Monetizing collections is a no-no in our field Jane so your cautionary concerns are on the money...so to speak. However, since it appears the fossils are not part of the collection, yet, your museum may be able to side-step such concerns and proceed to collateralize them. I know this might appear to be a cute way to avoid the technicality prohibitions against seeing collections as cash. But, until something has an accession number(s) assigned to it, it is usually not part of a museum's official collection and thus not subject to the generally accepted professional strictures we in the American museum community practice. That being said, I think using the potential collection as collateral is a bad idea. I can understand why your CFO has thought of this creative idea. Finance people see everything in terms of dollars and cents. Esoteric ruminations of curatorial philosophy rarely help balance the books. I directed a museum once where the board borrowed $10M for a capital campaign. We did not allow the collection to be seen as collateral. The property was. The board knew no bank would foreclose on the museum should it fail to meet its payment schedule. Five years after I left it did face this problem and renegotiated the loan down by about $5M, essentially forgiving future payments. The original loan was based on the museum's good faith (read optimistic) projections for its capital campaign. A campaign of the sort you allude to is the responsibility of a board of trustees. It would be interesting to know what your board thinks of the CFO's idea. I suspect we know the answer if the trustees are no longer vehemently giving or getting money for the project. In that case, the idea will be embraced.
it will be interesting to read others' responses to this novel arrangement.
Steve
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Steven Miller
Executive Director Emeritus
Boscobel House and Gardens
Garrison NY
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Original Message:
Sent: 02-28-2018 09:35 AM
From: Jane MacKnight
Subject: Using purchased collections as collateral for loan
We have a contract to purchase some dinosaur fossils and have made partial payments. Our CFO would like to use the fossils as collateral for a short-term loan (8-9 months) to complete the purchase of the fossils --- one of our banks is willing to do. It's a cash-flow issue because we are in the midst of a complex building renovation project and need to maximize funding streams. The loan and fossils will be paid in full before we accession them into our collection.
As an AAM accredited institution, I raised concern about encumbering our collections and have put the question forward to the Commission. However, I'm wondering if any other institutions have done anything similar for expensive collections purchase.
Many thanks for your thoughts.
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Jane MacKnight
Director Museum Planning (and former Registrar)
Cincinnati Museum Center at Union Terminal
Cincinnati OH
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