The Continuing Problem of Cy Pres

Thank you to WIlls, Trusts and Estates Prof Blog for the post regarding Fisk University, Cy Pres and Georgia O'Keefe's Art Collection.

Melanie B. Leslie (Professor of Law, Benjamin N. Cardozo School of Law) recently published her article entitled Time to sever the dead hand: Fisk University and the cost of the cy pres doctrine, 31 Cardozo Arts & Ent. L.J. 1-18 (2012). The introduction to the article is available below:

In 1949, painter Georgia O'Keeffe donated 101 valuable paintings and photographs to Fisk University, a prominent and historically important African-American university in Nashville, Tennessee. The donated art was part of a larger collection amassed by her late husband, Alfred Stieglitz, a prominent artist and collector.  Stieglitz's will gave O'Keeffe a life estate in his collection, which included works by Picasso, Cezanne, Renoir, Toulouse-Lautrec, O'Keeffe, Demuth, Hartley, Dove and Walkowitz.  Stieglitz's will also gave O'Keeffe the discretion to distribute the collection to nonprofit organizations of her choosing for the purpose of ensuring public access to the paintings to promote the study of art.  At O'Keeffe's death, any pieces in his collection that she had not donated were to be distributed to nonprofit organizations "under such arrangements as will assure to the public ... access thereto to promote the study of art."

O'Keeffe divided Stieglitz's collection among six institutions: the Metropolitan Museum of Art, the Philadelphia Museum of Art, the National Gallery of Art in Washington, the Art Institute of Chicago, the Library of Congress, and Fisk University.  The donation to Fisk, a small university with no museum experience, was unusual. In choosing Fisk, O'Keeffe was making a strong social statement - the South was racially segregated at that time, and O'Keeffe wanted to ensure that the art would be displayed in a place that welcomed both black and white members of the public.

But although she wanted to benefit Fisk, O'Keeffe - like many donors before and after - could not bring herself to relinquish complete control to the donee. Instead, she imposed a series of restrictions designed to ensure both the proper display and care of the art work and the creation of a perpetual memorial to Alfred Stieglitz. To achieve those ends, O'Keeffe stipulated in a series of letters to Fisk's President that the donated art must always be displayed together as one collection titled the Alfred Stieglitz Collection ("the Collection"), and that Fisk could never sell any piece in the Collection.  She also required that the Collection be housed in as safe a building as possible and kept under surveillance at all times when the room was not locked.  O'Keeffe severely limited the University's ability to loan the artwork, directed that no other art work could be shown in the same room as the Collection without her consent, prohibited the removal or change of any mounting or matting of photographs, and required that the walls of the room where the Collection was displayed be painted white or some other very light color chosen by O'Keeffe. Several years later, O'Keeffe donated four paintings from her own collection, including one of her own paintings, Radiator Building - Night, New York ("Radiator Building"), to Fisk, with the stipulation that the paintings be added to the Collection. 

O'Keeffe appears to have given little, if any, consideration to the impact the perpetual restrictions might have decades down the line. Like many donors who make restricted gifts, she failed to imagine how life might change in the years following her death. For example, she  does not appear to have contemplated that Fisk might cease to exist; that the University might one day lack funds to maintain the Collection; that the matting on the photographs might deteriorate; or that she might not be around to approve the paint color of the walls. She gave no guidance as to how Fisk should respond to changed circumstances or as to which of her objectives - benefitting Fisk, creating a perpetual memorial in honor of Stieglitz, keeping the Collection together, prohibiting sale of the Collection, and ensuring the Collection remained in the South - should be given priority in the event that changed circumstances should cause them to come into conflict. 

What happened sixty years later was predictable - changed circumstances, unforeseen by O'Keeffe, rendered it impossible for Fisk to comply with all of the restrictions. Fisk was on the brink of insolvency, and had to choose whether to close the University and relinquish the Collection, or find a way to replenish its endowment and properly care for the Collection.  Fisk decided to sell two paintings - including Radiator Building. The Tennessee Attorney General approved of the sale, subject to certain conditions, and Fisk, seeking court approval, filed an action for a declaratory judgment.  The O'Keeffe Museum of Santa Fe, New Mexico ("the Museum"), and later, the Attorney General of Tennessee, intervened to enforce the sale prohibition.  After six years of litigation and two appeals, a chancery court granted Fisk permission to sell a fifty percent interest in the Collection to the Crystal Bridges Museum in Arkansas for thirty million dollars. The deal allows Fisk to exhibit the Collection six months of every year.  The payment of thirty million dollars will ensure both that Fisk will survive and that it will be able to afford to properly care for and exhibit the artwork. 

Why did resolution of this conflict require six years of litigation and the expenditure of enormous amounts of charitable and public dollars? The blame lies with the law itself: the centuries-old doctrine of cy pres, which requires courts to determine how the donor would have responded to the changed circumstances, combined with the law's lack of clarity about who has standing to speak for the donor, practically guarantee that years of litigation will ensue when a charity finds itself unable to comply with a gift restriction. In the Fisk case, the law's fuzziness allowed the Museum - an unrelated third party - to make a grab for the Collection under the guise of effectuating donor's intent. The fact-specific cy pres standard also enabled the Tennessee Attorney General to make it extraordinarily difficult for Fisk to craft a solution involving entities located outside the state of Tennessee.  Although the court ultimately approved Fisk's contract with the Crystal Bridges Museum, that approval came at an extraordinarily high cost.

The doctrine of cy pres holds that donor's intent is of paramount value. Courts must therefore prioritize effectuation of intent over other concerns, such as donees' present needs or the inefficient use of charitable dollars.  This preoccupation with perpetual enforcement of donor intent is justified as necessary to encourage charitable bequests and protect donors' property rights.  Yet what the law giveth, it taketh away: the law's commitment to donor intent stops short at granting to donors standing to enforce the restrictions they create.  Instead, enforcement power is given to the attorneys general of each state. 

The Fisk litigation is just one of several recent epic battles over restricted charitable gifts and changed circumstances, but it is important because it neatly illustrates the problems that the law creates and highlights the need for legal reform. After elaborating on this point, I examine the Uniform Trust Code ("UTC"), which changes cy pres law in significant ways. I show how application of certain UTC provisions to the Fisk case would have reduced the length of the litigation and the corresponding waste of charitable assets, to some degree. I then argue that further reforms are necessary. I suggest that perhaps the time has come to consider limiting the duration of restrictions on charitable gifts. To offset any chilling effect that such a time limit might have on charitable giving, we might allow donors and their heirs to enforce restrictions during the period of enforceability.