How to Build a Corporate Art Collection with Timeless Value
Naturally, the objectives and motivations behind corporate art collections are very different from those of private ones.
While many private buyers acquire pieces based purely on emotional appeal, a substantial number of corporate art buyers are flocking toward the art market with financial gain in mind. Of course, it goes without saying that provenance and buying power puts corporations in the best position for profits.
With an estimated value of over $50 billion, the global auction market wouldn’t exist without influential collectors like Deutsche Bank, Progressive Insurance, or JPMorgan Chase.
Great collectors like these often become well-known and widely respected for their collections, even enjoying a modest or prominent cultural legacy.
The Journey of Building a Corporate Art Collection
Building a corporate art collection is often described as a journey, and there are many different paths to take.
The journey starts with browsing and leads to acquisition, ownership, and relinquishment. The destination ultimately depends on what you want from your holdings.
Purchase the Art With Purpose
Every stage of the acquisition process is crucial to a collection’s integrity and value.
Despite where the collection may end up, it’s best to start with a cohesive strategy. Experienced corporate art buyers often have basic, if not detailed guidelines about the corporate office wall art they acquire.
A useful way to get started is to set up a system for the selection and purchase of corporate office artwork for one of your locations. As with any niche market, realistically, very few corporate art collectors have the time or connections to source and assess quality artwork. To solve this problem, most collectors hire outside corporate art consultants to help them get started.
Curating a Unique Collection
A considerable number of collectors we speak to started their collections for practical aesthetic reasons and investment potential.
Although some see it as an afterthought, most corporate buyers are quite particular about the content of the artworks they acquire. Curatorial collections aim to communicate corporate identity to the employees, clients, as well as the public.
Some collectors begin with a particular theme or subject: a certain medium, historical period, movement, etc. Others focus on a specific culture or era.
It Takes a Village to Source Valuable Corporate Artwork
It’s not easy for new corporate art buyers to make the connections they need to build a valuable collection. There are no shortcuts. The best way to become a savvy investor is to actively follow the market.
The collectors who embed themselves in the art world and do as much research as they can often become experts in their own right.
Since networking is a contact sport, making connections means going out to galleries and art fairs. Biennials and art festivals are great opportunities to compare prices and get a sense of value at the time of acquisition.
- Ask about prices of similar works
- Search records
- Study auction estimates
- Follow sale results from auction houses
- Check price indices like Auction Club
- Read critical reviews of shows
- Associate with other collectors
- Speak to experts
Once you have established some meaningful relationships, try not to fall into your comfort zone. Many collectors miss out on opportunities because they fall into the habit of exclusively buying art from the same trusted dealers.
Doing Your Due Diligence
Although new technology like blockchain addresses two of the art market’s biggest trust problems, transparency, and title, the art world is opaque. New collectors should be aware of the risks.
Unsuspecting collectors are often defrauded by sellers only to learn later on that the works they purchased are impossible to resell. Even experienced collectors who do exhaustive research on provenance, condition, and authenticity can run into title issues.
This problem can easily be avoided with thorough research.
Take every opportunity to discuss the fine points of what you’re looking at with as many different informed people as you can. In addition, there are a variety of tools available to protect yourself against fraud, including the Art Loss Register’s database on lost and valuable stolen artworks.
Documenting Your Corporate Art Collections
Collectors are strongly encouraged to keep meticulous documentation.
The first step in managing an art collection is knowing exactly what comprises it and putting all related information into one accessible, secure, and comprehensive catalog system.
Cataloging can be a large undertaking, especially as collections grow. While there are many options, the approach you take depends on your needs and budget. No matter which route you choose, collections are much easier to manage and utilize with cloud-based software systems.
You can use subscription-based software to easily document, manage, and share your corporate artwork. If you need to maintain a large collection, it might make more sense to use internal resources.
- Save all written or printed materials you received with the art. Receipts, certificates of authenticity, etc.
- Get artwork descriptions from the corporate artist, gallery, or seller.
- Gather all related information and file it. This includes books, exhibit catalogs, brochures, reviews, articles, etc.
- What is the function of the artwork? Collect any information about the motivation behind the artwork.
- Find out where the piece has been shown. Examples include public exhibitions, art fairs, galleries, featured on television, reviews, etc.
Finding Investmentworthy Corporate Office Artwork
It all comes down to one question. What’s it worth?
One of the most important and difficult challenges of sustaining a corporate art collection is assessing its value. This estimate is crucial for investment purposes as well as insurance, taxes, and legacy planning.
Simply buying the art available may not be the most lucrative long-term investment strategy. Being able to identify soft sectors of the market will result in the greatest profit margins. In cases where the art represents a substantial investment, a trusted independent corporate art consultant should appraise the work.
Below are some facts to help you gauge an artwork’s value.
- What does the artwork mean?
- What is its function and/or significance?
- Does it fit in with the goals and guidelines of the collection?
- What materials is the work made of? Who made it? When was the concept developed?
- Has the artist shown before? Where and when?
- What is the artist’s background? What does he or she specialize in?
- What is the gallery’s reputation? Is it associated with any art fairs? What about publications?
- When was it installed? Where did it come from? How much did it sell for?
The Social, Economic, and Financial Benefits Corporate Art Collections
Corporate wall art collections may serve a practical aesthetic purpose, but they are far more than decorative.
While the underlying reasons behind starting a corporate art collection are varied, the significant social, economic, and financial benefits cannot be ignored.
The majority of today’s biggest corporate art collections represent the social use of art for multi-pronged benefits. Most collections serve to reflect the identity of the company and its value growth potential.
Financial Rewards and Returns on Art
In recent years art has shown modest growth, with contemporary art outperforming all other categories as a whole. Although art as an alternative investment class has been well-known for centuries, the idea is attracting a wave of new investors.
Because art has a low or negative correlation with other assets, its diversification potential is arguably one of its most attractive qualities. Historically, annualized art returns have run well above inflation; prices tend to parallel asset classes like hedge funds, private equity, and real estate.
Art is often compared to gold, which also has a low correlation to many other asset classes. Of course, markets crash, banks go under, and blue-chip companies can disappear overnight, but no matter what happens, a good Kuniyoshi will always be a good Kuniyoshi.
As a collector, serious financial issues can arise if disaster strikes or if you are no longer available. Legacy planning strategies can help mitigate potential tax issues for your beneficiaries.
Charitable CEOs are keenly aware that contributions are one way to eliminate capital gains taxes, claim deductions (if you itemize them), and potentially reduce estate tax liability.
You can also leave artwork to multiple beneficiaries through an LLC, so your heirs own the interest rather than the artwork while the manager of the LLC will maintain the collection.
Set up a trust
Trusts provide a range of tax transfer benefits as well. You can set your trust as irrevocable for heirs before the higher exemption expires. If certain conditions are met, your beneficiaries may be able completely to avoid gift taxes.
Corporate Art Collections Are Good for Business
Most of the time, the primary objective of a corporate art collection is to enhance the identity and perception of a brand. Showing at art fairs, sponsorships, exhibitions, and philanthropy are all prime marketing opportunities.
As we mentioned, many corporate office wall art collections are born out of the necessity to furnish a space. However, some of the most successful corporate art collections begin with a CEO who had the foresight to invest in contemporary art as a branding strategy. It can be a subtle yet powerful way to provoke dialogue and inspire your workforce.
Progressive Insurance is a shining example of this. The company began its collection in 1974 by installing original contemporary art on the walls of its new headquarters. Today Progressive is an influential player in the art world, similar to that of a secondary market dealer, with a collection of more than 10,000 contemporary works of art.
Acquire Corporate Wall Art From David Stanley Hewett
Why not buy something beautiful and profitable?
If you are looking to invest in Avant-Garde art from a renowned corporate artist, an original commission from David Stanley Hewett would make an excellent addition to your portfolio.
If you are interested, contact us by email or come and enjoy some featured artwork in person at the David Stanley Hewett Karuizawa Studio and Gallery. If you are out of the area, feel free to explore Hewett’s work online.