corporate art on society and the potential for governments to recognize art's value.

Takeaways

• 🏢 Corporations buy art not only for decoration but also to reflect their values and aspirations.
• 👩‍💼 Art in the workplace can enhance employee well-being, attract talent, and potentially boost productivity.
• 🖼️ Art collections can communicate a company's identity and desired image to both employees and clients.
• 💼 Companies often commission new works to project a modern and innovative image.
• 🌐 Corporate art collections can serve as a form of community investment and social responsibility.
• 🏛️ Art displayed in public spaces or loaned to museums can increase brand awareness and sophistication.
• 💵 Art is considered an asset class for corporations, similar to stocks and real estate, with potential for appreciation.
• 💼 Tax strategies related to art purchases can be used by corporations to manage their financial obligations.
• 🔮 The contents and valuation of corporate art collections are typically private, becoming public only in cases of company distress or change in ownership.
• 🤔 The growing influence of corporate art collections raises questions about their impact on public art accessibility and the art market.

Q & A

Why have corporations increasingly been forming significant art collections?

Corporations form significant art collections not just to fill walls but also to improve the daily well-being of employees, attract and retain talent, inspire creativity, and communicate corporate identity and values.

How does art in the workplace impact employees?

Art in the workplace can enhance the daily well-being of employees, potentially inspiring them and possibly improving productivity. It can also serve as a conversation starter, fostering a sense of community.

What messages can corporate art communicate to clients?

Corporate art can communicate various messages to clients, such as the company's wealth, stability, modernity, and innovativeness, depending on the type of art and its presentation.

How does art contribute to a corporation's identity?

Art contributes to a corporation's identity by reflecting the company's vision, mission, and values. It can also project an image of the company as modern and forward-thinking.

Why do some corporations commission new works from emerging artists?

Some corporations commission new works from emerging artists to project an image of being contemporary and innovative, aligning with their brand identity and potentially supporting local talent.

What role do experts and advisors play in corporate art collections?

Experts and advisors with art history backgrounds and curatorial credentials help craft a collection that aligns with the company's vision and mission, and they may also consider the potential for the art's value to appreciate over time.

How do corporate art collections relate to social responsibility policies?

Corporate art collections can be part of social responsibility policies, as they allow companies to invest in local communities, support artists, and interact with the wider community, potentially improving their public image.

Why might a company display its art collection in public spaces or museums?

Displaying art collections in public spaces or museums can increase brand awareness, cultivate an image of sophistication, and position the company as a conscientious philanthropist, which can be beneficial for public relations.

How does the tax treatment of art purchases by corporations differ from that of individuals?

Corporations often buy art with pre-tax dollars, as art is considered a business expense, which can effectively reduce the amount of profit subject to taxation, unlike individuals who typically buy art with after-tax income.

What happens to corporate art collections when a company faces financial difficulties or is sold?

When a company faces financial difficulties or is sold, the stakeholders or creditors may decide to sell the art collection, use it as assets, or in some cases, donate significant pieces to public institutions.

What are the potential ethical concerns regarding corporate art collections?

Potential ethical concerns include the impact of corporate buying on the diversity and freedom of artistic expression, the focus on non-controversial art, and the long-term accessibility and use of the art, which may not always align with public interests.

Outlines

00:00

🖼️ Corporate Art Collections: Motives and Benefits

This paragraph delves into the reasons why corporations invest in art collections, moving beyond mere decoration. It discusses how art enhances employee well-being, serves as a communication tool to clients, and shapes corporate identity. The narrative also touches on how art can be a strategic asset, influencing public perception and potentially increasing in value over time. The paragraph highlights various approaches to collecting, from reflecting company heritage to projecting a modern image, and the role of art in community engagement and social responsibility.

05:00

💵 The Financial Aspects of Corporate Art Acquisition

The second paragraph explores the financial implications of corporate art collecting, emphasizing art as an asset class akin to stocks and real estate. It explains how art can be a speculative investment and a tax strategy, allowing companies to defer or avoid taxes by treating art purchases as business expenses. The narrative also addresses the potential for art to appreciate in value, with examples of companies selling art for significant profits. Furthermore, it raises questions about the transparency of corporate art valuations and the implications of corporate collections for the art market and public access to art.

10:05

🤔 The Broader Implications of Corporate Art Patronage

The final paragraph ponders the broader implications of corporate involvement in the art world. It questions the motives behind corporate art collections and the impact on artists and the public. The discussion points to the potential for corporate collections to influence the type of art that is produced and displayed, as well as the accessibility of art to the general public. The paragraph concludes with a call to recognize the importance of art in society and to consider the role of government in supporting art and culture, contrasting with the corporate approach to art patronage.

Keywords

💡Corporate Art Collections

Corporate art collections refer to the practice of businesses acquiring and displaying art. This is not merely for aesthetic purposes but also to enhance the corporate identity, reflect the company's values, and potentially serve as an investment. In the script, it's discussed how these collections have grown significantly, indicating a broader strategic use beyond mere decoration, such as attracting and retaining employees, and communicating a company's image to clients.

💡Wellbeing

Wellbeing in the context of the video refers to the positive impact that art can have on the daily lives of employees within a corporation. The script mentions that corporations acknowledge the humanizing effect of art, which can improve the work environment and contribute to the overall happiness and productivity of the staff. This is exemplified by the idea that art on office walls can serve as a conversation starter or a source of inspiration.

💡Branding

Branding is the process by which a company creates a unique identity that differentiates it from others. The video script explains how art can be used as a tool for branding, where the choice of art communicates a message about the company's identity, values, and aspirations. For instance, a traditional painting in a law office might suggest stability and a long-standing reputation, while a modern piece could indicate innovation and a forward-thinking approach.

💡Investment

In the script, art is described as an asset class similar to stocks, bonds, and real estate, which corporations may invest in with the hope of appreciation over time. The video discusses the potential for art to be a sound investment, with the added benefit that it can align with a company's identity while also possibly increasing in value, as illustrated by the example of Deutsche Bank's art collection.

💡Tax Strategies

Tax strategies in the context of corporate art collections involve the financial maneuvers that companies may employ to reduce their tax liabilities. The video explains that purchasing art can be a way for corporations to spend pre-tax dollars, effectively reducing the amount of profit subject to taxation. This is because art, like other business expenses, can be deducted from taxable income, providing a potential financial incentive for collecting art.

💡Community Engagement

Community engagement through art is a concept discussed in the video, where corporations use their art collections to interact with and support the communities in which they operate. This can involve displaying works by local artists, investing in community arts projects, or making collections accessible to the public. The script gives an example of companies buying and displaying work from local artists to show their commitment to the community and to cultivate local support.

💡Cultural Philanthropy

Cultural philanthropy refers to the support of cultural and artistic endeavors by individuals or organizations. The video script touches on how corporations can use their art collections as a form of cultural philanthropy, contributing to the arts ecosystem and potentially enhancing their public image as supporters of culture. This is exemplified by companies making their collections available to the public or loaning works to public institutions.

💡Market Value

Market value in the context of the video pertains to the economic worth of a piece of art, which can be influenced by various factors, including corporate collecting. The script points out that displaying art in prestigious venues like museums can increase the appraised value of a work, thus affecting the market value. This is tied to the broader theme of how corporate involvement in art can impact the art market and the perceived value of artworks.

💡Art as a Tool for Image Crafting

The video discusses how art can be strategically used by corporations to craft a specific image or perception. Art on display can convey messages about a company's values, innovation, and social consciousness. For example, the script mentions how a company might display modern and contemporary art to project an image of being current and forward-thinking, aligning with the company's desired public persona.

💡Diversity in Art

Diversity in art is a concept that the video addresses, particularly in relation to the types of art that corporations tend to collect. The script notes that while corporations have made strides in collecting a diverse range of artists' works, they often avoid controversial or challenging pieces, which could impact the art market and the types of art that are produced and displayed. This reflects on the broader implications of corporate art collecting on artistic freedom and diversity.

Highlights

Corporations are increasingly forming significant art collections for reasons beyond mere decoration.

Art in the workplace can improve employee well-being and serve as a conversation starter among colleagues.

Corporate art collections can help attract and retain employees, potentially boosting productivity.

Art on display can communicate a company's wealth, history, and values to clients.

Art can be used to convey a company's identity and the image it wants to project to the public.

Modern and contemporary art is often favored by corporations to project a forward-thinking image.

Corporate art collections can be a strategic part of a company's marketing and communications efforts.

Some companies display art in unconventional spaces, such as drilling platforms, to enhance their brand image.

Corporate art collections can be a form of social responsibility and community investment.

Art collections are sometimes made accessible to the public through corporate galleries or museums.

Corporate art loans to public institutions can increase brand awareness and sophistication.

Art can appreciate in value, making it a potential investment for corporations.

Tax strategies related to art purchases can offer financial benefits for corporations.

Corporations may sell art from their collections, as seen with German Commerzbank's sale of a Giacometti work.

The contents and valuation of corporate art collections are often private, becoming public only in times of company distress.

Corporations balance community partnership with financial interests when collecting art.

Art collecting by corporations can have positive impacts on the art world and local communities.

The growing size of private corporate collections raises questions about public access and the focus of art displayed.

Corporate art collections tend to avoid controversial or challenging works, influencing gallery selections and artists' directions.

Corporations use art to appear more human and trustworthy, potentially influencing consumer behavior.

The transcript questions the role of art in society and whether governments should take a more active role in supporting it.

Transcripts

There are some obvious reasons why corporations buy art, like to decorate their walls with

images other than stock photography and inspirational quotes.

But in the last few decades the number of large corporations forming significant art

collections has ballooned, and it’s not just because they’ve got walls to fill.

What are their motivations?

And is this an entirely virtuous endeavor, or is there something murky afoot?

(Spoiler alert: something murky is afoot.)

Before we question it, let’s celebrate the good parts!

Like having art on the walls.

Corporations that collect are acknowledging the significant impact art can have in improving

the daily wellbeing of their employees.

Your employer might acknowledge your humanity by offering you occasional breaks or stocking

the tampon machine, or it could do so by more extravagant means, offering free food and

drink, nap rooms, or installing a slide, and yes, by adorning office lobbies and walls

with art.

Like other workplace perks, art can help attract and retain employees, inspire them, maybe

even improve their productivity.

Even if you don’t like the art, it might still stimulate ideas, or at least give you

and your colleagues something to gripe about together.

Art on the walls can serve the clientele, too, communicating a variety of messages,

like maybe a Hudson River School painting in a wood paneled law office says: “Hey!

Not only do we have money, but we’ve had it a heck of a long time!

You can trust us.”

Or maybe an enormous painting by Jean-Michel Basquiat snatched for millions at auction

might say: “We grew our pile of money super fast, and we can grow yours fast, too.”

Or something like this might say: “Look how hip and ahead of the curve I am.

I am hip and ahead of the curve in other ways, too, which I could share with you.”

Or it might be more literal: The headquarters of the Campbell’s Soup Company was long

decorated with expensive antique soup tureens, a way of saying, “We make soup.”

(They also collected a Warhol, of course.)

Along with architecture and furnishings and branding, art can communicate corporate identity.

Not who they are, necessarily, but who they want to be seen as.

This why a bank that’s over a hundred years old actively commissions new works from emerging

artists for their buildings.

The image they, and lots of companies want to project is not one of the stodgy past,

but of the now.

Hence a pretty narrow focus on modern and contemporary art.

Art can be a super direct way of making you think that, say, a warehouse full of quiet

coders is actually the next transformative tech company with its finger on the pulse

of tomorrow.

Corporate art collections usually have had organizing principles.

Like the Folger Coffee company collected silver coffee pots.

Most take a more subtle approach, like South Africa’s Standard Bank tends to collect

work by artists based in Africa or in other countries where they conduct business.

Many collections originate with art-loving founders or leadership, like David Rockefeller,

who in 1959 began the collection of Chase Manhattan Bank.

He was a lifelong patron of the arts, who served on the board of the Museum of Modern

Art and whose mother founded the museum.

While some considered this new practice frivolous, others soon followed suit, and Chase became

the model for other companies worldwide.

By the mid-1990s about half of all Fortune 500 companies were collecting art.

Today, collections usually still begin with someone higher-up’s personal interest in

art, but they’re quickly dispatched and overseen by experts and advisors, many of

whom have art history backgrounds and curatorial credentials.

These experts help craft a collection that’s intended to project the company’s vision

and mission and values.

It can be seen as an extension of marketing and communications efforts, improving or shaping

their public image over time.

The Norweigan energy company Equinor not only displays its collection in and on its prize-winning

architectural marvel of a headquarters, but it has also hung its art works on its North

Sea drilling platforms.

Companies might buy and display the work of local artists to invest in their communities

and cultivate support.

It can be a way of saying: “Hey, we might be a giant multinational corporation, but

we also know what’s going on here in your town.”

More and more companies consider their collections to be part of their social responsibility

policies---a way to interact with the wider community, spread the proceeds around, and

maybe lessen the chances of a proletariat revolution.

Corporate art isn’t always kept inside offices, either.

Many collections are made available to the public through rotating galleries, or full

blown museums, like the Cartier Foundation for Contemporary Art that opened in Paris

in 1994.

Or Panasonic's Shiodome museum in Tokyo that displays some of the company’s hundreds

of works by French Fauvist Georges Rouault.

Companies also share their art through loans to public institutions.

And we’re not just talking about individual works: Sometimes entire museum exhibitions

are devoted to single corporate collections.

This can spread brand awareness, cultivate an aura of sophistication, give them a fancy

party to invite top clients to, and let other people know that they aren’t soulless overlords

but conscientious philanthropists.

Oh, and showing art in a venerable museum can definitely increase the appraised value

of a work of art!

Which is why museums usually tread carefully in this area.

But it’s often worth the risk, because there’s a chance the art could later be donated to

the museum, or that the company might sponsor other shows.

And that brings us to the money.

Business are for-profit entities with profit-driven missions, and art is an asset class.

Like stocks and bonds and precious metals and real estate.

Art is a risky investment, one that may or may not pay off in the future, but there are

worse ones to make (boats).

Art is often considered an expense during building projects, like architecture and interior

design.

But unlike wallpaper, a painting isn’t necessarily going to deteriorate over time.

Hired experts play their part here, making educated bets on artworks that both align

with company identity and have a reasonable chance of appreciating in value.

Liz Christensen, the curator of Deutsche Bank’s art collection explained it this way in 2012:

“We’re not buying for investment.

But we’re not buying for not investment.”

And then there’s taxes.

The tax strategies corporations use in the collection of art vary widely by country.

But for companies in some places, purchasing expensive art can be a strategy for delaying

or even avoiding taxation.

Because art is usually considered a business expense, every hundred million dollars of

your company’s profits you spend on art is a hundred million dollars you don’t have

to pay taxes on, which often has the effect of discounting art purchases just as it does

with other corporate purchases.

Put another way, almost all individuals buy art with money that has already been taxed.

Almost all corporations buy art with money that has not yet been taxed.

So it’s not about avoiding taxes, but it’s not about not avoiding taxes.

Most corporations do not buy art for pure speculation, to turn around a sell it for

a profit a few years later.

They tend to keep their work for a while, which makes artists and galleries more likely

to sell to them.

But they do indeed sell works sometimes, like German Commerzbank sold a single Giacometti

work at auction in 2010 for 65 million pounds!

The contents and valuation of a corporate collection are usually kept private, that

is until the company falls on hard times or gets sold or dissolved.

Then the stakeholders or creditors have to decide what to do with it.

Like when the Seagram Company sold to Vivendi Universal, Vivendi acquired its entire collection

of modern art and decided to sell it all at auction.

With the exception of one work, a beloved monumental Picasso curtain that had hung in

the Seagram Building since 1959, which Vivendi was persuaded to bequeath to the New York

Landmarks Conservancy.

Because corporations are balancing a number of interests when collecting!

They want to be good community partners and seem like good community partners, but never

at the expense of their own financial interests.

Abraaj Capital, based in United Arab Emirates, collects and directly funds emerging artists,

many of whom live and work in the Middle East and have been historically overlooked.

Abraaj sponsors and runs an annual art prize and purchases works by the finalists to build

their collection.

The artists win--they get funding and recognition--and Abraaj wins because they’ve not only cultivated

good will, but also given their collection artists an accolade that can boost their market

value.

While art collecting seems to be a resoundingly positive practice for corporations, what does

it mean for everybody else?

It’s great that companies are responsible for bringing new and innovative works into

the world, not only supporting artists, but also a host of other art professionals who

help make it happen.

The art world has grown tremendously because of it, with some of the rewards trickling

down into communities.

But what happens when private collections are larger and even more impressive than public

ones?

And what does it mean when corporate leaders no longer give their art to museums with public-focused

missions, and make their own art palaces instead?

Whose interests do these companies have in mind when they’re selecting works, and when

they’re deciding who can see it and how?

For the most part, you’re not going to see controversial or challenging work on corporate

walls.

You’re not going to visit your local bank and come across, let’s say, a haunting,

unforgettable cut paper installation by Kara Walker, evoking and subverting the imagery

of America’s slave-owning past.

I like pleasant art, too, but wonder what effect large-scale corporate buying has on

gallery owners when they select which artists to show, and on artists as they determine

their own directions and try to make a living.

Corporate collections don’t tend to include nudes, or anything violent.

Some avoid any kind of human representation whatsoever.

Companies have come a long way in embracing the work of a diverse range of artists, but

they’re never going to buy or encourage the creation of work, like, say, this.

Which I think we can all agree should be encouraged to exist.

No matter how good their intentions, Corporations answer to their shareholders and not to you.

Their collection may be to some extent open and available now, but what about in the future?

Having art and funding its creation makes a company seem not just more trustworthy but

more … human.

Less like a purely profit-focused entity, and more like something or someone you can

feel good giving your money to.

How do we feel about art being used so flagrantly and effectively as a tool to get us to buy

goods and services?

Here’s what it leaves me thinking: If big corporations have acknowledged the centrality

of art to well being, why can’t our federal and local governments?

And if companies have figured out that art is an extremely powerful tool, when will the

rest of us realize it, too?

Thanks to all of our patrons for supporting The Art Assignment, especially our grandmasters

of the arts Vincent Apa, Josh Thomas, and Ernest Wolfe.