9 April 2013: The website of the American Alliance of Museums has a section titled, “How do I start a new museum?” It’s a fascinating question, suggesting that anyone can start a museum. In fact, most of the museums in the United States were started by private individuals and are privately funded and privately operated. Most American museums are also readily accessible to the general public and most of the art museums are located in cities.

• Building boom
• Public policy
• Public and private
• Most visited museums

Museums have become important parts of urban economies in the United States. According to the American Alliance of Museums, more people visit museums in the United States each year than attend all major sporting events and theme parks combined. Art museums are particularly prized trophies. An earlier era of wealth accumulation through art objects brought to public view collections by such industrialists as Carnegie, Frick, and Getty. Today, American cities are being enriched by iconic buildings housing paintings, sculptures, and decorative arts amassed by a new generation of entrepreneurs with names like Broad, Walton, and Michael.

American museums exist because of individual private interests yet they effectively function as vital public institutions. It’s worthwhile, therefore, to explore how and why this is so.

Building boom
In the past few years, major new art museums opened in Denver, Dallas, New York City, Washington DC, East Lansing, Michigan, and other cities. Recent museum renovation and expansion projects in the United States are almost too numerous to count.

Mayors have been quick to welcome the new additions to their cities’ cultural landscapes. Mayor Bob McCaslin of Bentonville, Arkansas says that the city’s new Crystal Bridges Museum, built to display the impressive private art collection of an heiress of the WalMart fortune, “will serve as a catalyst to promote a new level of development that's never been seen in Northwest Arkansas." The Associated Press reports that hotel and restaurant tax receipts were up dramatically in Bentonville in 2012 as a result of the 655,000 visitors to Crystal Bridges in its first year of operations.

The relocation of the Barnes Foundation’s unparalleled art collection from the suburbs to center city Philadelphia in 2012 prompted Philadelphia Mayor Michael Nutter to announce the city’s first-ever coordinated and sustained visual arts marketing campaign. The goal, according to Mayor Nutter, is to better tap the economic development potential of the city’s cultural assets to cement “Philadelphia’s position as a world class destination.” 

Competition between cities for museums can be intense. Los Angeles Mayor Antonio Villaraigosa’s lobbying efforts paid off in a museum now under construction in his city’s downtown. "Nearly a year ago, when other cities were courting [billionaire businessman] Eli Broad to build his museum in their towns, I met with him to encourage him that his museum and world-renowned art collection belong in Los Angeles,” explained Villaraigosa a few months ago. “The museum will serve as both an economic and cultural engine."

Cities appear to be the winners, with few major art museums opening or expanding in the suburbs.

Public policy
The US does not have a culture ministry as in many countries and direct government financial support for the arts is miniscule. The current annual budget for the National Endowment for the Arts is about $150 million in a federal budget that will spend $3.8 trillion this year. State and local governments spend less than one-tenth of one percent of general expenditures art-related endeavors.

US government support for the arts tends to be indirect, with government policies incentivizing the transfer of art objects from individual collectors to publicly-accessible museums. Art acquisition and transfer in the United States is a combination of the “privatized nature of the American cultural ‘system’ and public policies, principally in the form of tax incentives,” according to legal scholar Stephen Ulrice. These conditions have lead to a growth in the number of new and expanded museums in the United States.

Museums need few if any government approvals to open. Once open as nonprofit organizations, they are fully or partially exempted from property taxes. Museums enrich their collections through acquisitions, but mostly through the generosity of individual donors. This generosity, however, is not entirely altruistic. Governments incentivize individual donations of art objects to museums through one-time gift and estate tax deductions for such donations. Taxpayers pay for continuing public incentives in the form of federal, state, and local tax exemptions from income, property, and sales taxes for the donors of such transfers, as well as the museums that house them. In addition, the owners of works of art acquired abroad generally do not pay customs duties to import their purchases into the US.

Museums generate revenues in many ways, including paid membership, grants, admission fees, gift store sales, and, of course, donation of art from private individuals. However, by far the most important revenue source is indirect public support through tax subsidies. What this means is that even the wealthiest collectors likely could not build or sustain a museum-quality art collection without significant and ongoing public support.

Public and private
We typically think of the public realm as streets and parks and the private realm as buildings. The quality of the exchange between these realms is what gives a city life and character. But the distinction between public and private continues to blur in the US, and museums are a great example. The idea that governments or businesspersons or philanthropists should do it all, even if there were enough public or private funds to do so, would probably not provide as good a result for the general public and cities as the US has now, at least regarding museums.

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