News Detail

Charities commit $330m to help save Detroit's art from being sold in bailout

Some of the biggest charitable foundations in the US are stepping in to save Detroit’s renowned art gallery by contributing to a bailout for the city’s troubled pension funds.

The bankrupt city is currently working on a financial rescue plan that could lead to deep cuts for pensioners and the sale of some of the jewels from the collection at the Detroit Institute of Arts (DIA).

But in a first-of-its-kind arrangement, philanthropic – many with deep ties to the city – including the Ford Foundation and the Kresge Foundation, have committed $330m to shore up retirees' pensions in a deal that could save DIA’s art.

The deal was brokered by US chief district judge Gerald Rosen, the official mediator in Detroit’s historic bankruptcy. In a statement, Rosen called the foundations’ commitment “an extraordinary and unprecedented effort”. He said more foundation support was expected to be announced in the future.

The potential sale of the city’s finest art collection has sparked anger and protests in Detroit. Negotiators have been working on a plan to save the DIA for more than two months. The deal would transfer ownership of the museum from the city to the control of a nonprofit, protecting it from future municipal financial threats. In return the foundations would stipulate that Detroit must put the money into its pension system.

While the proposal represents a breakthrough for the city it is far from certain that the plan will prevent a breakup of the DIA’s collection which includes masterpieces by Bruegel, Rembrandt and Van Gogh.

Detroit emergency manager Kevyn Orr is expected to file a plan of adjustment, his recovery plan for the city, with the bankruptcy court within the next few weeks. He could include the foundation’s offer in that plan, a move that would likely give it more credibility in the eyes of the court.

James Spiotto, an expert on municipal bankruptcy at law firm Chapman and Cutler said: “It’s certainly a creative proposal and one that monetizes the collection without selling it while hopefully bringing people together to work on the plan of adjustment.”

Spiotto said the plan was “unlikely to go unmolested” but he said selling the art collection was never going to be as simple a deal as some creditors have claimed. “There are going to be complex legal issues. Many of these pieces were donated. What were the terms in those gifts? That’s quite apart from what the sale would do to the cultural life of the city.”