For Some Culture Executives, a Housing Perk Is Rolled Back

For years the Metropolitan Museum of Art housed its directors in a $5 million apartment on Fifth Avenue, where they lived for free and paid no taxes on that benefit.

The American Museum of Natural History’s president also lived for decades in a rent-free, tax-free luxury East Side apartment owned by the museum that is just down the block from Central Park.

The Los Angeles County Museum of Art long provided its director with a Tudor home valued at more than $6.5 million, and later a more modest mansion valued at $2.4 million.

But in recent years, as art organizations contend with financial struggles at a time of heightened sensitivity around issues of income inequality, cultural institutions have begun to revisit — and in some cases roll back — the perks they give top executives.

The Met sold its apartment, and now provides its director with a housing allowance on which he must pay taxes. The natural history museum’s new president chose to forego living in the museum’s luxury apartment and will receive a taxable housing allowance instead. And LACMA sold both of the homes where it once housed its director and now provides him with a housing allowance that is taxed as compensation.

“It was the one thing that would achieve cash in the bank and would not negatively impact our balance sheet, so all arrows pointed to the house,” said Michael Govan, LACMA’s director and chief executive, who added that he initiated the sales and had paid taxes on the so-called imputed value of his museum-owned housing. “It just seemed like the right time.”

“There has also been a revolution in museums,” he continued. “People were calling for more accountability at the same time that we were under duress.”

The Museum of Modern Art still provides a rent-free, tax-free home for its chief executive, arguing that living in a luxury apartment on the East Side of Manhattan is not a perk, but a requirement of the job.

The many institutions that still provide some housing subsidy now structure it as a taxable stipend, not a tax-free home. The changes come as museums and performing arts centers have grown increasingly mindful of how it looks to have their leaders living in luxurious digs on the institution’s dime when staff members are often stretching to make ends meet.

Workers at nearly two dozen American museums have formed unions in recent years, a surge fueled in part by increasing frustration over the pay gap between museum employees and executives. Workers at the Philadelphia Museum of Art walked off the job for 19 days last year, and labor and management there continue to debate the terms of the new contract. Employees of the Hispanic Society Museum & Library in New York ended their strike in May after nearly two months.

“Inequity within an organization is an optics issue,” said Rohit Deshpande, a professor at Harvard Business School who teaches a course on the business of the arts. At the same time, he added, boards will defend their generous compensation packages on the grounds that “it’s very hard to get and retain good arts administrators.”

While many arts leaders took pay cuts to offset some of the financial damage their institutions endured as a result of Covid-related closures, it was particularly difficult for museum workers to stomach furloughs and layoffs when executive salaries remained so comparatively large.

“We’ve seen this meteoric rise in the kinds of compensation packages that these directors want and expect, and museum staff are still relatively low paid,” said Maida Rosenstein, the president of Local 2110, which represents workers at several arts institutions. “In cities where the cost of housing is really high, they’re clearly using these things to attract people and everybody else is struggling to make rent.”

Beyond housing, cultural organizations also often help their executives pay for social club memberships or first-class travel, sometimes extending the travel allowance to a spouse or partner. But the institutions routinely describe these perks as business related on their tax returns: The travel upgrades, for example, are to be used only on museum business and a social club membership is subsidized because it’s an inviting place to entertain donors.

This is akin to the argument that has been used to defend the tax-free housing provided to museum directors.

Glenn D. Lowry, the director of the Museum of Modern Art, for example, earned $2 million in salary and other compensation last year. He lives for free in a $6 million condo in a tower above MoMA, which considers the housing arrangement a mandatory and nontaxable benefit.

“As a condition of employment and convenience to the museum, the director must reside in the museum-owned apartment on premises,” a MoMA spokeswoman said. “This supports the museum’s essential operations and mission while dually serving as an important on-site venue for official events the director is required to host.”

The museums are relying on a section of the tax code that holds that free housing should not be viewed as income when it is provided to employees — like university presidents and motel managers — who are required to live on a “business premises.”

Some tax experts say the definition of a business premise is not always clear-cut. “That’s a gray area,” said Charles M. Watkins, who specializes in nonprofit law. “What is a noncompensatory business reason, and whether it’s substantial, is based on all the facts and circumstances. There may be differences in the facts that justify different treatments.”

Like MoMA, the Museum of Natural History had long provided a rent-free and tax-free home for its president. Unlike MoMA, though, the apartment in an elegant East Side building was not directly on the premises, but on the other side of Central Park. Ellen V. Futter, the museum’s former president, lived there for some 30 years, but her successor, Sean M. Decatur, has decided not to move in, according to the museum.

“President Decatur and the board have discussed and decided this is the right time for the museum to move to the more current typical arrangement, where the president receives a housing stipend,” said Anne Canty, a museum spokeswoman.

The museum’s board will meet in the fall to decide whether to keep the apartment on East 79th Street.

Until he resigned under pressure in 2017, Thomas P. Campbell, a former director of the Met, lived in the museum’s luxury co-op apartment across the street at 993 Fifth Avenue.

But the Met sold the apartment for $5.6 million in 2019 and has moved to a model employed by many other museums: It now issues a taxable housing allowance as part of the compensation package it provides to its current director and chief executive, Max Hollein.

The museum declined to explain the change in policy.

Though it had not traditionally provided its director with a housing subsidy, the Brooklyn Academy of Music in 2015 gave its boss at the time, Katy Clark, nearly $1 million to put toward the purchase of a $1.9 million home overlooking Prospect Park.

The $968,000 bonus was provided on the condition that she serve for at least five years. Clark left the post in 2021 after serving less than six years, and kept the apartment.

The board defended its decision to provide the money for housing on the grounds that it had required Clark to move near BAM and that, given the high real estate prices, the housing bonus enabled her to sell her Manhattan apartment and buy a comparable home in Brooklyn.

A BAM spokeswoman said the organization has no plans to provide housing subsidies to its current or future leaders. Clark’s arrangement, she said, was a “one-shot deal as part of a compensation package,” and added: “BAM has never had a policy that provides a housing allowance to its president or staff members.”

FOLLOW US ON GOOGLE NEWS

Read original article here

Denial of responsibility! Web Times is an automatic aggregator of the all world’s media. In each content, the hyperlink to the primary source is specified. All trademarks belong to their rightful owners, all materials to their authors. If you are the owner of the content and do not want us to publish your materials, please contact us by email – webtimes.uk. The content will be deleted within 24 hours.

Leave a Comment