Pension fund for artists
Kathleen Pender Friday, May 28, 2004
A new for-profit company has formed in New York that will create a first-of-its-kind pension fund for artists.
The fund, called the Artist Pension Trust, is designed to offer some retirement security for a fairly select group of up-and-coming visual artists now in their 20s and 30s.
Instead of investing money, artists will contribute their own artwork to a trust. The artwork will be held for a number of years, then sold, with the proceeds going into the trust, from which artists will draw their pensions.
MutualArt, the company behind the fund, today introduces its first trust in New York, for East Coast artists. So far, 20 young artists have joined the trust.
The company plans to start a trust in Los Angeles, for West Coast artists, in about two months. It is hiring staff in California and plans to start selecting artists during the summer.
David Ross, former director of the San Francisco Museum of Modern Art, is president of the trust and a senior vice president with the holding company, MutualArt.
Ross left SFMOMA abruptly in August 2001. His three-year tenure with the museum, which coincided with the Internet boom, was marked by lavish spending and a robust rise in membership and attendance.
Ross now says he left because he "wanted to get out of the nonprofit world" and "do something more entrepreneurial."
Dan Galai, a former finance professor at UC Berkeley and UCLA, is senior vice president of the holding company, responsible for the business end of things. The trusts must comply with all federal laws governing pension plans, says Galai, who is now a finance professor at Hebrew University in Jerusalem.
Each trust will have 250 artists participating. The artists will be chosen by a prominent group of artists, art professors and gallery owners in each region.
When one trust reaches 250 artists, the company will start a second one in each region. Eventually, it plans to have trusts in London, Berlin, Tokyo, Shanghai or Beijing, and possibly Miami.
Each artist will contribute two pieces of artwork a year for the first five years, one piece per year for the next five years, and then one every other year until he or she has contributed 20.
Artists will start to receive income 20 years after the inception of their trust.
There are no other fees to participate. When a piece is sold, MutualArt will take 20 percent off the top as its fee. Half of what's left will go to the individual artist's own account. The other half will be divided equally among all the artists in the trust.
MutualArt was the brainchild of Moti Shniberg, a young entrepreneur who lives in New York and Tel Aviv. He is president of MutualArt.
Artists typically don't participate in corporate pension plans. Because of the ways their careers unfold, many fail to save for their retirement, the company says.
Works in the trust may be loaned to museums. The sale of works will be timed to maximize the return to the fund.
Galai explains that the trusts are defined contribution plans, like 401(k) plans. In these plans, participants contribute a certain amount of money, or in this case, artwork. But the amount they can take out depends on how well assets in the plan perform. There is no guaranteed pension payment, as there is in a traditional defined benefit plan.
"There are a lot of risk-management elements in the plan, says Galai, who wrote a book on risk management.
"We are diversifying over 250 artists. We know that not all will be successful. We don't know who at this stage will be successful. The successful ones will support the less successful ones, over time," he says.
The company has borrowed money from a group of investors to tide it over until the trusts start selling art, Galai adds.
For more information, go to www.artistpensiontrust.com.
E-mail Kathleen Pender at email@example.com.