Museums can strengthen their reputation and execute their public statements by aligning the billions of dollars in their endowments with their values and mission.
Photo courtesy of Force Majeure via Unsplash
It’s no secret that museums are coming under more scrutiny, both in terms of the society they nurture and the promises they make.
In recent years, conspicuous demonstrations by artists have highlighted important gifts from ‘tainted’ sources, suggesting that museums themselves should be mindful of how they make their money. In the wake of the Black Lives Matter protests, museums made strong public commitments to the values of diversity, equity and inclusion – but two years later, museum staff have questioned whether actions reflect words.
One way museums can strengthen their reputations and execute on their public statements is by aligning the billions of dollars in their foundations with their values and missions.
Other investors are already doing this: One-third of the US’s professionally managed wealth, approximately $17.1 trillion, is invested according to sustainable and impact investing strategies. That includes foundations like universities and endowments, which have already committed to hiring BIPOC and women’s fund managers and shunning industries like fossil fuels and companies that don’t treat their workers and communities well. However, museums are currently lagging behind the rest of this pack.
A recent survey of independent art and design museums in the US, released this week by Upstart Co-Lab, the Association of Art Museum Directors and the Black Trustee Alliance for Art Museums, sheds light on this disparity, finding that just 13 percent of these, museums are engaged in impact investing, compared to 47 percent of colleges and universities and 51 percent of foundations.
In addition, the study found that problems often cited as barriers for museums to engaging in impact investing have already been solved: the ability to measure impact, the availability of high-quality impact investing products across asset classes, and the ability to market standard Achieving finance returns. In fact, a Morningstar report found that sustainable funds outperformed the competition in 2021.
As evidenced by the survey results, investment committees and executive teams tend to drive the conversation about impact investing in the museums that their peers lead. But anyone committed to the future of America’s art museums can help transform museum endowments to impact investing.
In discussions with board members of universities, foundations and other cultural institutions that are already involved in impact investing, museum directors can gather facts about the financial performance of impact investing and gain practical insights. An appetite for impact investing knowledge can inform future board and investment committee appointments, as well as the selection of investment advisors, to ensure that individuals with relevant expertise are in key positions.
Donors should feel empowered to communicate the importance of value orientation in all activities – including investments – to the institutions they support. A good first step can be to start a conversation to better understand the museum’s investment practices the next time they make a charitable donation.
Impact investing options are available to investors of all income levels. Encouraging museums to align their investments with their values should therefore not be left solely to wealthy donors. Artists can become impact investors themselves and share their personal experiences publicly. In fact, artists are encouraged to communicate to museums exhibiting their work that value investing is important to them.
By supporting change, stakeholders can help museums fully express their role as stewards of culture and community and do more to mobilize their assets in alignment with their values and in service of their mission.
Laura Callanan is a founding partner of Upstart Co-Lab, a nonprofit that connects capital with creative people who make money and make a difference.
Maxwell L. Anderson is President of the Souls Grown Deep Foundation and Community Partnership.