Yes – the constitution will ensure all of the key administrative requirements of the group run smoothly. Critical in providing a well-lit framework, the rule of thumb is to keep the framework simple and complete. Webb’s has a recommended template that addresses all key issues such as how acquisition and divestment decisions can be made, what happens when a member wishes to leave, or when the group is dissolved, etc.

 

When a new group is formed, each member should sign a Members’ Undertaking to agree by the constitution. The undertaking can also contain rules about publicity, looking after the artworks, confidentiality, etc.

 

 

If a member decides to leave, your group will need to agree at the time what the most suitable financial arrangements are for both the departing member and the remaining group. The various options should be agreed at the outset (refer to constitution options) and need to accommodate a number of common variables. For example:

 

In the event a member wishes to resign early on, the group may decide to simply pay the member the sum of their contributions up to the relevant date. However, this could be financially onerous if a longer period has elapsed.

 

Another option is to find a new member to replace them and buy out their share. However, it is important that there is a fall-back position in case the arrangements cannot be agreed at the time.

 

The constitution should provide that if the members cannot reach agreement, the artworks in which the leaving member has a financial interest will be sold at the end of an agreed period of time, e.g. one year and the leaving member will receive his or her share at the time. This of course may also involve ancillary costs such as having the collection valued. We also recommend that new groups fix a review date after a reasonable period of time (taking into consideration the nature of the works and range of financial commitment each group undertakes) at which point the group decides whether to carry on with  the agreed acquisition strategy or sell or disperse the art works.

 

 

When the collecting group is set up, each member will enter into a formal legal agreement in the form of a written Members’ Undertaking (see above) that each member will abide by the constitution, which sets out a clear set of rules that regulate what happens if things go wrong and members fall out. The constitution should ensure that there are clear rules protecting each member’s financial interests.

 

 

 

 

It is important that the group agrees on some kind of high-level aesthetic theme e.g. ‘Work by artists under 40’ or ‘Three-dimensional work by New Zealand artists only’. Once agreed, a number of buying models can work. One option is to engage a professional art consultant to help guide the group through the art market. An art consultant can provide a level of expertise and insight that may other-wise be missing at the outset. Professional fees are generally modest and can be money well spent for the uninitiated. Alternatively (depending on the size of the group), all decisions about which works to purchase can be taken by a purchasing panel drawn from the members, which rotates. This means that sometimes work will be bought which others may not warm to. However, from our experience, this is all part of the fun of participating within a collecting group and is in the spirit of buying art as a group rather than just individually. Buying caps can also be employed which ensure that more substantial acquisitions must gain the support of the majority or all members of the group.

 

 

Once the collection gains momentum, it is common for the group to refine the collection by relinquishing one or more works to the market. In doing so, the collective boosts its buying fund and is able to strengthen the collection's aesthetic theme. In such a situation, and after agreeing which works are to be sold, the group could decide to offer members first refusal to buy the works or an individual piece before going to the open market. Groups should be free to decide to sell works on a permanent basis to individual members by mutual agreement of all the members.

 

 

At a very basic level, each member of the collective needs to be comfortable with the ongoing financial commitment. From our experience, we believe the best way to do this is to ensure a level of flexibility on this front. The rule of thumb is ‘easy in easy out’.

 

Once you have agreed what initial and ongoing contribution for the buying fund should be, it then needs to be recognised that peoples’ circumstances can obviously change, so there might well be occasions when someone is no longer in a position to maintain their contributions, or wishes (by agreement with the other members) to take a temporary break from making contributions. Every time a work is purchased from the pool, each member who has contributed to the pool obtains a financial share in the work which is recorded. If someone has not contributed to the pool, then they will not own a share in any work that is purchased during that time. Any shortfall in a member’s contribution would be reflected in an eventual sale of the work or the whole collection, for instance when the group is wound up.

 

 

 

Webb’s recommends a number of curators, art consultants and galleries in different regions who will be able to advise on artists to keep track of, or galleries to visit, or what events to attend such as art fairs — both locally and international.

 

It’s important that all artworks held in members’ homes are properly insured for their proper value. Members should be able to insure artworks under their existing household insurance policies, but some policies do exclude artworks. There are a number of insurance companies that deal specifically with art collections. Members must provide evidence of proper insurance cover before artworks are delivered to their homes. Many household policies have an ‘excess’ (or deductible) which the insured has to pay if there is a claim; if there is a claim under a policy, the individual member will be responsible for paying the excess to the group.

 

There are specialist art insurers in the market and further information on these will be made available to collecting groups in due course (refer to AXA art – we need to form an alliance here)

 

 

 

Yes there are and they are positive. Webb's is happy to put you in contact with a specialist who may outline these details for you.