“The art of living is the art of giving,” says the San Francisco-based fashion executive and philanthropist Maria Manetti Shrem, who chose this as the title of a Sotheby’s auction on 16 May of classic contemporary works of art from the collection she has formed with her second husband, the former Napa Valley vineyard owner, Jan Shrem.
Headlined by Picasso’s 1964 canvas, Femme nue couchée jouant avec un chat (sold for $21.2m with fees) the collection of 17 works was estimated to sell for more than $23m. An undisclosed portion of the proceeds will “benefit charitable causes in the fine arts, music, education and medical research and to inspire in others the joy of giving”, Manetti Shrem says in Sotheby’s press release. “I want to give with my warm hands, not after passing,” adds the Italian-born Manetti Shrem, who has stressed in interviews that she wants to inspire other wealthy people to give now.
Timing has become a significant issue in the realm of philanthropic giving in the US thanks to little-known but increasingly influential anonymous charitable vehicles known as Donor Advised Funds, or DAFs.
Remarkably, DAFs allow a wealthy individual to claim tax relief as soon as assets are donated to the fund, without being under any formal obligation to pay out that money to a charity within a fixed time. Assets can accrue value tax-free within the fund and philanthropic decision-making can be deferred to succeeding generations, in theory indefinitely. By contrast, tax-exempt private foundations in the US are obliged to donate at least about 5% of their net assets to charity each year. In addition, up to 60% of a donor’s adjusted gross income can be given to a DAF, while 30% is the limit for a private foundation.
The National Philanthropic Trust’s 2022 DAF Report says there were 1.3 million DAFs operating in the US in 2021, with $234bn of assets. Payouts to charitable organisations reached 27%, according to the report. Assets at private foundations were valued at $1.3trn.
Despite the largesse outlined in the DAF Report, these funds have attracted criticism. The Caritas Law Group blogged in 2021 that DAFs encouraged philanthropies to “warehouse wealth rather than distribute them to the charitable causes for which they were intended”. That same year, Inequality.org, which tracks inequality-related issues, pointed out that DAFs had become the fastest-growing recipients of donations in the nonprofit sector in the US. “Each year, disproportionately more and more charitable revenue is being diverted into DAFs while nonprofits on the ground struggle harder for funds,” Inequality.org notes.
How much of the money generated from philanthropic sales of art find their way into DAFs? Given the opacity of these anonymous structures, there appears to be no way of knowing.
Karen Kardos, the head of philanthropic advisory at Citi Private Bank in New York, was unable to come up with any figures. She says many ultra high net worth individuals use both private foundations and DAFs. The former are more prestigious, the latter more tax-advantageous. “They’re so easy to use,” Kardos says of DAFs. “There’s no filing. There’s no administration. They will continue to grow.”
When asked about her charity art auction, Manetti Shrem, like many who sell through such public sales (including the heirs of Microsoft co-founder Paul Allen), declined to discuss the specific structures of intended donations. However, she stresses, via Sotheby’s press office, that the couple’s charitable giving has not been motivated by tax deductions. In recent years, Manetti Shrem and her husband have supported more than 40 charitable programmes around the world.
The Shrem’s willingness to give in the here and now is not in doubt. But thanks to DAFs, other wealthy individuals who take reputational credit (and tax breaks) for charitable giving, are able—without the wider world knowing too much about it—to emulate St Augustine. The saint famously declared in his Confessions that in his youth he wanted to lead a better life—“but not yet!”
Slow progress on gender pay gap at most auction houses
Auction houses continue to have a serious pay gap problem
The numbers do not lie. Auction houses continue to have a serious pay gap problem, so much so, one former auction house executive, speaking on condition of anonymity, quips: “It’s been so bad for so long, reparations should be awarded.”
Six years ago, it became mandatory for UK businesses with more than 250 employees—including Christie’s, Sotheby’s and Bonhams—to report on their gender pay gaps (on that basis, Phillips is exempt, as are virtually all commercial art galleries and dealerships in the country). Generally speaking, little has improved since then.
According to Sotheby’s 2022 report, women earn 73p for every £1 that men earn when comparing median hourly pay, so the pay gap now stands at 27%, compared with 22.2% (78p for every £1) in 2017. At Christie’s, too, the pay gap has widened since reporting began. Last year, the pay gap was 26.3% compared with 25% in 2017.
Bonhams is the only auction house to buck the trend—its latest filings show an 8% gap, compared with 36.7% in 2017.
Job role skew
India Phillips, who became the UK managing director at Bonhams in January 2022, acknowledges that the firm was the worst offender when reporting began. “Huge efforts” have been made since then, she says, noting how women accounted for 70% of promotions over the past year, with a number entering senior management roles.
The most chronically underpaid are those in research, administrative and operational roles; both Christie’s and Sotheby’s say that the picture is very much skewed by the large proportion of women in junior roles. Historically, too, men have wholly and unwarrantedly dominated the executive class—though that is changing faster in auction houses than in parallel financial and advertising industries.
As a Christie’s spokeswoman puts it: “Around 70% of employees in our two lower quartiles of pay are women and around 50% of employees in the highest quartile of pay are females. If we were to hire more males into more junior levels of role this would impact the numbers.” A Sotheby’s spokesperson has a similar argument, noting that, because 68% of roles below deputy director level at the firm are held by women, and are therefore lower earners, “progress will be slow”. But, they add, “as we get to the upper quartile of our pay brackets, we are much more evenly split between men and women”.
So why are more women appointed at junior level, and why are fewer of them rising up the ladder to senior level positions?
The problem is two-fold. As India Phillips points out, around 80% of art history graduates are women, so she says there is an imbalance when interviewing for Bonhams’s graduate trainee scheme or entry level jobs.
Further up the ladder, one of the biggest barriers to career progression is related to motherhood—though auction houses are making efforts to improve the situation for women employees who have children. Bonhams now has “much friendlier family policies” than it did 15-20 years ago, to make sure that it is not losing talent. For its part, Sotheby’s has doubled maternity/adoption pay and recently introduced a new scheme that enables parents to pay for childcare through their payroll, which will significantly reduce their childcare fees.
Still, as one senior auction house employee puts it, “from a management perspective, it’s a nightmare” finding cover for a year-long maternity leave, particularly when sales are scheduled every two months.
And, with no concrete targets for gender parity by a certain date—let alone other forms of inclusion and diversity—will the next six years will be any better than the last?