So a Collector Just Donated a Bunch of Art. Not a Big Deal, Right? Actually...

When you work the arts beat at Inside Philanthropy, you occasionally get an "uh-oh" moment.

Something jumps out at you in a news item and you say to yourself, "Uh-oh... something's going on. I'm going to be writing about this topic a lot in the coming months."

One such moment in the visual arts space occurred when we first stumbled upon the idea that massive donations to pay for extravagant capital projects may actually be a bad thing. About two years ago the concept was floated, and since then it's become an accepted part of conventional thinking.

Everybody's talking about it. Everybody will continue to talk about it.

Another example involves museums' mad rush to acquire contemporary art. We started looking at this idea more closely earlier this summer, and sure enough, there's been a discernible uptick in museums acquiring contemporary art—and museums struggling due to their lack of contemporary art.

Which brings us to news out of Glen Falls, New York. It falls into the former category.

Art collector, architect, and Schenectady, New York resident Werner Feibes provided a major bequest of art and cash to the Hyde Collection, totaling more than $11 million. With the gift, the Hyde will create a new 1,500-square-foot gallery dedicated to the display of modern and contemporary art. Named in honor of the donor and his late partner, the Feibes and Schmitt Gallery will open to the public in the summer of 2017.

Are you thinking what we're thinking? Yup: It's a new capital project focused on contemporary art. The folks at the Hyde killed two birds with one stone!

To that end, the museum will use this gift as the cornerstone of a major fundraising initiative designed to match a portion of his cash gift to support the new gallery space. Add it all up, and the money will "expand the Hyde’s reputation as the leading visual arts institution in the region, positioning it to present the 'art of our time' alongside its Old Masters and distinguished works of European and American art."

Another trend underscored by this story is how more "small town" museums are raising their ambitions, engaging in bigger plays and pulling in bigger bucks. This, too, is a point we've been making often lately.

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And what about the donor, Werner Feibes?

Needless to say, Feibes represents the kind of donor that museum directors can only dream about. (Think Fievel gazing out the window singing "Somewhere Out There" in An American Tail.)

Along with the late James Schmitt, Feibes built a world-class art collection that explored non-objective art, Pop art, abstract art, and Minimalism. But more to the point, Feibes is a dream donor because he, you know, actually donated his work.

Building on Mr. Feibes' previous donation of 55 modern and contemporary works to the Hyde in 2015, the new bequest includes the remainder of the collection, which totals 105 works. Combined, the Feibes and Schmitt gift more than doubles the Hyde's holdings of modern and contemporary art, positioning the museum as a "regional hub for Post-war art."

Now, you may think we were being more pithy than usual when stating that Feibes "actually donated his work." But it's important to call attention to this seemingly innocuous action. That's because the contemporary art world as a whole—and with it, the fates of museums both large and small—are inextricably (and unsurprisingly) tied to market forces which are, in turn, tied to the whims of collectors.

(This is a subject we touched upon recently when examining the research of Robert Ekelund, whose forthcoming book is entitled The Economics of American Art: Art, Artists and Market Institutions.)

It boils down to an issue of supply and demand. There is a demand for contemporary art, but supply is scarce. And when collectors like Donald and Shelley Rubin or J. Tomilson Hill start their own foundation and gallery rather than donate the work, it exacerbates scarcity, thereby driving prices up even further. Scorned acquisition directors clench their fists and scream heavenward as the camera dramatically zooms out.

So what's the bottom line, exactly?

It's simple. By donating the remainder of his contemporary art collection, Feibes' gift carries more weight than it would initially appear.