December 9, 2013 | Read Time: 4 minutes
Note: This story has been updated to include a quote from philanthropist A. Paul Schaap.
A community foundation in Detroit has set up a fund to raise money to protect the Detroit Institute of Arts collection and help pay the pensions of retired government workers as part of the city’s bankruptcy proceedings.
The Community Foundation for Southeast Michigan said that potential donors had been inspired by the announcement on Friday that a local philanthropist—A. Paul Schaap, a retired Wayne State University chemistry professor and entrepreneur—planned to provide $5-million for that purpose.
“Individuals, businesses, and others have been searching for a way to participate in this effort,” it said in a statement.
The fund complements efforts that a bankruptcy mediator, U.S. District Judge Gerald Rosen, has been making to entice a group of about 10 local and national foundations to contribute up to $500-million to shield the art museum’s city-owned treasures, which are being eyed by Detroit’s creditors. He has suggested the foundation money could also be used to help pay some of Detroit’s pension obligations, which would have the “residual effect” of freeing up the city money for much-needed revitalization projects, said one person close to the talks.
Masterpieces Could Be Sold
The city’s emergency manager, Kevyn Orr, sent shock waves through the art world when he asked Christie’s auction house to value a portion of the museum’s collection—including masterpieces by Bruegel the Elder, Rembrandt, and van Gogh—that bear a credit line “purchased by the city of Detroit.” That led to fears that the museum would be forced to sell some of its treasures to help pay the city’s debts.
Bill Nowling, Mr. Orr’s spokesman, said the emergency manager had to determine the value of all city assets, including the art, but he is not wedded to any particular way of “monetizing” the collection. Christie’s suggested other alternatives such as using the art as collateral for a loan, leasing it, selling it to a buyer who loans or gives it back to the museum, or sending it on a traveling exhibition.
But a group of creditors intensified the pressure last month when they asked the bankruptcy judge to set up a committee to oversee ways of raising money from the museum’s collection.
U.S. Bankruptcy Judge Steven Rhodes ruled last week that Detroit could officially enter bankruptcy, meaning that Mr. Orr can work full steam on a “plan of adjustment” that will offer a blueprint for paying city debts. Mr. Nowling said Mr. Orr plans to present the plan the first week in January, which gives foundations a tight deadline for offering to help foot the bill.
Judge Rosen has met with national grant makers including the Ford Foundation, John S. and James L. Knight Foundation, and Kresge Foundation, and local organizations including the community foundation, the Skillman Foundation, and the Fred A. and Barbara M. Erb Family Foundation.
Several foundations contacted by The Chronicle said they could not discuss the talks because Judge Rosen had requested confidentiality.
Mr. Orr has said he supports Judge Rosen’s efforts to seek philanthropic dollars. Mr. Nowling said that the foundations’ fund could, for example, be set up to provide revenue to the city over 10 to 20 years in exchange for setting up a covenant that declares that the Detroit art museum’s collection is held in “public trust” and can’t be sold for any other purpose than strengthening the museum. Mr. Orr “has the ability to create that covenant if it was to come out as a result of negotiations or mediation,” he said.
Robin Ferriby, vice president for philanthropic services at the Community Foundation for Southeast Michigan, said the new Fund to Support Detroit Retirees, Cultural Heritage, and Revitalization had received a “steady stream” of contributions from across the country, and even one from Europe, since it was announced over the weekend. He said it was premature to give a dollar figure.
Mr. Schaap, who founded the chemical-biotechnology company Limogen, said he and his wife, Carol, decided to contribute the $5-million after reading about Judge Rosen’s efforts to get the foundations to set up a fund to protect the art institute and pensions.
“I thought both purposes were a good idea,” he said. “That’s going to be a tough sell for these foundations. There needs to be support for this from individuals, family foundations, corporations–an effort across a much broader base.”
Send an email to Suzanne Perry.
